<PAGE>
As filed with the Securities and Exchange Commission on March 16, 1999
Registration No. 333-71715
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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CROWN CASTLE INTERNATIONAL CORP.
(Exact name of Registrant as specified in its charter)
Delaware 4899 76-0470458
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Number) Identification Number)
incorporation or
organization)
---------------
Mr. Charles C. Green, III
510 Bering Drive
Suite 500
Houston, Texas 77057
(713) 570-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Copies to:
Stephen L. Burns, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine. Information contained
herein is subject to completion or amendment. A Registration Statement
relating to these securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers to buy be accepted
prior to the time the Registration Statement becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statements filed with the +
+Securities and Exchange Commission relating to these securities is effective. +
+This prospectus is not an offer to sell these securities and it is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
March 16, 1999
Prospectus
CROWN CASTLE INTERNATIONAL CORP.
Offer to Exchange all Outstanding 12 3/4% Senior Exchangeable Preferred Stock
due 2010 for
12 3/4% Senior Exchangeable Preferred Stock due 2010, which have been
Registered under the Securities Act of 1933
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This prospectus (and accompanying Letter of Transmittal) relates to our
proposed offer to exchange up to $200,000,000 of our new 12 3/4% Senior
Exchangeable Preferred Stock due 2010, which we refer to as the new preferred
stock, which will be freely transferable, for any and all outstanding 12 3/4%
Senior Exchangeable Preferred Stock due 2010 issued in a private offering on
December 16, 1998, which we refer to as the old preferred stock. We refer to
the new preferred stock and the old preferred stock collectively as the
exchangeable preferred stock.
Expiration Date:
. The exchange offer expires at 5:00 p.m., New York City time, on [ ], 1999,
unless extended.
Withdrawal Rights:
. Tenders of old preferred stock may be withdrawn at any time prior to the
expiration of the exchange offer.
The New Preferred Stock:
. The terms of the new preferred stock are substantially identical to the terms
of the old preferred stock, except that the new preferred stock will be
freely tradeable.
The Exchange Debentures:
. The terms of the exchange debentures are substantially identical to the terms
of the restricted exchange debentures, except that the exchange debentures
will be freely tradeable.
-------------
Please see "Risk Factors" beginning on page 24 for a discussion of certain
factors you should consider in connection with the exchange offer.
-------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the new preferred stock or determined
if this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read this entire prospectus
(and accompanying Letter of Transmittal and related documents) and any
amendments or supplements carefully before making your investment decision.
-------------
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Prospectus Summary................. 1
Risk Factors....................... 21
Use of Proceeds.................... 33
Dividend Policy.................... 33
Capitalization..................... 34
Unaudited Pro Forma Condensed
Consolidated Financial
Statements........................ 35
Selected Financial and Other Data
of CCIC........................... 42
Selected Financial and Other Data
of CTI............................ 44
Management's Discussion
and Analysis of
Financial Condition and Results of
Operations........................ 46
The Exchange Offer................. 58
Industry Background................ 65
Business........................... 72
The Proposed Transactions.......... 96
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Proposed Offerings............. 107
Management......................... 108
Certain Relationships and Related
Transactions...................... 119
Principal Stockholders............. 128
Description of Securities.......... 131
Book-Entry, Delivery and Form...... 183
Description of Capital Stock....... 188
Description of Certain
Indebtedness...................... 195
Certain U.S. Federal Income Tax
Considerations................... 200
Plan of Distribution............... 200
Legal Matters...................... 201
Independent Auditors............... 201
Available Information.............. 201
Index to Financial Statements...... F-1
</TABLE>
----------------
Our U.K. subsidiary, Castle Transmission Services (Holdings) Ltd., which we
refer to as CTSH, publishes its consolidated financial statements in pounds
sterling. For the convenience of the reader, this prospectus contains
translations of certain pound sterling amounts into U.S. dollars at specified
rates, or, if not so specified, at the noon buying rate in New York City for
cable transfers in pounds sterling as certified for customs purposes by the
Federal Reserve Bank of New York on December 31, 1998, of (Pounds)1.00 =
$1.6628. No representation is made that the pound sterling amounts have been,
could have been or could be converted into U.S. dollars at the rates indicated
or any other rates. On March 15, 1999, the noon buying rate was (Pounds)1.00 =
$1.6223.
i
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
It may not contain all the information that is important to you. We encourage
you to read this entire prospectus carefully.
The Company
We are a leading owner and operator of wireless communications and broadcast
transmission infrastructure. After giving effect to the completion of the
proposed transactions we describe in this prospectus, as of December 31, 1998,
we owned or managed 6,105 towers, including 4,419 towers in the United States
and Puerto Rico and 1,686 towers in the United Kingdom. Our customers currently
include many of the world's major wireless communications and broadcast
companies, including Bell Atlantic Mobile, BellSouth Mobility, AT&T Wireless,
Nextel and the British Broadcasting Corporation.
Our strategy is to use our leading domestic and international position to
capture the growing consolidation and build-out opportunities created by:
. the outsourcing of towers by major wireless carriers;
. the need for existing wireless carriers to expand coverage and improve
capacity;
. the additional demand for towers created by new entrants into the
wireless communications industry;
. the privatization of state-run broadcast transmission networks; and
. the introduction of new digital broadcast transmission technology and
wireless technologies.
Our two main businesses are leasing antenna space on wireless and broadcast
multi-tenant towers and operating broadcast transmission networks. We also
provide complementary services to our customers, including network design,
radio frequency engineering, site acquisition, site development and
construction, antenna installation and network management and maintenance. We
believe that our end-to-end service capabilities are a key competitive
advantage in forming strategic partnerships to acquire large wireless and
broadcast tower portfolios and in winning tower construction mandates.
Our primary business in the United States is the leasing of antenna space to
wireless carriers under long-term contracts. After completion of the proposed
transactions we describe in this prospectus, we will have tower clusters in 26
of the 50 largest U.S. metropolitan areas, 23 of which are east of the
Mississippi river. We believe that by owning and managing large tower clusters
we are able to offer our customers the ability to expand their networks rapidly
and efficiently across particular markets or regions. Our acquisition strategy
has been focused on adding tower clusters. For example, we have entered into
agreements with both Bell Atlantic Mobile, which we refer to as BAM, and
BellSouth Mobility, which we refer to as BellSouth, that will allow us to
control and operate substantially all the towers in their 850 MHz networks in
the eastern, southwestern and midwestern United States.
Our primary business in the United Kingdom is the operation of television and
radio broadcast transmission networks. Our towers provide broadcast coverage to
99% of the population and substantially all of the major metropolitan markets.
In 1997, we acquired the BBC's national broadcast transmission infrastructure
and network services. Following the acquisition of the BBC's tower
infrastructure, we were awarded long-term contracts to provide the BBC and
other broadcasters analog and digital transmission services. We also lease
antenna space to wireless operators in the United Kingdom on the towers we
acquired from the BBC and from various wireless carriers. After completion of
the One2One transaction described in this prospectus, we will have a nationwide
wireless footprint in the United Kingdom. We believe that our towers are
uniquely situated in locations that wireless carriers seeking to lease antenna
space find particularly desirable.
We believe our towers are attractive to a diverse range of wireless
communications industries, including PCS, cellular, ESMR, SMR, paging, and
fixed microwave, as well as radio and television broadcasting. In the
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United States our major customers include AT&T Wireless, Aerial, BAM, BellSouth
Mobility, Motorola, Nextel, PageNet and Sprint PCS. In the United Kingdom our
major customers include the BBC, Cellnet, Dolphin, NTL, ONdigital, One2One,
Orange, Virgin Radio and Vodafone.
We have embarked on a major construction program for our customers to enhance
our tower footprint. In 1998, we constructed 231 towers at an aggregate cost of
approximately $46.0 million, and had begun construction of an additional 72
towers as of December 31, 1998. In 1999, we plan to construct between 800 and
1,100 towers at an estimated aggregate cost of between $150.0 million and
$200.0 million for wireless carriers such as BAM, BellSouth and Nextel. The
actual number of towers built may be outside that range depending on
acquisition opportunities and potential build-to-suit contracts from large
wireless carriers. In addition, we were selected to build and operate in the
United Kingdom the world's first digital terrestrial television system.
Industry Overview
As the wireless communications industry has become more competitive, wireless
carriers have sought operating and capital efficiencies by outsourcing network
services and the build-out and operation of new and existing infrastructure.
These carriers have also begun co-locating transmission equipment with other
carriers on multiple tenant towers. We believe that there has been a
fundamental shift in strategy among established carriers relating to
infrastructure ownership. In order to concentrate on their customer bases and
expansion of their service offerings, many such carriers have begun to sell
their wireless communications infrastructure to, or establish joint ventures
with, experienced infrastructure providers that have the proven ability to
manage networks.
The television broadcasting industry is experiencing significant change
because of the impending widespread deployment of digital terrestrial
television broadcasting. Many countries are expected to start to establish
digital services within the next five years. The shift to digital transmission
will require network design, development and engineering services and the
significant enhancement of existing broadcast transmission infrastructure,
including new transmission and monitoring equipment and the modification,
strengthening and construction of towers. In addition, state-run broadcast
transmission networks are continuing to be privatized throughout the world.
We expect these trends to continue globally in both the wireless
communications and broadcasting industries. We believe that the next logical
step for wireless carriers and broadcasters will be the outsourcing of the
operation of their towers and transmission networks, including the transmission
of their signals, in much the same way as the BBC has done with its
transmission network. We believe that such carriers and broadcasters will only
entrust the operation of their towers and the transmission of their signals to
those infrastructure providers, such as us, that have the ability to manage
towers and transmission networks and a proven track record of providing end-to-
end services to the wireless communications and broadcasting industries.
Growth Strategy
Our objective is to become the premier global provider of wireless
communications and broadcast transmission infrastructure and related services.
Our experience in expanding tower footprints and operating analog and digital
transmission networks, our significant relationships with wireless carriers and
broadcasters and our ability to offer customers our in-house technical and
operational expertise positions us to accomplish this objective. The key
elements of our growth strategy are to:
Maximize Utilization of Tower Capacity. We seek to increase the number of
antenna leases on the towers and rooftops that we own or manage. Many of our
towers have significant capacity for additional antennas. We can increase the
number of tenants on these towers at a low incremental cost.
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Leverage Expertise of U.S. and U.K. Personnel to Capture Global Growth
Opportunities. Our ability to design, develop (build) and operate wireless
communications and broadcast transmission networks, including the transmission
of signals, is an important competitive advantage in our pursuit of growth
opportunities, as evidenced by the BBC, One2One, BAM, BellSouth and Powertel
transactions.
Partner with Wireless Carriers to Assume Ownership of their Existing Towers.
We will continue to seek to partner with major wireless carriers in order to
assume ownership of their towers directly or through joint ventures or control
their towers through contractual arrangements. We believe that we will be able
to capitalize on our relationships with our strategic partners and customers
with international operations to expand our global footprint.
Provide Build-to-Suit Towers for Wireless Carriers and Broadcasters. We are
aggressively pursuing build-to-suit opportunities. As wireless carriers
continue to expand and fill-in their service areas, they will require
additional communications sites and will have to build new towers where co-
location is not available. Similarly, the introduction of digital terrestrial
television broadcasting in the United States and elsewhere in the world will
require the construction of new broadcast towers to accommodate new digital
transmission equipment and analog transmission equipment displaced from
existing towers.
Acquire Existing Broadcast Transmission Networks. We intend to pursue
selective acquisitions of broadcast transmission networks and related
infrastructure around the world. We believe we can capitalize on the experience
we have gained through the acquisition of the BBC's broadcast transmission
network and our roll-out of digital television transmission services throughout
the United Kingdom.
Continue to Decentralize Management Functions. In order to better manage our
tower lease-up efforts and build-out programs, and in anticipation of the
continued growth of our tower footprint throughout the United States, we have
begun and plan to continue decentralizing some management and operational
functions. To that end, in addition to our Pittsburgh operating headquarters
and regional office, we have opened five regional offices and plan to add 10
additional regional offices in connection with the proposed transactions
described below.
Proposed Transactions
Proposed BAM JV
On December 8, 1998, we entered into an agreement, which we call the
Formation Agreement, with BAM to form a joint venture to own and operate
approximately 1,427 towers. These towers represent substantially all the towers
in BAM's 850 MHz wireless network in the eastern and southwestern United States
and provide coverage of 11 of the top 50 U.S. metropolitan areas, including New
York, Philadelphia, Boston, Washington, D.C. and Phoenix. A substantial
majority of these towers are over 100 feet tall and can accommodate multiple
tenants.
Upon its formation, we will manage the day-to-day operations of the proposed
joint venture. Concurrently with the formation of the joint venture, BAM and
the joint venture will enter into a master build-to-suit agreement pursuant to
which the joint venture will build and own the next 500 towers to be built for
BAM's wireless communications business. The joint venture will have the right
to build an additional 200 towers for BAM thereafter. Pursuant to a global
lease agreement, BAM will lease antenna space on the towers transferred to the
joint venture, as well as the towers built pursuant to the build-to-suit
agreement.
Upon its formation, we will own approximately 62.3% of the joint venture and
BAM and certain of its affiliates will own the other 37.7% along with a 0.001%
interest in the joint venture's operating subsidiary. To form the proposed
joint venture, we will contribute $250.0 million in cash and approximately 15.6
million shares of our common stock (valued at $197.0 million) to the joint
venture. BAM and its affiliates will transfer approximately 1,427 towers along
with related assets and liabilities to the joint venture. The joint venture
expects
3
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to borrow $180.0 million under a committed $250.0 million revolving credit
facility, following which the joint venture will make a $380.0 million cash
distribution to BAM. The joint venture initially will have approximately $46.0
million of cash to fund its operations and pay costs and expenses associated
with building new towers.
Proposed BellSouth Transaction
On March 8, 1999, we entered into a preliminary agreement, which we call the
Letter Agreement, with BellSouth and certain of its affiliates to control and
operate approximately 1,850 towers. These towers represent substantially all
the towers in BellSouth's 850 MHz wireless network in the southeastern and
midwestern United States and provide coverage of 12 of the top 50 U.S.
metropolitan areas, including Miami, Atlanta, Tampa, Nashville and
Indianapolis. A substantial majority of these towers are over 100 feet tall and
can accommodate multiple tenants.
We will be responsible for managing, maintaining, marketing and leasing the
available space on BellSouth's towers. BellSouth will enter into a master
build-to-suit agreement with us pursuant to which we will have the right to
build, control and operate the next 500 towers to be built for BellSouth's
wireless communications business. BellSouth will lease antenna space on the
towers subject to the Letter Agreement, as well as the towers built pursuant to
the build-to-suit agreement.
The transaction is structured as a taxable sale pursuant to a master
sublease. While we will have complete responsibility for the towers and will
receive all the economic benefits of leasing available space on the towers,
BellSouth will continue to own the tower infrastructure. We will pay BellSouth
$610.0 million, consisting of $430.0 million in cash and approximately 9.1
million shares of our common stock (valued at $180.0 million), subject to
adjustment. While the transaction is expected to close in a series of closings
beginning in the second quarter of 1999, we will begin marketing all the towers
immediately. In connection with our entering into the Letter Agreement, we have
placed $50.0 million in an escrow account which will be returned to us at the
first closing date. See "Risk Factors--We May Not Consummate the Proposed
Transactions."
Proposed Powertel Acquisition
On March 15, 1999, we entered into an agreement, which we call the Asset
Purchase Agreement, with Powertel to purchase approximately 650 towers and
related assets. These towers represent substantially all of Powertel's owned
towers in its 1.9 GHz wireless network in the southeastern and midwestern
United States. Approximately 90% of these towers are clustered in seven
southeastern states, providing coverage of such major metropolitan areas as
Atlanta, Birmingham, Jacksonville, Memphis and Louisville, and a number of
major connecting highway corridors in the southeast. These towers are
complementary to BellSouth's 850 MHz footprint in the southeast and have
minimal coverage overlap. Substantially all of these towers are over 100 feet
tall, were built within the last three years and can accommodate multiple
tenants.
Concurrently with the tower acquisition, we will enter into master lease
agreements pursuant to which Powertel will lease antenna space on the towers we
acquire in the acquisition.
We will purchase the 650 towers from Powertel for an aggregate cash purchase
price of $275.0 million. Pursuant to the Asset Purchase Agreement and a related
escrow agreement, we have placed $50.0 million in escrow to be applied to the
purchase price at closing. See "Risk Factors--We May Not Consummate the
Proposed Transactions".
Proposed One2One Transaction
On March 5, 1999, we entered into an agreement, which we call the Framework
Agreement, with One2One, pursuant to which our U.K. operating subsidiary, which
we call CTI, has agreed to manage, develop and, at its option, acquire up to
821 towers. These towers represent substantially all the towers in One2One's
1800 MHz nationwide wireless network in the United Kingdom. We believe this
transaction will position us to capitalize on lease-up and build-out
opportunities provided by the introduction of new wireless technologies such as
UMTS.
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CTI will be responsible for managing and leasing available space on the
towers, and will receive all the income from any such third party leases. The
term of the management arrangement will be for up to 25 years. During the
three-year period following the closing, CTI will have the right, at its
option, to acquire for (Pounds)1.00 per site One2One's interest in the 821
towers, to the extent such interests can be assigned. One2One has also agreed
to include as part of the Framework Agreement, including CTI's right to acquire
sites during the three-year period, any new One2One towers constructed during
the term of the agreement.
As consideration for this transaction, CTI has agreed to provide One2One with
free rent on the 821 towers for nine years, free rent on newly constructed
One2One towers assigned to CTI for 15 years and free rent on CTI towers on
which One2One currently leases space for two years.
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Although we expect the Proposed BAM JV, the Proposed Powertel Acquisition and
the Proposed One2One Transaction to be consummated during the first half of
1999, and the first closing of the Proposed BellSouth Transaction to be
consummated by May 31, 1999, the operative agreements governing these
transactions are subject to a number of significant conditions. Therefore, we
cannot guarantee you that we will close any of these proposed transactions on
the terms described in this document or at all. See "Risk Factors--We May Not
Consummate the Proposed Transactions". When we refer to financial information
in this prospectus as "after giving effect to" or "pro forma for" the Proposed
Transactions, we mean after giving effect to the proposed transactions
described above, other than the Proposed One2One Transaction, which does not
have a material impact on our pro forma financial results.
Proposed Offerings
At the same time that we file this amendment to our exchange offer, we are
filing a Registration Statement on Form S-1 in connection with a concurrent
public underwritten offering of our common stock and our % Senior Discount
Notes due 2011, which we refer to as the Proposed Offerings. The proceeds from
the Proposed Offerings will be used, in part, to finance the Proposed BellSouth
Transaction and the Proposed Powertel Acquisition.
Recent Transactions
On August 21, 1998, we increased our ownership interest in CTSH to 80.0% by
consummating a share exchange with the shareholders of CTSH. The remaining
20.0% of CTSH's shares are owned by a company called TeleDiffusion de France,
or TdF, whose ultimate parent is France Telecom. Immediately prior to the
exchange, we converted all shares of our then existing preferred stock into
shares of our common stock and reclassified our then existing common stock into
shares of our common stock. We refer to the exchange and the conversions
collectively as the Roll-Up. At that time, we also raised approximately $150.0
million in an initial public offering of our common stock. We have allocated
the net proceeds from our IPO to finance a portion of our investment in the
Proposed BAM JV.
On October 8, 1998, we acquired all the outstanding shares of Millennium
Communications Limited for aggregate consideration of $14.5 million, consisting
of cash, our common stock and the assumption of indebtedness. Millennium
develops, owns and operates telecommunications towers and related assets in the
United Kingdom. On the date of acquisition, Millennium owned 102 tower sites.
Millennium is being operated as a subsidiary of CTI.
On December 21, 1998, we privately placed 200,000 shares of our 12 3/4%
Senior Exchangeable Preferred Stock due 2010, with a liquidation preference of
$1,000 per share. We used a portion of the net proceeds of the
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exchangeable preferred stock offering to repay substantially all of our then
outstanding indebtedness under our senior credit facility. We have allocated
the remaining net proceeds of the preferred stock offering to finance the
balance of our investment in the Proposed BAM JV.
On March 15, 1999, we entered into a loan agreement to finance our escrow
payments in connection with the Proposed BellSouth Transaction and the Proposed
Powertel Acquisition. We intend to use a portion of the net proceeds of the
offerings to repay all amounts outstanding under this loan agreement.
----------------
Our principal executive offices are located at 510 Bering Drive, Suite 500,
Houston, Texas 77057, and our telephone number is (713) 570-3000.
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Corporate Structure
The following chart illustrates, assuming the Proposed Transactions and the
Proposed Offerings described in this prospectus had been completed, (1) the
organizational structure of the Company and its principal subsidiaries and (2)
our consolidated debt obligations. See "Capitalization" and "The Proposed
Transactions".
Restricted Group
Crown Castle International Corp. |
("CCIC") |
|
. $251.0 million 10-5/8% Senior Discount Notes |
due 2007 (principal amount at maturity)/(a)/ |----
| |
. $ million Senior Dicount Notes | |
due 2011 (principal amount at maturity)/(a)/ | |
| |
. $200.0 million 12-3/4% Senior Exchangeable | |
Preferred Stock due 2010 | |
------------------------------------------------------------------- |
| | | |
100.0% | 100.0% | 100.0% | |
| | | |
Crown Communication, Inc. Proposed Powertel Proposed BellSouth |
("CCI") Subsidiary Subsidiary |
|
. Senior Credit ("CCP") ("CCSI") |
Facility/(c)/ |
|
|
Unrestricted Subsidiaries |
|
|
|
|
----------------------------------------
|
|
----------------------------------------
| |
80.0% | 62.3% |
| |
CTI Group Proposed BAM JV
("CTI")
. Revolving Credit . Revolving Credit
Facility/(d)/ Facility/(e)/
. (Pound) 125.0 million 9.0%
Guaranteed Bonds
- ---------------
(a) As of December 31, 1998, the accreted value of our outstanding senior
discount notes was $168.1 million.
(b) Our newly issued senior discount notes will have an initial accredited
value of $300.0 million.
(c) As of December 31, 1998, $5.5 million was drawn of the $100.0 million
revolving credit facility.
(d) As of December 31, 1998, (Pounds) 33.2 million was drawn of the (Pounds)
64.0 million revolving credit facility.
(e) The Company expects that the proposed joint venture will obtain a new
credit facility of up to $250.0 million of revolving credit loans with
availability subject to a borrowing base. The Company expects that $180.0
million will be drawn at the formation of the proposed joint venture.
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The Offering
Summary of Terms of the Exchange Offer
The exchange offer relates to the exchange of up to $200,000,000 aggregate
liquidation preference of our outstanding 12 3/4 Senior Exchangeable Preferred
Stock due 2010, which we call the old preferred stock, for up to an equal
aggregate liquidation preference of our 12 3/4 Senior Exchangeable Preferred
Stock due 2010, which has been registered under the Securities Act of 1933 and
which we call the new preferred stock. The shares of the new preferred stock
will be our obligations as governed by the terms of the certificate of
designations we filed on December 18, 1998 with the Secretary of State of the
State of Delaware. The form and terms of the shares of the new preferred stock
are identical in all material respects to the form and terms of the shares of
the old preferred stock except:
. that the shares of the new preferred stock have been registered under
the Securities Act,
. that the shares of the new preferred stock are not entitled to certain
registration rights which are applicable to the shares of the old
preferred stock under a registration rights agreement, and
. for certain liquidated damages provisions.
For more information, see "Description of Securities".
The Exchange Offer.......... We are offering to exchange $1,000 liquidation
preference of new preferred stock for each $1,000
liquidation preference of old preferred stock.
As of the date of this document, $200,000,000 in
aggregate liquidation preference of old preferred
stock is outstanding. The old preferred stock was
originally issued in a private placement. As a
condition to the purchase of the old preferred
stock, the initial purchasers required that we
make a registered offer to exchange the old
preferred stock for other securities
substantially similar to the old preferred stock.
We are making this exchange offer to satisfy this
contractual obligation.
Resale......................
Based on an interpretation by the staff of the
Securities and Exchange Commission set forth in
no-action letters issued to third parties, we
believe that new preferred stock issued pursuant
to the exchange offer in exchange for old
preferred stock may be offered for resale, resold
and otherwise transferred by you (unless you are
our "affiliate" within the meaning of Rule 405
under the Securities Act of 1933, or a broker-
dealer which acquired the old preferred stock
directly from us) without compliance with the
registration and prospectus delivery provisions
of the Securities Act of 1933, provided that you
are acquiring the new preferred stock in the
ordinary course of your business and that you
have not engaged in, do not intend to engage in,
and have no arrangement or understanding with any
person to participate in the distribution of the
new preferred stock. Each participating broker-
dealer that receives shares of new preferred
stock for its own account pursuant to the
exchange offer in exchange for shares of old
preferred stock that were acquired as a result of
market-making or other trading activity must
acknowledge that it will deliver a prospectus in
connection with any resale of the shares of new
preferred stock. See "Plan of Distribution".
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Any holder of old preferred stock who (i) is our
affiliate, (ii) does not acquire new preferred
stock in the ordinary course of its business,
(iii) tenders in the exchange offer with the
intention to participate, or for the purpose of
participating, in a distribution of new preferred
stock or (iv) is a broker-dealer that acquired
the old preferred stock directly from us, must
comply with the registration and prospectus
delivery requirements of the Securities Act of
1933 in connection with the resale of the new
preferred stock.
Expiration Date.............
5:00 p.m., New York City time, on , 1999, (20
business days after effectiveness of the
registration statement of which this prospectus
is a part), unless we extend the exchange offer,
in which case the term "Expiration Date" means
the latest date and time to which the exchange
offer is extended.
Certain Conditions to the
Exchange Offer.............
The exchange offer is subject to certain
customary conditions, which we may waive. For
more information, see "The Exchange Offer--
Conditions to the Exchange Offer".
Special Procedures for
Beneficial Holders.........
If you are a beneficial owner whose shares of old
preferred stock are registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee and you wish to tender in the
exchange offer, you should contact the person in
whose name your shares of old preferred stock are
registered promptly and instruct such person to
tender on your behalf. If you wish to tender in
the exchange offer on your own behalf, you must,
prior to completing and executing the Letter of
Transmittal and delivering your shares of old
preferred stock, either make appropriate
arrangements to register ownership of the shares
of old preferred stock in your name or obtain a
properly completed bond power from the person
whose name your shares of old preferred stock are
registered. The transfer of registered ownership
may take considerable time.
Withdrawal Rights...........
Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the expiration
date pursuant to the procedures described under
"The Exchange Offer--Withdrawal of Tenders".
Acceptance of Old Preferred
Stock and Delivery of New
Preferred Stock............ We will accept for exchange any and all shares of
old preferred stock that are properly tendered in
the exchange offer prior to 5:00 p.m., New York
City time, on the expiration date. The shares of
new preferred stock will be delivered promptly
after the expiration date. For more details, see
"The Exchange Offer--Terms of the Exchange".
Certain Tax Consequences....
The exchange pursuant to the exchange offer will
generally not be a taxable event for Federal
income tax purposes. For more details, see
"Certain U.S. Federal Income Tax Considerations".
9
<PAGE>
Use of Proceeds............. We will not receive any proceeds from the
exchange pursuant to the exchange offer. See "Use
of Proceeds".
Exchange Agent..............
ChaseMellon Shareholder Services, L.L.C. is
serving as exchange agent in connection with the
exchange offer.
Summary Description of the Securities to be Registered
The New Preferred Stock:
Securities Offered.......... 200,000 shares of 12 3/4% Senior Exchangeable
Preferred Stock due 2010 with a liquidation
preference of $1,000 per share.
We have the option to exchange the Exchangeable
Preferred Stock, in whole but not in part, for 12
3/4% Senior Subordinated Exchange Debentures due
2010.
Dividends................... Annual fixed rate of 12 3/4%.
We will declare and pay dividends on March 15,
June 15, September 15 and December 15 of each
year, commencing on March 15, 1999.
On or before December 15, 2003, we have the
option to pay dividends in cash or in additional
fully paid and non-assessable shares of new
preferred stock having an aggregate liquidation
preference equal to the amount of such dividends.
After December 15, 2003, we will pay dividends
only in cash.
Mandatory Redemption........ We will be required to redeem all of the shares
of new preferred stock outstanding on December
15, 2010 at a redemption price equal to 100% of
the liquidation preference of such shares, plus
accumulated and unpaid dividends to the date of
redemption.
Optional Redemption......... On or after December 15, 2003, we may redeem some
or all of the shares of new preferred stock at
any time at the redemption prices (together with
accumulated and unpaid dividends, if any, to the
date of redemption) listed in the section
"Description of Securities--Description of Senior
Exchangeable Preferred Stock" under the heading
"Optional Redemption".
In addition, before December 15, 2001, we may
redeem up to 35% of the outstanding shares of new
preferred stock with the proceeds of certain
public equity offerings or strategic equity
investments at a redemption price equal to
112.750% of the liquidation preference of the new
preferred stock, together with accumulated and
unpaid dividends, if any, to the date of
redemption.
Change of Control........... If we experience specific kinds of changes in
control, we will be required to make an offer to
purchase any and all shares of new preferred
stock for cash at a purchase price of 101% of the
liquidation preference of such shares, together
with all accumulated
10
<PAGE>
and unpaid dividends to the date of purchase.
However, our repurchase of new preferred stock
under these circumstances must comply with
certain provisions of the indenture governing our
outstanding senior notes. If we were unable to
comply with those provisions and fail to
repurchase new preferred stock, then holders of
the new preferred stock would be entitled to
certain voting rights. In addition, there can be
no assurance that we will have sufficient funds
to repurchase the new preferred stock in the
event of a change of control or that our
creditors will otherwise allow us to make the
repurchase. See "Risk Factors--Repurchase of the
Exchangeable Preferred Stock or the Exchange
Debentures Upon a Change of Control".
Ranking.....................
The new preferred stock will rank (1) senior to
all our other classes of capital stock
established after the issue date of the new
preferred stock that do not expressly provide
that they rank on a parity with the new preferred
stock as to dividends and distributions upon the
liquidation, winding up and dissolution of us and
(2) on a parity with any class of capital stock
established after the date of issuance of the new
preferred stock the terms of which provide that
such class or series will rank on a parity with
the new preferred stock as to dividends and
distributions upon our liquidation, winding up
and dissolution.
Our obligations with respect to the new preferred
stock are subordinate and junior in right of
payment to all our present and future
indebtedness, including the notes, and are
effectively subordinate to all debt and
liabilities (including trade payables) of our
restricted and unrestricted subsidiaries.
Our creditors will have priority over the new
preferred stock with respect to claims on our
assets. See "Description of Securities--
Description of Senior Exchangeable Preferred
Stock--Ranking."
Certain Covenants........... We will issue the new preferred stock pursuant to
the terms of the certificate of designations that
we filed on December 18, 1998 and which became
part of our certificate of incorporation. The
certificate of designations contains certain
covenants that, among other things, limit our
ability and the ability of certain of our
subsidiaries to:
. borrow money;
. pay dividends on stock or purchase our capital
stock;
. make investments; and
. sell assets or merge with or into other
companies.
These covenants are subject to important
exceptions and qualifications which are described
in "Description of Securities-- Description of
Senior Exchangeable Preferred Stock" under the
heading "Certain Covenants."
11
<PAGE>
Voting Rights............... The new preferred stock will have no voting
rights except as required by law and as specified
in the certificate of designations. If we fail to
meet our obligations under the covenants
contained in the certificate of designations, the
holders of the new preferred stock will be
entitled to elect two additional members of our
Board of Directors.
Exchange Feature............
On any scheduled dividend payment date, we have
the option to exchange all (but not less than
all) of the shares of new preferred stock then
outstanding for our 12 3/4% Senior Subordinated
Exchange Debentures due 2010 which we call the
exchange debentures. If we exercise our option to
exchange, we will issue exchange debentures in an
aggregate principal amount equal to the aggregate
liquidation preference of the outstanding new
preferred stock.
The indenture governing our outstanding senior
notes contains substantial restrictions on our
ability to exchange new preferred stock for
exchange debentures. See "Description of
Securities--Description of Senior Exchangeable
Preferred Stock--Exchange".
Registration Rights and
Liquidated Damages......... Holders of new preferred stock (except as
described below) are not entitled to any
registration rights with respect to the new
preferred stock. Pursuant to a registration
rights agreement, we agreed to file with the
Commission within 60 days following the
consummation of the offering a registration
statement with respect to an offer to exchange
the exchangeable preferred stock for a new series
of our exchangeable preferred stock registered
under the Securities Act, with terms
substantially identical to the exchangeable
preferred stock. We also agreed to use all
commercially reasonable efforts to cause the
registration statement to become effective within
150 days following consummation of the offering.
If the exchange offer is not permitted by
applicable law or is not consummated within the
time periods specified in the registration rights
agreement, we will be required to provide a shelf
registration statement to cover resales of shares
of exchangeable preferred stock by holders of
such shares. If we fail to satisfy these
registration obligations, we will be obligated to
pay liquidated damages to holders of the
exchangeable preferred stock at the rates listed
in the section "Description of Securities--
Registration Rights and Liquidated Damages".
The Exchange Debentures:
Securities Offered.......... 12 3/4% Senior Subordinated Exchange Debentures
due 2010 in an aggregate principal amount equal
to the aggregate liquidation preference of the
new preferred stock outstanding on the date of
the exchange, plus such principal amount of
additional exchange debentures as may be issued
in lieu of cash interest.
Maturity.................... December 15, 2010.
12
<PAGE>
Interest.................... At an annual fixed rate of 12 3/4%.
We will pay interest on each June 15 and December
15 of each year, commencing on the first of these
dates that occurs after the date of the exchange.
On or before December 15, 2003, we have the
option to pay interest in cash or in additional
exchange debentures in an aggregate principal
amount equal to the amount of such interest.
After December 15, 2003, we will pay interest
only in cash.
Ranking..................... These exchange debentures are senior subordinated
debts.
They rank behind all of our current and future
indebtedness (excluding trade payables) other
than indebtedness that expressly provides that it
is on a parity with or subordinated in right of
payment to the exchange debentures.
On or after December 15, 2003, we may redeem some
Optional Redemption......... or all of the exchange debentures at any time at
the redemption prices (together with accrued and
unpaid interest, if any, to the date of
redemption) listed in the section "Description of
Securities--Description of Senior Subordinated
Exchange Debentures" under the heading "Optional
Redemption".
In addition, before December 15, 2001, we may
redeem up to 35% of the exchange debentures with
the proceeds of certain public equity offerings
or strategic equity investments at the price
listed in the section "Description of
Securities--Description of Senior Subordinated
Exchange Debentures" under the heading "Optional
Redemption". If we choose this option, we must
redeem the exchange debentures within 60 days of
receiving the proceeds.
Mandatory Offer to If we sell certain assets or experience specific
Repurchase................. kinds of changes of control, we must offer to
repurchase the exchange debentures at the prices
listed in the section "Description of
Securities--Description of Senior Subordinated
Exchange Debentures" under the heading
"Repurchase at the Option of Holders".
Basic Covenants of the
Exchange Indenture......... If and when we issue the exchange debentures, we
will issue them under an indenture with United
States Trust Company of New York, as trustee. The
indenture will, among other things, restrict our
ability and the ability of certain of our
subsidiaries to:
.borrow money;
.pay dividends on stock or purchase stock;
.make investments; and
.sell certain assets or merge with or into other
companies.
13
<PAGE>
For more details, see the section "Description of
Securities--Description of Senior Subordinated
Exchange Debentures" under the heading "Certain
Covenants".
Registration Rights;
Liquidated Damages......... If we exchange the old preferred stock into
exchange debentures before we consummate a
registered exchange offer for the old preferred
stock, we will be required to make a registered
exchange offer to all holders of exchange
debentures. This registered exchange offer will
give holders of exchange debentures the
opportunity to exchange their debentures for new
debentures that are substantially identical to
the original debentures but have been registered
under the Securities Act. If we fail to
consummate the registered exchange offer within
the required time frame, we will pay liquidated
damages at the rates listed in the section
"Description of Securities--Registration Rights
and Liquidated Damages". We will continue to pay
liquidated damages until we fulfill our
registration obligations.
Risk Factors
You should carefully consider all of the information in this prospectus. In
particular, you should evaluate the specific risk factors under "Risk Factors"
for a discussion of certain risks related to your participation in the exchange
offer.
14
<PAGE>
Summary Unaudited Pro Forma Financial and Other Data
The unaudited pro forma financial and other data set forth below have been
derived from the Pro Forma Financial Statements (as defined) included under
"Unaudited Pro Forma Condensed Consolidated Financial Statements". The pro
forma statement of operations data and other data for the year ended December
31, 1998, give effect to (1) the 1998 Transactions (as defined under "Unaudited
Pro Forma Condensed Consolidated Financial Statements"), (2) the Proposed
Offerings and (3) the Proposed Transactions (as defined under "Unaudited Pro
Forma Condensed Consolidated Financial Statements") as if they had occurred on
January 1, 1998. The pro forma balance sheet data give effect to the Proposed
Offerings and the Proposed Transactions as if they had occurred on December 31,
1998. The unaudited pro forma financial and other data for the Restricted Group
(as defined) are not intended as alternative measures of operating results,
financial position or cash flow from operations (as determined in accordance
with generally accepted accounting principles). The information set forth below
should be read in conjunction with "Unaudited Pro Forma Condensed Consolidated
Financial Statements", "Selected Financial and Other Data of CCIC", "Selected
Financial and Other Data of CTI", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and the notes thereto of CCIC, CTI, Bell Atlantic Mobile Tower
Operations and Powertel Tower Operations included elsewhere in this document.
<TABLE>
<CAPTION>
Company Restricted Group
Pro Forma Pro Forma
------------ ----------------
Year Ended Year Ended
December 31, December 31,
1998 1998
------------ ----------------
(Dollars in thousands)
<S> <C> <C>
Statement of Operations Data:
Net revenues:
Site rental and broadcast transmission........ $ 251,679 $ 72,286
Network services and other.................... 50,299 32,217
--------- ---------
Total net revenues.......................... 301,978 104,503
--------- ---------
Costs of operations:
Site rental and broadcast transmission........ 94,663 23,684
Network services and other.................... 29,480 17,329
--------- ---------
Total costs of operations................... 124,143 41,013
--------- ---------
Expected incremental operating expenses for
Proposed Transactions(a)....................... 21,054 15,917
General and administrative...................... 28,571 21,153
Corporate development(b)........................ 4,633 4,625
Non-cash compensation charges(c)................ 16,589 9,907
Depreciation and amortization................... 148,155 61,066
--------- ---------
Operating income (loss)......................... (41,167) (49,178)
Other income (expense):
Interest and other income (expense)........... 4,945 1,101
Interest expense and amortization of deferred
financing costs.............................. (89,059) (50,608)
--------- ---------
Income (loss) before income taxes and minority
interests...................................... (125,281) (98,685)
Provision for income taxes...................... (374) (374)
Minority interests.............................. 1,307 --
--------- ---------
Net income (loss)............................... (124,348) (99,059)
Dividends on preferred stock.................... (26,745) (26,745)
--------- ---------
Net income (loss) after deduction of dividends
on preferred stock............................. $(151,093) $(125,804)
========= =========
Other Data:
Site data(d):
Towers and revenue producing rooftop sites at
end of period................................
========= =========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Company Restricted Group
Pro Forma Pro Forma
------------ ----------------
Year Ended Year Ended
December 31, December 31,
1998 1998
------------ ----------------
(Dollars in thousands)
<S> <C> <C>
EBITDA(e):
Site rental and broadcast transmission......... $ 148,581 $ 46,823
Network services and other..................... 683 (4,486)
Expected incremental operating expenses for
Proposed Transactions (a)..................... (21,054) (15,917)
Corporate development expenses(b).............. (4,633) (4,625)
---------- ----------
Total EBITDA................................. $ 123,577 $ 21,795
========== ==========
Adjusted EBITDA(e)............................... -- $
Capital expenditures............................. $ 202,553 88,535
Summary cash flow information:
Net cash provided by operating activities...... 111,891 13,511
Net cash used for investing activities......... (212,763) (88,535)
Net cash provided by financing activities...... 1,042,743 1,010,263
Ratio of earnings to fixed charges(f)............ -- --
Ratio of EBITDA to cash interest expense(g)...... 3.06x 6.23x
</TABLE>
<TABLE>
<CAPTION>
Company Pro Forma Restricted Group Pro Forma
As of December 31, 1998 As of December 31, 1998
------------------------------------- ----------------------------------------
Pro Forma for Pro Forma for
Proposed Proposed
Pro Forma Offerings and Pro Forma Offerings and
Historical for Proposed Proposed Historical for Proposed Proposed
CCIC Offerings Transactions CCIC Offerings Transactions
---------- ------------ ------------- ---------- ------------ -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 296,450 $ 962,575 $ 49,583 $ 41,785 $ 707,910 (h) $ 3,293 (h)
Property and equipment,
net.................... 592,594 592,594 2,067,969 165,205 165,205 1,048,100
Total assets............ 1,523,230 2,200,230 2,769,269 1,130,685 1,807,685 2,184,994
Total debt.............. 429,710 729,710 909,710 173,599 473,599 473,599
Net debt(i)............. 133,260 (232,865) 860,127 131,814 (234,311) 470,306
Redeemable preferred
stock.................. 201,063 201,063 201,063 201,063 201,063 201,063
Total stockholders'
equity 737,562 1,114,562 1,491,562 737,562 1,114,562 1,491,562
</TABLE>
- --------
(a) CCIC expects that it will incur incremental operating expenses as a result
of the Proposed Transactions. Such incremental expenses are currently
estimated to amount to approximately $5.2 million per year for the Proposed
BAM JV and approximately $15.9 million per year for the Proposed BellSouth
Transaction and the Proposed Powertel Acquisition. The Company has included
the effect of these incremental expenses in the accompanying summary pro
forma financial data in order to more accurately present the effect of the
Proposed Transactions on CCIC's consolidated results of operations. The
effect of these incremental expenses has not been reflected in the
Unaudited Pro Forma Condensed Consolidated Statement of Operations included
elsewhere in this document. See "Notes to Unaudited Pro Forma Condensed
Consolidated Statement of Operations."
(b) Corporate development expenses represent costs incurred in connection with
acquisitions and development of new business initiatives. These expenses
consist primarily of allocated compensation, benefits and overhead costs
that are not directly related to the administration or management of
existing towers.
(c) Represents charges related to the issuance of stock options to certain
employees and executives.
(d) Represents the aggregate number of sites of CCIC, CTI, the Proposed BAM JV
and the Proposed Powertel Acquisition at the end of the period. As of
December 31, 1998, we had contracts with 1,365 buildings in the United
States to manage on behalf of such buildings the leasing of space for
antennas on the rooftops of such buildings. A revenue producing rooftop
represents a rooftop where we have arranged a lease of space on such
rooftop and, as such, are receiving payments in respect of our management
contract. We generally do not receive any payment for rooftops under
management unless we actually lease space on such rooftops to third
parties. As of December 31, 1998, we had 1,284 rooftop sites under
management throughout the United States that were not revenue producing
rooftops but were available for leasing to customers and, in the United
Kingdom, we had 54 revenue producing rooftop sites that were occupied by
our transmitters but were not available for leasing to customers.
16
<PAGE>
(e) EBITDA is defined as operating income (loss) plus depreciation and
amortization and non-cash compensation charges. Adjusted EBITDA is defined
as the sum of (i) annualized site rental and broadcast transmission EBITDA
before corporate development for the most recent calendar quarter and (ii)
EBITDA, less site rental and broadcast transmission EBITDA before corporate
development, for the most recent four calendar quarters. EBITDA and
Adjusted EBITDA are presented as additional information because management
believes them to be useful indicators of our ability to meet debt service
and capital expenditure requirements. They are not, however, intended as
alternative measures of operating results or cash flow from operations (as
determined in accordance with generally accepted accounting principles).
Furthermore, our measure of EBITDA may not be comparable to similarly
titled measures of other companies.
(f) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income (loss) before income taxes, minority interests and fixed
charges. Fixed charges consist of interest expense, the interest component
of operating leases and amortization of deferred financing costs. For the
year ended December 31, 1998, our earnings were insufficient to cover our
fixed charges by $125.3 million. For the year ended December 31, 1998,
earnings were insufficient to cover fixed charges of the Restricted Group
by $98.7 million.
(g) Total interest expense for the year ended December 31, 1998 includes
amortization of deferred financing costs and discount of $47.2 million for
CCIC, $0.9 million for CTI and $0.6 million for the Proposed BAM JV.
(h) Pro forma balances of cash and cash equivalents for the Restricted Group
exclude $248.1 million of proceeds from the IPO and the offering of
exchangeable preferred stock (along with interest earned on such amounts
since the consummation of these transactions) that will be contributed to
the Proposed BAM JV, of which approximately $45.9 million will remain in
the Proposed BAM JV after its formation.
(i) Net debt represents total debt less cash and cash equivalents.
17
<PAGE>
Summary Financial and Other Data of CCIC
The summary historical consolidated financial and other data for CCIC set forth
below for each of the four years in the period ended December 31, 1998, and as
of December 31, 1995, 1996, 1997 and 1998, have been derived from the
consolidated financial statements of CCIC, which have been audited by KPMG LLP,
independent certified public accountants. The results of operations for the
year ended December 31, 1998 are not comparable to the year ended December 31,
1997, and the results for the year ended December 31, 1997 are not comparable
to the year ended December 31, 1996 as a result of business acquisitions
consummated in 1997 and 1998. Results of operations of these acquired
businesses are included in the Company's consolidated financial statements for
the periods subsequent to the respective dates of acquisition. The summary
historical financial and other data for the Restricted Group (as defined) are
not intended as alternative measures of operating results or cash flows from
operations (as determined in accordance with generally accepted accounting
principles). The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations--CCIC" and the consolidated financial
statements and the notes thereto of CCIC included elsewhere in this document.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------
1995 1996 1997 1998
------- ------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues:
Site rental and broadcast
transmission...................... $ 4,052 $ 5,615 $ 11,010 $ 75,028
Network services and other......... 6 592 20,395 38,050
------- ------- -------- --------
Total net revenues............... 4,058 6,207 31,405 113,078
------- ------- -------- --------
Costs of operations:
Site rental and broadcast
transmission...................... 1,226 1,292 2,213 26,254
Network services and other......... -- 8 13,137 21,564
------- ------- -------- --------
Total costs of operations........ 1,226 1,300 15,350 47,818
------- ------- -------- --------
General and administrative........... 729 1,678 6,824 23,571
Corporate development(a)............. 204 1,324 5,731 4,625
Non-cash compensation charges(b) .... -- -- -- 12,758
Depreciation and amortization........ 836 1,242 6,952 37,239
------- ------- -------- --------
Operating income (loss).............. 1,063 663 (3,452) (12,933)
Other income (expense):
Equity in earnings (losses) of
unconsolidated affiliate.......... -- -- (1,138) 2,055
Interest and other income
(expense)(c)...................... 53 193 1,951 4,220
Interest expense and amortization
of deferred financing costs....... (1,137) (1,803) (9,254) (29,089)
------- ------- -------- --------
Loss before income taxes and minority
interests........................... (21) (947) (11,893) (35,747)
Provision for income taxes........... -- (10) (49) (374)
Minority interests................... -- -- -- (1,654)
------- ------- -------- --------
Net loss............................. (21) (957) (11,942) (37,775)
Dividends on preferred stock......... -- -- (2,199) (5,411)
------- ------- -------- --------
Net loss after deduction of dividends
on preferred stock.................. $ (21) $ (957) $(14,141) $(43,186)
======= ======= ======== ========
Loss per common share--basic and di-
luted............................... $ (0.01) $ (0.27) $ (2.27) $ (1.02)
======= ======= ======== ========
Common shares outstanding--basic and
diluted (in thousands).............. 3,316 3,503 6,238 42,518
======= ======= ======== ========
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1995 1996 1997 1998
------- ------- -------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Other Data:
Site data (at period end)(d):
Towers owned.......................... 126 155 240 1,344
Towers managed........................ 7 7 133 129
Rooftop sites managed (revenue
producing)(e)........................ 41 52 80 135
------- ------- -------- ---------
Total sites owned and managed....... 174 214 453 1,608
======= ======= ======== =========
EBITDA(f):
Site rental........................... $ 2,697 $ 3,555 $ 7,682 $ 44,661
Network services and other............ (594) (326) 1,549 (2,972)
Corporate development expenses(a)..... (204) (1,324) (5,731) (4,625)
------- ------- -------- ---------
Total EBITDA........................ $ 1,899 $ 1,905 $ 3,500 $ 37,064
======= ======= ======== =========
Restricted Group EBITDA................. $ 1,899 $ 1,905 $ 3,500 $ 5,799
Capital expenditures.................... 161 890 18,035 138,759
Summary cash flow information:
Net cash provided by (used for)
operating activities................. 1,672 (530) (624) 44,976
Net cash used for investing
activities........................... (16,673) (13,916) (111,484) (149,248)
Net cash provided by financing
activities........................... 15,597 21,193 159,843 345,248
Ratio of earnings to fixed charges(g)... -- -- -- --
Balance Sheet Data (at period end):
Cash and cash equivalents............... $ 596 $ 7,343 $ 55,078 $ 296,450
Property and equipment, net............. 16,003 26,753 81,968 592,594
Total assets............................ 19,875 41,226 371,391 1,523,230
Total debt.............................. 11,182 22,052 156,293 429,710
Redeemable preferred stock(h)........... 5,175 15,550 160,749 201,063
Total stockholders' equity (deficit).... 619 (210) 41,792 737,562
</TABLE>
- --------
(a) Corporate development expenses represent costs incurred in connection with
acquisitions and development of new business initiatives. These expenses
consist primarily of allocated compensation, benefits and overhead costs
that are not directly related to the administration or management of
existing towers. For the year ended December 31, 1997, such expenses
include (i) nonrecurring cash bonuses of $0.9 million paid to certain
executive officers in connection with the CTI Investment and (ii) a
nonrecurring cash charge of $1.3 million related to the purchase by CCIC of
shares of common stock from CCIC's former chief executive officer in
connection with the CTI Investment. See "Certain Relationships and Related
Transactions".
(b) Represents charges related to the issuance of stock options to certain
employees and executives.
(c) Includes a $1.2 million fee received in March 1997 as compensation for
leading the investment consortium which provided the equity financing for
CTI in connection with the CTI Investment.
(d) Represents the aggregate number of sites of CCIC as of the end of each
period.
(e) As of December 31, 1998, CCIC had contracts with 1,365 buildings in the
United States to manage on behalf of such buildings the leasing of space
for antennas on the rooftops of such buildings. A revenue producing rooftop
represents a rooftop where CCIC has arranged a lease of space on such
rooftop and, as such, is receiving payments in respect of its management
contract. CCIC generally does not receive any payment for rooftops under
management unless CCIC actually leases space on such rooftops to third
parties. As of December 31, 1998, CCIC had 1,284 rooftop sites under
management throughout the United States that were not revenue producing but
were available for leasing to customers and, in the United Kingdom, we had
54 revenue producing rooftop sites that were occupied by the Company's
transmitters but were not available for leasing to customers.
(f) EBITDA is defined as operating income (loss) plus depreciation and
amortization and non-cash compensation changes. EBITDA is presented as
additional information because management believes it to be a useful
indicator of CCIC's ability to meet debt service and capital expenditure
requirements. It is not, however, intended as an alternative measure of
operating results or cash flow from operations (as determined in accordance
with generally accepted accounting principles). Furthermore, CCIC's measure
of EBITDA may not be comparable to similarly titled measures of other
companies.
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(g) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income (loss) before income taxes, fixed charges and equity in
earnings (losses) of unconsolidated affiliate. Fixed charges consist of
interest expense, the interest component of operating leases and
amortization of deferred financing costs. For the years ended December 31,
1995, 1996, 1997 and 1998, earnings were insufficient to cover fixed
charges by $21,000, $0.9 million, $10.8 million and $37.8 million,
respectively.
(h) The 1995, 1996 and 1997 amounts represent (1) the Senior Convertible
Preferred Stock privately placed by CCIC in August 1997 and October 1997,
all of which has been converted into shares of common stock, and (2) the
Series A convertible preferred stock, the Series B convertible preferred
stock and the Series C convertible preferred stock privately placed by CCIC
in April 1995, July 1996 and February 1997, respectively, all of which has
been converted into shares of common stock in connection with the
consummation of the IPO. The 1998 amount represents the 12 3/4%
exchangeable preferred stock.
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RISK FACTORS
You should carefully consider the risks described below, as well as the
other information included in this prospectus, when evaluating your
participation in the exchange offer.
There May be Consequences if You Fail to Exchange the Old Preferred Stock
We will issue new preferred stock in exchange for the old preferred stock
pursuant to the exchange offer only following the satisfaction of the
procedures and conditions set forth in "The Exchange Offer--Procedures for
Tendering." Such procedures and conditions include timely receipt by the
exchange agent of such shares of old preferred stock, and of a properly
completed and duly executed Letter of Transmittal. Shares of old preferred
stock which you do not tender or we do not accept will, following the exchange
offer, continue to be restricted securities and you may not offer or sell them
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act of 1933 and applicable state securities law.
Any shares of old preferred stock tendered and exchanged in the exchange
offer will reduce the aggregate principal amount of the old preferred stock
outstanding. Following the exchange offer, if you did not tender your shares
of old preferred stock you generally will not have any further registration
rights, and such shares of old preferred stock will continue to be subject to
certain transfer restrictions. Accordingly, the liquidity of the market for
such shares of old preferred stock could be adversely affected. The shares of
old preferred stock are currently eligible for sale pursuant to Rule 144A and
Regulation S through the Private Offerings, Resale and Trading through
Automated Linkages ("PORTAL") market of the National Association of Securities
Dealers, Inc. Because we anticipate that most holders of old preferred stock
will elect to exchange such shares of old preferred stock, we anticipate that
the liquidity of the market for any shares of old preferred stock remaining
after the consummation of the exchange offer may be substantially limited.
We May Not Be Able to Manage the Integration Necessitated by Our Rapid Growth
Our ability to implement our growth strategy depends, in part, on our
successes in integrating our acquisitions, investments, joint ventures and
strategic alliances into our operations. We have grown significantly over the
past two years through acquisitions and, as evidenced by the Proposed
Transactions, such growth continues to be an important part of our business
plan. The addition of approximately 4,748 towers to our tower footprints
through the Proposed Transactions will increase our current business
considerably and will add operating complexities. Successful integration of
these transactions will depend primarily on our ability to manage these
combined operations and to integrate new management with and into our existing
management. We cannot guarantee that we will be able to successfully integrate
these acquired businesses and assets or any future acquisitions into our
business or implement our plans without delay. If we fail to do so it could
have a material adverse effect on our financial condition and results of
operations.
We regularly evaluate potential acquisition and joint venture opportunities
and are currently evaluating potential transactions that could involve
substantial expenditures, possibly in the near term. Implementation of our
acquisition strategy may impose significant strains on our management,
operating systems and financial resources. If we fail to manage our growth or
encounter unexpected difficulties during expansion it could have a material
adverse effect on our financial condition and results of operations. The
pursuit and integration of acquisitions, investments, joint ventures and
strategic alliances will require substantial attention from our senior
management, which will limit the amount of time they are able to devote to our
existing operations. If we are successful in consummating future acquisitions,
we may have to incur substantial amounts of debt and contingent liabilities
and an increase in amortization expenses related to goodwill and other
intangible assets, all of which could have a material adverse effect on our
financial condition and results of operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources".
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Our Substantial Level of Indebtedness Could Adversely Affect Our Financial
Condition
We are a highly leveraged company. The following chart sets forth certain
important credit information and is presented as of December 31, 1998, (1)
assuming we had completed the Proposed Offerings and (2) assuming we had
completed the Proposed Offerings and consummated the Proposed Transactions,
each as of December 31, 1998.
<TABLE>
<CAPTION>
Pro Forma for
the Proposed
Pro Forma for Offerings and
the Proposed the Proposed
Offerings Transactions
------------- -------------
(Dollars in thousands)
<S> <C> <C>
Total indebtedness.......................... $ 729,710 $ 909,710
Redeemable preferred stock.................. 201,063 201,063
Stockholders' equity........................ 1,114,562 1,491,562
Debt and redeemable preferred stock to
equity ratio............................... 0.84x 0.74x
</TABLE>
In addition, assuming we had completed the Proposed Transactions and the
Proposed Offerings on January 1, 1998, for the twelve months ended December
31, 1998, our earnings would have been insufficient to cover fixed charges by
$104.2 million.
Given our substantial indebtedness, we could be affected in the following
ways:
. We could be more vulnerable to general adverse economic and industry
conditions.
. We may find it more difficult to obtain additional financing to fund
future working capital, capital expenditures and other general
corporate requirements.
. We will be required to dedicate a substantial portion of our cash flow
from operations to the payment of principal and interest on our debt,
reducing the available cash flow to fund other projects.
. We may have limited flexibility in planning for, or reacting to,
changes in our business and in the industry.
. We will have a competitive disadvantage relative to other less
leveraged companies in our industry.
Our ability to service our debt and to fund planned capital expenditures in
connection with our business strategy will depend, to a degree, on factors
beyond our control, including general economic, financial, competitive and
regulatory environments. We cannot guarantee that we will be able to generate
enough cash flow from operations or that we will be able to obtain enough
capital to service our debt or fund our planned capital expenditures. In
addition, we may need to refinance some or all of our indebtedness on or
before maturity. We cannot guarantee, however, that we will be able to
refinance our indebtedness on commercially reasonable terms or at all.
Currently we have debt instruments in place which restrict our ability to
incur more indebtedness, pay dividends, create liens, sell assets and engage
in certain mergers and acquisitions. Some of our subsidiaries, under the debt
instruments, are also required to maintain specific financial ratios. Our
ability to comply with the restrictions of these instruments and to satisfy
our debt obligations will depend on our future operating performance. If we
fail to comply with the debt restrictions, we will be in default under those
instruments, which in some cases would cause the maturity of substantially all
of our long-term indebtedness to be accelerated. See "Description of Certain
Indebtedness".
We May Not Consummate the Proposed Transactions or the Proposed Offerings
The Proposed Offerings are not conditioned on the consummation of the
Proposed BAM JV, the Proposed BellSouth Transaction, the Proposed Powertel
Acquisition or the Proposed One2One Transaction, and we cannot guarantee that
we will complete any or all of these transactions. While we have signed
definitive agreements
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with respect to the Proposed BAM JV, the Proposed Powertel Acquisition and the
Proposed One2One Transaction, and a preliminary agreement in connection with
the Proposed BellSouth Transaction, there are many conditions that must be
satisfied before we can close these transactions.
In addition, we cannot assure you that the transactions, if and when
consummated, will be done so on the terms described in this prospectus. The
Formation Agreement relating to the Proposed BAM JV, the Letter Agreement
related to the Proposed BellSouth Acquisition, the Asset Purchase Agreement
relating to the Proposed Powertel Acquisition and the Framework Agreement
relating to the Proposed One2One Transaction include provisions that could
result in our purchasing fewer towers at closing. If one or more of these
transactions is not consummated or is consummated on significantly different
terms than those described in this prospectus, it could substantially affect
the implementation of our business strategy.
Moreover, if the Proposed BAM JV is not consummated, the net proceeds from
the preferred stock offering would not be used to form the joint venture, and
if the Proposed BellSouth Transaction or the Proposed Powertel Acquisition is
not consummated, part of the net proceeds from the Proposed Offerings would
not be used to consummate those transactions. Therefore, in either case, we
would have substantial discretion in applying the proceeds of the exchangeable
preferred stock offering and of the Proposed Offerings to other uses. See "--
We Will Have Broad Discretion in the Application of Proceeds from the Proposed
Offerings". Further, we cannot guarantee that we would be able to identify any
other acquisition of comparable value to our business or that any other
acquisition that we did pursue would be on substantially the same economic
terms as any of the proposed transactions we describe in this prospectus.
In connection with our entering into the Asset Purchase Agreement with
Powertel, we made a $50.0 million escrow payment, which amount, or some
portion thereof, is subject to our forfeit if the Proposed Powertel
Acquisition does not close as a result of our inability or unwillingness to
deliver the balance of the purchase price at the scheduled closing date. In
connection with our entering into the Letter Agreement with BellSouth, we
placed $50.0 million into an escrow fund. We could be forced to pay this
amount to BellSouth if we do not enter into definitive agreements with respect
to the Proposed BellSouth Transaction, or if we fail to comply with all
conditions, covenants and representations we are required to fulfill in
connection with the closings of the Proposed BellSouth Transaction. The loss
of these escrow payments, alone or together, would significantly affect our
available working capital and could have a material adverse effect on our
ability to effect our business strategy. See "The Proposed Transactions".
We Require Significant Capital to Expand Our Operations and Make Acquisitions
Our business strategy contemplates substantial capital expenditures (1) in
connection with the expansion of our tower footprints by partnering with
wireless carriers to assume ownership or control of their existing towers, by
pursuing build-to-suit opportunities and by pursuing other tower acquisition
opportunities and (2) to acquire existing transmission networks globally as
opportunities arise. We anticipate that we will build, through the end of
1999, approximately 750 towers in the United States at a cost of approximately
$175.0 million and approximately 200 towers in the United Kingdom at a cost of
approximately $23.0 million. We also expect that the capital expenditure
requirements related to the roll-out of digital broadcast transmission in the
United Kingdom will be approximately (Pounds)100.0 million ($170.0 million).
In addition to capital expenditures in connection with contracted build-to-
suits, we expect to apply a significant amount of capital to finance the cash
portion of the consideration being paid in connection with the Proposed
Transactions.
To fund the execution of the our business strategy, including the Proposed
Transactions, we expect to use the net proceeds of the Proposed Offerings, the
borrowings available under CCI's senior credit facility, the borrowings
available under CTI's credit facility and the remaining net proceeds from our
IPO and our 12 3/4% exchangeable preferred stock offering. Following
consummation of the Proposed Offerings and assuming all the Proposed
Transactions are consummated, we believe we will have sufficient liquidity to
fund our operations and pursue our business strategy in the near term. Our
business strategy, however, includes the pursuit of additional tower
acquisition and build-out opportunities, and we may have additional cash needs
as opportunities arise.
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<PAGE>
Some of the opportunities that we are currently pursuing could require
significant additional capital. In the event we do not otherwise have cash
available, or borrowings under our credit facilities have otherwise been
utilized, when an opportunity arises, we would be forced to seek additional
debt or equity financing or to forego the opportunity. In the event we
determine to seek additional debt or equity financing, there can be no
assurance that any such financing will be available (on commercially
acceptable terms or at all) or permitted by the terms of our existing
indebtedness. To the extent we are unable to finance future capital
expenditures, we will be unable to achieve our currently contemplated business
strategy. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources".
Our Ability to Pay Dividends on the Exchangeable Preferred Stock is Dependent
on Several Factors
Our ability to pay any dividends is dependent on applicable provisions of
state law, and our ability to pay cash dividends on the exchangeable preferred
stock is subject to the terms of the 10 5/8% notes indenture, which currently
prohibit us from paying cash dividends on any preferred stock, including the
exchangeable preferred stock. Our ability to pay dividends on the exchangeable
preferred stock in the future will depend on our meeting certain financial
criteria. See "Description of Certain Indebtedness". Moreover, under Delaware
law we are permitted to pay dividends on our capital stock, including the
exchangeable preferred stock, only out of surplus, or if there is no surplus,
out of net profits for the year in which a dividend is declared or for the
immediately preceding fiscal year. Surplus is defined as the excess of a
company's total assets over the sum of its total liabilities plus the par
value of its outstanding capital stock. In order to pay dividends in cash, we
must have surplus or net profits equal to the full amount of the cash dividend
at the time such dividend is declared. We cannot predict what the value of our
assets or the amount of the liabilities will be in the future and,
accordingly, we cannot guarantee that we will be able to pay cash dividends on
the exchangeable preferred stock.
The Exchangeable Preferred Stock is Subordinated to Our Other Debt
Our obligations with respect to the exchangeable preferred stock are
subordinate and junior in right of payment to all our present and future
indebtedness, including the Notes. In the event of a bankruptcy, liquidation
or reorganization, our assets will be available to pay obligations on the
exchangeable preferred stock only after we have paid all other indebtedness.
Therefore, we may not have sufficient assets remaining to pay amounts due on
any or all of the exchangeable preferred stock then outstanding.
While any shares of exchangeable preferred stock are outstanding, we may not
authorize, create or increase the amount of any class or series of stock that
ranks senior to the exchangeable preferred stock with respect to the payment
of dividends or amounts upon liquidation, dissolution or winding up without
the consent of the holders of a majority of the outstanding shares of
exchangeable preferred stock. However, without the consent of any holder of
exchangeable preferred stock, we may create additional classes of stock,
increase the authorized number of shares of preferred stock or issue a new
series of stock that ranks pari passu with or junior to the exchangeable
preferred stock with respect to the payment of dividends and amounts upon
liquidation, dissolution or winding up.
If We Issue the Exchange Debentures, They Will be Subordinated to Our Other
Debt
If the exchange debentures are issued, they will rank behind all of our
existing indebtedness (other than trade payables) and all of our future
borrowings (other than trade payables), except any future indebtedness that
expressly provides that it ranks equal with, or subordinated in right of
payment to, the exchange debentures. As a result, upon any distribution to our
creditors in a bankruptcy, liquidation or reorganization or similar proceeding
relating to us or our property, the holders of our senior debt will be
entitled to be paid in full in cash before any payment may be made with
respect to the exchange debentures.
In addition, all payments on the exchange debentures will be blocked in the
event of a payment default on senior debt and may be blocked for up to 179 of
360 consecutive days in the event of certain non-payment defaults on senior
debt.
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<PAGE>
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to our company, holders of the exchange debentures will
participate with trade creditors and all other holders of subordinated
indebtedness of the company in the assets remaining after we have paid all of
the senior debt. However, because the indenture requires that amounts
otherwise payable to holders of senior debt instead, holders of the exchange
debentures may receive less, ratably, than holders of trade payables in any
such proceeding. In any of these cases, we may not have sufficient funds to
pay all of our creditors and holders of exchange debentures may receive less,
ratably, than the holders of senior debt.
On December 31, 1998, we had $545.4 million of outstanding indebtedness and
other liabilities (including approximately $375.9 million of indebtedness and
other liabilities of our subsidiaries), all of which would have been senior in
right of payment to the exchange debentures. Assuming we had consummated the
Proposed Transactions and the Proposed Offerings and applied the net proceeds
as intended on December 31, 1998, as of that date we would have had $1,025.7
million of indebtedness and other liabilities (including $556.2 million of
indebtedness and other liabilities of our subsidiaries). See "Description of
Securities--Description of the Senior Subordinated Exchange Debentures--
Ranking".
We May Be Required to Offer to Repurchase of the Exchangeable Preferred Stock
or the Exchange Debentures Upon a Change of Control
Under the certificate of designation (in the case of the exchangeable
preferred stock) and the exchange indenture (in the case of the exchange
debentures), in the event of certain changes of control of CCIC:
. we are required to offer to purchase all outstanding shares of
exchangeable preferred stock, in whole or in part, at a purchase price
equal to 101% of its aggregate liquidation preference, plus accumulated
and unpaid dividends; and
. each holder of exchange debentures may require us to purchase their
exchange debentures, in whole or in part, at a purchase price equal to
101% of their aggregate principal amount, plus any accrued and unpaid
interest.
In the case of the senior exchangeable preferred stock, our offer to
repurchase upon a change of control must comply with certain provisions of our
existing senior notes indenture. If we are unable to comply with those
provisions and fail to repurchase senior exchangeable preferred stock, then
holders of the senior exchangeable preferred stock would be entitled to
certain voting rights. In addition, if a change of control were to occur, we
may not have the financial resources to repurchase all of the exchangeable
preferred stock and/or exchange debentures and repay any other indebtedness
that would become payable upon the occurrence of the change of control. This
feature of the exchangeable preferred stock and exchange debentures may in
certain circumstances discourage or make more difficult a sale or takeover of
us.
We Will Have Broad Discretion in the Application of Proceeds from the Proposed
Offerings
We will allocate a substantial portion of the estimated net proceeds from
the Proposed Offerings to fund the Proposed BellSouth Transaction and the
Proposed Powertel Acquisition and for general corporate purposes. In addition,
we may use these funds for as yet unidentified acquisitions, investments or
joint ventures in the United States or abroad, especially if any or all of the
Proposed Transactions are not consummated. If we do not consummate any or all
of the Proposed Transactions, we would have a significant amount of
unallocated net proceeds. Due to the number and variability of factors that we
will analyze before we determine how to use these net proceeds, we cannot
determine now how we would reallocate such proceeds. In addition, in such case
we would have broad discretion in allocating these net proceeds from the
offerings without any action or approval of our stockholders. Moreover, the
indenture governing the issuance of the notes will not contain any
restrictions on the use of proceeds from the Proposed Offerings. Accordingly,
investors will not have the opportunity to evaluate the economic, financial
and other relevant information that will be considered by us in determining
the application of any such net proceeds.
25
<PAGE>
As a Holding Company, We Depend on Dividends from Subsidiaries to Meet Cash
Requirements or Pay Dividends
Crown Castle International Corp. is a holding company with no business
operations of its own. CCIC's only significant asset is the outstanding
capital stock of its subsidiaries. CCIC conducts all its business operations
through its subsidiaries. Accordingly, CCIC's only source of cash to pay
dividends or make other distributions on its capital stock or to pay interest
on its outstanding indebtedness is distributions with respect to its ownership
interest in its subsidiaries from the net earnings and cash flow generated by
such subsidiaries. Although the notes to be issued in the proposed debt
offering will not require cash interest payments until , at such time the
notes to be issued in the proposed debt offering will have accreted to $
million and will require annual cash interest payments of . In addition, the
notes to be issued in the proposed debt offering will mature on . In
addition, we will be required to begin paying cash interest payments on our 10
5/8% discount notes in May 2003 and on our 12 3/4% exchangeable preferred
stock in March 2004. CCIC currently expects that the earnings and cash flow of
its subsidiaries will be retained and used by such subsidiaries in their
operations, including to service their respective debt obligations. Even if
CCIC determined to pay a dividend on or make a distribution in respect of the
capital stock of its subsidiaries, there can be no assurance that CCIC's
subsidiaries will generate sufficient cash flow to pay such a dividend or
distribute such funds to CCIC or that applicable state law and contractual
restrictions, including negative covenants contained in the debt instruments
of such subsidiaries, would permit such dividends or distributions.
Furthermore, the terms of CCI's senior credit facility and its outstanding
notes place restrictions on CCI's ability, and the terms of CTI's credit
facility and its outstanding bonds place restrictions on CTI's ability, to pay
dividends or to make distributions, and in any event, such dividends or
distributions may only be paid if no default has occurred under the applicable
instrument. In addition, CCIC's subsidiaries will be permitted under the terms
of their existing debt instruments to incur additional indebtedness that may
restrict or prohibit the making of distributions, the payment of dividends or
the making of loans by such subsidiaries to CCIC. See "--Our Substantial Level
of Indebtedness Could Adversely Affect Our Financial Condition" and
"Description of Certain Indebtedness".
Our Agreements with TdF Give TdF Substantial Governance and Economic Rights
We have entered into agreements with TdF that give TdF significant
protective rights with respect to the governance of CCIC and CTI, the
ownership of CTI and the disposition of shares in CCIC and CTI. CTI's
operations currently account for a substantial majority of our revenues.
TdF's Governance Rights
We have granted TdF the ability to govern some of our activities, including
the ability to:
. prohibit us from entering into certain material transactions, including
material acquisitions;
. elect up to two members of our Board of Directors; and
. elect at least one director to the executive and nominating and
corporate governance committees of our Board of Directors.
In addition, TdF has significant governance rights over CTI. Although TdF
currently has only a 20% equity interest in CTI, these governance rights give
TdF generally rights characteristic of those that a 50% partner to a joint
venture would have.
TdF's exercise of these rights could be contrary to your interests and could
prevent us from conducting some activities that our Board of Directors
consider to be in our best interests and the best interests of our
shareholders. See "Certain Relationships and Related Transactions--Agreements
with TdF Related to the Roll Up--Governance Agreement".
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<PAGE>
TdF's CTSH Option
Under the circumstances described below, TdF also will have the right to
acquire all of our shares in CTSH or to require us to purchase all of TdF's
shares in CTSH, at fair market value in either case. This right will be
triggered under the following circumstances:
. the sale of all or substantially all of our assets;
. a merger, consolidation or similar transaction that would result in any
person owning more than 50% of our voting power or equity securities;
. an unsolicited acquisition by any person of more than 25% of our voting
power or equity securities; or
. other circumstances arising from an acquisition by any person that
would give rise to a right of the BBC to terminate our analog or
digital transmission contracts with the BBC.
Further, immediately before any of these events occurs, TdF will have the
right to require us to purchase 50% of their Class A common stock in cash at
the same price we would have to pay once the event occurs.
If we were required to sell our shares in CTSH to TdF, we would no longer
own our U.K. business. On the other hand, if we were required to purchase all
of TdF's shares in CTSH and/or purchase 50% of their Class A common stock, we
cannot guarantee that we would have the necessary funds to do so or that we
would be permitted to do so under our debt instruments. If we did not have
sufficient funds, we would have to seek additional financing. We cannot
guarantee, however, that such financing would be available on commercially
reasonable terms or at all. If such financing were not available, we might be
forced to sell certain other assets at unfavorable prices in order to generate
the cash needed to buy the shares from TdF. In addition, our obligation to
purchase TdF's shares could result in an event of default under our debt
instruments.
TdF's Liquidity Rights
Under certain other circumstances, TdF will have the right to require us to
purchase all of their shares in CTSH, at fair market value. We may elect to
pay either (1) in cash or (2) with our common stock at a discount of 15% to
its market value. We cannot guarantee that we will have sufficient funds to
purchase such shares for cash if TdF were to require us to purchase their
shares of capital stock of CTSH. If we did not have sufficient funds, we would
either need to seek additional financing or purchase the shares with our
common stock. We cannot guarantee that we could obtain such financing on terms
acceptable to us. If we were to issue shares of common stock to effect the
purchase, this would result in substantial dilution of our other stockholders,
could adversely affect the market prices of the common stock and could impair
our ability to raise additional capital through the sale of our equity
securities.
TdF's Preemptive Rights
Except in certain circumstances, if we issue any equity securities (other
than equity that is mandatorily exchangeable for debt, such as the
exchangeable preferred stock) to any person, including the equity offering and
in connection with the Proposed BAM JV and the Proposed BellSouth Transaction,
we must offer TdF the right to purchase, at the same cash price and on the
same other terms proposed, up to the amount of such equity securities as would
be necessary for TdF and its affiliates to maintain their consolidated
ownership percentage in us.
The Construction and Acquisition of Towers Involves Various Risks
Our growth strategy depends on our ability to construct, acquire and operate
towers in conjunction with the expansion of wireless carriers. As of December
31, 1998, we had 72 towers under construction. We currently have plans to
commence construction on approximately 800 to 1,100 additional towers during
fiscal 1999. Our ability to construct new towers can be affected by a number
of factors beyond our control, including:
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<PAGE>
. zoning and local permitting requirements and national regulatory
approvals;
. availability of construction equipment and 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. You should
consider that:
. the barriers to new construction may prevent us from building towers
where we want;
. we may not be able to complete the number of towers planned for
construction in accordance with the requirements of our customers; and
. we cannot guarantee that there will be a significant need for the
construction of new towers once the wireless carriers complete the
build-out of their tower network infrastructure.
Competition for the acquisition of towers is keen, and we expect it to
continue to grow. We not only compete against other independent tower owners
and operators, but also against wireless carriers, broadcasters and site
developers. As competition increases for tower acquisitions, we may be faced
with fewer acquisition opportunities, as well as higher acquisition prices.
While we regularly explore acquisition opportunities, we cannot guarantee that
we will be able to identify suitable towers to acquire in the future. In
addition, we may need to seek additional debt or equity financing in order to
fund such acquisitions and for working capital to fund the construction of the
towers we have already planned or have under contract. We cannot, however,
guarantee that such financing will be available or that the proposed
financings will be permitted under our debt instruments. Moreover, we cannot
guarantee that we will be able to identify, finance and complete future
construction and acquisitions on acceptable terms or that we will be able to
manage profitably and market under-utilized capacity on additional towers. The
extent to which we are unable to construct or acquire additional towers, or
manage profitably tower expansion, may have a material adverse effect on our
financial condition and results of operations.
We believe that the time frame for the current wireless build-out cycle may
be limited to the next few years, as many PCS and PCN networks have already
been built out in large markets. If we do not move quickly and aggressively to
obtain growth capital and capture this infrastructure opportunity, our
financial condition and results of operations could be materially adversely
affected.
Our Business Depends on the Demand for Wireless Communications
Demand for our site rentals depends on demand for communication sites from
wireless carriers, which, in turn, depends on the demand for wireless
services. Most types of wireless services currently require ground-based
network facilities, including communication sites for transmission and
reception. The demand for our sites depends on certain factors which we cannot
control, including:
. the level of demand for wireless services generally;
. the financial condition and access to capital of wireless carriers;
. the strategy of carriers with respect to owning or leasing
communication sites;
. changes in telecommunications regulations; and
. general economic conditions.
The wireless communications industry has experienced significant growth in
recent years. A slowdown in the growth of, or reduction in, demand in a
particular wireless segment could adversely affect the demand for
communication sites. For example, we anticipate that a significant amount of
our revenues over the next several years will be generated from carriers in
the PCS and PCN market and, as such, we will be subject to downturns in PCS
and PCN demand. Moreover, wireless carriers often operate with substantial
leverage, and financial
28
<PAGE>
problems for our customers could result in accounts receivable going
uncollected, in the loss of a customer and the associated lease revenue or in
a reduced ability of these customers to finance expansion activities.
Finally, advances in technology, such as the development of new satellite
systems, could reduce the need for land-based transmission and reception
networks. The occurrence of any of these factors could have a material adverse
effect on our financial condition and results of operations.
Variability in Demand for Network Services May Reduce the Predictability of
Our Results
Demand for our network services fluctuates from period to period and within
periods. These fluctuations are caused by a number of factors, including:
. the timing of customers' capital expenditures;
. annual budgetary considerations of customers;
. the rate and volume of wireless carriers' tower build-outs;
. timing of existing customer contracts; and
. general economic conditions.
While demand for our network services fluctuates, we must incur certain
costs, such as maintaining a staff of network services employees in
anticipation of future contracts, even when there may be no current business.
Consequently, the operating results of our network services businesses for any
particular period may vary significantly, and should not be considered as
necessarily being indicative of longer-term results. Furthermore, as wireless
carriers complete their build-outs, the need for the construction of new
towers and the demand for certain network services could decrease
significantly and could result in fluctuations and, possibly, significant
declines in our operating performance.
We Operate our Business in an Increasingly Competitive Industry--Many of Our
Competitors Have Significantly More Resources
We face competition for site rental customers from various sources,
including:
. other large independent tower owners;
. wireless carriers that own and operate their own tower footprints and
lease antenna space to other carriers;
. site development companies which acquire antenna space on existing
towers for wireless carriers and manage new tower construction; and
. traditional local independent tower operators.
Wireless carriers that own and operate their own tower footprints generally
are substantially larger and have greater financial resources than we have. 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 rental
business.
We compete for acquisition and new tower construction opportunities with
wireless carriers, broadcasters, site developers and other independent tower
operators. We believe that competition for tower acquisitions will increase
and that additional competitors will enter the tower market. These additional
competitors may have greater financial resources than we have. See "--The
Construction and Acquisition of Towers Involves Various Risks".
NTL, which owns the privatized engineering division of the Independent
Broadcasting Authority, is our principal competitor in the terrestrial
broadcast transmission market in the United Kingdom. We could encounter
significant competition from NTL for our transmission business with the BBC or
ONdigital following the
29
<PAGE>
expiration of our current contracts with these broadcasters. See "--We Rely
Heavily on Agreements with Several Business Partners".
We Rely Heavily on Agreements with Several Business Partners
Assuming we had completed the Roll-Up and the Proposed Transactions as of
January 1, 1998, none of our customers would have accounted for more than ten
percent of our revenues except the BBC which would have accounted for
approximately 25.1% of our revenues for the twelve month period ended December
31, 1998.
Our broadcast transmission business is substantially dependent on contracts
with the BBC. See "Business--U.K. Operations--Significant Contracts". The
initial term of our analog transmission contract with the BBC will expire on
March 31, 2007, and our digital transmission contract with the BBC expires on
October 31, 2010. In addition, our digital transmission contract with the BBC
may be terminated by the BBC after five years if the BBC's board of governors
does not believe that digital television in the United Kingdom has enough
viewers, subject to payment to CTI of predetermined cash compensation if this
occurs. We cannot guarantee that the BBC will renew these contracts or that
they will not attempt to negotiate terms that are not as favorable to us as
those in place now. If we were to lose the BBC contracts, our business,
results of operations and financial condition would be materially adversely
affected.
In order to optimize service coverage in the United Kingdom and enable
viewers to receive all analog UHF television services using one receiving
antenna, CTI and NTL have agreed to share all UHF television sites. See
"Business--U.K. Operations--Significant Contracts". We are currently in
negotiations with NTL to amend the agreement to reflect the build-out of
digital transmission sites and equipment, new rates for site sharing fees for
new digital facilities and revised operating and maintenance procedures for
the new equipment. This agreement may be terminated with five years' notice by
either CTI or NTL, and is set to expire on December 31, 2005. Although we do
not believe that the agreement will be terminated, we cannot guarantee that it
will not be, which could have a material adverse effect on our business,
results of operations and financial condition.
We Are Subject to Extensive Regulations Which Could Change at Any Time
We are subject to a variety of foreign, federal, state and local regulation.
In the United States, both the Federal Communications Commission and Federal
Aviation Administration regulate towers and other sites used for wireless
communications transmitters and receivers. Such regulations control siting and
marking of towers and may, depending on the characteristics of the tower,
require registration of tower facilities. Most proposals to construct new
antenna structures or to modify existing antenna structures are reviewed by
both the FCC and the FAA to ensure that a structure will not present a hazard
to aviation. We generally indemnify our customers against any failure to
comply with applicable standards. Failure to comply with applicable
requirements may lead to civil penalties or require us to assume costly
indemnification obligations. 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, such regulations increase the costs
associated with new tower construction. We cannot guarantee that existing
regulatory policies will not adversely affect the timing or cost of new tower
construction or that additional regulations will not be adopted which increase
such delays or result in additional costs. These factors could have a material
adverse effect on our financial condition and results of operations.
In the United Kingdom, both OFTEL and the Radiocommunications Agency
regulate and monitor telecommunications and frequency licensing for sites used
for wireless communications transmitters and receivers. Site rental fees for
broadcasting (but not telecommunications) are also subject to price regulation
by OFTEL. In order to construct or materially alter towers, we must receive
regulatory approvals from the Civil Aviation Authority, which ensures that new
antenna structures do not present a hazard to aviation, and from local
government planning authorities. In addition, we sometimes must receive
international frequency clearance. Our
30
<PAGE>
ability to respond to customers' demands may be delayed or even prevented by
the need to seek these approvals. We cannot guarantee, therefore, that
existing regulatory policies will not adversely affect the timing or cost of
new tower construction or that additional regulations will not be adopted
which increase such delays or result in additional costs. These factors could
have a material adverse effect on our financial condition and results of
operations.
Since we signed the analog transmission contract with the BBC, the BBC has
increased its service requirements to include 24-hour broadcasting on our
terrestrial transmission network for the BBC's two national television
services and a requirement for CTI to add a number of filler stations to its
network to extend existing BBC services. The BBC has agreed to increases of
approximately (Pounds)800,000 ($1,330,240) per year in the charges payable by
the BBC to CTI for these service enhancements. The additional charges may
necessitate an amendment to CTI's Transmission Telecommunications License.
OFTEL, the relevant regulatory authority in the United Kingdom, has confirmed
in initial discussions with CTI that it is not OFTEL's intention to prevent
the provision of such additional services to the BBC at an additional charge.
CTI is discussing with OFTEL the most appropriate way to rectify this
situation in order to allow the additional services to be provided to the BBC
in return for the additional agreed payments. While we expect the license to
be amended, there can be no assurance as to the final resolution of these
issues with OFTEL.
Our customers may also become subject to new regulations or regulatory
policies which adversely affect the demand for communication sites. In
addition, as we pursue international opportunities, we will be subject to
regulation in foreign jurisdictions.
We are also subject to laws and regulations relating to worker health and
safety. If we fail to comply with such laws and regulations, it could have a
material adverse effect on our business, results of operations or financial
condition.
Costs of Compliance with Environmental Laws Could Adversely Affect Our
Financial Condition
Our operations are subject to foreign, federal, state and local laws and
regulations regarding the management, use, storage, disposal, emission,
release and remediation of, and exposure to, hazardous and nonhazardous
substances, materials or wastes. Under certain environmental laws, we could be
held liable for the remediation of hazardous substance contamination at
current or former facilities or at third-party waste disposal sites, and we
also could be subject to personal injury or property damage claims related to
such contamination. Although we believe that we are in substantial compliance
with all applicable environmental laws, we cannot guarantee that costs of
compliance with existing or future environmental laws will not have a material
adverse effect on our financial condition and results of operations. See
"Business--Environmental Matters".
Emissions from Our Antennas May Create Health Risks
Our towers are subject to government requirements and other guidelines
relating to radio frequency emissions. The potential connection between radio
frequency emissions and certain negative health effects, including some forms
of cancer, has been the subject of substantial study by the scientific
community in recent years. To date, the results of these studies have been
inconclusive. Although we have not been subject to any claims relating to
radio frequency emissions, we cannot guarantee that we will not be subject to
such claims in the future.
We Are Subject to Risks Associated with Our International Operations
We conduct business in countries outside the United States, which exposes us
to fluctuations in foreign currency exchange rates. For the twelve month
period ended December 31, 1998, assuming we had completed the Roll-Up on
January 1, 1998, but without giving effect to the Proposed Transactions,
approximately 74.3% of our consolidated revenues would have originated outside
the United States, all of which were denominated in currencies other than U.S.
dollars (principally pounds sterling). We have not historically engaged in
significant hedging activities with respect to our non-U.S. dollar operations.
31
<PAGE>
Our international operations are subject to other risks, such as the
imposition of government controls, inflation, tariff or taxes and other trade
barriers, difficulties in staffing and managing international operations,
price, wage and exchange controls, and political, social and economic
instability. We cannot guarantee that these and other factors will not have a
material adverse effect on our financial condition or results of operations.
We Are Heavily Dependent on Our Senior Management
Our existing operations and continued future development are dependent to a
significant extent upon the performance and active participation of certain
key individuals, including senior management. We cannot guarantee that we will
be successful in retaining the services of these, or other key personnel. None
of our employees have signed noncompetition agreements. If we were to lose any
of these individuals, our financial condition and results of operations could
be materially adversely affected.
We are Subject to Year 2000 Compliance Problems
We are in the process of conducting a comprehensive review of our computer
systems to identify which of our systems will need to be modified, upgraded or
converted to recognize dates after December 31, 1999, which is known as the
year 2000 problem. The failure to correct a material year 2000 problem could
result in a system failure, such as the failure of tower lighting or security
monitoring systems, or miscalculations causing disruption of operations
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
In 1997 we established a year 2000 project to ensure that the issue received
appropriate priority and that the necessary resources were made available.
This project includes the replacement of our worldwide business computer
systems with systems that use programs that will make approximately 90% of our
business computer systems year 2000 compliant. The testing phase of the year
2000 project is ongoing as hardware or system software is remediated, upgraded
or replaced. Testing as well as remediation is scheduled for completion in
June 1999. The final phase of our year 2000 project, contingency planning,
will be completed and tested to the extent possible by September 1999.
However, we cannot assure you that all year 2000 compliance issues will be
resolved without any future disruption or that we will not incur significant
additional expense. In addition, if some of our major suppliers and customers
fail to address their own year 2000 compliance issues, their non-compliance
could have a material adverse effect on us and our operations.
There is Currently No Market for the Securities
The shares of new preferred stock will be new securities for which there
currently is no established trading market. We do not intend to apply for
listing of the new preferred stock on a national securities exchange or
automatic quotation system. Although the initial purchasers of the old
preferred stock have informed us that they currently intend to make a market
in the new preferred stock, the initial purchasers are not obligated to do so,
and any such market making may be discontinued at any time without notice. The
liquidity of any market for the shares of new preferred stock will depend upon
the number of holders of the new preferred stock, the interest of securities
dealers in making a market in the new preferred stock and other factors.
Accordingly, there can be no assurance as to the development or liquidity of
any market for the shares of new preferred stock. If an active trading market
for the shares of new preferred stock does not develop, the market price and
liquidity of the shares of new preferred stock may be adversely affected. If
the shares of new preferred stock are traded, they may trade at a discount
from their initial offering price, depending upon prevailing interest rates,
the market for similar securities, our financial performance and certain other
factors. The liquidity of, and trading markets for, the shares of new
preferred stock also may be adversely affected by general declines in the
market for payment-in-kind preferred stock. Such declines may adversely affect
the liquidity of, and trading markets for, the shares of new preferred stock,
independent of our financial performance or prospects.
32
<PAGE>
Historically, the market for payment-in-kind preferred stock has been
subject to disruptions that have caused substantial volatility in the prices
of securities similar to the new preferred stock. There can be no assurance
that the market, if any, for the shares of new preferred stock will not be
subject to similar disruptions. Any such disruptions may have an adverse
effect on the holders of the new preferred stock.
This Document Includes Forward-Looking Statements
This document includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical facts
included in this document, including, without limitation, the statements under
"Prospectus Summary", "Management's Discussion and Analysis of Financial
Condition and Results of Operations", "Industry Background" and "Business" and
located elsewhere in this document regarding industry prospects, our prospects
and our financial position are forward-looking statements. Although we believe
that the expectations reflected in such forward-looking statements are
reasonable, we can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from our expectations are disclosed in this document, including,
without limitation, in conjunction with the forward-looking statements
included under "Risk Factors". 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. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this document might not occur.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and
do not anticipate paying cash dividends on our capital stock in the
foreseeable future. It is our current policy to retain earnings to finance the
expansion of our operations. Future declaration and payment of dividends, if
any, will be determined in light of the then-current conditions, including our
earnings, operations, capital requirements, financial condition and other
factors deemed relevant by the Board of Directors. In addition, our ability to
pay dividends is limited by the terms of our debt instruments and the terms of
the certificate of designations in respect of our exchangeable preferred
stock. See "Description of Certain Indebtedness" and "Description of Capital
Stock".
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<PAGE>
CAPITALIZATION
The following table sets forth as of December 31, 1998 (i) the historical
capitalization of the Company, (ii) the pro forma capitalization of the Company
after giving effect to the Proposed Offerings and (iii) the pro forma
capitalization of the Company after giving effect to the Proposed Offerings and
the Proposed Transactions. The information set forth below should be read in
conjunction with "Unaudited Pro Forma Condensed Consolidated Financial
Statements", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the consolidated financial statements and the notes
thereto included elsewhere in this document. The Proposed Transactions are not
contingent upon the Proposed Offerings. See "Unaudited Pro Forma Condensed
Consolidated Financial Statements" for detail regarding the pro forma
adjustments.
<TABLE>
<CAPTION>
December 31, 1998
--------------------------------------
Pro Forma
for Proposed
Pro Forma Offerings and
for Proposed Proposed
Actual Offerings Transactions
---------- ------------ -------------
(Dollars in thousands, except share
amounts)
<S> <C> <C> <C>
Cash and cash equivalents(a)............ $ 296,450 $ 962,575 $ 49,583
========== ========== ==========
Notes payable and current maturities of
long-term debt......................... $ -- $ -- $ --
========== ========== ==========
Long-term debt (less current
maturities):
Senior Credit Facility(b).............. $ 5,500 $5,500 $5,500
10 5/8% Senior Discount Notes due
2007.................................. 168,099 168,099 168,099
CTI Credit Facility(b)................. 55,177 55,177 55,177
9% Guaranteed Bonds due 2007........... 200,934 200,934 200,934
Proposed BAM JV Credit Facility........ -- -- 180,000
Proposed Notes offered................. -- 300,000 300,000
---------- ---------- ----------
Total long-term debt(a)............... 429,710 729,710 909,710
---------- ---------- ----------
Minority interests...................... 39,185 39,185 50,915
Redeemable preferred stock:
Exchangeable Preferred Stock ($.01 par
value; 400,000 shares authorized;
200,000 shares issued)(a)............. 201,063 201,063 201,063
Stockholders' equity:
Common stock ($.01 par value;
690,000,000 shares authorized):
Common Stock (83,123,873 shares
issued, actual; shares issued, pro
forma for offerings; and shares
issued, pro forma for the offerings
and the Proposed Transactions)(c).... 831 831 831
Class A Common Stock (11,340,000
shares issued)....................... 113 113 113
Additional paid-in capital(c).......... 795,153 1,175,153 1,552,153
Cumulative foreign currency translation
adjustment............................ 1,690 1,690 1,690
Accumulated deficit.................... (60,225) (63,225) (63,225)
---------- ---------- ----------
Total stockholders' equity(a)......... 737,562 1,114,562 1,491,562
---------- ---------- ----------
Total capitalization(a).............. $1,407,520 $2,084,520 $2,653,250
========== ========== ==========
</TABLE>
- --------
(a) On a pro forma basis for the Proposed Offerings and the Proposed
Transactions, the Restricted Group (as defined) would have cash and cash
equivalents, total long-term debt, redeemable preferred stock, total
stockholders' equity and total capitalization of $3.3 million, $473.6
million, $201.1 million, $1,491.6 million, and $2,166.2 million,
respectively. See "Unaudited Pro Forma Condensed Consolidated Financial
Statements--Notes to Unaudited Pro Forma Condensed Consolidated Balance
Sheet".
(b) As of March 1, 1999, our principal U.S. subsidiary, CCI, had unused
borrowing availability under the Senior Credit Facility of approximately
$54.0 million, and our principal U.K. subsidiary, CTI, had approximately
(Pounds)24.0 million ($39.9 million) of unused borrowing availability under
the CTI Credit Facility. See "Description of Certain Indebtedness".
(c) The Company's issuance of (1) approximately 15.6 million shares of common
stock in connection with the formation of the Proposed BAM JV, (2)
approximately 9.1 million shares of common stock in connection with the
Proposed BellSouth Transaction and (3) approximately million shares of
common stock pursuant to the equity offering will give TdF the right to
purchase up to approximately (1) 5.42 million shares of common stock at
approximately $12.65 per share, (2) million shares of common stock at
approximately $ per share and (3) million shares of common stock at a
price equal to the public offering price less the underwriting discount
pursuant to TdF's antidilutive right under the Governance Agreement. See
"Certain Relationships and Related Transactions--Agreements with TdF
Related to the Roll-Up--Governance Agreement".
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<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
statements (the "Pro Forma Financial Statements") are based on the historical
financial statements of CCIC and the historical financial statements of the
entities acquired by CCIC during the period presented, adjusted to give effect
to the following transactions (collectively, the "Transactions"):
(1) the Roll-Up;
(2) the IPO;
(3) the conversion of CCIC's senior convertible preferred stock into
common stock (all of which, as of July 17, 1998, had been converted);
(4) the issuance of CCIC's 12 3/4% Exchangeable Preferred Stock due 2010;
(5) the Proposed Offerings;
(6) the Proposed BAM JV;
(7) the Proposed BellSouth Transaction; and
(8) the Proposed Powertel Acquisition.
In this pro forma discussion, we refer to the transactions set forth in
clauses (1) through (4) of the preceding sentence collectively as the 1998
Transactions, and we refer to the Proposed BAM JV, the Proposed BellSouth
Transaction and the Proposed Powertel Acquisition collectively as the Proposed
Transactions. We refer to all of the above transactions as the Transactions.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1998 gives effect to the Transactions as if they
had occurred as of January 1, 1998. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet gives effect to the (1) Proposed Offerings and (2)
the Proposed Transactions as if they had occurred as of December 31, 1998. The
pro forma adjustments are described in the accompanying notes and are based
upon available information and certain assumptions that management believes are
reasonable.
Included in the notes accompanying the Pro Forma Financial Statements are
tables summarizing the unaudited pro forma results of operations and balance
sheet for CCIC and its Restricted Subsidiaries (as defined in the Indenture
governing the 10 5/8% discount notes, the "10 5/8% Notes Indenture"); such
group of companies is hereinafter referred to as the "Restricted Group". The
Restricted Group excludes CTI and the Proposed BAM JV, both of which are
designated as Unrestricted Subsidiaries (as defined in the 10 5/8% Notes
Indenture) under our debt instruments.
The Pro Forma Financial Statements do not purport to represent what CCIC's
results of operations or financial condition would actually have been had the
1998 Transactions, the Proposed Offerings or the Proposed Transactions in fact
occurred on such dates or to project CCIC's results of operations or financial
condition for any future date or period. The Pro Forma Financial Statements
should be read in conjunction with the consolidated financial statements and
the notes thereto included elsewhere in this document and "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
The Roll-Up, the Proposed BAM JV and the Proposed Powertel Acquisition are
accounted for under the purchase method of accounting. The total purchase price
for the Roll-Up, the Proposed BAM JV and the Proposed Powertel Acquisition have
been allocated to the identifiable tangible and intangible assets and
liabilities of the applicable acquired business based upon CCIC's preliminary
estimate of their fair values with the remainder allocated to goodwill and
other intangible assets. The allocations of the purchase prices are subject to
revision when additional information concerning asset and liability valuations
is obtained; however, the Company does not expect that any such revisions will
have a material effect on its consolidated financial position or results of
operations. The Company has recorded the purchase price for the Roll-Up based
on (i) the number of shares of CCIC's common stock and Class A common stock
exchanged for shares of CTI's capital stock and (ii) the price per share
received by CCIC in our IPO.
35
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1998
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
for 1998 Adjustments
Adjustments Pro Forma Adjustments Transactions Historical for
Historical Historical for 1998 for 1998 for Proposed and Proposed Proposed Proposed
CCIC(a) CTI(b) Transactions Transactions Offerings Offerings BAM JV(j) BAM JV
---------- ---------- ------------ ------------ ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues:
Site rental and
broadcast
transmission.... $ 75,028 $84,714 $ -- $159,742 $ -- $ 159,742 $ 11,183 $31,009(k)
Network services
and other....... 38,050 12,514 (265)(c) 50,299 -- 50,299 -- --
-------- ------- -------- -------- -------- --------- -------- -------
Total net
revenues........ 113,078 97,228 (265) 210,041 -- 210,041 11,183 31,009
-------- ------- -------- -------- -------- --------- -------- -------
Operating
expenses:
Costs of
operations:
Site rental and
broadcast
transmission.... 26,254 35,901 -- 62,155 -- 62,155 14,941 -- (l)
Network services
and other....... 21,564 7,916 -- 29,480 -- 29,480 -- --
General and
administrative.. 23,571 5,265 (265)(c) 28,571 -- 28,571 -- -- (l)
Corporate
development..... 4,625 8 -- 4,633 -- 4,633 -- --
Non-cash
compensation
charges......... 12,758 3,831 -- 16,589 -- 16,589 -- --
Depreciation and
amortization.... 37,239 25,684 11,463 (d) 74,386 -- 74,386 6,278 23,346 (m)
-------- ------- -------- -------- -------- --------- -------- -------
126,011 78,605 11,198 215,814 -- 215,814 21,219 23,346
-------- ------- -------- -------- -------- --------- -------- -------
Operating income
(loss).......... (12,933) 18,623 (11,463) (5,773) -- (5,773) (10,036) 7,663
Other income
(expense):
Equity in
earnings of
unconsolidated
affiliate....... 2,055 -- (2,055)(e) -- -- -- -- --
Interest and
other income
(expense)....... 4,220 725 -- 4,945 -- 4,945 -- --
Interest expense
and amortization
of deferred
financing
costs........... (29,089) (13,378) 3,689 (f) (38,778) (32,570)(i) (71,348) -- (17,711)(n)
-------- ------- -------- -------- -------- --------- -------- -------
Income (loss)
before income
taxes and
minority
interests....... (35,747) 5,970 (9,829) (39,606) (32,570) (72,176) (10,036) (10,048)
Provision for
income taxes.... (374) -- -- (374) -- (374) -- --
Minority
interests....... (1,654) -- (1,194)(g) (2,848) -- (2,848) -- 4,155 (o)
-------- ------- -------- -------- -------- --------- -------- -------
Net income
(loss).......... (37,775) 5,970 (11,023) (42,828) (32,570) (75,398) (10,036) (5,893)
Dividends on
preferred
stock........... (5,411) -- (21,334)(h) (26,745) -- (26,745) -- --
-------- ------- -------- -------- -------- --------- -------- -------
Net income (loss)
after deduction
of dividends on
preferred
stock........... $(43,186) $ 5,970 $(32,357) $(69,573) $(32,570) $(102,143) $(10,036) $(5,893)
======== ======= ======== ======== ======== ========= ======== =======
Loss per common
share--basic and
diluted ........ $ (1.02) $ (0.74) $
======== ======== =========
Common shares
outstanding--
basic and
diluted (in
thousands)...... 42,518 94,064
======== ======== =========
<CAPTION>
Pro Forma
for 1998
Transactions,
Proposed Adjustments Adjustments
Offerings for for
and Proposed Proposed Pro Forma
Proposed BellSouth Historical Powertel for the
BAM JV Transaction Powertel(s) Acquisition Transactions
------------- --------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net revenues:
Site rental and
broadcast
transmission.... $ 201,934 $33,840(p) $ 1,865 $14,040(t) $ 251,679
Network services
and other....... 50,299 -- -- -- 50,299
------------- --------------- ----------- ------------- ------------
Total net
revenues........ 252,233 33,840 1,865 14,040 301,978
------------- --------------- ----------- ------------- ------------
Operating
expenses:
Costs of
operations:
Site rental and
broadcast
transmission.... 77,096 11,400(l)(q) 6,167 -- (l) 94,663
Network services
and other....... 29,480 -- -- -- 29,480
General and
administrative.. 28,571 -- (l) -- -- (l) 28,571
Corporate
development..... 4,633 -- -- -- 4,633
Non-cash
compensation
charges......... 16,589 -- -- -- 16,589
Depreciation and
amortization.... 104,010 30,500 (r) 7,534 6,111 (u) 148,155
------------- --------------- ----------- ------------- ------------
260,379 41,900 13,701 6,111 322,091
------------- --------------- ----------- ------------- ------------
Operating income
(loss).......... (8,146) (8,060) (11,836) 7,929 (20,113)
Other income
(expense):
Equity in
earnings of
unconsolidated
affiliate....... -- -- -- -- --
Interest and
other income
(expense)....... 4,945 -- -- -- 4,945
Interest expense
and amortization
of deferred
financing
costs........... (89,059) -- -- -- (89,059)
------------- --------------- ----------- ------------- ------------
Income (loss)
before income
taxes and
minority
interests....... (92,260) (8,060) (11,836) 7,929 (104,227)
Provision for
income taxes.... (374) -- -- -- (374)
Minority
interests....... 1,307 -- -- -- 1,307
------------- --------------- ----------- ------------- ------------
Net income
(loss).......... (91,327) (8,060) (11,836) 7,929 (103,294)
Dividends on
preferred
stock........... (26,745) -- -- -- (26,745)
------------- --------------- ----------- ------------- ------------
Net income (loss)
after deduction
of dividends on
preferred
stock........... $(118,072) $(8,060) $(11,836) $ 7,929 $(130,039)
============= =============== =========== ============= ============
Loss per common
share--basic and
diluted ........ $ $
============= ============
Common shares
outstanding--
basic and
diluted (in
thousands)......
============= ============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
36
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
(Dollars in thousands)
(a) The historical results of operations for CTI are included in CCIC's
historical results of operations for the period from the date of the Roll-
Up, August 21, 1998, through December 31, 1998.
(b) Reflects the historical results of operations of CTI (under U.S. GAAP) for
the periods prior to the consummation of the Roll-Up on August 21, 1998.
Such results have been translated from pounds sterling to U.S. dollars at
the average Noon Buying Rate for the period.
(c) Reflects the elimination of management fees payable to CCIC from CTI.
(d) Reflects the incremental amortization of goodwill as a result of the Roll-
Up. Goodwill is being amortized over twenty years.
(e) Reflects the elimination of equity accounting adjustments to include
CCIC's percentage in CTI's earnings and losses.
(f) Reflects decrease in interest expense attributable to the repayment of
borrowings under CCIC's senior credit facility from a portion of the net
proceeds from the issuance of our 12 3/4% exchangeable preferred stock.
(g) Reflects the minority interest in dividends accrued on CTI's Redeemable
Preference Shares.
(h) Reflects (1) decrease in dividends of $4,348 attributable to the
conversion of the outstanding shares of senior convertible preferred stock
into shares of common stock and (2) increase in dividends of $25,682
attributable to 12 3/4% exchangeable preferred stock.
(i) Reflects (1) increase in interest expense of $29,570 as a result of the
issuance of the notes in the Proposed Debt Offering at an assumed interest
rate of % per annum and (2) nonrecurring financing fees of $3,000
related to the term loans incurred to fund the escrow payments in
connection with the Proposed BellSouth Transaction and the Proposed
Powertel Acquisition (the "Term Loans").
(j) Reflects the historical results of operations of the tower operations to
be contributed to the Proposed BAM JV.
(k) Reflects additional revenues to be recognized by the Proposed BAM JV
pursuant to the BAM global lease and the Formation Agreement.
(l) CCIC expects that the Proposed BAM JV will incur incremental operating
expenses as a stand-alone entity. Such incremental expenses are currently
estimated to amount to approximately $5.2 million per year. In addition,
CCIC expects that it will incur incremental operating expenses as a result
of the Proposed BellSouth Transaction and the Proposed Powertel
Acquisition. Such incremental expenses are currently estimated to amount
to approximately $15.9 million per year. These incremental operating
expenses are based on management's best estimates rather than any
contractual obligations; as such, these amounts have not been presented as
adjustments in the accompanying Pro Forma Financial Statement.
(m) Reflects the incremental depreciation of property and equipment as a
result of the Proposed BAM JV. Property and equipment is being depreciated
over twenty years.
(n) Reflects additional interest expense attributable to borrowings under a
credit facility to be entered into by the Proposed BAM JV. Such borrowings
are initially estimated to incur interest at a rate of 9.25% per annum.
(o) Reflects the minority partner's 37.7% interest in the Proposed BAM JV's
operations.
(p) Reflects additional revenues to be recognized by CCIC in connection with
the Proposed BellSouth Transaction pursuant to the Sublease and the Letter
Agreement. This amount includes $26,640 in revenues to be received from
BellSouth and $7,200 in revenues to be received from other tenants.
(q) Reflects additional costs to be incurred for ground rents in connection
with the Proposed BellSouth Transaction pursuant to the Letter Agreement.
(r) Reflects the incremental depreciation of property and equipment as a
result of the Proposed BellSouth Transaction. Property and equipment is
being depreciated over twenty years.
(s) Reflects the historical results of operations of the tower operations to
be acquired in the Proposed Powertel Acquisition.
(t) Reflects additional revenues to be recognized by CCIC in connection with
the Proposed Powertel Acquisition pursuant to the Master Site Agreements
and the Asset Purchase Agreement.
(u) Reflects the incremental depreciation of property and equipment as a
result of the Proposed Powertel Acquisition. Property and equipment is
being depreciated over twenty years.
37
<PAGE>
The following tables summarize the unaudited pro forma results of operations
for the Restricted Group. Such information is not intended as an alternative
measure of the operating results as would be determined in accordance with
generally accepted accounting principles.
<TABLE>
<CAPTION>
Year Ended December 31, 1998
---------------------------------------------------------------------------------------------------
Restricted Adjustments Adjustments Restricted
Exclusion of Group for for Group Pro
Pro Forma Exclusion of Certain Pro Forma Proposed Proposed Forma for
for Proposed Unrestricted Adjustments for Proposed BellSouth Historical Powertel the
Offerings Subsidiaries for Roll-Up Offerings Transaction Powertel Acquisition Transactions
------------ ------------ ------------ ------------ ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues:
Site rental and
broadcast
transmission...... $ 159,742 $(137,201) $ -- $ 22,541 $33,840 $ 1,865 $14,040 $ 72,286
Network services
and other......... 50,299 (18,082) -- 32,217 -- -- -- 32,217
--------- --------- ------- -------- ------- -------- ------- ---------
Total net
revenues......... 210,041 (155,283) -- 54,758 33,840 1,865 14,040 104,503
--------- --------- ------- -------- ------- -------- ------- ---------
Operating expenses:
Costs of
operations:
Site rental and
broadcast
transmission..... 62,155 (56,038) -- 6,117 11,400 6,167 -- 23,684
Network services
and other........ 29,480 (12,151) -- 17,329 -- -- -- 17,329
General and
administrative.... 28,571 (7,683) 265 21,153 -- -- -- 21,153
Corporate
development....... 4,633 (8) -- 4,625 -- -- -- 4,625
Non-cash
compensation
charges........... 16,589 (6,682) -- 9,907 -- -- -- 9,907
Depreciation and
amortization...... 74,386 (46,002) (11,463) 16,921 30,500 7,534 6,111 61,066
--------- --------- ------- -------- ------- -------- ------- ---------
215,814 (128,564) (11,198) 76,052 41,900 13,701 6,111 137,764
--------- --------- ------- -------- ------- -------- ------- ---------
Operating income
(loss)............ (5,773) (26,719) 11,198 (21,294) (8,060) (11,836) 7,929 (33,261)
Other income
(expense):
Interest and other
income (expense).. 4,945 (3,844) -- 1,101 -- -- -- 1,101
Interest expense
and amortization
of deferred
financing costs... (71,348) 20,740 -- (50,608) -- -- -- (50,608)
--------- --------- ------- -------- ------- -------- ------- ---------
Income (loss)
before income
taxes and minority
interests......... (72,176) (9,823) 11,198 (70,801) (8,060) (11,836) 7,929 (82,768)
Provision for
income taxes...... (374) -- -- (374) -- -- -- (374)
Minority
interests......... (2,848) 1,654 1,194 -- -- -- -- --
--------- --------- ------- -------- ------- -------- ------- ---------
Net income (loss).. (75,398) (8,169) 12,392 (71,175) (8,060) (11,836) 7,929 (83,142)
Dividends on
preferred stock... (26,745) -- -- (26,745) -- -- -- (26,745)
--------- --------- ------- -------- ------- -------- ------- ---------
Net income (loss)
after deduction of
dividends on
preferred stock... $(102,143) $ (8,169) $12,392 $(97,920) $(8,060) $(11,836) $ 7,929 $(109,887)
========= ========= ======= ======== ======= ======== ======= =========
</TABLE>
38
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
for
Proposed Adjustments
Adjustments Pro Forma Adjustments Offerings for
for for Historical for and Proposed
Historical Proposed Proposed Proposed Proposed Proposed BellSouth Historical
CCIC Offerings Offerings BAM JV(e) BAM JV BAM JV Transaction Powertel(o)
---------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash
equivalents..... $ 296,450 $666,125(a) $ 962,575 $ -- $(208,375)(f) $ 754,200 $(430,000)(l) $ --
Receivables...... 36,420 -- 36,420 -- -- 36,420 -- --
Inventories...... 6,599 -- 6,599 -- -- 6,599 -- --
Prepaid expenses
and other
current assets.. 2,647 -- 2,647 -- -- 2,647 -- 2,031
---------- -------- ---------- ------- --------- ---------- --------- --------
Total current
assets......... 342,116 666,125 1,008,241 -- (208,375) 799,866 (430,000) 2,031
Property and
equipment, net.. 592,594 -- 592,594 83,557 508,923 (g) 1,185,074 610,000 (m) 121,490
Investments in
affiliates...... 2,258 -- 2,258 -- -- 2,258 -- --
Goodwill and
other intangible
assets, net..... 569,740 -- 569,740 -- -- 569,740 -- --
Deferred
financing costs
and other
assets, net..... 16,522 10,875(b) 27,397 -- 4,625 (h) 32,022 -- --
---------- -------- ---------- ------- --------- ---------- --------- --------
$1,523,230 $677,000 $2,200,230 $83,557 $305,173 $2,588,960 $180,000 $123,521
========== ======== ========== ======= ========= ========== ========= ========
Liabilities and
Stockholders'
Equity:
Current
liabilities:
Accounts
payable......... $ 46,020 $ -- $ 46,020 $ -- $ -- $46,020 $ -- $ --
Other current
liabilities..... 46,867 -- 46,867 -- -- 46,867 -- 309
Long-term debt,
current
maturities...... -- -- -- -- -- -- -- --
---------- -------- ---------- ------- --------- ---------- --------- --------
Total current
liabilities.... 92,887 -- 92,887 -- -- 92,887 -- 309
Long-term debt,
less current
maturities...... 429,710 300,000(c) 729,710 -- 180,000 (i) 909,710 -- --
Other
liabilities..... 22,823 -- 22,823 -- -- 22,823 -- --
---------- -------- ---------- ------- --------- ---------- --------- --------
Total
liabilities.... 545,420 300,000 845,420 -- 180,000 1,025,420 -- 309
---------- -------- ---------- ------- --------- ---------- --------- --------
Minority
interests....... 39,185 -- 39,185 -- 11,730 (j) 50,915 -- --
Redeemable
preferred
stock........... 201,063 -- 201,063 -- -- 201,063 -- --
Stockholders'
equity.......... 737,562 377,000(d) 1,114,562 83,557 113,443 (k) 1,311,562 180,000 (n) 123,212
---------- -------- ---------- ------- --------- ---------- --------- --------
$1,523,230 $677,000 $2,200,230 $83,557 $305,173 $2,588,960 $ 180,000 $123,521
========== ======== ========== ======= ========= ========== ========= ========
<CAPTION>
Adjustments
for
Proposed Pro Forma
Powertel for the
Acquisition Transactions
-------------- ------------
<S> <C> <C>
Assets:
Current assets:
Cash and cash
equivalents..... $(274,617)(p) $ 49,583
Receivables...... -- 36,420
Inventories...... -- 6,599
Prepaid expenses
and other
current assets.. -- 4,678
-------------- ------------
Total current
assets......... (274,617) 97,280
Property and
equipment, net.. 151,405 (q) 2,067,969
Investments in
affiliates...... -- 2,258
Goodwill and
other intangible
assets, net..... -- 569,740
Deferred
financing costs
and other
assets, net..... -- 32,022
-------------- ------------
$(123,212) $2,769,269
============== ============
Liabilities and
Stockholders'
Equity:
Current
liabilities:
Accounts
payable......... $ -- $ 46,020
Other current
liabilities..... -- 47,176
Long-term debt,
current
maturities...... -- --
-------------- ------------
Total current
liabilities.... -- 93,196
Long-term debt,
less current
maturities...... -- 909,710
Other
liabilities..... -- 22,823
-------------- ------------
Total
liabilities.... -- 1,025,729
-------------- ------------
Minority
interests....... -- 50,915
Redeemable
preferred
stock........... -- 201,063
Stockholders'
equity.......... (123,212)(r) 1,491,562
-------------- ------------
$(123,212) $2,769,269
============== ============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
39
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(Dollars in thousands)
<TABLE>
<C> <C> <S> <C>
(a) Reflects the following adjustments to cash and cash
equivalents:
(1) Increase resulting from the receipt of proceeds from the
Proposed Offerings....................................... $ 700,000
(2) Decrease resulting from the payment of underwriting
discounts and commissions and other fees and expenses
related to the Proposed Offerings........................ (30,875)
(3) Decrease resulting from the payment of nonrecurring
financing fees related to the Term Loans................. (3,000)
---------
Total adjustments to cash and cash equivalents........... $ 666,125
=========
(b) Reflects deferred financing costs resulting from the payment
of underwriting discounts and commissions and other fees and
expenses related to the Proposed Debt Offering.
(c) Reflects the increase resulting from the receipt of proceeds
from the Proposed Debt Offering.
(d) Reflects the following adjustments to stockholders' equity:
(1) Increase resulting from the receipt of proceeds from the
Proposed Equity Offering................................. $ 400,000
(2) Decrease resulting from the payment of underwriting
discounts and commissions and other fees and expenses
related to the Proposed Equity Offering.................. (20,000)
(3) Decrease resulting from payment of nonrecurring financing
fees related to the Term Loans........................... (3,000)
---------
Total adjustments to stockholders' equity................ $ 377,000
=========
(e) Reflects the historical amounts from the statement of net
assets for the tower operations to be contributed to the
Proposed BAM JV.
(f) Reflects the following adjustments to cash and cash
equivalents:
(1) Increase resulting from borrowings under a credit
facility to be entered into by the Proposed BAM JV....... $ 180,000
(2) Decrease resulting from distribution to minority
partner.................................................. (380,000)
(3) Decrease resulting from payment of deferred financing
costs for a credit facility to be entered into by the
Proposed BAM JV.......................................... (4,625)
(4) Decrease resulting from payment of fees and expenses
related to the Proposed BAM JV........................... (3,750)
---------
Total adjustments to cash and cash equivalents........... $(208,375)
=========
(g) Reflects the increase in basis of property and equipment
contributed to the Proposed BAM JV by the minority partner.
(h) Reflects the deferred financing costs for the credit facility
to be entered into by the Proposed BAM JV.
(i) Reflects the borrowings under a credit facility to be entered
into by the Proposed BAM JV.
(j) Reflects the 37.7% minority interest in the Proposed BAM JV.
(k) Reflects the following adjustments to stockholders' equity:
(1) Increase resulting from increase in basis of property and
equipment contributed to the Proposed BAM JV by the
minority partner......................................... $ 508,923
(2) Decrease resulting from distribution to minority
partner.................................................. (380,000)
(3) Decrease resulting from minority interest................ (11,730)
(4) Decrease resulting from payment of fees and expenses
related to the Proposed BAM JV........................... (3,750)
---------
Total adjustments to stockholders' equity................ $ 113,443
=========
(l) Reflects the payment of the cash portion of the purchase price
for the Proposed BellSouth Transaction.
(m) Reflects the basis of property and equipment recorded in
connection with the Proposed BellSouth Transaction.
(n) Reflects the increase resulting from the issuance of common
stock for a portion of the purchase price for the Proposed
BellSouth Transaction.
(o) Reflects the historical amounts from the statement of net
assets for the tower operations to be acquired in the Proposed
Powertel Acquisition.
(p) Reflects the payment of the closing price for the Proposed
Powertel Acquisition.
(q) Reflects the increase in basis of property and equipment
acquired in the Proposed Powertel Acquisition.
(r) Reflects the elimination of the historical basis of the net
assets acquired in the Proposed Powertel Acquisition.
</TABLE>
The following table summarizes the adjustments for the Proposed Offerings,
with increases to liabilities and stockholders' equity balances shown as
negative amounts:
<TABLE>
<CAPTION>
Adjustment Reference
-------------------------------------------------
(a)(1),(c),(d)(1) (a)(2),(b),(d)(2) (a)(3),(d)(3) Totals
----------------- ----------------- ------------- ---------
<S> <C> <C> <C> <C>
Cash and cash equiva-
lents.................. $ 700,000 $(30,875) $(3,000) $ 666,125
Deferred financing cost
and other assets, net.. -- 10,875 -- 10,875
Long-term debt, less
current maturities..... (300,000) -- -- (300,000)
Stockholders' equity.... (400,000) 20,000 3,000 (377,000)
--------- -------- ------- ---------
$ -- $ -- $ -- $ --
========= ======== ======= =========
</TABLE>
40
<PAGE>
The following table summarizes the adjustments for the Proposed BAM JV, with
increases to liabilities and stockholders' equity balances shown as negative
amounts:
<TABLE>
<CAPTION>
Adjustment Reference
------------------------------------------------------------------------
(f)(1),(i) (f)(2),(k)(2) (f)(3),(h) (f)(4),(k)(4) (g),(j),(k)(1),(k)(3) Totals
---------- ------------- ---------- ------------- --------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equiva-
lents.................. $ 180,000 $(380,000) $(4,625) $(3,750) $ -- $(208,375)
Property and equipment,
net.................... -- -- -- -- 508,923 508,923
Deferred financing costs
and other assets, net.. -- -- 4,625 -- -- 4,625
Long-term debt, less
current maturities..... (180,000) -- -- -- -- (180,000)
Minority interests...... -- -- -- -- (11,730) (11,730)
Stockholders' equity.... -- 380,000 -- 3,750 (497,193) (113,443)
--------- --------- ------- ------- --------- ---------
$ -- $ -- $ -- $ -- $ -- $ --
========= ========= ======= ======= ========= =========
</TABLE>
The following table summarizes the adjustments for the Proposed BellSouth
Transaction, with increases to liabilities and stockholders' equity balances
shown as negative amounts:
<TABLE>
<CAPTION>
Adjustment Reference
--------------------
(l),(m),(n)
--------------------
<S> <C>
Cash and cash equivalents............................... $(430,000)
Property and equipment, net............................. 610,000
Stockholders' equity.................................... (180,000)
---------
$ --
=========
</TABLE>
The following table summarizes the adjustments for the Proposed Powertel
Acquisition, with increases to liabilities and stockholders' equity balances
shown as negative amounts:
<TABLE>
<CAPTION>
Adjustment Reference
--------------------
(p),(q),(r)
--------------------
<S> <C>
Cash and cash equivalents............................... $(274,617)
Property and equipment, net............................. 151,405
Stockholders' equity.................................... 123,212
---------
$ --
=========
</TABLE>
The following table summarizes the unaudited pro forma balance sheet for the
Restricted Group. Such information is not intended as an alternative measure of
financial position as determined in accordance with generally accepted
accounting principles.
<TABLE>
<CAPTION>
As of December 31, 1998
-----------------------------------------------------------------------------------------------------------
Restricted
Group
Pro Forma
Restricted for
Group Proposed Adjustments Restricted
Pro Pro Offerings for Adjustments Group
Forma for Exclusion of Forma for Adjustments and Proposed for Proposed Pro Forma
Proposed Unrestricted Proposed for Proposed Proposed BellSouth Historical Powertel for the
Offerings Subsidiaries Offerings BAM JV BAM JV Transaction Powertel Acquisition Transactions
---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash
equivalents...... $ 962,575 $(254,665) $ 707,910 $ -- $ 707,910 $(430,000) $ -- $(274,617) $ 3,293
Receivables....... 36,420 (18,733) 17,687 -- 17,687 -- -- -- 17,687
Inventories....... 6,599 (5,309) 1,290 -- 1,290 -- -- -- 1,290
Prepaid expenses
and other
current assets... 2,647 (2,039) 608 -- 608 -- 2,031 -- 2,639
---------- --------- ---------- -------- ---------- --------- -------- --------- ----------
Total current
assets......... 1,008,241 (280,746) 727,495 -- 727,495 (430,000) 2,031 (274,617) 24,909
Property and
equipment, net.... 592,594 (427,389) 165,205 -- 165,205 610,000 121,490 151,405 1,048,100
Investments in
affiliates........ 2,258 -- 2,258 -- 2,258 -- -- -- 2,258
Investments in
Unrestricted
Subsidiaries...... -- 744,941 744,941 197,000 941,941 -- -- -- 941,941
Goodwill and other
intangible assets,
net............... 569,740 (426,011) 143,729 -- 143,729 -- -- -- 143,729
Deferred financing
costs and other
assets, net....... 27,397 (3,340) 24,057 -- 24,057 -- -- -- 24,057
---------- --------- ---------- -------- ---------- --------- -------- --------- ----------
$2,200,230 $(392,545) $1,807,685 $197,000 $2,004,685 $ 180,000 $123,521 $(123,212) $2,184,994
========== ========= ========== ======== ========== ========= ======== ========= ==========
Liabilities and
Stockholders'
Equity:
Current
liabilities:
Accounts
payable.......... $ 46,020 $ (34,648) $11,372 $ -- $11,372 $ -- $ -- $ -- $ 11,372
Other current
liabilities...... 46,867 (40,586) 6,281 -- 6,281 -- 309 -- 6,590
Long-term debt,
current
maturities....... -- -- -- -- -- -- -- -- --
---------- --------- ---------- -------- ---------- --------- -------- --------- ----------
Total current
liabilities.... 92,887 (75,234) 17,653 -- 17,653 -- 309 -- 17,962
Long-term debt,
less current
maturities........ 729,710 (256,111) 473,599 -- 473,599 -- -- -- 473,599
Other liabilities.. 22,823 (22,015) 808 -- 808 -- -- -- 808
---------- --------- ---------- -------- ---------- --------- -------- --------- ----------
Total
liabilities...... 845,420 (353,360) 492,060 -- 492,060 -- 309 -- 492,369
---------- --------- ---------- -------- ---------- --------- -------- --------- ----------
Minority
interests......... 39,185 (39,185) -- -- -- -- -- -- --
Redeemable
preferred stock... 201,063 -- 201,063 -- 201,063 -- -- -- 201,063
Stockholders'
equity............ 1,114,562 -- 1,114,562 197,000 1,311,562 180,000 123,212 (123,212) 1,491,562
---------- --------- ---------- -------- ---------- --------- -------- --------- ----------
$2,200,230 $(392,545) $1,807,685 $197,000 $2,004,685 $ 180,000 $123,521 $(123,212) $2,184,994
========== ========= ========== ======== ========== ========= ======== ========= ==========
</TABLE>
41
<PAGE>
SELECTED FINANCIAL AND OTHER DATA OF CCIC
The selected historical consolidated financial and other data for CCIC set
forth below for each of the four years in the period ended December 31, 1998,
and as of December 31, 1995, 1996, 1997 and 1998, have been derived from the
consolidated financial statements of CCIC, which have been audited by KPMG LLP,
independent certified public accountants. The results of operations for the
year ended December 31, 1998 are not comparable to the year ended December 31,
1997, and the results for the year ended December 31, 1997 are not comparable
to the year ended December 31, 1996 as a result of business acquisitions
consummated in 1997 and 1998. Results of operations of these acquired
businesses are included in the Company's consolidated financial statements for
the periods subsequent to the respective dates of acquisition. The selected
historical financial and other data for the Restricted Group (as defined) are
not intended as alternative measures of operating results or cash flows from
operations (as determined in accordance with generally accepted accounting
principles). The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations--CCIC" and the consolidated financial
statements and the notes thereto of CCIC included elsewhere in this document.
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1995 1996 1997 1998
-------- -------- --------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues:
Site rental and broadcast
transmission..................... $ 4,052 $ 5,615 $ 11,010 $ 75,028
Network services and other........ 6 592 20,395 38,050
-------- -------- --------- ----------
Total net revenues.............. 4,058 6,207 31,405 113,078
-------- -------- --------- ----------
Costs of operations:
Site rental and broadcast
transmission..................... 1,226 1,292 2,213 26,254
Network services and other........ -- 8 13,137 21,564
-------- -------- --------- ----------
Total costs of operations....... 1,226 1,300 15,350 47,818
-------- -------- --------- ----------
General and administrative......... 729 1,678 6,824 23,571
Corporate development(a)........... 204 1,324 5,731 4,625
Non-cash compensation charges(b)... -- -- -- 12,758
Depreciation and amortization...... 836 1,242 6,952 37,239
-------- -------- --------- ----------
Operating income (loss)............ 1,063 663 (3,452) (12,933)
Equity in earnings (losses) of
unconsolidated affiliate.......... -- -- (1,138) 2,055
Interest and other income
(expense)(c)...................... 53 193 1,951 4,220
Interest expense and amortization
of deferred financing costs....... (1,137) (1,803) (9,254) (29,089)
-------- -------- --------- ----------
Loss before income taxes and
minority interests................ (21) (947) (11,893) (35,747)
Provision for income taxes......... -- (10) (49) (374)
Minority interests................. -- -- -- (1,654)
-------- -------- --------- ----------
Net loss........................... (21) (957) (11,942) (37,775)
Dividends on preferred stock....... -- -- (2,199) (5,411)
-------- -------- --------- ----------
Net loss after deduction of
dividends on preferred stock...... $ (21) $ (957) $ (14,141) $ (43,186)
======== ======== ========= ==========
Loss per common share--basic and
diluted........................... $ (0.01) $ (0.27) $ (2.27) $ (1.02)
======== ======== ========= ==========
Common shares outstanding--basic
and diluted (in thousands)........ 3,316 3,503 6,238 42,518
======== ======== ========= ==========
Other Data:
Site data (at period end)(d):
Towers owned....................... 126 155 240 1,344
Towers managed..................... 7 7 133 129
Rooftop sites managed (revenue
producing)(e)..................... 41 52 80 135
-------- -------- --------- ----------
Total sites owned and managed...... 174 214 453 1,608
======== ======== ========= ==========
EBITDA(f).......................... $ 1,899 $ 1,905 $ 3,500 $ 37,064
Restricted Group EBITDA............ 1,899 1,905 3,500 5,799
Capital expenditures............... 161 890 18,035 138,759
Summary cash flow information:
Net cash provided by (used for)
operating activities............. 1,672 (530) (624) 44,976
Net cash used for investing
activities....................... (16,673) (13,916) (111,484) (149,248)
Net cash provided by financing
activities....................... 15,597 21,193 159,843 345,248
Ratio of earnings to fixed
charges(g)........................ -- -- -- --
Balance Sheet Data (at period end):
Cash and cash equivalents.......... $ 596 $ 7,343 $ 55,078 $ 296,450
Property and equipment, net........ 16,003 26,753 81,968 592,594
Total assets....................... 19,875 41,226 371,391 1,523,230
Total debt......................... 11,182 22,052 156,293 429,710
Redeemable preferred stock(h)...... 5,175 15,550 160,749 201,063
Total stockholders' equity
(deficit)......................... 619 (210) 41,792 737,562
</TABLE>
42
<PAGE>
- --------
(a) Corporate development expenses represent costs incurred in connection with
acquisitions and development of new business initiatives. These expenses
consist primarily of allocated compensation, benefits and overhead costs
that are not directly related to the administration or management of
existing towers. For the year ended December 31, 1997, such expenses
include (i) nonrecurring cash bonuses of $0.9 million paid to certain
executive officers in connection with the CTI Investment and (ii) a
nonrecurring cash charge of $1.3 million related to the purchase by CCIC
of shares of common stock from CCIC's former chief executive officer in
connection with the CTI Investment. See "Certain Relationships and Related
Transactions".
(b) Represents charges related to the issuance of stock options to certain
employees and executives.
(c) Includes a $1.2 million fee received in March 1997 as compensation for
leading the investment consortium which provided the equity financing for
CTI in connection with the CTI Investment.
(d) Represents the aggregate number of sites of CCIC as of the end of each
period.
(e) As of December 31, 1998, CCIC had contracts with 1,365 buildings in the
United States to manage on behalf of such buildings the leasing of space
for antennas on the rooftops of such buildings. A revenue producing
rooftop represents a rooftop where CCIC has arranged a lease of space on
such rooftop and, as such, is receiving payments in respect of its
management contract. CCIC generally does not receive any payment for
rooftops under management unless CCIC actually leases space on such
rooftops to third parties. As of December 31, 1998, CCIC had 1,284 rooftop
sites under management throughout the United States that were not revenue
producing but were available for leasing to customers and, in the United
Kingdom, the Company had 54 revenue producing rooftop sites that were
occupied by the Company's transmitters but were not available for leasing
to customers.
(f) EBITDA is defined as operating income (loss) plus depreciation and
amortization and non-cash compensation charges. EBITDA is presented as
additional information because management believes it to be a useful
indicator of CCIC's ability to meet debt service and capital expenditure
requirements. It is not, however, intended as an alternative measure of
operating results or cash flow from operations (as determined in
accordance with generally accepted accounting principles). Furthermore,
CCIC's measure of EBITDA may not be comparable to similarly titled
measures of other companies.
(g) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income (loss) before income taxes, fixed charges and equity in
earnings (losses) of unconsolidated affiliate. Fixed charges consist of
interest expense, the interest component of operating leases and
amortization of deferred financing costs. For the years ended December 31,
1995, 1996, 1997 and 1998, earnings were insufficient to cover fixed
charges by $21,000, $0.9 million, $10.8 million and $37.8 million,
respectively.
(h) The 1995, 1996 and 1997 amounts represent (1) the Senior Convertible
Preferred Stock privately placed by CCIC in August 1997 and October 1997,
all of which has been converted into shares of common stock, and (2) the
Series A Convertible Preferred Stock, the Series B Convertible Preferred
Stock and the Series C Convertible Preferred Stock privately placed by
CCIC in April 1995, July 1996 and February 1997, respectively, all of
which has been converted into shares of common stock in connection with
the consummation of the IPO. The 1998 amount represents the 12 3/4% Senior
Exchangeable Preferred Stock due 2010.
----------------
The selected quarterly historical consolidated financial data for CCIC set
forth below have been derived from the consolidated financial statements of
CCIC.
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
------------ ------------ --------------- --------------
(In thousands of dollars, except per share amounts)
<S> <C> <C> <C> <C>
1997:
Net revenues........... $ 1,994 $ 4,771 $ 11,481 $ 13,159
Gross profit(1)........ 1,731 2,258 5,648 6,418
Net loss............... (443) (1,706) (4,001) (5,792)
Loss per common share--
basic and diluted..... (0.13) (0.51) (0.62) (0.69)
1998:
Net revenues........... $ 11,837 $ 11,530 $ 28,894 $ 60,817
Gross profit(1)........ 6,244 7,550 15,835 35,631
Net loss............... (6,606) (6,426) (17,444) (7,299)
Loss per common share--
basic and diluted..... (0.79) (0.78) (0.33) (0.09)
</TABLE>
- --------
(1) Represents net revenues less costs of operations.
43
<PAGE>
SELECTED FINANCIAL AND OTHER DATA OF CTI
The selected historical financial data for CTI, which was 34.3% owned by
CCIC prior to the Roll-Up, presents (i) selected historical financial data of
the BBC Home Service Transmission Business prior to its acquisition by CTI (the
"Predecessor") for the year ended March 31, 1996 and the eleven and two months
ended February 27, 1997, (ii) selected historical consolidated financial data
of CTI after such acquisition for the one month ended March 31, 1997 and for
the nine months ended December 31, 1997, and (iii) selected historical
consolidated financial data of CTI for the eight months ended August 31, 1998.
The selected historical financial data for the year ended March 31, 1996 and
the eleven months ended February 27, 1997 have been derived from the financial
statements of the Predecessor, which have been audited by KPMG, Chartered
Accountants. The selected financial data for the one month ended March 31, 1997
and the nine months ended December 31, 1997 have been derived from the
consolidated financial statements of CTI, which have been audited by KPMG,
Chartered Accountants. The selected historical financial data for the two
months ended February 27, 1997 have been derived from the unaudited financial
statements of the Predecessor, and the selected historical financial data for
the eight months ended August 31, 1998 have been derived from the unaudited
consolidated financial statements of CTI, which include all adjustments that
CTI considers necessary for a fair presentation of the financial position and
results of operations for that period. The results of operations for the one
month ended March 31, 1997, the nine months ended December 31, 1997 and the
eight months ended August 31, 1998 are not necessarily indicative of the
results of operations of CTI that may be expected for the entire year. CCIC
acquired a majority ownership interest in CTI upon consummation of the Roll-Up
in August 1998 and, as a result, historical financial data of CTI for the year
ended December 31, 1998 is not presented. This information reflects financial
data for CTI as a whole, is not limited to that portion of the financial data
attributable to CCIC's percentage ownership of CTI prior to the Roll-Up and is
not indicative of any distributions or dividends that CCIC might receive in the
future. CTI is subject to significant restrictions on its ability to make
dividends and distributions to CCIC. See "Risk Factors--As a Holding Company,
We Depend on Dividends from Subsidiaries to Meet Cash Requirements or Pay
Dividends". The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations--CTI" and the consolidated financial
statements and the notes thereto of CTI included elsewhere in this document.
<TABLE>
<CAPTION>
Predecessor Company CTI
---------------------------------------------- ---------------------------------------------
Eleven Two One Nine Eight
Year Months Months Month Months Months
Ended Ended Ended Ended Ended Ended
March 31, February 27, February 27, March 31, December 31, August 31,
1996 1997 1997 1997 1997 1998
-------------- -------------- -------------- ------------- -------------- --------------
(Pounds sterling in thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Net revenues..... (Pounds)70,367 (Pounds)70,614 (Pounds)12,805 (Pounds)6,433 (Pounds)56,752 (Pounds)59,033
Operating
expenses(b)..... 62,582 56,612 10,108 5,188 47,976 47,821
-------------- -------------- -------------- ------------- -------------- --------------
Operating
income.......... 7,785 14,002 2,697 1,245 8,776 11,212
Interest and
other income.... -- -- -- 49 288 440
Interest expense
and amortization
of deferred
financing
costs........... -- -- -- (969) (12,419) (9,507)
-------------- -------------- -------------- ------------- -------------- --------------
Income (loss)
before income
taxes........... 7,785 14,002 2,697 325 (3,355) 2,145
Provision for
income taxes.... -- -- -- -- -- --
-------------- -------------- -------------- ------------- -------------- --------------
Net income (loss)
under U.K.
GAAP............ 7,785 14,002 2,697 325 (3,355) 2,145
Adjustments to
convert to U.S.
GAAP............ 3,707 3,993 726 78 866 1,493
-------------- -------------- -------------- ------------- -------------- --------------
Net income (loss)
under U.S.
GAAP............ (Pounds)11,492 (Pounds)17,995 (Pounds)3,423 (Pounds)403 (Pounds)(2,489) (Pounds)3,638
============== ============== ============== ============= ============== ==============
Other Data:
Site data(c):
Towers and
revenue
producing
rooftop sites
at end of
period.........
EBITDA (under
U.S. GAAP)(d)... (Pounds)20,620 (Pounds)27,040 (Pounds)5,161 (Pounds)3,064 (Pounds)25,695 (Pounds)29,244
Capital
expenditures
(under U.S.
GAAP)........... 18,079 21,810 711 748 14,361 36,304
Ratio of earnings
to fixed
charges(e)......
Ratio of EBITDA
to cash interest
expense.........
Summary cash flow
information
(under U.S.
GAAP):
Net cash provided
by operating
activities...... 24,311 28,146 5,161 4,871 25,555 27,226
Net cash used for
investing
activities...... (17,190) (21,811) (711) (52,889) (14,668) (36,135)
Net cash provided
by (used for)
financing
activities...... (7,121) (6,335) (4,450) 57,706 (12,423) 9,955
<CAPTION>
CTI
---------------------------------
One Nine Eight
Month Months Months
Ended Ended Ended
March 31, December 31, August 31,
1997(a) 1997(a) 1998(a)
--------- ------------ ----------
(Dollars in thousands)
<S> <C> <C> <C>
Statement of
Operations Data:
Net revenues..... $10,697 $94,365 $98,160
Operating
expenses(b)..... 8,627 79,774 79,517
--------- ------------ ----------
Operating
income.......... 2,070 14,591 18,643
Interest and
other income.... 81 479 731
Interest expense
and amortization
of deferred
financing
costs........... (1,611) (20,650) (15,808)
--------- ------------ ----------
Income (loss)
before income
taxes........... 540 (5,580) 3,566
Provision for
income taxes.... -- -- --
--------- ------------ ----------
Net income (loss)
under U.K.
GAAP............ 540 (5,580) 3,566
Adjustments to
convert to U.S.
GAAP............ 130 1,440 2,483
--------- ------------ ----------
Net income (loss)
under U.S.
GAAP............ $ 670 $(4,140) $ 6,049
========= ============ ==========
Other Data:
Site data(c):
Towers and
revenue
producing
rooftop sites
at end of
period......... 801 808
============ ==========
EBITDA (under
U.S. GAAP)(d)... $ 5,095 $42,726 $48,627
Capital
expenditures
(under U.S.
GAAP)........... 1,244 23,879 60,366
Ratio of earnings
to fixed
charges(e)...... 1.44x -- 1.44x
Ratio of EBITDA
to cash interest
expense......... 3.58x 2.71x 3.76x
Summary cash flow
information
(under U.S.
GAAP):
Net cash provided
by operating
activities...... 8,099 42,493 45,271
Net cash used for
investing
activities...... (87,944) (24,390) (60,085)
Net cash provided
by (used for)
financing
activities...... 95,954 (20,657) 16,553
</TABLE>
44
<PAGE>
- --------
(a) CTI publishes its consolidated financial statements in pounds sterling.
For the convenience of the reader, the information set forth above
contains translations of pound sterling amounts into U.S. dollars at the
Noon Buying Rate on December 31, 1998 of (Pounds)1.00=1.6628. No
representation is made that the pound sterling amounts have been, could
have been or could be converted into U.S. dollars at the rate indicated or
any other rates. On February 26, 1999, the Noon Buying Rate was
(Pounds)1.00 = $1.6027.
(b) Included in operating expenses for the eight months ended August 31, 1998
are non-cash compensation charges for (Pounds)2.3 million ($3.9 million)
related to the issuance of stock options to certain executives and
employees.
(c) As of August 31, 1998, CTI's 54 revenue producing rooftop sites were
occupied by its transmitters but were not available for leasing to
customers.
(d) EBITDA is defined as operating income (loss) plus depreciation and
amortization and non-cash compensation charges. EBITDA is presented as
additional information because management believes it to be a useful
indicator of CTI's ability to meet debt service and capital expenditure
requirements. It is not, however, intended as an alternative measure of
operating results or cash flow from operations (as determined in
accordance with generally accepted accounting principles). Furthermore,
CTI's measure of EBITDA may not be comparable to similarly titled
measures of other companies.
(e) For purposes of computing the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes and fixed charges.
Fixed charges consist of interest expense, the interest component of
operating leases and amortization of deferred financing costs. For the
nine months ended December 31, 1997, earning were insufficient to cover
fixed charges by (Pounds)2.5 million ($4.1 million).
45
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion sets forth separately the historical consolidated
results of operations of CCIC and CTI and is intended to assist in
understanding (1) CCIC's consolidated financial condition as of December 31,
1998 and its consolidated results of operations for each year in the three-
year period ended December 31, 1998 and (2) CTI's consolidated results of
operations for each twelve-month period in the two-year period ended March 31,
1998. The statements in this discussion regarding the industry outlook, the
Company's expectations regarding the future performance of its businesses and
the other nonhistorical statements in this discussion are forward-looking
statements. These forward-looking statements are subject to numerous risks and
uncertainties, including but not limited to the uncertainties relating to
decisions on capital expenditures to be made in the future by wireless
carriers and broadcasters and the risks and uncertainties described in "Risk
Factors". This discussion should be read in conjunction with "Unaudited Pro
Forma Condensed Consolidated Financial Statements", "Selected Financial and
Other Data of CCIC", "Selected Financial and Other Data of CTI" and the
consolidated financial statements and the notes thereto included elsewhere in
this document. Results of operations of the acquired businesses that are
wholly and majority owned are included in the Company's consolidated financial
statements for the periods subsequent to the respective dates of acquisition.
As such, the Company's results of operations for the year ended December 31,
1998 are not comparable to the year ended December 31, 1997, and the results
for the year ended December 31, 1997 are not comparable to the year ended
December 31, 1996.
Overview
The continued growth of the Company's business depends substantially on the
condition of the wireless communications and broadcast industries. The Company
believes that the demand for communications sites will continue to grow and
expects that, due to increased competition, wireless carriers will continue to
seek operating and capital efficiencies by (1) outsourcing certain network
services and the build-out and operation of new and existing infrastructure
and (2) co-locating antennas and transmission equipment on multiple tenant
towers. In addition, wireless carriers are beginning to seek to sell their
wireless communications infrastructure to, or establish joint ventures with,
experienced infrastructure providers, such as the Company, that have the
ability to manage networks.
Further, the Company believes that wireless carriers and broadcasters will
continue to seek to outsource the operation of their towers and, eventually,
their transmission networks, including the transmission of their signals.
Management believes that the Company's ability to manage towers and
transmission networks and its proven track record of providing end-to-end
services to the wireless communications and broadcasting industries position
it to capture such business.
The willingness of wireless carriers to utilize the Company's infrastructure
and related services is affected by numerous factors, including consumer
demand for wireless services, interest rates, cost of capital, availability of
capital to wireless carriers, tax policies, willingness to co-locate
equipment, local restrictions on the proliferation of towers, cost of building
towers and technological changes affecting the number of communications sites
needed to provide wireless communications services to a given geographic area.
The Company's revenues that are derived from the provision of transmission
services to the broadcasting industry will be affected by the timing of the
roll-out of digital terrestrial television broadcasts in both the United
Kingdom and the United States, as well as in other countries around the world,
consumer demand for digital terrestrial broadcasting, interest rates, cost of
capital, zoning restrictions on tall towers and the cost of building towers.
As an important part of its business strategy, the Company will seek (1) to
take advantage of the operating leverage of its site rental business by
increasing the antenna space leased on its owned or managed communications
sites, (2) to leverage its in-house technical and operational expertise,
(3) to expand its tower footprints by partnering with wireless carriers to
assume ownership of their existing towers and by pursuing build-to-suit
opportunities and (4) to acquire existing transmission networks globally as
opportunities arise.
46
<PAGE>
Results of Operations
The Company's primary sources of revenues are from (1) the rental of antenna
space on towers and rooftops sites, (2) the provision of network services and
(3) the provision of analog and digital broadcast transmission services.
CCIC
CCIC's primary sources of revenues are from (1) the rental of antenna space
on towers and rooftop sites and (2) the provision of network services, which
includes network design and site selection, site acquisition, site development
and construction and antenna installation.
Site rental revenues are received primarily from wireless communications
companies, including cellular, PCS, paging, specialized mobile radio/enhanced
specialized mobile radio ("SMR/ESMR") and microwave operators. Site rental
revenues are generally recognized on a monthly basis under lease agreements,
which typically have original terms of five years (with three or four optional
renewal periods of five years each). Average revenues for CCIC's managed
rooftop sites are less than for the owned and managed towers because a
substantial portion of the revenues from the tenants at rooftop sites is
remitted to the building owner or manager.
Network services revenues consist of revenues from (1) network design and
site selection, (2) site acquisition, (3) site development and construction,
(4) antenna installation and (5) other services. Network services revenues are
received primarily from wireless communications companies. Network services
revenues are recognized under service contracts which provide for billings on
either a fixed price basis or a time and materials basis. Demand for CCIC's
network services fluctuates from period to period and within periods. See
"Risk Factors--Variability in Demand for Network Services May Reduce the
Predictability of Our Results". Consequently, the operating results of CCIC's
network services businesses for any particular period may vary significantly,
and should not be considered as indicative of longer-term results. CCIC also
derives revenues from the ownership and operation of microwave radio and SMR
networks in Puerto Rico where CCIC owns radio wave spectrum in the 2,000 MHz
and 6,000 MHz range (for microwave radio) and the 800 MHz range (for SMR).
These revenues are generally recognized under monthly management or service
agreements.
Costs of operations for site rental primarily consist of land leases,
repairs and maintenance, utilities, insurance, property taxes and monitoring
costs as well as, in the case of managed sites, rental payments. For any given
tower, such costs are relatively fixed over a monthly or an annual time
period. As such, operating costs for owned towers do not generally increase
significantly as additional customers are added. However, rental expenses at
certain managed towers increase as additional customer antennas are added,
resulting in higher incremental revenues but lower incremental margins than on
owned towers. Costs of operations for network services consist primarily of
employee compensation and related benefits costs, subcontractor services,
consulting fees, and other on-site construction and materials costs. CCIC
incurs these network services costs (1) to support its internal operations,
including construction and maintenance of its owned towers, and (2) to
maintain the employees necessary to provide end-to-end services to third
parties regardless of the level of such business at any time. The Company
believes that its experienced staff enables it to provide the type of end-to-
end services that enhance its ability to acquire access to the infrastructure
of wireless carriers and to attract significant build-to-suit contracts.
General and administrative expenses consist primarily of employee
compensation and related benefits costs, advertising, professional and
consulting fees, office rent and related expenses and travel costs. Corporate
development expenses represent costs incurred in connection with acquisitions
and development of new business initiatives. These expenses consist primarily
of allocated compensation, benefits and overhead costs that are not directly
related to the administration or management of existing towers.
Depreciation and amortization charges relate to CCIC's property and
equipment (primarily towers, construction equipment and vehicles), goodwill
and other intangible assets recorded in connection with business acquisitions.
Depreciation of towers and amortization of goodwill are computed with a useful
life of 20 years. Amortization of other intangible assets (principally the
value of existing site rental contracts at Crown) is computed with a useful
life of 10 years. Depreciation of construction equipment and vehicles are
generally computed with useful lives of 10 years and 5 years, respectively.
47
<PAGE>
In May 1997, the Company consummated the TEA acquisition and the
TeleStructures acquisition. In August 1997, the Company consummated the
acquisition of Crown Communication. In August 1998, the Company consummated a
share exchange with the shareholders of CTSH, pursuant to which the Company's
ownership of CTSH increased from approximately 34.3% to 80%. In October 1998,
CTI consummated the Millennium acquisition. Results of operations of these
acquired businesses are included in the Company's consolidated financial
statements for the periods subsequent to the respective dates of acquisition.
As such, the Company's results of operations for the year ended December 31,
1998 are not comparable to the year ended December 31, 1997, and the results
for the year ended December 31, 1997 are not comparable to the year ended
December 31, 1996. See "--CTI" for a description of the revenues and operating
expenses that are included in CCIC's consolidated results of operations
subsequent to the consummation of the share exchange in August 1998.
The following information is derived from CCIC's historical Consolidated
Statements of Operations for the periods indicated.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1996 December 31, 1997 December 31, 1998
-------------------- ------------------ ------------------
Percent Percent Percent
of Net of Net of Net
Amount Revenues Amount Revenues Amount Revenues
--------- --------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues:
Site rental and
broadcast
transmission.......... $ 5,615 90.5% $ 11,010 35.1% $ 75,028 66.4%
Network services and
other................. 592 9.5 20,395 64.9 38,050 33.6
--------- ------- -------- ----- -------- -----
Total net revenues... 6,207 100.0 31,405 100.0 113,078 100.0
--------- ------- -------- ----- -------- -----
Operating expenses:
Costs of operations:
Site rental and
broadcast
transmission.......... 1,292 23.0 2,213 20.1 26,254 35.0
Network services and
other................. 8 1.4 13,137 64.4 21,564 56.7
--------- -------- --------
Total costs of
operations.......... 1,300 21.0 15,350 48.9 47,818 42.3
General and
administrative........ 1,678 27.0 6,824 21.7 23,571 20.8
Corporate development.. 1,324 21.3 5,731 18.3 4,625 4.1
Non-cash compensation
charges............... -- -- -- -- 12,758 11.3
Depreciation and
amortization.......... 1,242 20.0 6,952 22.1 37,239 32.9
--------- ------- -------- ----- -------- -----
Operating income
(loss)................. 663 10.7 (3,452) (11.0) (12,933) (11.4)
Other income (expense):
Equity in earnings
(losses) of
unconsolidated
affiliate............. -- -- (1,138) (3.6) 2,055 1.8
Interest and other
income (expense)...... 193 3.1 1,951 6.2 4,220 3.7
Interest expense and
amortization of
deferred financing
costs................. (1,803) (29.0) (9,254) (29.5) (29,089) (25.7)
--------- ------- -------- ----- -------- -----
Loss before income taxes
and minority
interests.............. (947) (15.2) (11,893) (37.9) (35,747) (31.6)
Provision for income
taxes.................. (10) (0.2) (49) (0.1) (374) (0.3)
Minority interests...... -- -- -- -- (1,654) (1.5)
--------- ------- -------- ----- -------- -----
Net loss................ $ (957) (15.4)% $(11,942) (38.0)% $(37,775) (33.4)%
========= ======= ======== ===== ======== =====
</TABLE>
Comparison of Years Ended December 31, 1998 and 1997
Consolidated revenues for 1998 were $113.1 million, an increase of $81.7
million from 1997. This increase was primarily attributable to (i) a $64.0
million, or 581.5%, increase in site rental and broadcast transmission
revenues, of which $52.5 million was attributable to CTI and $11.5 million was
attributable to the Crown operations; (ii) an $11.4 million increase in
network services revenues from the Crown operations; and (iii) $5.6 million in
network services revenues from CTI.
Costs of operations for 1998 were $47.8 million, an increase of $32.5
million from 1997. This increase was primarily attributable to (i) a $24.0
million increase in site rental and broadcast transmission costs, of which
$20.1 million was attributable to CTI and $3.9 million was attributable to the
Crown operations; (ii) a $3.8 million increase in network services costs
related to the Crown operations; and (iii) $4.2 million in network services
costs from CTI. Costs of operations for site rental and broadcast transmission
as a percentage of site rental and broadcast transmission revenues increased
to 35.0% for 1998 from 20.1% for 1997, primarily due to
48
<PAGE>
(1) higher costs attributable to the CTI operations which are inherent with
CTI's broadcast transmission business, and (2) higher costs for the Crown
operations. Costs of operations for network services as a percentage of
network services revenues decreased to 56.7% for 1998 from 64.4% for 1997,
primarily due to improved margins from the Crown operations. Margins from the
Crown network services operations vary from period to period, often as a
result of increasingly competitive market conditions.
General and administrative expenses for 1998 were $23.6 million, an increase
of $16.7 million from 1997. This increase was primarily attributable to (i) an
$11.3 million increase in expenses related to the Crown operations; (ii) a
$2.8 million increase in expenses at our corporate office; and (iii) $2.4
million in expenses at
CTI. General and administrative expenses as a percentage of revenues decreased
for 1998 to 20.8% from 21.7% for 1997 because of lower overhead costs as a
percentage of revenues for CTI, partially offset by higher overhead costs as a
percentage of revenues for Crown and the increase in costs at our corporate
office.
Corporate development expenses for 1998 were $4.6 million, a decrease of
$1.1 million from 1997. Corporate development expenses for 1997 included
nonrecurring compensation charges associated with the CTI Investment of (i)
$0.9 million for certain executive bonuses and (ii) the repurchase of shares
of our common stock from a member of our Board of Directors, which resulted in
compensation charges of $1.3 million. Corporate development expenses for 1998
included discretionary bonuses related to the Company's performance totaling
approximately $1.8 million for certain members of our management.
We have recorded non-cash compensation charges of $12.8 million related to
the issuance of stock options to certain employees and executives. Such
charges are expected to amount to approximately $1.6 million per year through
2002 and approximately $0.8 million in 2003. See "--Compensation Charges
Related to Stock Option Grants".
Depreciation and amortization for 1998 was $37.2 million, an increase of
$30.3 million from 1997. This increase was primarily attributable to (1) a
$9.5 million increase in depreciation and amortization related to the property
and equipment, goodwill and other intangible assets acquired in the Crown
acquisition; and (2) $20.3 million of depreciation and amortization related to
the property and equipment and goodwill from CTI.
The equity in earnings (losses) of unconsolidated affiliate represents our
34.3% share of CTI's net earnings (losses) for the periods from March 1997
through August 1998 (at which time the share exchange with CTI's shareholders
was consummated). For the eight months ended August 31, 1998, after making
appropriate adjustments to CTI's results of operations for such period to
conform to generally accepted accounting principles of the United States, CTI
had net revenues, operating income, interest expense (including amortization
of deferred financing costs) and net income of $97.2 million, $18.6 million,
$13.4 million and $6.0 million, respectively. Included in CTI's results of
operations for such period are non-cash compensation charges for approximately
$3.8 million related to the issuance of stock options to certain members of
CTI's management.
Interest and other income for 1997 includes a $1.2 million fee received in
March 1997 as compensation for leading the investment consortium which
provided the equity financing for CTI. Interest income for 1998 resulted
primarily from (1) the investment of excess proceeds from the sale of the 10
5/8% discount notes in November 1997; and (2) the investment of the net
proceeds from the IPO in August 1998. See "--Liquidity and Capital Resources".
Interest expense and amortization of deferred financing costs for 1998 was
$29.1 million, an increase of $19.8 million, or 214.3%, from 1997. This
increase was primarily attributable to amortization of the original issue
discount on the 10 5/8% Notes and interest on CTI's indebtedness.
Minority interests represent the minority shareholder's 20% interest in
CTI's operations.
Comparison of Years Ended December 31, 1997 and 1996
Consolidated revenues for 1997 were $31.4 million, an increase of $25.2
million from 1996. This increase was primarily attributable to (1) a $5.4
million, or 96.1%, increase in site rental revenues, of which $4.2 million was
attributable to the Crown operations and $0.7 million was attributable to the
Puerto Rico operations; (2) $10.4 million in network services revenues from
TEA; and (3) $7.2 million in network services revenues from
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<PAGE>
the Crown operations. The remainder of the increase was largely attributable
to higher revenues from SMR and microwave radio services in Puerto Rico and
the monthly service fees received from CTI beginning in March 1997.
Costs of operations for 1997 were $15.4 million, an increase of $14.1
million from 1996. This increase was primarily attributable to (1) $8.5
million of network services costs related to the TEA operations; (2) $3.9
million of network services costs related to the Crown operations; and (3)
$0.9 million in site rental costs attributable to the Crown operations. Costs
of operations for site rental as a percentage of site rental revenues
decreased to 20.1% for 1997 from 23.0% for 1996 because of increased
utilization of the towers located in the southwestern United States and Puerto
Rico. Costs of operations for network services as a percentage of network
services revenues were 64.4% for 1997, reflecting lower margins that are
inherent in the network services businesses acquired in 1997.
General and administrative expenses for 1997 were $6.8 million, an increase
of $5.1 million from 1996. This increase was primarily attributable to $3.0
million of expenses related to the Crown operations and $1.4 million of
expenses related to the TEA operations, along with an increase in costs of
$0.2 million at CCIC's corporate office. General and administrative expenses
as a percentage of revenues decreased for 1997 to 21.7% from 27.0% for 1996
because of lower overhead costs as a percentage of revenues for Crown and TEA.
Corporate development expenses for 1997 were $5.7 million, an increase of
$4.4 million from 1996. A substantial portion of this increase was
attributable to nonrecurring compensation charges associated with the CTI
Investment of (1) $0.9 million for certain executive bonuses and (2) the
repurchase of shares of CCIC's common stock from a member of its Board of
Directors, which resulted in compensation charges of $1.3 million. The
remaining $2.2 million of the increase in corporate development expenses was
attributable to a higher allocation of personnel costs, along with an overall
increase in such costs, associated with an increase in acquisition and
business development activities.
Depreciation and amortization for 1997 was $7.0 million, an increase of $5.7
million from 1996. This increase was primarily attributable to (1) $4.7
million of depreciation and amortization related to the property and
equipment, goodwill and other intangible assets acquired in the Crown
acquisition; (2) $0.5 million of depreciation and amortization related to the
property and equipment and goodwill acquired in the TEA and TeleStructures
acquisitions; and (3) $0.3 million resulting from twelve months of
depreciation related to the property and equipment acquired in the Puerto Rico
acquisition.
The equity in losses of unconsolidated affiliate of $1.1 million represents
CCIC's 34.3% share of CTI's net loss for the period from March through
December 1997. After making appropriate adjustments to CTI's results of
operations for such period to conform to generally accepted accounting
principles of the United States, CTI had net revenues, operating income,
interest expense (including amortization of deferred financing costs) and net
losses of $103.5 million, $16.5 million, $20.4 million and $3.3 million,
respectively.
Interest and other income for 1997 includes a $1.2 million fee received in
March 1997 as compensation for leading the investment consortium which
provided the equity financing for CTI, the impact on earnings of which was
partially offset by certain executive bonuses related to the CTI Investment
and included in corporate development expenses. Interest income for 1997
resulted primarily from the investment of excess proceeds from the sale of
CCIC's Series C convertible preferred stock in February 1997.
Interest expense and amortization of deferred financing costs for 1997 was
$9.3 million, an increase of $7.5 million, or 413.3%, from 1996. This increase
was primarily attributable to (1) commitment fees related to an unfunded
interim loan facility related to the Crown acquisition and an unfunded
revolving credit facility; (2) interest on notes payable to the former
stockholders of Crown for a portion of the purchase price of the Crown
Communication Inc.; (3) amortization of the original issue discount on the 10
5/8% discount notes; (4) interest and fees associated with borrowings under
CCIC's bank credit facility which were used to finance the Crown acquisition
on an interim basis; (5) interest on outstanding borrowings assumed in
connection with the Crown acquisition; and (6) interest on borrowings under
CCIC's bank credit facility which were used to finance the acquisition of the
Puerto Rico system.
50
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CTI
CTI's primary sources of revenues are from (1) the provision of analog and
digital broadcast transmission services to the BBC and commercial
broadcasters, (2) the rental of antenna space on towers and (3) the provision
of network services, which includes broadcast consulting, network design and
site selection, site acquisition, site development and antenna installation
and site management and other services.
Broadcast transmission services revenues are received for both analog and
digital transmission services. Monthly analog transmission revenues are
principally received from the BBC under a contract with an initial 10-year
term through March 31, 2007. Digital transmission services revenues from the
BBC and ONdigital are recognized under contracts with initial terms of 12
years through November 15, 2010. Monthly revenues from these digital
transmission contracts increase over time as the network rollout progresses.
See "Business--U.K. Operations--Significant Contracts".
Site rental revenues are received from other broadcast transmission service
providers (primarily NTL) and wireless communications companies, including all
four U.K. cellular operators (Cellnet, Vodafone, One2One and Orange). As of
December 31, 1998, approximately 200 companies rented space on approximately
514 of CTI's 919 towers and rooftops. Site rental revenues are generally
recognized on a monthly basis under lease agreements with original terms of
three to twelve years. Such lease agreements generally require annual payments
in advance, and include rental rate adjustment provisions between one and
three years from the commencement of the lease. Site rental revenues are
expected to become an increasing portion of CTI's total U.K. revenue base, and
the Company believes that the demand for site rental from communication
service providers will increase in line with the expected growth of these
communication services in the United Kingdom.
Network services revenues consist of (1) network design and site selection,
site acquisition, site development and antenna installation (collectively,
"network design and development") and (2) site management and other services.
Network design and development services are provided to (1) a number of
broadcasting and related organizations, both in the United Kingdom and other
countries; (2) all four U.K. cellular operators; and (3) a number of other
wireless communications companies, including Dolphin and Highway One. These
services are usually subject to a competitive bid, although a significant
proportion result from an operator coming onto an existing CTI site. Revenues
from such services are recognized on either a fixed price or a time and
materials basis. Site management and other services, consisting of both
network monitoring and equipment maintenance, are carried out in the United
Kingdom for a number of emergency service organizations. Revenues for such
services are received under contracts with original terms of between three and
five years. They provide for fixed prices with respect to network monitoring
and variable pricing dependent on the level of equipment maintenance carried
out in a given period.
Costs of operations for broadcast transmission services consist primarily of
employee compensation and related benefits costs, utilities, rental payments
under the Site-Sharing Agreement with NTL, circuit costs and repairs and
maintenance on both transmission equipment and structures.
Site rental operating costs consist primarily of employee compensation and
related benefits costs, utilities and repairs and maintenance. The majority of
such costs are relatively fixed in nature, with increases in revenue from new
installations on existing sites generally being achieved without a
corresponding increase in costs.
Costs of operations for network services consist primarily of employee
compensation and related benefits costs and on-site construction and materials
costs.
General and administrative expenses consist primarily of office occupancy
and related expenses, travel costs, professional and consulting fees,
advertising, insurance and employee training and recruitment costs. Corporate
development expenses represent costs incurred in connection with acquisitions
and development of new business initiatives. These expenses consist primarily
of external professional fees related to specific activities and allocated
compensation, benefits and overhead costs that are not directly related to the
administration or management of CTI's existing lines of business.
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<PAGE>
Depreciation and amortization charges relate to CTI's property and equipment
(primarily towers, broadcast transmission equipment and associated buildings)
and goodwill recorded in connection with the acquisition of the Home Service
Transmission business from the BBC (the "BBC Home Service Transmission
Business"). Depreciation of towers is computed with useful lives of 20 to 25
years; depreciation of broadcast transmission equipment is computed with a
useful life of 20 years; and depreciation of buildings is computed with useful
lives ranging from 20 to 50 years. Amortization of goodwill is computed with a
useful life of 20 years.
The following information is derived from the Consolidated Profit and Loss
Accounts of (i) CTI for periods subsequent to February 28, 1997 (the date of
inception of CTI's operations) and (ii) the BBC Home Service Transmission
Business for periods prior to that date. For purposes of the following
discussion, CTI's results for the month ended March 31, 1997 have been
combined with the results of the BBC Home Service Transmission Business for
the eleven months ended February 27, 1997, and CTI's results for the nine
months ended December 31, 1997 have been combined with its results for the
three months ended March 31, 1998. The following discussion presents an
analysis of such combined results for the twelve-month periods ended March 31,
1998 and 1997. Results for CTI are not comparable to results from the BBC Home
Service Transmission Business due to differences in the carrying amounts of
property and equipment and goodwill. As of December 31, 1997, CTI changed its
fiscal year end for financial reporting purposes from March 31 to December 31;
as such, the results for the three months ended March 31, 1998 are unaudited.
CTI uses the U.K. pound sterling as the functional currency for its
operations. The following amounts have been translated to U.S. dollars using
the average Noon Buying Rate for each period. The following amounts reflect
certain adjustments to present the results of operations in accordance with
U.S. generally accepted accounting principles ("GAAP"). For the results of the
BBC Home Service Transmission Business, such adjustments affect depreciation
and amortization expense as a result of differences in the carrying amounts
for property and equipment; for CTI, such adjustments affect (1) operating
expenses as a result of differences in the accounting for pension costs, and
(2) interest expense as a result of the capitalization of interest costs in
connection with constructed assets.
<TABLE>
<CAPTION>
Twelve Months Ended Twelve Months Ended
March 31, 1997 March 31, 1998
----------------------- -----------------------
Percent Percent
of Net of Net
Amount Revenues Amount Revenues
----------- ---------- ----------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net revenues:
Site rental and broadcast
transmission............... $ 112,122 91.7% $ 113,558 89.2%
Network services and other.. 10,090 8.3 13,731 10.8
----------- -------- ----------- --------
Total net revenues........ 122,212 100.0 127,289 100.0
----------- -------- ----------- --------
Operating expenses:
Costs of operations:
Site rental and broadcast
transmission.............. 61,339 54.7 53,957 47.5
Network services and oth-
er........................ 5,912 58.6 6,075 44.2
----------- -------- ----------- --------
Total cost of operations.. 67,251 55.0 60,032 47.1
General and administrative.. 7,196 5.9 8,626 6.8
Corporate development....... -- -- 2,303 1.8
Depreciation and
amortization............... 17,256 14.1 37,382 29.4
----------- -------- ----------- --------
Operating income.............. 30,509 25.0 18,946 14.9
Other income (expense):
Interest and other income... 79 0.1 746 0.6
Interest expense and
amortization of deferred
financing costs............ (1,434) (1.2) (24,201) (19.0)
Income (loss) before income
taxes........................ 29,154 23.9 (4,509) (3.5)
Provision for income taxes.. -- -- -- --
----------- -------- ----------- --------
Net income (loss)............. $ 29,154 23.9% $ (4,509) (3.5)%
=========== ======== =========== ========
</TABLE>
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Comparison of Twelve Months Ended March 31, 1998 and Twelve Months Ended March
31, 1997
Consolidated revenues for the twelve months ended March 31, 1998 were $127.3
million, an increase of $5.1 million from the twelve months ended March 31,
1997. This increase was primarily attributable to (1) a $1.4 million increase
in broadcast transmission services and site rental revenues and (2) a $3.6
million increase in network services and other revenues. Revenues from the BBC
for the twelve months ended March 31, 1998 amounted to $79.5 million, or 62.5%
of total revenues, as compared to $85.5 million, or 70.0% of total revenues,
for the twelve months ended March 31, 1997. Revenues from NTL for the twelve
months ended March 31, 1998 amounted to $11.8 million, or 9.2% of total
revenues. Network services revenues for the twelve months ended March 31, 1998
consisted of $10.6 million from network design and development services and
$3.1 million from site management and other services.
Costs of operations for the twelve months ended March 31, 1998 were $60.0
million, a decrease of $7.2 million from the twelve months ended March 31,
1997. This decrease was primarily attributable to a $7.4 million decrease in
broadcast transmission services and site rental costs, partially offset by a
$0.2 million increase in network services and other costs. Costs of operations
as a percentage of revenues for broadcast transmission services and site
rental were 47.5% for the twelve months ended March 31, 1998, as compared to
54.7% for the twelve months ended March 31, 1997. This decrease was
attributable to (1) increases in site rental revenues from existing sites with
little change in site operating costs; and (2) the elimination, as of February
28, 1997, of certain costs recharged to the BBC Home Service Transmission
Business by the BBC. Costs of operations as a percentage of revenues for
network services and other were 44.2% for the twelve months ended March 31,
1998, as compared to 58.6% for the twelve months ended March 31, 1997. This
decrease was attributable to (1) a higher proportion of broadcast consulting
revenues, which result in higher margins than certain other network design and
development services and (2) the elimination, as of February 28, 1997, of
certain costs recharged to the BBC Home Service Transmission Business by the
BBC. Costs of operations for site rental and broadcast transmission for the
twelve months ended March 31, 1998 includes non-cash compensation charges for
$1.1 million related to the issuance of stock options to certain employees.
General and administrative expenses for the twelve months ended March 31,
1998 were $8.6 million, an increase of $1.4 million from the twelve months
ended March 31, 1997. As a percentage of revenues, general and administrative
expenses were 6.8% and 5.9% for the twelve months ended March 31, 1998 and
1997, respectively. This increase was attributable to costs incurred by CTI as
a separate enterprise which were not directly incurred by the BBC Home Service
Transmission Business as a part of the BBC.
Corporate development expenses for the twelve months ended March 31, 1998
relate primarily to costs incurred in connection with certain projects in
Australasia and non-cash compensation charges for $1.8 million related to the
issuance of stock options to certain executives.
Depreciation and amortization for the twelve months ended March 31, 1998 was
$37.4 million, an increase of $20.1 million from the twelve months ended March
31, 1997. Monthly charges for depreciation and amortization increased for
periods subsequent to February 28, 1997 due to (i) a decrease in the estimated
useful lives for certain transmission and power plant equipment from 25 to 20
years; and (ii) the amortization of goodwill recorded in connection with the
acquisition of the BBC Home Service Transmission Business.
Interest and other income for the twelve months ended March 31, 1998
resulted primarily from (i) the investment of excess proceeds from amounts
drawn under CTI's bank credit facilities in February 1997; and (ii) the
investment of cash generated from operations during the period.
Interest expense and amortization of deferred financing costs for the twelve
months ended March 31, 1998 was $24.2 million. This amount was comprised of
(1) $4.9 million related to amounts drawn under the CTI Credit Facility; (2)
$15.6 million related to the CTI Bonds; and (3) $3.7 million for the
amortization of deferred financing costs. Interest expense and amortization of
deferred financing costs of $1.4 million for the twelve months ended March 31,
1997 was attributable to amounts drawn under the CTI Credit Facility. The BBC
Home Service Transmission Business did not incur any financing costs as a part
of the BBC prior to February 28, 1997.
53
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Liquidity and Capital Resources
Our business strategy contemplates substantial capital expenditures (1) in
connection with the expansion of our tower footprints by partnering with
wireless carriers to assume ownership or control of their existing towers by
pursuing build-to-suit opportunities and by pursuing other tower acquisition
opportunities and (2) to acquire existing transmission networks globally as
opportunities arise. Since its inception, CCIC has generally funded its
activities (other than acquisitions and investments) through excess proceeds
from contributions of equity capital. CCIC has financed acquisitions and
investments with the proceeds from equity contributions, borrowings under our
senior credit facilities, issuances of debt securities and the issuance of
promissory notes to sellers. Since its inception, CTI has generally funded its
activities (other than the acquisition of the BBC Home Service Transmission
Business) through cash provided by operations and borrowings under CTI's
credit facility. CTI financed the acquisition of the BBC Home Service
Transmission Business with the proceeds from equity contributions and the
issuance of CTI's 9% bonds.
For the years ended December 31, 1996, 1997 and 1998, our net cash provided
by (used for) operating activities was ($0.5 million), ($0.6 million) and
$45.0 million, respectively. For the years ended December 31, 1996, 1997 and
1998, our net cash provided by financing activities was $21.2 million, $159.8
million and $345.2 million, respectively. Our primary financing-related
activities in 1998 included the following:
Exchangeable Preferred Stock Offering. On December 16, 1998, we privately
placed 200,000 shares of our 12 3/4% Senior Exchangeable Preferred Stock
due 2010, with a liquidation preference of $1,000 per share, resulting in
net proceeds to us of approximately $193.0 million. We used a portion of
the net proceeds of the exchangeable preferred stock offering to repay our
outstanding indebtedness under CCI's senior credit facility. We intend to
use the remainder of the net proceeds of the exchangeable preferred stock
offering to finance a portion of our investment in the Proposed BAM JV.
Initial Public Offering. On August 18, 1998, we consummated our IPO at a
price to the public of $13.00 per share. We sold 12,320,000 shares of our
common stock and received proceeds of $151.0 million (after underwriting
discounts of $9.1 million but before other expenses of the IPO, which
totaled approximately $4.1 million). We intend to use the net proceeds from
the IPO to finance a portion of our investment in the Proposed BAM JV.
Capital expenditures were $138.8 million for the twelve months ended
December 31, 1998, of which $3.7 million were for CCIC, $84.9 million was for
CCI and $50.2 million were for CTI. We anticipate that we will build, through
the end of 1999, approximately 750 towers in the United States at a cost of
approximately $175.0 million and approximately 200 towers in the United
Kingdom at a cost of approximately $23.0 million. We also expect that the
capital expenditure requirements related to the roll-out of digital broadcast
transmission in the United Kingdom will be approximately (Pounds)40.0 million
($66.5 million).
In addition to capital expenditures in connection with build-to-suits, we
expect to apply a significant amount of capital to finance the cash portion of
the consideration being paid in connection with the Proposed Transactions.
In connection with the Proposed BAM JV, we will contribute, in addition to
other consideration, $250.0 million in cash to the joint venture. The joint
venture expects to borrow $180.0 million under a committed $250.0 million
revolving credit facility, following which the joint venture will make a
$380.0 million cash distribution to BAM. We have allocated the net proceeds of
our IPO and a portion of the net proceeds of our 12 3/4% exchangeable
preferred stock offering to finance our cash contribution to the joint
venture.
In connection with the Proposed BellSouth Transaction, we will pay
BellSouth, in addition to other consideration, $430.0 million in cash. We have
deposited $50.0 million in an escrow account pending the first closing of the
transaction, which we funded through a loan agreement we entered into on March
15, 1999. We expect to use a portion of the net proceeds of the Proposed
Offerings to finance this transaction.
In connection with the Proposed Powertel Acquisition, we will pay Powertel
$275.0 million in cash. We have deposited $50.0 million, which we funded
through the March 15, 1999 loan agreement, in an escrow
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<PAGE>
account to be applied to the purchase price at closing. We expect to use a
portion of the net proceeds of the Proposed Offerings to finance this
transaction.
We expect that the consummation of the Proposed Transactions and the
execution of our build-to-suit program will have a material impact on our
liquidity. We expect that once integrated, these transactions will have a
positive impact on liquidity, but will require some period of time to offset
the initial adverse impact on liquidity. In addition, we believe that as new
build to suit towers become operational and we begin to add tenants, they
should result in a long-term increase in liquidity.
Our liquidity may also be materially impacted if we fail to consummate any
or all of the Proposed Transactions. In the event we consummate the Proposed
Offerings and subsequently fail to consummate the Proposed BAM JV, the
Proposed BellSouth Transaction or the Proposed Powertel Acquisition, the
proceeds of the Proposed Offerings or, in the case of the Proposed BAM JV, the
proceeds of our prior 12 3/4% exchangeable preferred stock offering, would no
longer be required to be allocated to finance such transaction and would be
available to us as additional liquidity. If the Proposed Transaction giving
rise to such additional liquidity were the Proposed BellSouth Transaction or
the Proposed Powertel Acquisition, the increase in our liquidity could be
somewhat offset by any portion of the escrow payments made in connection with
such transactions that we may forfeit as a result of not closing such
transactions. See "Risk Factors--The Proposed Transactions".
To fund the execution of the our business strategy, including the Proposed
Transactions, we expect to use the net proceeds of the Proposed Offerings, the
borrowings available under CCI's senior credit facility, the borrowings
available under CTI's credit facility and the remaining net proceeds from our
IPO and our 12 3/4% exchangeable preferred stock offering. Following
consummation of the Proposed Offerings and assuming all the Proposed
Transactions are consummated, we believe we will have sufficient liquidity to
fund our operations and pursue our business strategy in the near term. Our
business strategy, however, includes the pursuit of additional tower
acquisition and build-out opportunities, and we may have additional cash needs
as opportunities arise. Some of the opportunities that we are currently
pursuing could require significant additional capital. In the event we do not
otherwise have cash available, or borrowings under our credit facilities have
otherwise been utilized, when an opportunity arises, we would be forced to
seek additional debt or equity financing or to forego the opportunity. In the
event we determine to seek additional debt or equity financing, there can be
no assurance that any such financing will be available (on commercially
acceptable terms or at all) or permitted by the terms of our existing
indebtedness. To the extent we are unable to finance future capital
expenditures, we will be unable to achieve our currently contemplated business
strategy.
As of December 31, 1998, after giving pro forma effect to the Proposed
Offerings, we would have had consolidated cash and cash equivalents of $962.6
million (including $6.5 million at CTI), consolidated long-term debt of $729.7
million, consolidated redeemable preferred stock of $201.1 million and
consolidated stockholders' equity of $1,114.6 million. As of December 31,
1998, after giving pro forma effect to the Proposed Offerings and the Proposed
Transactions, we would have had consolidated cash and cash equivalents of
$49.6 million (including $6.5 million at CTI and $45.9 million at the Proposed
BAM JV), consolidated long-term debt of $909.7 million, consolidated
redeemable preferred stock of $201.1 million and consolidated stockholders'
equity of $1,491.6 million.
As of March 1, 1999, CCI and its subsidiaries had unused borrowing
availability under its senior credit facility of approximately $54.0 million,
and CTI had unused borrowing availability under its credit facility of
approximately (Pounds)24.0 million ($39.9 million). As of December 31, 1998,
CCI and its subsidiaries and CTI and its subsidiaries had approximately $77.6
million and (Pounds)30.8 million ($51.2 million) of unused borrowing
availability, respectively, under CCI's senior credit facility and CTI's
credit facility. Upon its formation, the Proposed BAM JV will borrow $180.0
million under a committed $250.0 million credit facility. CCI's senior credit
facility and CTI's credit facility require, and the Proposed BAM JV credit
facility will require, that the respective borrowers maintain certain
financial covenants; in addition, all three credit facilities place
restrictions on the ability of the borrower and its subsidiaries to, among
other things, incur debt and liens, pay dividends, make capital expenditures,
undertake transactions with affiliates and make investments. These facilities
also limit the ability of the borrowing subsidiaries to pay dividends to CCIC.
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<PAGE>
Prior to May 15, 2003, the interest expense on our 10 5/8% discount notes
will be comprised solely of the amortization of original issue discount.
Thereafter, the 10 5/8% discount notes will require annual cash interest
payments of approximately $26.7 million. Prior to December 15, 2003, we do not
expect to pay cash dividends on our exchangeable preferred stock or, if
issued, cash interest on the exchange debentures. Thereafter, assuming all
dividends or interest have been paid-in-kind, our exchangeable preferred stock
or, if issued, the exchange debentures will require annual cash dividend or
interest payments of approximately $47.8 million. Annual cash interest
payments on the CTI Bonds are (Pounds)11.25 million ($18.7 million). In
addition, CCI's senior credit facility and CTI's credit facility will require
periodic interest payments on amounts borrowed thereunder. Our ability to make
scheduled payments of principal of, or to pay interest on, our debt
obligations, and our ability to refinance any such debt obligations (including
our 10 5/8% discount notes and the CTI Bonds), 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. We anticipate that we may need to refinance all or a
portion of our indebtedness (including our 10 5/8% discount notes and the CTI
Bonds) on or prior to its scheduled maturity. There can be no assurance that
we will be able to effect any required refinancings of our indebtedness on
commercially reasonable terms or at all. See "Risk Factors".
Compensation Charges Related to Stock Option Grants
During the period from April 24, 1998 through July 15, 1998, we granted
options to employees and executives for the purchase of 3,236,980 shares of
our common stock at an exercise price of $7.50 per share. Of such options,
options for 1,810,730 shares vested upon consummation of the IPO and the
remaining options for 1,426,250 shares will vest at 20% per year over five
years, beginning one year from the date of grant. In addition, we have
assigned our right to repurchase shares of our common stock from a stockholder
(at a price of $6.26 per share) to two individuals (including a newly-elected
director) with respect to 100,000 of such shares. Since the granting of these
options and the assignment of these rights to repurchase shares occurred
subsequent to the date of the share exchange agreement with CTI's shareholders
and at prices substantially below the price to the public in the IPO, we have
recorded a non-cash compensation charge related to these options and shares
based upon the difference between the respective exercise and purchase prices
and the price to the public in the IPO. Such compensation charge will total
approximately $18.4 million, of which approximately $10.6 million was
recognized upon consummation of the IPO (for such options and shares which
vested upon consummation of the IPO), and the remaining $7.8 million is being
recognized over five years (approximately $1.6 million per year) through the
second quarter of 2003. An additional $1.6 million in non-cash compensation
charges will be recognized through the third quarter of 2001 for stock options
issued to certain members of CTI's management prior to the consummation of the
share exchange.
Impact of Recently Issued Accounting Standards
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5 requires
that costs of start-up activities be charged to expense as incurred and
broadly defines such costs. We have deferred certain costs incurred in
connection with potential business initiatives and new geographic markets, and
SOP 98-5 will require that such deferred costs be charged to results of
operations upon its adoption. SOP 98-5 is effective for fiscal years beginning
after December 15, 1998. We will adopt the requirements of SOP 98-5 as of
January 1, 1999. The cumulative effect of the change in accounting principle
for the adoption of SOP 98-5 will result in a charge to results of operations
in our financial statements for the three months ending March 31, 1999; it is
currently estimated that such charge will amount to approximately $2,300,000.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS
133"). SFAS 133 requires that derivative instruments be recognized as either
assets or liabilities in the consolidated balance sheet based on their fair
values. Changes in the fair values of such derivative instruments will be
recorded either in results of operations or in other
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comprehensive income, depending on the intended use of the derivative
instrument. The initial application of SFAS 133 will be reported as the effect
of a change in accounting principle. SFAS 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. We will adopt the
requirements of SFAS 133 in our financial statements for the three months
ending March 31, 2000. We have not yet determined the effect that the adoption
of SFAS 133 will have on our consolidated financial statements.
Year 2000 Compliance
The year 2000 problem is the result of computer programs having been written
using two digits (rather than four) to define the applicable year. Any of our
computer programs that have date-sensitive software may recognize a date using
"00" as 1900 rather than the year 2000, or may not recognize the date at all.
This could result in a system failure or miscalculations causing disruption of
operations including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
In 1997 we established a year 2000 project to ensure that the issue received
appropriate priority and that necessary resources were made available. This
project includes the replacement of our worldwide business computer systems
with systems that use programs primarily from J.D. Edwards, Inc. The new
systems are expected to make approximately 90% of our business computer
systems year 2000 compliant and are in production today. Remaining business
software programs, including those supplied by vendors, will be made year 2000
compliant through the year 2000 project or they will be retired. None of our
other information technology projects has been delayed due to the
implementation of the year 2000 project.
Our year 2000 project is divided into the following phases: (1) inventorying
year 2000 items; (2) assigning priorities to identified items; (3) assessing
the year 2000 compliance of items determined to be material to us; (4)
repairing or replacing material items that are determined not to be year 2000
compliant; (5) testing material items; and (6) designing and implementing
contingency and business continuation plans for each organization and company
location. We have completed the inventory and priority assessment phases and
are 90% complete with the assessing compliance phase. The remaining items
include various third party assurances regarding the year 2000 status of their
operations. We are now continuing with the testing phase of the year 2000
project. All critical broadcast equipment and non-information technology
related equipment has been tested and is either year 2000 compliant, has been
designated as year 2000 ready, or will be repaired or replaced by June 1999. A
year 2000 ready designation implies the equipment or system will function
without adverse effects beyond year 2000 but may not be aware of the century.
All critical information technology systems have been designated year 2000
compliant or are scheduled to be retired or remediated by July 1999. The
testing phase is ongoing as hardware or system software is remediated,
upgraded or replaced. Testing as well as remediation is scheduled for
completion in July 1999. The final phase of our year 2000 project, contingency
planning, will be completed and tested to the extent possible by September
1999.
We have expended $6.9 million on the year 2000 project through December 31,
1998, of which approximately $6.8 million related to the implementation of the
J.D. Edwards Systems and related hardware. Funds for the year 2000 project are
provided from a separate budget of $0.6 million for all items.
The failure to correct a material year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the year 2000 problem, resulting in part from the uncertainty of
the year 2000 readiness of third-party suppliers and customers, we are unable
to determine at this time whether the consequences of year 2000 failures will
have a material impact on our results of operations, liquidity or financial
condition. The year 2000 project is expected to significantly reduce our level
of uncertainty about the year 2000 problem and, in particular, about the year
2000 compliance and readiness of our material business partners. We believe
that, with the implementation of new business systems and completion of the
project as scheduled, the possibility of significant interruptions of normal
operations should be reduced.
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THE EXCHANGE OFFER
Purpose of the Exchange Offer
In connection with the sale of the old preferred stock, we entered into the
Registration Rights Agreement with the initial purchasers, pursuant to which
we agreed to use our best efforts to file with the Commission a registration
statement with respect to the exchange of the old preferred stock for a new
series of exchangeable preferred stock with terms identical in all material
respects to the terms of the old preferred stock, except that the new
preferred stock have been registered under the Securities Act and are issued
free of any covenant regarding registration, including the payment of
additional interest upon a failure to file or have declared effective an
exchange offer registration statement or to consummate the exchange offer by
certain dates.
We are making the exchange offer in reliance on the position of the staff of
the Commission as set forth in Exxon Capital Holdings Corp., SEC No-Action
Letter (April 13, 1989), Morgan Stanley & Co. Inc., SEC No-Action Letter (June
5, 1991) and Shearman & Sterling, SEC No-Action Letter (July 2, 1993).
However, we have not sought our own no-action letter, and there can be no
assurance that the staff of the Commission would make a similar determination
with respect to the exchange offer as in such other circumstances. Based upon
these interpretations by the staff of the Commission, we believe that new
preferred stock issued pursuant to this exchange offer in exchange for old
preferred stock may be offered for resale, resold and otherwise transferred by
a holder thereof other than (i) a broker-dealer who purchased such old
preferred stock directly from us to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (ii) a person that is our
"affiliate" (as defined in Rule 405 of the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities
Act, provided that such new preferred stock are acquired in the ordinary
course of such holder's business and that such holder is not participating,
and has no arrangement or understanding with any person to participate, in the
distribution of such new preferred stock. Holders of old preferred stock
accepting the exchange offer will represent to us in the Letter of Transmittal
that such conditions have been met. Any holder who participates in the
exchange offer for the purpose of participating in a distribution of the new
preferred stock may not rely on the position of the staff of the Commission as
set forth in these no-action letters and would have to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. A secondary resale
transaction in the United States by a holder who is using the exchange offer
to participate in the distribution of new preferred stock must be covered by a
registration statement containing the selling securityholder information
required by Item 507 of Regulation S-K of the Securities Act.
Each broker-dealer that receives new preferred stock for its own account
pursuant to the exchange offer must acknowledge that it acquired the old
preferred stock, as a result of market-making activities or other trading
activities and will deliver a prospectus in connection with any resale of such
new preferred stock. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales
of new preferred stock received in exchange for old preferred stock where such
old preferred stock were acquired by such broker-dealer as a result of market-
making activities or other trading activities. The Letter of Transmittal
states that by acknowledging and delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. We have agreed that for a period of 180 days after the
expiration date, they will make this prospectus available to broker-dealers
for use in connection with any such resale. See "Plan of Distribution".
Except as aforesaid, this prospectus may not be used for an offer to resell,
resale or other retransfer of new preferred stock.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old preferred stock in any jurisdiction in which the
exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
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Terms of the Exchange
Upon the terms and subject to the conditions of the exchange offer, we will,
unless such old preferred stock are withdrawn in accordance with the
withdrawal rights specified in "Withdrawal of Tenders" below, accept any and
all old preferred stock validly tendered prior to 5:00 p.m., New York City
time, on the expiration date. The date of acceptance for exchange of the old
preferred stock, and consummation of the exchange offer, is the exchange date,
which will be the first business day following the expiration date (unless
extended as described herein). We will issue, on or promptly after the
exchange date, an aggregate liquidation preference of up to $200,000,000 of
new preferred stock in exchange for an equal liquidation preference at
maturity of outstanding old preferred stock tendered and accepted in
connection with the exchange offer. The new preferred stock issued in
connection with the exchange offer will be delivered on the earliest
practicable date following the exchange date. Holders may tender some or all
of their old preferred stock in connection with the exchange offer.
The terms of the new preferred stock are identical in all material respects
to the terms of the old preferred stock, except that the new preferred stock
have been registered under the Securities Act and are issued free from any
covenant regarding registration, including the payment of additional interest
upon a failure to file or have declared effective an exchange offer
registration statement or to consummate the exchange offer by certain dates.
The new preferred stock will evidence the same obligations as the old
preferred stock and will be issued under and be entitled to the same benefits
under the certificate of designation as the old preferred stock. As of the
date of this prospectus, $200,000,000 aggregate liquidation preference of the
old preferred stock is outstanding.
In connection with the issuance of the old preferred stock, we arranged for
the old preferred stock originally purchased by qualified institutional buyers
to be issued and transferable in book-entry form through the facilities of The
Depository Trust Company ("DTC"), acting as depositary. Except as described
under "Book-Entry, Delivery and Form," the new preferred stock will be issued
in the form of a global note registered in the name of DTC or its nominee and
each holder's interest therein will be transferable in book-entry form through
DTC. See "Book-Entry, Delivery and Form."
Holders of old preferred stock do not have any appraisal or dissenters'
rights in connection with the exchange offer. Old preferred stock which are
not tendered for exchange or are tendered but not accepted in connection with
the exchange offer will remain outstanding and be entitled to the benefits of
the certificate of designations, but will not be entitled to any registration
rights under the Registration Rights Agreement.
We shall be deemed to have accepted validly tendered old preferred stock
when, as and if we have given oral or written notice thereof to the exchange
agent. The exchange agent will act as agent for the tendering holders for the
purposes of receiving the new preferred stock from us.
If any tendered old preferred stock are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted old preferred stock will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the expiration date.
Holders who tender old preferred stock in connection with the exchange offer
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of old preferred stock in connection with the exchange offer. We will
pay all charges and expenses, other than certain applicable taxes described
below, in connection with the exchange offer. See "--Fees and Expenses".
Expiration Date; Extensions; Amendments
The term "expiration date" shall mean 5:00 p.m., New York City time, on
, 1999, unless extended by us in our sole discretion (but in no event to
a date later than , 1999), in which case the term "expiration date" shall
mean the latest date and time to which the exchange offer is extended.
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We reserve the right, in our sole discretion (i) to delay accepting any old
preferred stock, to extend the exchange offer or to terminate the exchange
offer and to refuse to accept old preferred stock not previously accepted, if
any of the conditions set forth below under "Conditions to the Exchange Offer"
shall not have been satisfied and shall not have been waived by us (if
permitted to be waived by us) and (ii) to amend the terms of the exchange
offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written
notice thereof to the registered holders. If the exchange offer is amended in
a manner that we determine to constitute a material change, we will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered holders of the old preferred stock, and we will
extend the exchange offer for a period of five to ten business days, depending
upon the significance of the amendment and the manner of disclosure to the
registered holders, if the exchange offer would otherwise expire during such
five to ten business day period. In no event, however, shall the expiration
date be later than , 1999.
If we determine to make a public announcement of any delay, extension,
amendment or termination of the exchange offer, we shall have no obligation to
publish, advertise or otherwise communicate any such public announcement,
other than by making a timely release to an appropriate news agency.
Conditions to the Exchange Offer
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or to exchange, any old preferred stock for
any new preferred stock, and may terminate or amend the exchange offer before
the acceptance of any old preferred stock for exchange, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the exchange offer
which, in our reasonable good faith judgment, would be expected to impair
our ability to proceed with the exchange offer, or
(b) any law, statute, rule of regulation is adopted or enacted, or any
existing law, statute, rule or regulation is interpreted by the Commission
or its staff, which, in our reasonable good faith judgment, would be
expected to impair our ability to proceed with the exchange offer.
If we determine in our reasonable good faith judgment that any of the
foregoing conditions exist, we may (i) refuse to accept any old preferred
stock and return all tendered old preferred stock to the tendering holders,
(ii) extend the exchange offer and retain all old preferred stock tendered
prior to the expiration of the exchange offer, subject, however, to the rights
of holders who tendered such old preferred stock to withdraw their tendered
old preferred stock which have not been withdrawn. If such waiver constitutes
a material change to the exchange offer, we will promptly disclose such waiver
by means of a prospectus supplement that will be distributed to the registered
holders, and we will extend the exchange offer for a period of five to ten
business days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the exchange offer would otherwise
expire during such five to ten business days. In no event, however, shall the
expiration date be a date later than , 1999.
Procedures for Tendering
To tender in connection with the exchange offer, a holder must complete,
sign and date the Letter of Transmittal, or a facsimile thereof, have the
signatures thereon guaranteed if required by the Letter of Transmittal and
mail or otherwise deliver such Letter of Transmittal or such facsimile,
together with the old preferred stock (unless such tender is being effected
pursuant to the procedure for book-entry transfer described below) and any
other required documents, to the exchange agent prior to 5:00 p.m., New York
City time, on the expiration date.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the old preferred stock by
causing DTC to transfer such old preferred stock into the exchange agent's
account in accordance with DTC's procedure for such transfer. Although
delivery of old preferred stock may be effected through book-entry transfer
into the exchange agent's account at DTC, the Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, must, in any
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case, be transmitted to and received or confirmed by the exchange agent at its
addresses set forth under the caption "exchange agent," below, prior to 5:00
p.m., New York City time, on the expiration date. DELIVERY OF DOCUMENTS TO DTC
IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
The tender by a holder of old preferred stock will constitute an agreement
between us and such holder in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
The method of delivery of old preferred stock and the Letter of Transmittal
and all other required documents to the exchange agent is at the election and
risk of the holders. Instead of delivery by mail, it is recommended that
holders use an overnight or hand delivery service. In all cases, sufficient
time should be allowed to assure delivery to the exchange agent before the
expiration date. No Letter of Transmittal of old preferred stock should be
sent to us. Holders may request their respective brokers, dealers, commercial
banks, trust companies or nominees to effect the tenders for such holders.
Any beneficial owner whose old preferred stock are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact the registered holder promptly and instruct
such registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivery of
such owner's old preferred stock, either make appropriate arrangements to
register ownership of the old preferred stock in such owner's name or obtain a
properly completed bond power from the registered holder. The transfer of
registered ownership may take considerable time.
Signature on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the old preferred stock tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Payment
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal,
or (ii) for the account of an Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any old preferred stock listed therein, such old preferred stock
must be endorsed by such registered holder or accompanied by a properly
completed bond power, in each case signed or endorsed in blank by such
registered holder as such registered holder's name appears on such old
preferred stock.
If the Letter of Transmittal or any old preferred stock or bond powers are
signed or endorsed by trustees, executors, administrators, guardians,
attorney-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by us, evidence satisfactory to us of their authority to so act
must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance and withdrawal of tendered old preferred stock will be
determined by us in our sole discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all old preferred
stock not properly tendered or any old preferred stock whose acceptance by us
would, in the opinion of our U.S. counsel, be unlawful. We also reserve the
right to waive any defects, irregularities or conditions of tender as to any
particular old preferred stock either before or after the expiration date. Our
interpretation of the terms and conditions of the exchange offer (including
the instructions in the Letter of Transmittal) will be final and binding, on
all parties. Unless waived, any defects or irregularities in connection with
tenders of old preferred stock must be cured within such time as we shall
determine. Although we intend to request the exchange agent to notify holders
of defects or irregularities with respect to tenders of old preferred stock,
neither we, the exchange agent nor any other person
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shall have any duty or incur any liability for failure to give such
notification. Tenders of old preferred stock will not be deemed to have been
made until such defects or irregularities have been cured or waived. Any old
preferred stock received by the exchange agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived
will be returned by the exchange agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the expiration date.
In addition, we reserve the right, as set forth above under the caption
"Conditions to the Exchange Offer", to terminate the exchange offer.
By tendering, each holder represents to us that, among other things, the new
preferred stock acquired in connection with the exchange offer are being
obtained in the ordinary course of business of the person receiving such new
preferred stock, whether or not such person is the holder, that neither the
holder nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such new preferred stock and that
neither the holder nor any such other person is our "affiliate" (as defined in
Rule 405 under the Securities Act). If the holder is a broker-dealer which
will receive new preferred stock for its own account in exchange of old
preferred stock, it will acknowledge that it acquired such old preferred stock
as the result of market making activities or other trading activities and it
will deliver a prospectus in connection with any resale of such new preferred
stock. See "Plan of Distribution".
Guaranteed Delivery Procedures
Holders who wish to tender their old preferred stock and (i) whose old
preferred stock are not immediately available, or (ii) who cannot deliver
their old preferred stock, the Letter of Transmittal or any other required
documents to the exchange agent, or cannot complete the procedure for book-
entry transfer, prior to the expiration date, may effect a tender of their old
preferred stock if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the expiration date, the exchange agent received from such
eligible institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number or
numbers of such old preferred stock and the principal amount of old
preferred stock tendered, stating that the tender is being made thereby and
guaranteeing that, within five business days after the expiration date, the
Letter of Transmittal (or facsimile thereof) together with the certificate
or certificates representing the old preferred stock to be tendered in
proper form for transfer (or confirmation of a book-entry transfer into the
exchange agent's account at DTC of old preferred stock delivered
electronically) and any other documents required by the Letter of
Transmittal will be deposited by the eligible institution with the exchange
agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof) as well as the certificate or certificates representing
all tendered old preferred stock in proper form for transfer (or
confirmation of a book-entry transfer into the exchange agent's account at
DTC of old preferred stock delivered electronically) and all other
documents required by the Letter of Transmittal are received by the
exchange agent within five business days after the expiration date.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of old preferred stock may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
expiration date.
To withdraw a tender of old preferred stock in connection with the exchange
offer, a written facsimile transmission notice of withdrawal must be received
by the exchange agent at its address set forth herein prior to 5:00 p.m., New
York City time, on the expiration date. Any such notice of withdrawal must (i)
specify the name of the person who deposited the old preferred stock to be
withdrawn, (ii) identify the old preferred stock to be withdrawn (including
the certificate number or numbers and principal amount of such old preferred
stock), (iii) be signed by the depositor in the same manner as the original
signature on the Letter of Transmittal by which
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such old preferred stock were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
trustee register the transfer of such old preferred stock into the name of the
person withdrawing the tender, and (iv) specify the name in which any such old
preferred stock are to be registered, if different from that of the depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by us, whose
determination shall be final and binding on all parties. Any old preferred
stock so withdrawn will be deemed not to have been validly tendered for
purposes of the exchange offer and no new preferred stock will be issued with
respect thereto unless old preferred stock so withdrawn are validly re-
tendered. Any old preferred stock which have been tendered but which are not
accepted for exchange or which are withdrawn will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer. Properly withdrawn
old preferred stock may be retendered by following one of the procedures
described above under the caption "Procedures for Tendering" at any time prior
to the expiration date.
Exchange Agent
ChaseMellon Shareholder Services, L.L.C. has been appointed as exchange
agent in connection with the exchange offer. Questions and requests for
assistance, requests for additional copies of this prospectus or of the Letter
of Transmittal should be directed to the exchange agent, at its offices at
2323 Bryan Street, Suite 2300, Dallas, Texas 75201. The exchange agent's
telephone number is (214) 965-2220 and facsimile number is (214) 965-2233.
Fees and Expenses
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer. We will pay certain other expenses to be
incurred in connection with the exchange offer, including the fees and
expenses of the exchange agent, accounting and certain legal fees.
Holders who tender their old preferred stock for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, new
preferred stock are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the old preferred stock
tendered, or if tendered old preferred stock are registered in the name of any
person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of old
preferred stock in connection with the exchange offer, then the amount of any
such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendered holder.
Accounting Treatment
The new preferred stock will be recorded at the same carrying value as the
old preferred stock as reflected in our accounting records on the date of the
exchange. Accordingly, we will not recognize any gain or loss for accounting
purposes upon the consummation of the exchange offer. Any expenses of the
exchange offer that we paid will be charged against our additional paid-in
capital in accordance with generally accepted accounting principles.
Consequences of Failures to Properly Tender Old Preferred Stock in the
Exchange
Issuance of the new preferred stock in exchange for the old preferred stock
pursuant to the exchange offer will be made only after timely receipt by the
exchange agent of such old preferred stock, a properly completed and duly
executed Letter of Transmittal and all other required documents. Therefore,
holders of the old preferred stock desiring to tender such old preferred stock
in exchange for new preferred stock should allow sufficient time to ensure
timely delivery. We are under no duty to give notification of defects or
irregularities with respect to tenders of old preferred stock for exchange.
Old preferred stock that are not tendered or that are tendered but we do not
accept, will, following consummation of the exchange offer, continue to be
subject to the existing
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restrictions upon transfer thereof under the Securities Act and, upon
consummation of the exchange offer, certain registration rights under the
Registration Rights Agreement will terminate.
In the event the exchange offer is consummated, we will not be required to
register the remaining old preferred stock. Remaining old preferred stock will
continue to be subject to the following restrictions on transfer: (i) the
remaining old preferred stock may be resold only if registered pursuant to the
Securities Act, if any exemption from registration is available thereunder, or
if neither such registration nor such exemption is required by law, and (ii)
the remaining old preferred stock will bear a legend restricting transfer in
the absence of registration or an exemption therefrom. We do not currently
anticipate that it will register the remaining old preferred stock under the
Securities Act. To the extent that old preferred stock are tendered and
accepted in connection with the exchange offer, any trading market for
remaining old preferred stock could be adversely affected.
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INDUSTRY BACKGROUND
General
The Company owns, operates and manages wireless communications and broadcast
transmission infrastructure, including towers and other communications sites,
and also provides a full range of complementary network support services. Each
of the wireless communications and broadcasting industries is currently
experiencing a period of significant change.
The wireless communications industry is growing rapidly as new wireless
technologies are developed and consumers become more aware of the benefits of
wireless services. Wireless technologies are being used in more applications
and the cost of wireless services to consumers is declining. A significant
number of new competitors in the wireless communications industry have
developed as additional frequency spectrum has become available for a wide
range of uses, most notably Personal Communications Services ("PCS") (known as
"PCN" in the United Kingdom). This competition, combined with an increasing
reliance on wireless communications by consumers and businesses, has led to an
increased demand for higher quality, uninterrupted service and improved
coverage, which, in turn, has led to increased demand for communications sites
as new carriers build out their networks and existing carriers upgrade and
expand their networks to maintain their competitiveness. These trends are
affecting the wireless communications industry around the world.
As the wireless communications industry has become more competitive,
wireless carriers have sought operating and capital efficiencies by
outsourcing certain network services and the build-out and operation of new
and existing infrastructure and by co-locating transmission equipment with
other carriers on multiple tenant towers. The need for co-location has also
been driven by the growing trend by municipalities to slow the proliferation
of towers. Further, the Company believes that there has been a fundamental
shift in strategy among established wireless carriers relating to
infrastructure ownership. The Company believes that in order to free up
capital for the growth and management of their customer bases and expansion of
their service offerings, such carriers are beginning to seek to sell their
wireless communications infrastructure to, or establish joint ventures with,
experienced infrastructure providers that have the ability to manage networks.
The Company believes that those infrastructure providers with a proven track
record of providing end-to-end services will be best positioned to
successfully acquire access to such wireless communications infrastructure.
The television broadcasting industry is experiencing significant change
because of the impending widespread deployment of digital terrestrial
television broadcasting (known as "DTV" in the United States and "DTT" in the
United Kingdom). In the United States, the FCC has required the four major
networks (ABC, CBS, NBC and Fox) to commence DTV broadcasts in the top ten
markets by May 1999 and in the top 30 markets by November 1999. In the United
Kingdom, pursuant to the Broadcasting Act 1996, six digital television
transmission multiplexes, which permit the holders to transmit digital
television broadcasting services, have been allocated. The Company
successfully began commercial operation of the DTT network from an initial 22
transmission sites on November 15, 1998. Australia, France, Germany, Japan,
Spain and Sweden are expected to be the next countries to introduce digital
terrestrial television, followed by other European nations and later by
developing countries. Many countries are expected to start to establish
digital services within the next five years. The shift to digital transmission
will require network design, development and engineering services and the
significant enhancement of existing broadcast transmission infrastructure,
including new transmission and monitoring equipment and the modification,
strengthening and construction of towers (including over 1,000 tall towers in
the United States). In addition, state-run broadcast transmission networks are
continuing to be privatized throughout the world.
The Company expects these trends to continue around the world in both the
wireless communications and broadcasting industries. The Company believes that
the next logical step in the outsourcing of infrastructure by wireless
carriers and broadcasters will be the outsourcing of the operation of their
towers and transmission networks, including the transmission of their signals,
in much the same way as the BBC has done with its
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transmission network. This outsourcing will allow carriers to realize
additional operating and capital efficiencies and to focus on management of
their customer bases and expansion of their service offerings. Management
believes that such carriers will only entrust the transmission of their
signals to those infrastructure providers, such as the Company, that have the
ability to manage towers and transmission networks and a proven track record
of providing end-to-end services to the wireless communications and
broadcasting industries.
Development of the Tower Industry
United States. 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. Further, 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 such 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. The Company believes the majority of these operators
were small business owners with a small number of local towers and few
services other than site rental. 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, 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 suitable clusters of towers formerly owned by
carriers and broadcasters in order to establish regional and national "tower
footprints". Carriers expanding or building a network in a geographic area
generally seek to lease space for antennas from a tower company with a
strategically located cluster of towers and other communication sites in that
area in order to efficiently and effectively establish service coverage in a
given market.
Today, towers are owned by a variety of companies, including wireless
carriers, local and long distance telecommunications companies, broadcasting
companies, independent tower operators, utilities and railroad companies.
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 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 such services through in-house
departments, and local nonintegrated service contractors focused on specific
segments such as radio frequency engineering and site acquisition.
Broadcast towers in the United States have typically been owned and operated
on a fragmented basis. Typically, each network affiliate in each major market
owns and operates its own television broadcasting tower. Local stations often
have co-located their transmission equipment on these towers. Radio broadcast
towers have also typically been erected by each station in a given market.
Both television and radio broadcast towers have generally been constructed
only for a single user and would require substantial strengthening to house
new digital transmission equipment or other analog transmission equipment. As
a result, similar to wireless communications towers, such towers historically
have been treated as corporate cost centers operated primarily for the purpose
of transmitting such broadcasters' signals.
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United Kingdom. The first towers in the United Kingdom were built for the
BBC's MF radio services. Additional towers were built in the 1940s to transmit
HF radio services around the world. In the 1950s, both the BBC and Independent
Television Authority (the predecessor of the Independent Broadcasting
Authority) built towers for transmission of VHF television. The BBC used some
of these towers and built additional towers in the 1960s for its VHF/FM radio
services. UHF television started in 1964 and is now transmitted from some
1,100 towers. These towers have been built at a relatively constant rate
(compared with wireless communications towers). The majority of tall towers
were built in the 1950s and 1960s. The number of smaller towers built peaked
at approximately 80 per year in the 1970s, reducing to approximately 25 per
year in the early 1990s. The size and structure of towers varies widely due to
location, antenna requirements and wind loading. Towers built primarily for
broadcast transmission are often able to carry wireless communications
antennas. Those that are currently incapable of doing so can be strengthened
or replaced.
Since 1982, the growth of wireless communications in the United Kingdom has
led to significant expansion in the number of towers. Historically, there have
been four major wireless carriers in the United Kingdom, each of which, in
general, built towers for its own use, rather than as multiple tenant owners.
These towers are owned and maintained by such carriers and, as in the United
States, were treated as corporate cost centers operated primarily for the
purpose of transmitting or receiving their signals. With the smaller
geographic size of the United Kingdom, as compared to the United States, these
carriers typically constructed their tower footprint to provide national
coverage. Because of this nationwide build out, independent tower owners have
not developed as they have in the United States. In addition to wireless
communications providers, towers in the United Kingdom are owned by a variety
of companies, such as telecommunications companies, utilities and railroad
companies.
Today, tower owners are upgrading their networks to provide more capacity
and better service to their customers, while new entrants to the wireless
communications market have sought to acquire rapid access to networks that
provide national coverage. With the significant costs associated with the
approval process for and the construction of new towers, and the significant
capital requirements associated with ownership of tower infrastructure,
wireless carriers have begun to look to third party tower owners to co-locate
their antennas on existing towers, to build, own and operate new towers and to
acquire such carriers' portfolios of existing towers.
Characteristics of the Tower Industry
Management believes that, in addition to the favorable growth and
outsourcing trends in the wireless communications and broadcasting industries
and high barriers to entry as a result of regulatory and local zoning
restrictions associated with new tower sites, tower operators benefit from
several favorable characteristics. The ability of tower operators to provide
antenna sites to customers on multiple tenant towers provides them with
diversification against the specific technology, product and market risks
typically faced by any individual carrier. The emergence of new technologies,
carriers, products and markets may allow independent tower operators to
further diversify against such risks. Additionally, tower operators face
increased "Not-In-My-Backyard" ("NIMBY") sentiment by communities and
municipalities, which is reducing the number of opportunities for new towers
to be built and driving the trend toward co-location on multiple tenant
towers.
The Company believes that independent tower operators also benefit from the
contractual nature of the site rental business and the predictability and
stability of monthly, recurring revenues. In addition, the site rental
business has low variable costs and significant operating leverage. Towers
generally are fixed cost assets with minimal variable costs associated with
additional tenants. A tower operator can generally expect to experience
increasing operating margins when new tenants are added to existing towers.
The site rental business typically experiences low tenant churn as a result
of the high costs that would be incurred by a wireless carrier were it 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. Similarly, a television or FM broadcaster would
incur significant costs were it to relocate a transmitter because, in order to
avoid interruption
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of its transmissions, it would be necessary for the broadcaster to install and
commence operations of a second broadcast site prior to ceasing signal
transmission at the first site. In addition, regulatory problems associated
with licensing the location of the new antenna with the FCC, in the United
States, or being licensed for the location by the Radiocommunications Agency
(the "RA") in the United Kingdom, may arise if the new location is at the edge
of the wireless carrier's coverage area and if there is a possible adverse
impact on other carriers. Municipal approvals are becoming increasingly
difficult to obtain and may also affect the carrier's decision to relocate.
The costs associated with network reconfiguration and FCC, RA and municipal
approval and the time required to complete these activities may not be
justified by any potential savings in reduced site rental expense.
Trends in the Wireless Communications and Broadcasting Industries
The Company's existing and future business opportunities are affected by the
ongoing trends within the two major industries it serves, namely the wireless
communications industry and the radio and television broadcasting industry.
Each of these industries is currently experiencing a period of significant
change that the Company believes is creating an increasing demand for
communication sites and related infrastructure and network support services.
Wireless Communications
The wireless communications industry now provides a broad range of services,
including cellular, PCS, paging and SMR. The industry has benefitted in recent
years from increasing demand for its services, and industry experts expect
this demand to continue to increase.
The Company believes that more communication sites will be required in the
future to accommodate the expected increase in demand for wireless
communications services. Further, the Company sees 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 addition, network services may
be required to service the network build-outs of new carriers and the network
upgrades and expansion of existing carriers.
In addition to the increasing demand for wireless services and the need to
develop and expand wireless communications networks, the Company believes that
other trends influencing the wireless communication industry have important
implications for independent tower operators. In order to speed new network
deployment or expansion and generate efficiencies, carriers are increasingly
co-locating transmission equipment with that of other network operators. The
trend towards co-location has been furthered by the NIMBY arguments generated
by local zoning/planning authorities in opposition to the proliferation of
towers. Further, the number of competitors in wireless communications is
increasing due to the auction of new spectrum and the deployment of new
technologies. In this increasingly competitive environment, many carriers are
dedicating their capital and operations primarily to those activities that
directly contribute to subscriber growth, such as marketing and distribution.
These carriers, therefore, have sought to reduce costs and increase efficiency
through the outsourcing of infrastructure network functions such as
communication site ownership, construction, operation and maintenance.
Further, the Company believes that these carriers are beginning to seek to
move their tower portfolios off their balance sheets through sales to, or
joint ventures with, experienced tower operators who have the proven
capability to provide end-to-end services to the wireless communications
industry.
United States. Current emerging wireless communications systems, such as PCS
and SMR, represent an immediate and sizable market for independent tower
operators and network services providers as carriers build out large
nationwide and regional networks. While several PCS and SMR carriers have
already built limited networks in certain markets, these carriers still need
to fill in "dead zones" and expand geographic coverage. The Cellular
Telecommunications Industry Association ("CTIA") estimates that, as of June
1998, there were 57,674 antenna sites in the United States. The Personal
Communications Industry Association ("PCIA")
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estimates that the wireless communications industry will construct at least
100,000 new antenna sites over the next 10 years. As a result of advances in
digital technology, SMR operators, including Nextel, have also begun to design
and deploy digital mobile telecommunications networks in competition with
cellular carriers. In particular 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.
In addition, as wireless communications networks expand and new networks are
deployed, the Company anticipates that demand for microwave transmission
facilities that provide "backhaul" of traffic between communications sites to
or from a central switching facility will also increase.
Licenses are also being awarded, and technologies are being developed, for
numerous new wireless applications that will require networks of communication
sites. Future potential applications include those that will be deployed by
the winners of licenses auctioned in February and March 1998 for local multi-
point distribution services, including wireless local loop, wireless cable
television, wireless data and wireless Internet access, as well as the
forthcoming auctions for PCS and local multi-point distribution services.
Radio spectrum required for these technologies has, in many cases, already
been awarded and licensees have begun to build out and offer services through
new wireless systems. Examples of these systems include local loop networks
operated by WinStar and Teligent, wireless cable networks operated by
companies such as Cellular Vision and CAI Wireless, and data networks being
constructed and operated by RAM Mobile Data, MTEL and Ardis.
United Kingdom. As in the United States, the development of newer wireless
communications technologies, such as PCN and digital Terrestrial Trunked Radio
("TETRA"), provides tower operators with immediate opportunities for site
rental and new tower build out. The four existing national GSM/PCN carriers
continue to fill in "dead zones" and add capacity to their networks. Also, the
carrier that is using the TETRA standard, which is similar to GSM and has been
adopted throughout Europe, is deploying a network across the United Kingdom.
The United Kingdom's newly-licensed wireless local loop operators have the
potential to be important site rental customers. Wireless local loop operators
provide telephony services that are comparable to the range and quality of
services delivered over the fixed wire networks. This technology is being
rapidly deployed as a low-cost alternative to fixed networks. To date, a total
of seven spectrum licenses have been awarded to companies planning to deploy
wireless loop systems. In addition, the deployment of a new national digital
PMR system (using the TETRA standard) for the use of the U.K. emergency
services and the announced licensing in early 1999 by the U.K. Government of
UMTS (Universal Mobile Telecommunications Service) networks, which will be the
third generation of cellular, should create additional demand for antenna
space and tower sites.
Radio and Television Broadcasting
General. There are currently three main transmission delivery methods for
television and radio broadcasts: terrestrial, direct-to-home ("DTH") satellite
and cable. Terrestrial technology, the most common delivery method in the
United States and many other countries including the United Kingdom, relies on
signal transmission by wireless telegraphy from a network of terrestrial
transmitters for direct reception by viewers or listeners through an aerial
system. Satellite signals are transmitted to satellites that then beam the
signal over a target area (satellite footprint) for reception by a customer's
satellite dish. A satellite customer must either purchase or rent a dish and a
receiver/decoder and pay subscription fees to the relevant provider. A cable
television customer typically rents a receiver/decoder and pays a subscription
fee to receive services that are distributed to the home through co-axial or
fiber optic cable.
Until the 1990s, all three delivery methods used analog technology, which
remains the most widespread technology in use today. In the early 1990s,
digital technology was developed for radio and television broadcasting and has
begun to be introduced for the transmission of radio and television signals.
Digital transmission is now possible by terrestrial, satellite and cable
methods.
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Digital technology allows a number of signals to be compressed and
interleaved, using a technical process called "multiplexing", before the
combined signal is transmitted within a single frequency channel. This process
makes the signal more robust, allowing the use of parts of the spectrum
unavailable to analog. A greater quantity of audio-visual information can be
transmitted with the same amount of frequency spectrum allowing higher
resolution or multiple channels to be broadcast. At the point of reception,
the compression and interleaving are decoded and individual signals recovered.
Some of the principal advantages of digital compared to analog transmission
include: (1) greater number, choice and flexibility of broadcasting services
offered; (2) scope for greater interactivity on the part of viewers and
listeners; (3) greater capacity for pay-television (subscription and pay-per-
view) as well as free-to-air services; and (4) enhanced picture quality and
sound. The development and timing of implementation of digital transmission
technology to the general public is a function of several factors, including
technological advancement, cost of equipment and conversion process, quality
improvement of visual and sound transmission and demand for terrestrial
bandwidth. The transition to digital transmission will involve additional
costs to viewers and program and transmission service providers. Viewers will
require additional equipment such as set-top boxes or digital televisions.
Program providers have begun to re-equip their studios and production
facilities with digital technology.
United States. Prior to the introduction of digital transmission, the U.S.
broadcasting industry had generally been a mature one in terms of demand for
transmission tower capacity, although even then opportunities existed for
independent tower operators to purchase transmission networks, manage them on
behalf of broadcasters under long-term contracts and lease space on
broadcasting towers to wireless carriers.
The FCC-mandated introduction of digital television broadcasting will
provide new opportunities for independent tower operators. The conversion of
broadcasting systems from analog to digital technology will require a
substantial number of new towers to be constructed to accommodate the new
systems and analog equipment displaced from existing towers. Even with DTV
transmissions, television station owners will continue to broadcast the
existing analog signals for a number of years. Broadcasters that own their own
tower infrastructure may elect to remove third-party tenants from their towers
to make room for their own DTV equipment. These displaced tenants, and tower
owners that are unable to remove existing third party tenants from their
towers, will require new towers to accommodate their transmission equipment.
The National Association of Broadcasters projects that by the year 2010
approximately 1,400 tall towers will be required to be built, strengthened or
modified to support DTV, with 200 towers required in the top 50 markets within
the next five years. Further, because of the need for broadcasters to purchase
new transmission equipment to deploy DTV, they will have fewer resources to
devote to the build out of new tower infrastructure. The Company believes that
these circumstances, along with the relative scarcity of suitable sites and
prevalent NIMBY attitudes, will allow experienced tower operators to build and
operate multiple tenant broadcast towers to transmit DTV signals. These towers
will also be attractive sites for the distribution of FM radio broadcasts.
United Kingdom. The broadcasting industry in the United Kingdom has
generally been a mature one in terms of demand for transmission tower
capacity. Existing towers provide almost universal coverage for analog
transmission, which remains the primary mode of transmission for television
and radio programs in the United Kingdom. Most of the BBC's radio services,
three Independent National Radio services and many local services are
broadcast by analog terrestrial means. Some radio services are also available
by satellite and cable for reception on fixed installations, but not portable
or mobile sets.
Digital television services in the United Kingdom were launched in 1998 from
terrestrial transmitters (DTT) and satellite (DST). The Broadcasting Act of
1996 sets out a framework for the licensing of digital terrestrial multiplexes
and an industry interest group has been established to coordinate the
establishment of digital television in the United Kingdom. The British
Government has allocated six multiplexes for DTT: two and one-half of these
multiplexes were reserved for the BBC, ITV, Channel 4, S4C and Channel 5,
three were awarded to ONdigital (which is a joint venture of Carlton
Communications PLC and Granada Group PLC) and the other
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one-half was awarded to S4C Digital Network. The Company has been awarded the
digital transmission contract for the four multiplexes held by the BBC and
ONdigital, while NTL has been awarded the digital transmission contract for
the other two multiplexes.
Build-out of digital terrestrial transmission equipment in the United
Kingdom is being based on existing analog terrestrial infrastructure,
including transmission sites and towers. In the initial phase of the rollout
of digital terrestrial transmission equipment, 81 analog transmission sites
and towers will be upgraded with new transmitters and associated systems
required to support DTT. Digital broadcasts from these sites are expected to
reach approximately 90% of the U.K. population. It is expected that additional
sites will continue to be upgraded until the "vast majority" of viewers can
receive digital broadcasts.
While no formal timetable has been set for the discontinuation of analog
terrestrial television broadcasting, the British Government has announced its
intention to review, by 2002, the timing of analog "switch-off". When analog
television transmission ceases, large amounts of frequency spectrum will be
released. New uses for this spectrum have not yet been defined but
applications are likely to include other digital broadcasting applications and
mobile communications. The spectrum is inherently suitable for terrestrial
transmission, so it is likely that existing towers will be used to provide
many of the new services.
In September 1995, the BBC launched the United Kingdom's first digital radio
service, which is now broadcast to approximately 60% of the U.K. population
from 29 transmission sites. Independent Local Radio licenses for additional
digital radio multiplexes are expected to be issued by the end of 1999.
To date, existing broadcast towers have been used as transmission sites for
the BBC's digital radio service, and it is anticipated that existing towers
also will be used for the independent services, often sharing the antennas
used for the BBC's digital radio service. While digital radio has the
advantage of using a single frequency network, which enables expanded
geographic coverage as compared with the multiple frequency networks used for
analog radio, to replicate the coverage of analog radio it will be necessary
to broadcast digital radio from more sites than at present. Although detailed
planning has not yet begun, it is expected that existing towers will provide
the necessary sites. As with DTT, the Company believes that ownership of key
broadcasting sites across the United Kingdom will allow an experienced
operator to provide the infrastructure necessary to accommodate the growth in
digital radio at minimum cost.
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BUSINESS
We are a leading owner and operator of wireless communications and broadcast
transmission infrastructure. After giving effect to the completion of the
Proposed Transactions, as of December 31, 1998, we owned or managed 6,105
towers, including 4,419 towers in the United States and Puerto Rico and 1,686
towers in the United Kingdom. Our customers currently include many of the
world's major wireless communications and broadcast companies, including BAM,
BellSouth, AT&T Wireless, Nextel and the BBC.
Our strategy is to use our leading domestic and international position to
capture the growing consolidation and build-out opportunities created by:
. the outsourcing of towers by major wireless carriers;
. the need for existing wireless carriers to expand coverage and improve
capacity;
. the additional demand for towers created by new entrants into the
wireless communications industry;
. the privatization of state-run broadcast transmission networks; and
. the introduction of new digital broadcast transmission technology and
wireless technologies.
Our two main businesses are leasing antenna space on wireless and broadcast
multi-tenant towers and operating broadcast transmission networks. We also
provide complementary services to our customers, including network design,
radio frequency engineering, site acquisition, site development and
construction, antenna installation and network management and maintenance. We
believe that our end-to-end service capabilities are a key competitive
advantage in forming strategic partnerships to acquire large wireless and
broadcast tower portfolios and in winning tower construction mandates.
Our primary business in the United States is the leasing of antenna space to
wireless operators under long-term contracts. After completion of the proposed
transactions we describe in this prospectus, we will have tower clusters in 26
of the 50 largest U.S. metropolitan areas, including 23 metropolitan areas
east of the Mississippi river. We believe that by owning and managing large
tower clusters we are able to offer customers the ability to fulfill rapidly
and efficiently their network expansion plans across particular markets or
regions. Our acquisition strategy has been focused on adding tower clusters.
For example, we have entered into agreements with BAM and BellSouth that will
allow us to control and operate substantially all the towers in their 850 MHz
networks in the eastern, southwestern and midwestern United States.
Our primary business in the United Kingdom is the operation of television
and radio broadcast transmission networks. Our towers provide broadcast
coverage to 99% of the population and substantially all of the major
metropolitan markets. In 1997, we acquired the BBC's national broadcast
transmission infrastructure and network services. Following the acquisition of
the BBC's tower infrastructure, we were awarded long-term contracts to provide
the BBC and other broadcasters analog and digital transmission services. We
also lease antenna space to wireless operators in the United Kingdom on the
towers we acquired from the BBC and from various wireless carriers. We believe
that these broadcast towers are uniquely situated in locations that wireless
carriers seeking to lease antenna space find particularly desirable.
We believe our towers are attractive to a diverse range of wireless
communications industries, including PCS, cellular, ESMR, SMR, paging, and
fixed microwave, as well as radio and television broadcasting. In the United
States our major customers include AT&T Wireless, Aerial, BAM, BellSouth,
Motorola, Nextel, PageNet and Sprint PCS. In the United Kingdom our major
customers include the BBC, Cellnet, Dolphin, NTL, ONdigital, One2One, Orange,
Virgin Radio and Vodafone.
We have embarked on a major construction program for our customers to
enhance our tower footprint. In 1998, we constructed 231 towers at an
aggregate cost of approximately $46.0 million, and had begun construction of
an additional 72 towers as of December 31, 1998. In 1999, we plan to construct
between 800 and 1,100 towers at an estimated aggregate cost between $150.0
million and $200.0 million for wireless carriers such as BAM, BellSouth and
Nextel. The actual number of towers built may be outside that range depending
on
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acquisition opportunities and potential build-to-suit contracts from large
wireless carriers. In addition, we were selected to build and operate the
world's first digital terrestrial television system in the United Kingdom
based on our broadcast engineering expertise.
Growth Strategy
Our objective is to become the premier global provider of wireless
communications and broadcast transmission infrastructure and related services.
Our experience in establishing and expanding our existing tower footprints,
our experience in owning and operating both analog and digital transmission
networks, our significant relationships with wireless carriers and
broadcasters and our ability to offer customers our in-house technical and
operational expertise, uniquely position us to capitalize on global growth
opportunities. The key elements of our business strategy are to:
. Maximize Utilization of Tower Capacity. We are seeking to take advantage
of the substantial operating leverage of our site rental business by
increasing the number of antenna leases on our owned and managed
communications sites. We believe that many of our towers have
significant capacity available for additional antenna space rental and
that increased utilization of our tower capacity can be achieved at low
incremental cost. For example, prior to our purchase of the BBC's
broadcast transmission network in 1997, the rental of available antenna
capacity on the BBC's premier tower sites was not actively marketed to
third parties. We believe there is substantial demand for such capacity.
In addition, we believe that the extra capacity on our tower footprints
in the United States and the United Kingdom will be highly desirable to
new entrants into the wireless communications industry. Such carriers
are able to launch service quickly and relatively inexpensively by
designing the deployment of their networks based on our attractive
existing tower footprints. Further, we intend to selectively build and
acquire additional towers to improve the coverage of our existing tower
footprints to further increase their attractiveness. We intend to use
targeted sales and marketing techniques to increase utilization of and
investment return on our existing, newly constructed and acquired
towers.
. Leverage Expertise of U.S. and U.K. Personnel to Capture Global Growth
Strategy. We are seeking to leverage the skills of our personnel in the
United States and the United Kingdom. We believe that our ability to
manage networks, including the transmission of signals, will be an
important competitive advantage in our pursuit of global growth
opportunities, as evidenced by the BBC, One2One, BAM, BellSouth and
Powertel transactions. With our wireless communications and broadcast
transmission network design and radio frequency engineering expertise,
we are well positioned (1) to partner with major wireless carriers to
assume ownership of their existing towers, (2) to provide build-to-suit
towers for wireless carriers and broadcasters and (3) to acquire
existing broadcast transmission networks that are being privatized
around the world.
. Partner with Wireless Carriers to Assume Ownership of their Existing
Towers. In addition to the proposed joint venture with BAM and the
transaction with BellSouth, we are continuing to seek to partner with
other major wireless carriers to assume ownership of their existing
towers directly or through joint ventures or control their towers
through contractual arrangements. We believe the primary criteria of
such carriers in selecting a company to own and operate their wireless
communications infrastructure will be the company's perceived capability
to maintain the integrity of their networks, including their
transmission signals. Therefore, we believe that those companies with a
proven track record of providing end-to-end services will be best
positioned to successfully acquire access to such wireless
communications infrastructure. We believe that similar opportunities
will arise globally as the wireless communications industry further
expands.
. Provide Build-to-Suit Towers for Wireless Carriers and Broadcasters. As
wireless carriers continue to expand and fill-in their service areas,
they will require additional communications sites and will have to build
new towers where co-location is not available. Similarly, the
introduction of digital terrestrial television broadcasting in the
United States will require the construction of new broadcast towers to
accommodate new digital transmission equipment and analog transmission
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equipment displaced from existing towers. We are aggressively pursuing
these build-to-suit opportunities, leveraging on our ability to offer
end-to-end services.
. Acquire Existing Broadcast Transmission Networks. In 1997, CTI
successfully acquired the privatized domestic broadcast transmission
network of the BBC. In addition, we are implementing the roll-out of
digital television transmission services throughout the United Kingdom.
As a result of this experience, we are well positioned to acquire other
state-owned analog and digital broadcast transmission networks globally
when opportunities arise. These state-owned broadcast transmission
networks typically enjoy premier sites giving an acquirer the ability to
offer unused antenna capacity to new and existing radio and television
broadcasters and wireless carriers, as well as to install new
technologies such as digital terrestrial transmission services. In
addition, our experience in broadcast transmission services allows us to
consider, when attractive opportunities arise, acquiring wireless
transmission networks as well as the acquisition of associated wireless
communications infrastructure. We are currently pursuing international
acquisition and privatization opportunities, including a bid in
connection with the state-run auction of Australia's National
Transmission Network.
. Continue to Decentralize Management Functions. In order to better manage
our tower lease-up efforts and build-out programs, and in anticipation
of the continued growth of our tower footprints throughout the United
States, we have begun and plan to continue decentralizing some
management and operational functions. To that end, in addition to our
Pittsburgh operating headquarters and regional office, we have opened
and staffed five regional offices, including Houston, Louisville,
Phoenix, Albany and Puerto Rico. Upon consummation of the Proposed
Transactions we plan to open 10 additional regional offices, five in
connection with the Proposed BAM JV, three in connection with the
Proposed BellSouth Transaction and two in connection with the Proposed
Powertel Acquisition. The principal responsibilities of these offices
are to manage the leasing of tower space on a regional basis through a
dedicated local sales force, to maintain the towers already located in
the region and to implement our build-to-suit commitments in the area.
We believe that by moving a significant amount of our operating
personnel to regional offices we will be better able to strengthen our
relationship with regional carriers, serve our customers more
effectively and identify additional build-to-suit opportunities with
local and regional carriers.
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The Company
CCIC is a holding company that conducts all of its business through its
subsidiaries. CCIC's two principal operating subsidiaries are CCI, through
which it conducts its U.S. operations, and CTI, through which it conducts its
U.K. operations. The following table indicates, as of December 31, 1998, after
giving pro forma effect to the Proposed Transactions, the geographic
concentration of our 6,105 owned and managed towers and 132 revenue producing
rooftop sites:
U.S. Towers and Rooftop Sites
<TABLE>
<CAPTION>
% of
% of Company
CCI BAM JV BellSouth Powertel Total U.S. Total Total
--- ------ --------- -------- ----- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Towers:
Florida............. 3 -- 434 76 513 11.4% 8.2%
Georgia............. -- 21 341 151 513 11.4 8.2
Alabama............. -- 9 179 188 376 8.4 6.0
Pennsylvania........ 219 212(a) -- -- 326 7.2 5.2
Tennessee........... 1 1 202 113 317 7.0 5.1
Louisiana........... 51 13 162 -- 226 5.0 3.6
Mississippi......... 21 8 125 62 216 4.8 3.5
Texas............... 167 43 -- -- 210 4.7 3.4
South Carolina...... 12 161 10 19 202 4.5 3.2
Kentucky............ -- -- 191 -- 191 4.2 3.1
Indiana............. -- -- 183 -- 183 4.1 2.9
North Carolina...... 11 137 20 -- 168 3.2 2.7
Arizona............. 12 152 -- -- 164 3.6 2.6
New Jersey.......... 1 142 -- -- 143 3.2 2.3
New York............ -- 119 -- -- 119 2.6 1.9
Maryland............ -- 108 -- -- 108 2.4 1.7
Massachusetts....... -- 81 -- -- 81 1.8 1.3
New Mexico.......... 34 36 -- -- 70 1.6 1.1
Virginia............ 5 57 -- -- 62 1.4 1.0
Connecticut......... -- 39 -- -- 39 * *
Ohio................ 26 -- -- -- 26 * *
Delaware............ -- 24 -- -- 24 * *
New Hampshire....... -- 23 -- -- 23 * *
West Virginia....... 17 13(b) -- -- 18 * *
Puerto Rico......... 14 -- -- -- 14 * *
Rhode Island........ -- 13 -- -- 13 * *
All Others.......... 15 15 3 41 74 1.6 1.2
--- ----- ----- --- ----- ----- ----
Rooftops(d)........... 78 -- -- -- 78 1.7 1.3
--- ----- ----- --- ----- ----- ----
Total................. 687 1,427(c) 1,850 650 4,497 100.0% 72.1%
=== ===== ===== === ===== ===== ====
</TABLE>
- --------
(a) Includes 105 towers we currently manage.
(b) Includes 12 towers we currently manage.
(c) Includes 117 towers we currently manage.
(d) We manage an additional 1,286 rooftop sites throughout the United States
that do not currently produce revenue but are available for leasing to our
customers.
* Less than 1%.
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U.K. Towers and Rooftop Sites
<TABLE>
<CAPTION>
% of
% of Company
CTI One2One Total U.K. Total Total
--- ------- ----- ---------- -------
<S> <C> <C> <C> <C> <C>
Towers:
England.................................. 492 767 1,259 72.4% 20.1%
Wales.................................... 134 39 173 9.9 2.8
Scotland................................. 151 15 166 9.5 2.7
Northern Ireland......................... 88 -- 88 5.1 1.4
--- --- ----- ----- ----
Rooftops................................... 54 -- 54 3.1 *
--- --- ----- ----- ----
Total...................................... 919 821 1,740 100.0% 27.9%
=== === ===== ===== ====
</TABLE>
U.S. Operations
Overview
Our primary business focus in the United States is the leasing of antenna
space on multiple tenant towers and rooftops to a variety of wireless carriers
under long-term lease contracts. Supporting our competitive position in the
site rental business, we maintain in-house expertise in, and offer our
customers, infrastructure and network support services that include network
design and communication site selection, site acquisition, site development
and construction and antenna installation.
We lease antenna space to our customers on our owned and managed towers. We
generally receive fees for installing customers' equipment and antennas on a
tower and also receive monthly rental payments from customers payable under
site rental leases that generally range in length from three to five years.
Our U.S. customers include such companies as AT&T Wireless, Aerial
Communications, AirTouch Cellular, Arch Communications, Bell Atlantic Mobile,
BellSouth Mobility, Cellular One, Federal Express, Lucent Technologies,
Motorola, Nextel, Nokia, PageNet, Skytel, Sprint PCS and TSR Wireless, as well
as private network operators and various federal and local government
agencies, such as the FBI, the IRS and the U.S. Postal Service.
At December 31, 1998, without giving effect to the Proposed Transactions, we
owned or managed 609 towers and 78 rooftop sites in the United States and
Puerto Rico. These towers and rooftop sites are located in western
Pennsylvania (primarily in and around the greater Pittsburgh area), in the
southwestern United States (primarily in western Texas), across Puerto Rico
and along I-95 in North Carolina and South Carolina.
Upon completion of the Proposed BAM JV, the joint venture will control and
operate approximately 1,427 towers. These towers represent substantially all
the towers in BAM's 850 MHz wireless network in the eastern and southwestern
United States and provide coverage of 11 of the top 50 U.S. metropolitan areas
including New York, Philadelphia, Boston, Washington D.C. and Phoenix. A
substantial majority of these towers are over 100 feet tall and can
accommodate multiple tenants.
After consummation of the Proposed BellSouth Transaction, we will control
and operate 1,850 towers. These towers represent substantially all the towers
in BellSouth's 850 MHz wireless network in the southeastern and midwestern
United States and provide coverage of 12 of the top 50 U.S. metropolitan
areas, including Miami, Atlanta, Tampa, Nashville and Indianapolis. A
substantial majority of these towers are over 100 feet tall and can
accommodate multiple tenants.
Upon completion of the Proposed Powertel Acquisition, we will own and
operate an additional 650 towers. These towers represent substantially all of
Powertel's owned towers in its 1.9 GHz wireless network in the southeastern
and midwestern United States. Approximately 90% of these towers are clustered
in seven southeastern states providing coverage of such metropolitan areas as
Atlanta, Birmingham, Jacksonville, Memphis and Louisville, and a number of
major connecting highway corridors in the southeast. These towers are
complementary to BellSouth's 850 MHz foot print in the Southeast and have
minimal coverage overlap. Substantially all of these towers are over 100 feet
tall, were built within the last three years and can such accommodate multiple
tenants.
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We are actively seeking to enter into arrangements with other major wireless
carriers and independent tower operators to acquire additional tower
footprints. We believe that, like BAM, BellSouth and Powertel, other wireless
carriers will seek to enter into contractual arrangements with independent
tower carriers, such as us, for the ownership or control of their tower
footprints.
We also plan to leverage CCI's network design expertise to construct new
towers. We plan to build towers in areas where carriers' signals fail to
transmit in their coverage area. The areas, commonly known as "dead zones",
are attractive tower locations. When population density and perceived demand
are such that we believe the economics of constructing such towers are
justified, we build towers that can accommodate multiple tenants. The multiple
tenant design of these towers obviates the need for expensive and time
consuming modifications to upgrade undersized towers, saving critical capital
and time for carriers facing time-to-market constraints. The towers are also
designed to easily add additional customers, and the equipment shelters are
built to accommodate another floor for new equipment and air conditioning
units when additional capacity is needed. The tower site is zoned for multiple
carriers at the time the tower is constructed to allow new carriers to quickly
utilize the site. In addition, the towers, equipment shelters and site
compounds are engineered to protect and maintain the structural integrity of
the site.
Our existing build-to-suit contracts include an agreement with Nextel, under
which we have already constructed 67 sites and have an option to construct up
to 96 additional sites. In connection with the Proposed BAM JV, BAM and the
joint venture will enter into a master build-to-suit agreement pursuant to
which the joint venture will build and own the next 500 towers to be built for
BAM's wireless communications business over the next five years. Further, we
have agreed to enter into a build-to-suit agreement with BellSouth, as part of
the Proposed BellSouth Transaction, to construct at least 500 towers on behalf
of BellSouth in the region covered by that transaction over the next five
years. See "The Proposed Transactions--The Proposed BAM JV--Build to Suit
Agreement" and "--The Proposed BellSouth Transaction--Build to Suit
Agreement".
Site Rental
In the United States, we rent antenna space on our owned and managed towers
and rooftops to a variety of carriers operating cellular, PCS, SMR, ESMR,
paging and other networks.
Tower Site Rental. We lease space to our customers on our owned and managed
towers. We generally receive fees for installing customers' equipment and
antennas on a tower (as provided in our network services programs) and also
receive monthly rental payments from customers payable under site leases. In
the United States, the majority of our outstanding customer leases, and the
new leases typically entered into by us, have original terms of five years
(with three or four optional renewal periods of five years each) and provide
for annual price increases based on the Consumer Price Index.
We also provide a range of site maintenance services in order to support and
enhance our site rental business. We believe that by offering services such as
antenna, base station and tower maintenance and security monitoring, we are
able to offer quality services to retain our existing customers and attract
future customers to our communication sites. We were the first site management
company in the United States selected by a major wireless communications
company to exclusively manage its tower network and market the network to
other carriers for co-location.
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The following table describes, without giving effect to the Proposed
Transactions, our top ten revenue producing towers in the United States and
Puerto Rico:
<TABLE>
<CAPTION>
December
Number of 1998
Tenant Monthly
Name Location Height (ft) Leases Revenue
---- -------- ----------- --------- --------
<S> <C> <C> <C> <C>
Crane.............................. Pennsylvania 450 99 $67,372
Bluebell........................... Pennsylvania 300 110 54,555
Monroeville........................ Pennsylvania 500 63 39,315
Lexington.......................... Kentucky 500 89 38,644
Sandia Crest....................... New Mexico 140 16 26,984
Greensburg......................... Pennsylvania 375 40 26,932
Cranberry.......................... Pennsylvania 400 44 26,455
Cerro de Punta..................... Puerto Rico 220 37 24,988
Beaver............................. Pennsylvania 500 43 25,360
El Yunque.......................... Puerto Rico 200 34 23,500
--- --------
Total..................................................... 575 $354,105
=== ========
</TABLE>
We have existing master lease agreements with AT&T Wireless, Aerial
Communications, BAM, Nextel and Sprint PCS, among others, which provide
certain terms (including economic terms) that govern new leases entered into
by such parties during the term of their master lease agreements, including
the lease of space on towers in the Pittsburgh major trading area ("Pittsburgh
MTA"), which includes greater Pittsburgh and parts of Ohio, West Virginia and
western Pennsylvania. Each of the Aerial Communications and Sprint PCS
agreements has a 10-year master lease term through December 2006, with one 10-
year and one five-year renewal period. Rents are adjusted periodically based
on the cumulative Consumer Price Index. Nextel's master lease agreement with
the Company has a 10-year master lease term through October 2006, with two
10-year renewal options. We have also entered into an independent contractor
agreement with Nextel. The BAM agreement has a 25-year master lease term
through December 2020.
We have significant site rental opportunities arising out of our existing
agreements with BAM and Nextel. In our existing lease agreement with BAM, we
have exclusive leasing rights for 117 existing towers and we currently have
sublessees on 58 of these towers in the greater Pittsburgh area. The lease
agreement provides that CCI may sublet space on any of these towers to another
carrier subject to certain approval rights of BAM. To date, BAM has never
failed to approve a sublease proposed by CCI. If the Proposed BAM JV is
formed, it is expected that these 117 towers will be among the 1,427 towers to
be contributed to the joint venture by BAM. Because we would maintain the
right to put sublessees on those 117 towers, revenue resulting from the
addition of new tenants on those towers would continue to be realized by us
rather than the joint venture. In connection with the Nextel Agreement, as of
December 31, 1998, we have the option to own and operate up to 96 additional
towers.
We will also enter into master lease agreements and have significant site
rental opportunities in connection with the Proposed Transactions. In
connection with the Proposed BAM JV we will enter into a global lease under
which BAM will lease antenna space on the towers transferred to the joint
venture, as well as the towers built pursuant to the build-to-suit agreement.
In connection with the Proposed BellSouth Transaction, we will be paid a
monthly site maintenance fee from BellSouth for its use of space on the towers
we control. We will also enter into a master lease agreement with the sellers
in the Proposed Powertel Acquisition pursuant to which the sellers will rent
space on the acquired towers. In each of the Proposed Transactions, we will be
permitted to lease additional space on the towers to third parties. See "The
Proposed Transactions".
Rooftop Site Rental. We are a leading rooftop site management company in the
United States. Through our subsidiary, Spectrum, we develop new sources of
revenue for building owners by effectively managing all
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<PAGE>
technical aspects of rooftop telecommunications, including two-way radio
systems, microwave facilities, fiber optics, wireless cable, paging, rooftop
infrastructure services and optimization of equipment location. We also handle
billing and collections and all calls and questions regarding the site,
totally relieving the building's management of this responsibility. In
addition to the technical aspects of site management, we provide operational
support for both wireless carriers looking to build out their wireless
networks, and building owners seeking to out source their site rental
activities. We generally enter into management agreements with building owners
and receive a percentage of the revenues generated from the tenant license
agreements.
Network Services
We design, build and operate our own communication sites. Through CCI, we
have developed an in-house expertise in certain value-added services that we
offer to the wireless communications and broadcasting industries. Because we
view CCI as a turn-key provider with "end-to-end" design, construction and
operating expertise, we offer our customers the flexibility of choosing
between the provision of a full ready-to-operate network infrastructure or any
of the component services involved therein. Such services include network
design and site selection, site acquisition, site development and construction
and antenna installation.
Network Design and Site Selection. We have extensive experience in network
design and engineering and site selection. While we maintain sophisticated
network design services primarily to support the location and construction of
Company-owned multiple tenant towers, we do from time to time provide network
design and site selection services to carriers and other customers on a
consulting contract basis. Our network design and site selection services
provide our customers with relevant information, including recommendations
regarding location and height of towers, appropriate types of antennas,
transmission power and frequency selection and related fixed network
considerations. In 1998, we provided network design services primarily for our
own footprints and also for certain customers, including Triton
Communications, Nextel, Aerial Communications and Sprint PCS. These customers
were typically charged on a time and materials basis.
To capitalize on the growing concerns over tower proliferation, we have
developed a program called "Network Solutions" through which we will attempt
to form strategic alliances with local governments to create a single
communications network in their communities. To date our efforts have focused
on western Pennsylvania, where we have formed alliances with three
municipalities. These alliances are intended to accommodate wireless carriers
and local public safety, emergency services and municipal services groups as
part of an effort to minimize tower proliferation. By promoting towers
designed for co-location, these alliances will reduce the number of towers in
communities while serving the needs of wireless carriers and wireless
customers.
Site Acquisition. In the United States, we are engaged in site acquisition
services for our own purposes and for third parties. Based on data generated
in the network design and site selection process, a "search ring", generally
of a one-mile radius, is issued to the site acquisition department for
verification of possible land purchase or lease deals within the search ring.
Within each search ring, Geographic Information Systems ("GIS") specialists
select the most suitable sites, based on demographics, traffic patterns and
signal characteristics. Once a site is selected and the terms of an option to
purchase or lease the site are completed, a survey is prepared and the
resulting site plan is created. The plan is then submitted to the local
zoning/planning board for approval. If the site is approved, our construction
department takes over the process of constructing the site.
We have provided site acquisition services to several customers, including
AT&T Wireless, Aerial Communications, AirTouch Cellular, BAM, BellSouth, GTE
Mobilnet, Nextel, Omnipoint, Pagemart, Sprint PCS and Teligent. These
customers engage us for such site acquisition services on either a fixed price
contract or a time and materials basis.
Site Development and Construction and Antenna Installation. We have provided
site development and construction and antenna installation services to the
U.S. communications industry for over 18 years. We have extensive experience
in the development and construction of tower sites and the installation of
antenna,
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<PAGE>
microwave dishes and electrical and telecommunications lines. Our site
development and construction services include clearing sites, laying
foundations and electrical and telecommunications lines, and constructing
equipment shelters and towers. We have designed and built and presently
maintain tower sites for a number of our wireless communications customers and
a substantial part of our own tower network. We can provide cost-effective and
timely completion of construction projects in part because our site
development personnel are cross-trained in all areas of site development,
construction and antenna installation. A varied inventory of heavy
construction equipment and materials are maintained by us at our 45-acre
equipment storage and handling facility in Pittsburgh, which is used as a
staging area for projects in major cities in the eastern region of the United
States. We generally set prices for each site development or construction
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 have the capability and expertise to install antenna
systems for our paging, cellular, PCS, SMR, ESMR, microwave and broadcasting
customers. As this service is performed, we use our technical expertise to
ensure that there is no interference with other tenants. We typically bill for
our antenna installation services on a fixed price basis.
Our construction management capabilities reflect Crown's extensive
experience in the construction of networks and towers. For example, Crown was
instrumental in launching networks for Sprint PCS, Nextel and Aerial
Communications in the Pittsburgh MTA. In addition, Crown supplied these
carriers with all project management and engineering services which included
antenna design and interference analyses.
In 1998, we provided site development and construction and antenna
installation services to approximately 33 customers in the United States,
including AT&T Wireless, BAM, Nextel and Sprint PCS.
Broadcast Site Rental and Services
We also provide site rental and related services to customers in the
broadcasting industry in the United States. The launch of DTV in the United
States will require significant expansion and modification of the existing
broadcast infrastructure. Because of the significant cost involved in the
construction or modification of tall towers, along with the large capital
expenditures broadcasters will incur in acquiring digital broadcast equipment,
we believe that the television broadcasting industry, which has historically
been opposed to co-location and third party ownership of broadcast
infrastructure, will seek to outsource tower ownership due to cost
constraints. See "Industry Background".
Our objective is to become a leader in the build out of the approximately
200 tall towers expected to be built in the United States over the next five
years. We believe that our experience in providing digital transmission
services in the United Kingdom will make us an attractive provider of
broadcast services to the major networks and their affiliates. In addition, we
will seek to partner with broadcasters and major station ownership groups that
own property zoned for tall towers, but that lack sufficient resources and
expertise to build a tower. We will then attempt to co-locate on the tower the
transmitters of commercial broadcast television stations and high powered FM
radio stations in that market as well as wireless carriers.
Electronic news gathering ("ENG") systems benefit from the towers and
services offered by the Company. The ENG trucks, often in the form of local
television station news vans with telescoping antennas on their roofs, send
live news transmission back to the studio from the scene of an important
event. Typically, these vans cannot transmit signals beyond about 25 miles. In
addition, if they are shielded from the television transmitter site, they
cannot make the connection even at close range. We have developed an ENG
repeater system that can be used on many of our towers in western Pennsylvania
and expect to develop similar systems in other markets in which we have or
develop tower footprints. This system allows the ENG van to send a signal to
one of our local towers where the signal is retransmitted back to the
television transmitter site. The retransmission of the signal from our
tower to the various television transmitter sites is done via a microwave
link. We charge the station for the ENG receiver system at the top of our
tower and also charge them for the microwave dish they place on our tower. Our
ENG customers are affiliates of the NBC, ABC, CBS and Fox networks.
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We also have employees with considerable direct construction experience and
market knowledge in the U.S. broadcasting industry, having worked with
numerous television networks around the United States, and a number of other
local broadcasting companies. We have installed master FM and television
systems on buildings across the country. We have supervised the construction
and operation of the largest master FM antenna facility in the United States
and have engineered and installed two 2,000 foot broadcast towers with master
FM antennas. We believe that this experience may help us negotiate favorable
construction contracts for both tower and rooftop sites, and to gain an
expertise in the complex issues surrounding electronic compatibility and RF
engineering.
Significant Contracts
We have many agreements with telecommunications providers in the United
States, including leases, site management contracts and independent contractor
agreements. We currently have important contracts with, among others, BAM,
Nextel and BellSouth. While these agreements currently are important to us,
our most significant contracts in the U.S. will result from consummation of
the Proposed Transactions. In addition, we are party to a contract with the
State of New York, which we believe to be the first of its kind, to manage all
State-owned real estate for wireless communications purposes for the next 20
years. This contract includes the rights to more than 16,000 structures and
rooftops, tens of thousands of miles of rights-of-way and millions of acres of
State-owned land.
Customers
In both our site rental and network services businesses, we work with a
number of customers in a variety of businesses including cellular, PCS, ESMR,
paging and broadcasting. We work primarily with large national carriers such
as BAM, BellSouth, Sprint PCS, Nextel and AT&T Wireless. For the year ended
December 31, 1998, no customer in the United States accounted for more than
10.0% of CCI's revenues, other than Nextel, which accounted for approximately
12.5% of CCI's consolidated revenues. Nextel revenues are expected to grow as
we build out Nextel interstate corridor sites.
<TABLE>
<CAPTION>
Industry Selected Customers
-------- ------------------
<S> <C>
Cellular..................... AT&T Wireless, BAM
PCS.......................... Sprint PCS, Western Wireless, Powertel
Broadcasting................. Hearst Argyle Television, Trinity Broadcasting
SMR/ESMR..................... Nextel, SMR Direct
Governmental Agencies........ FBI, INS, Puerto Rico Police
Private Industrial Users..... IBM, Phillips Petroleum
Data......................... Ardis, RAM Mobile Data
Paging....................... AirTouch, PageNet, TSR Wireless
Utilities.................... Equitable Resources, Nevada Power
Other........................ WinStar, Teligent
</TABLE>
Sales and Marketing
Our sales and marketing personnel, located in our regional offices, target
carriers expanding their networks, entering new markets, bringing new
technologies to market and requiring maintenance or add-on business. All types
of wireless carriers are targeted including broadcast, cellular, paging, PCS,
microwave and two-way radio. We are also interested in attracting 9-1-1,
federal, state, and local government agencies, as well as utility and
transportation companies to locate on existing sites. Our objective is to pre-
sell capacity on our towers by promoting sites prior to construction. Rental
space on existing towers is also aggressively marketed and sold.
We utilize numerous public and proprietary databases to develop detailed
target marketing programs directed at auction block license awardees, existing
tenants and specific market groups. Mailings focus on regional build outs, new
sites and services. The use of databases, such as those with information on
sites, demographic data, licenses and deployment status, coupled with measured
coverage data and RF coverage
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prediction software, allows our sales and marketing personnel to target
specific carriers' needs for specific sites. To foster productive
relationships with our major existing tenants and potential tenants, we have
formed a team of account relationship managers. These managers work to develop
build-to-suit, site leasing services and site management opportunities, as
well as ensure that customers' emerging needs are translated into new site
products and services.
The marketing department maintains our visibility within the wireless
communications industry through regular advertising and public relations
efforts including actively participating in trade shows and generating regular
press releases, newsletters and targeted mailings (including promotional
flyers). Our promotional activities range from advertisements and site
listings in industry publications to maintaining a presence at national trade
shows. Potential clients are referred to our Web site, which contains Company
information as well as site listings. In addition, our sites are listed on the
Cell Site Express Web site. This Web site enables potential tenants to locate
existing structures by latitude, longitude or address. Clients can easily
contact us via e-mail through the Web site or Cell Site Express. Our network
services capabilities are marketed in conjunction with our tower footprints.
To follow up on targeted mailings and to cold-call on potential clients, we
have established a telemarketing department. Telemarketers field inbound and
outbound calls and forward leads to local sales representatives or
relationship managers for closure. Local sales representatives are stationed
in each cluster to develop and foster close business relationships with
decision-makers in each customer organization. Sales professionals work with
marketing specialists to develop sales presentations targeting specific client
demands.
In addition to a dedicated, full-time sales and marketing staff, a number of
senior managers spend a significant portion of their efforts on sales and
marketing activities. These managers call on existing and prospective
customers and also seek greater visibility in the industry through speaking
engagements and articles in national publications. Furthermore, many of these
managers have been recognized as industry experts, are regularly quoted in
articles and are called on to testify at local hearings and to draft local
zoning ordinances.
Public and community relations efforts include coordinating community
events, such as working with amateur radio clubs to supply emergency and
disaster recovery communications, charitable event sponsorship, and promoting
charitable donations through press releases.
Competition
In the United States, we compete with other independent tower owners, some
of which also provide site rental and network services; wireless carriers,
which own and operate their own tower networks; service companies that provide
engineering and site acquisition services; and other potential competitors,
such as utilities, outdoor advertisers and broadcasters, some of which have
already entered the tower industry. Wireless carriers that own and operate
their own tower networks generally are substantially larger and have greater
financial resources than us. We believe that tower location, capacity, price,
quality of service and density within a geographic market historically have
been and will continue to be the most significant competitive factors
affecting tower rental companies. We also compete for acquisition and new
tower construction opportunities with wireless carriers, site developers and
other independent tower operating companies and believe that competition for
tower site acquisitions will increase and that additional competitors will
enter the tower market, some of which may have greater financial resources
than us.
The following is a list of the independent tower companies that we compete
with in the United States: American Tower Corporation, Pinnacle Towers,
SpectraSite, SBA Communications, WesTower, Unisite, LCC International and
Lodestar Communications.
The following companies are primarily competitors for our rooftop site
management activities in the United States: AAT, APEX, Commsite International,
JJS Leasing, Inc., Motorola, Signal One, Subcarrier Communications, Tower
Resources Management and Unisite.
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We believe that the majority of our competitors in the site acquisition
business operate within local market areas exclusively, while a small minority
of firms appear to offer their services nationally, including SBA
Communications Corporation, Whalen & Company and Gearon & Company (a
subsidiary of American Tower Corporation). We offer our services nationwide
and we believe we are currently one of the largest providers of site
development services to the U.S. and international markets. The market
includes participants from a variety of market segments offering individual,
or combinations of, competing services. The field of competitors includes site
acquisition 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 turnkey site development services through multiple subcontractors) and
carriers' internal staff. We believe that carriers base their decisions on
site development services on certain criteria, including a company's
experience, track record, local reputation, price and time for completion of a
project. We believe that we compete favorably in these areas.
U.K. Operations
Overview
We own and operate, through our 80% interest in CTI, one of the world's most
established television and radio transmission networks and are expanding our
leasing of antenna space on our towers to a variety of wireless carriers. We
provide transmission services for four of the six digital terrestrial
television services in the U.K., two BBC analogue television services, six
national BBC radio services (including the first digital audio broadcast
service in the United Kingdom), 37 local BBC radio stations and two national
commercial radio services through our network of transmitters, which reach
99.4% of the U.K. population. These transmitters are located on approximately
1,300 towers, more than half of which we own and the balance of which are
licensed to us under a site-sharing agreement (the "Site-Sharing Agreement")
with NTL, our principal competitor in the United Kingdom. We have also secured
long-term contracts to provide digital television transmission services to the
BBC and ONdigital. See "--Significant Contracts". In addition to providing
transmission services, we also lease antenna space on our transmission
infrastructure to various communications service providers and provide
telecommunications network installation and maintenance services and
engineering consulting services.
Our core revenue generating activity in the United Kingdom is the analog
terrestrial transmission of radio and television programs broadcast by the
BBC. CTI's business, which was formerly owned by the BBC, was privatized under
the Broadcasting Act 1996 and sold to CTI in February 1997. At the time the
BBC Home Service Transmission Business was acquired, CTI entered into a 10-
year transmission contract with the BBC for the provision of terrestrial
analog television and analog and digital radio transmission services in the
United Kingdom. In the twelve months ended December 31, 1998, approximately
60.6% of CTI's consolidated revenues were derived from the provision of
services to the BBC.
At December 31, 1998, we owned, leased or licensed 861 transmission sites on
which we operated 865 towers, including the 102 towers we acquired in the
Millennium acquisition. In addition, as of December 31, 1998 we were
constructing eight new towers on existing sites and had 112 site acquisition
projects in process for new tower sites. We have 54 revenue producing rooftop
sites that are occupied by our transmitters but are not available for leasing
to our customers. Our sites are located throughout England, Wales, Scotland
and Northern Ireland.
We expect to significantly expand our existing tower footprints in the
United Kingdom by building and acquiring additional towers. We believe our
existing tower network encompasses many of the most desirable tower locations
in the United Kingdom for wireless communications. However, due to the shorter
range over which communications signals carry (especially newer technologies
such as PCN) as compared to broadcast signals, wireless communications
providers require a denser footprint of towers to cover a given area.
Therefore, in order to increase the attractiveness of our tower footprints to
wireless communications providers, we will seek to build or acquire new
communications towers. Using our team of over 300 engineers with state-of-the-
art network design and radio frequency engineering expertise, we locate sites
and design towers that will be
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attractive to multiple tenants. We seek to leverage such expertise by entering
into build-to-suit contracts with various carriers, such as BT, Cable &
Wireless Communications, Cellnet, Dolphin, Energis, Highway One, One2One,
Orange and Scottish Telecom, thereby securing an anchor tenant for a site
before incurring capital expenditures for the site build-out. As of December
31, 1998, we were building eight towers that we will own. In addition, we
expect to make strategic acquisitions of existing communications sites
(primarily those owned by wireless communications operators) in order to
expand our infrastructure and to further leverage our site management
experience.
On March 5, 1999, we entered into an agreement with One2One pursuant to
which CTI has agreed to manage, develop and, at its option, acquire 821
towers. These towers represent substantially all the towers in One2One's
nationwide 900 MHz wireless network in the United Kingdom. These towers will
allow CTI to market a nationwide network of towers to third generation
wireless carriers in the United Kingdom following the completion of the
pending auction of such licenses by the U.K. government.
We believe that we generally have significant capacity on our towers in the
United Kingdom. Although approximately 133 of our towers are poles with
limited capacity, we typically will be able to build new towers that will
support multiple tenants on these sites (subject to the applicable planning
process). We intend to upgrade these limited capacity sites where we believe
we can achieve appropriate returns to merit the necessary capital expenditure.
For example, in connection with a contract with Vodafone, we are upgrading 68
of these sites with limited capacity. See "--Significant Contracts--Vodafone".
Approximately 59 of our sites are used for Medium Frequency ("MF") broadcast
transmissions. At this frequency, the entire tower is used as the transmitting
antenna and is therefore electrically "live". Such towers are therefore
unsuitable for supporting other tenant's communications equipment. However, MF
sites generally have substantial ground area available for the construction of
new multiple tenant towers.
Transmission Business
Analog. For the twelve months ended December 31, 1998, CTI generated
approximately 52.8% of its revenues from the provision of analog broadcast
transmission services to the BBC. Pursuant to the BBC Analog Transmission
Contract, we provide terrestrial transmission services for the BBC's analog
television and radio programs and certain other related services (including
BBC digital radio) for an initial 10-year term through March 31, 2007. See "--
Significant Contracts". For the twelve months ended December 31, 1998, the BBC
Analog Transmission Contract generated revenues of approximately (Pounds)49.4
million ($82.1 million) for us.
In addition to the BBC Analog Transmission Contract, we have separate
contracts to provide maintenance and transmission services for two national
radio stations, Virgin Radio and Talk Radio. These contracts are for periods
of eight years commencing from, respectively, March 31, 1993 and February 4,
1995.
We own all of the transmission equipment used for broadcasting the BBC's
domestic radio and television programs, whether located on one of CTI's sites
or on an NTL or other third-party site. As of December 31, 1998, CTI had 3,465
transmitters, of which 2,196 were for television broadcasting and 1,269 were
for radio.
A few of our most powerful television transmitters together cover the
majority of the U.K. population. The coverage achieved by the less powerful
transmitters is relatively low, but is important to the BBC's ambition of
attaining universal coverage in the United Kingdom. This is illustrated by the
following analysis of the population coverage of our analog television
transmitters:
<TABLE>
<CAPTION>
Combined
Number of sites population
(ranked by coverage) coverage
-------------------- ----------
<S> <C>
1 (Crystal Palace).......................... 21%
top 16...................................... 79
top 26...................................... 86
top 51...................................... 92
all......................................... 99.4
</TABLE>
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All of our U.K. transmitters are capable of unmanned operation and are
maintained by mobile maintenance teams from 27 bases located across the United
Kingdom. Access to the sites is strictly controlled for operational and
security reasons, and buildings at 140 of the sites are protected by security
alarms connected to CTI's Technical Operations Centre at Warwick. The Site-
Sharing Agreement provides us with reciprocal access rights to NTL's broadcast
transmission sites on which we have equipment.
Certain of our transmitters that serve large populations or important
geographic areas have been designated as priority transmitters. These
transmitters have duplicated equipment so that a single failure will not
result in total loss of service but will merely result in an output-power
reduction that does not significantly degrade the service to most viewers and
listeners.
Digital. We have entered into contracts with the holders (including the BBC)
of four of the six DTT multiplexes allocated by the U.K. government to design,
build and operate their digital transmission networks. In connection with the
implementation of DTT, new transmission infrastructure will be required. We
have committed to invest approximately (Pounds)100.0 million ($170.0 million)
for the build out of new infrastructure to support DTT over the next two
years, (Pounds)55.3 million ($92.0 million) of which we had already invested
by December 31, 1998. By the year 2000, 81 transmission sites will need to be
upgraded with new transmitters and associated systems to support DTT. Of these
sites, 49 are owned by us with the remainder owned by NTL. An arrangement
similar to that of the Site-Sharing Agreement is being negotiated to govern
the particular issues arising out of the sharing of digital transmission sites
between NTL and us.
We successfully began commercial operation of the DTT networks from an
initial 22 transmission sites on November 15, 1998. This launch marks the
first stage of the project to introduce the digital broadcast system that will
eventually replace conventional analog television services in the United
Kingdom. As the network size expands during 1999, the number of viewers who
are able to receive the service will increase significantly. We have accepted
an invitation from the U.K. television regulator, the Independent Television
Commission (ITC), to play a major role in planning further DTT network
extensions to be built in the year 2000 and beyond.
We are currently the sole provider of transmission services for digital
radio broadcasts in the United Kingdom. In September 1995, the BBC launched
its initial DAB scheme over our transmission network, and this service is now
broadcast to approximately 60% of the U.K. population. A license for an
independent national digital radio network was awarded to the Digital One
consortium during 1998 and it is expected that this service will commence
during 1999. We are in negotiations to provide accommodation and access to
masts and antennas at 24 transmission sites to support the launch of Digital
One. In addition, local digital radio licenses will be awarded during 1999. We
believe we are well positioned to become the transmission service provider to
the winners of such licenses.
Site Rental
The BBC transmission network provides a valuable initial footprint for the
creation of wireless communications networks. As of December 31, 1998,
approximately 200 companies rented antenna space on approximately 405 of CTI's
919 towers and rooftops. These site rental agreements have normally been for
three to 12 years and are generally subject to rent reviews every three years.
Site sharing customers are generally charged annually in advance, according to
rate cards that are based on the antenna size and position on the tower. Our
largest site rental customer in the United Kingdom is NTL under the Site-
Sharing Agreement. This agreement generated approximately (Pounds)592,000
($984,400) of site rental revenue in December 1998.
We also provide a range of site maintenance services in order to support and
enhance our U.K. site rental business. We believe that by offering services
such as antenna, base station and tower maintenance and monitoring, we are
able to offer quality services to retain our existing customers and attract
future customers to our communications sites. We complement our U.K.
transmission experience with our site management experience in the United
States to provide customers with a top-of-the-line package of service and
technical support.
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The following table describes our top ten revenue producing towers in the
United Kingdom:
<TABLE>
<CAPTION>
Number of CTI's
Tenant December 1998
Name Location Height(ft) Leases Monthly Revenue
---- ------------ ---------- --------- ------------------------
<S> <C> <C> <C> <C> <C>
Brookmans Park.......... S.E. England 147 19 (Pounds) 25,026 $ 41,613
Bow Brickhill........... S.E. England 197 13 17,479 29,064
Mendip.................. S.W. England 924 19 16,534 27,493
Hannington.............. S. England 440 15 12,267 20,398
Crystal Palace.......... London 653 14 11,638 19,352
Wrotham................. S. England 379 14 11,385 18,931
Waltham................. C. England 954 10 10,750 17,875
Redruth................. S.W. England 500 18 10,523 17,498
Heathfield.............. S. England 443 15 10,296 17,120
Oxford.................. C. England 507 14 9,973 16,583
--- --------------- --------
Total......................................... 151 (Pounds)135,871 $225,927
=== =============== ========
</TABLE>
Other than NTL, CTI's largest (by revenue) site rental customers consist
mainly of wireless carriers such as Cellnet, One2One, Orange and Vodafone.
Revenues from these non-BBC sources are expected to become an increasing
portion of CTI's total U.K. revenue base, as the acquired BBC Home Service
Transmission Business is no longer constrained by governmental restrictions on
the BBC's commercial activities. We believe that the demand for site rental
from communication service providers will increase in line with the expected
growth of these communication services in the United Kingdom.
We have master lease agreements with all of the major U.K.
telecommunications site users including BT, Cable & Wireless Communications,
Cellnet, Dolphin, Energis, Highway One, One2One, Orange, Scottish Telecom and
Vodafone. These agreements typically specify the terms and conditions
(including pricing and volume discount plans) under which these customers have
access to all sites within our U.K. portfolio. Customers make orders for
specific sites using the standard terms included in the master lease
agreements. As of December 31, 1998, there were approximately 400 applications
in process for installations at existing sites under such agreements.
Network Services
CTI provides broadcast and telecommunications engineering services to
various customers in the United Kingdom. We retained all the BBC Home Service
Transmission Business employees upon CTI's acquisition. Accordingly, we have
engineering and technical staff of the caliber and experience necessary not
only to meet the requirements of our current customer base, but also to meet
the challenges of developing digital technology. Within the United Kingdom,
CTI has worked with several telecommunications operations on design and build
projects as they roll-out their networks. CTI has had success in bidding for
broadcast consulting contracts, including, over the last four years, in
Thailand, Taiwan, Poland and Sri Lanka.
With the expertise of our engineers and technical staff, we are a turn-key
provider to the wireless communications and broadcast industries. We can
provide customers with a ready-to-operate network infrastructure or any of the
component services involved therein. Such services include network design and
site selection, site acquisition, site development and antenna installation.
Network Design and Site Selection. We have extensive experience in network
design and engineering and site selection. While we maintain sophisticated
network design services primarily to support the location and construction of
multiple tenant towers that we own, from time to time we do provide network
design and site selection services to carriers and other customers on a
consulting contract basis. Our network design and site selection services
provide our customers with relevant information including recommendations
regarding location and height of towers, appropriate types of antennas,
transmission power and frequency selection and related fixed network
considerations.
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Site Acquisition. In the United Kingdom, we are involved in site acquisition
services for our own purposes and for third parties. We recognize that the
site acquisition phase often carries the highest risk for a project. To ensure
the greatest possible likelihood of success and timely acquisition, we combine
a desktop survey of potential barriers to development with a physical site
search that includes initial design analyses, CDM assessments and, where
necessary, line-of-sight surveys. We leverage off our experience in site
acquisition and co-location when meeting with local planning authorities.
Site Development and Antenna Installation. We use a combination of external
and internal resources for site construction. Our engineers are experienced in
both construction techniques and construction management, ensuring an
efficient and simple construction phase. Selected civil contractors are
managed by CTI staff for the ground works phase. Specialist erection
companies, with whom we have a long association, are used for tower
installation. Final antenna installation is undertaken by our own experienced
teams.
Site Management and Other Services. We also provide complete site
management, preventive maintenance, fault repair and system management
services to the Scottish Ambulance Service. We also maintain a mobile radio
system for the Greater Manchester Police and provide maintenance and repair
services for transmission equipment and site infrastructure.
Significant Contracts
CTI's principal analog broadcast transmission contract is the BBC Analog
Transmission Contract. CTI also has entered into two digital television
transmission contracts, the BBC Digital Transmission Contract and the
ONdigital Digital Transmission Contract (as defined). CTI also provides
facilities to NTL (in its capacity as a broadcast transmission provider to
non-CTI customers) under the Site-Sharing Agreement. CTI also has long-term
service agreements with broadcast customers such as Virgin Radio and Talk
Radio. In addition, CTI has several agreements with telecommunications
providers, including leases, site management contracts and independent
contractor agreements. CTI has entered into contracts to design and build
infrastructure for customers such as Cellnet, One2One, Orange, Scottish
Telecom and Vodafone.
BBC Analog Transmission Contract
CTI entered into a 10-year transmission contract with the BBC for the
provision of terrestrial analog television and analog and digital radio
transmission services in the United Kingdom at the time the BBC Home Service
Transmission Business was acquired, which contract was subsequently amended on
July 16, 1998 (the "BBC Analog Transmission Contract") to incorporate a small
number of minor modifications requested by the BBC. The BBC Analog
Transmission Contract provides for charges of approximately (Pounds)46.5
million ($77.3 million) to be payable by the BBC to CTI for the year ended
March 31, 1998 and each year thereafter to the termination date, adjusted
annually at the inflation rate less 1%. In addition, for the duration of the
contract an annual payment of (Pounds)300,000 ($498,840) is payable by the BBC
for additional broadcast-related services. At the BBC's request, since October
1997, the number of television broadcast hours has been increased to 24 hours
per day for the BBC's two national television services, which has added over
(Pounds)500,000 ($831,400) annually to the payments made by the BBC to the
Company.
The BBC Analog Transmission Contract also provides for CTI to be liable to
the BBC for "service credits" (i.e., rebates of its charges) in the event that
certain standards of service are not attained as a result of what the contract
characterizes as "Accountable Faults" or the failure to meet certain "response
times" in relation to making repairs at certain key sites. We believe that CTI
is well-equipped to meet the BBC's service requirements by reason of the
collective experience its existing management gained while working with the
BBC. Following completion of three formal six-month performance reviews, CTI
achieved a 100% "clean sheet" performance, incurring no service credit
penalties.
The initial term of the BBC Analog Transmission Contract ends on March 31,
2007. Thereafter, the BBC Analog Transmission Contract may be terminated with
12 months' prior notice by either of the parties, expiring
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on March 31 in any contract year, from and including March 31, 2007. It may
also be terminated earlier (i) by mutual agreement between CTI and the BBC,
(ii) by one party upon the bankruptcy or insolvency of the other party within
the meaning of section 123 of the Insolvency Act 1986, (iii) upon certain
force majeure events with respect to the contract as a whole or with respect
to any site (in which case the termination will relate to that site only),
(iv) by the non-defaulting party upon a material breach by the other party and
(v) upon the occurrence of certain change of control events (as defined in the
BBC Analog Transmission Contract).
BBC Commitment Agreement
On February 28, 1997, in connection with the acquisition of the BBC Home
Service Transmission Business, the Company, TdF, TeleDiffusion de France S.A.,
which is the parent company of TdF and DFI ("TdF Parent"), and the BBC entered
into the BBC Commitment Agreement (the "BBC Commitment Agreement"), whereby we
and TdF agreed (i) not to dispose of any shares in CTSH or any interest in
such shares (or enter into any agreement to do so) until February 28, 2000;
and (ii) to maintain various minimum indirect ownership interests in CTI and
CTSH for periods ranging from three to five years commencing February 28,
1997. These provisions restrict our ability and the ability of TdF to sell,
transfer or otherwise dispose of their respective CTSH shares (and,
indirectly, their CTI shares). The restrictions do not apply to disposals of
which the BBC has been notified in advance and to which the BBC has given its
prior written consent, which, subject to certain exceptions, consent shall not
be unreasonably withheld or delayed. The BBC has consented to waive the above
restrictions (i) to enable the Company and TdF to enter into the Governance
Agreement and the CTSH Shareholders' Agreement and (ii) to allow the exercise
of rights under such agreements and (iii) to permit the roll-up of CTI
immediately prior to the IPO.
The BBC Commitment Agreement also required TdF Parent and us to enter into a
services agreements with CTI. The original services agreement entered into by
TdF Parent and CTI on February 28, 1997 (pursuant to which TdF makes available
certain technical consultants, executives and engineers to CTI) was amended on
August 21, 1998 to extend the original minimum term of services provided from
three years to seven years, commencing February 28, 1997, thereafter
terminable on 12-month's prior notice given by CTI to TdF after February 28,
2003. See "The Roll-Up--Roll-Up Arrangements--CTI Series Agreement".
ONdigital Digital Transmission Contract
In 1997, the Independent Television Commission awarded ONdigital three of
the five available commercial digital terrestrial television multiplexes for
new program services. We bid for and won the 12 year contract from ONdigital
to build and operate its digital television transmission network (the
"ONdigital Digital Transmission Contract"). The contract provides for
approximately (Pounds)20.0 million ($34.0 million) of revenue per year from
2001 to 2008, with lesser amounts payable before and after these years and
with service credits repayable for performance below agreed thresholds.
BBC Digital Transmission Contract
In 1998, we bid for and won the 12 year contract from the BBC to build and
operate its digital terrestrial television transmission network (the "BBC
Digital Transmission Contract"). This contract provides for approximately
(Pounds)10.5 million ($17.8 million) of revenue per year (assuming the BBC
commits to the full DTT roll-out contemplated by the BBC Digital Transmission
Contract) during the 12 year period, with service credits repayable for
performance below agreed thresholds. There is a termination provision during
the three-month period following the fifth anniversary of our commencement of
digital terrestrial transmission services for the BBC exercisable by the BBC
but only if the BBC's Board of Governors determines, in its sole discretion,
that DTT in the United Kingdom does not have sufficient viewership to justify
continued DTT broadcasts. Under this provision, the BBC will pay us a
termination fee in cash that substantially recovers the Company's capital
investment in the network, and any residual ongoing operating costs and
liabilities. Like the BBC Analog Transmission Contract, the contract is
terminable upon the occurrence of certain change of control events (as defined
in the BBC Digital Transmission Contract).
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BT Digital Distribution Contract
Under the BBC Digital Transmission Contract and the ONdigital Digital
Transmission Contract, in addition to providing digital terrestrial
transmission services, CTI has agreed to provide for the distribution of the
BBC's and ONdigital's broadcast signals from their respective television
studios to CTI's transmission network. Consequently, in May 1998, CTI entered
into a 12 year distribution contract (the "BT Digital Distribution Contract")
with British Telecommunications plc ("BT") (with provisions for extending the
term), in which BT has agreed to provide fully duplicated, fiber-based,
digital distribution services, with penalties for late delivery and service
credits for failure to deliver 99.99% availability.
Site-Sharing Agreement
In order to optimize service coverage and enable viewers to receive all
analog UHF television services using one receiving antenna, the BBC, as the
predecessor to CTI, and NTL made arrangements to share all UHF television
sites. This arrangement was introduced in the 1960s when UHF television
broadcasting began in the United Kingdom. In addition to service coverage
advantages, the arrangement also minimizes costs and avoids the difficulties
of obtaining additional sites.
Under the Site-Sharing Agreement, the party that is the owner, lessee or
licensee of each site is defined as the "Station Owner". The other party (the
"Sharer") is entitled to request a license to use certain facilities at that
site. The Site-Sharing Agreement and each site license provide for the Station
Owner to be paid a commercial license fee in accordance with the Site-Sharing
Agreement ratecard and for the Sharer to be responsible, in normal
circumstances, for the costs of accommodation and equipment used exclusively
by it. The Site-Sharing Agreement may be terminated with five years' prior
notice by either of the parties and expires on December 31, 2005 or on any
tenth anniversary of that date. It may also be terminated (i) following a
material breach by either party which, if remediable, is not remedied within
30 days of notice of such breach by the non-breaching party, (ii) on the
bankruptcy or insolvency of either party and (iii) if either party ceases to
carry on a broadcast transmission business or function.
Negotiations are in progress between NTL and us to amend the Site-Sharing
Agreement to account for the build-out of digital transmission sites and
equipment, a new rate card related to site sharing fees for new digital
facilities and revised operating and maintenance procedures related to digital
equipment.
Vodafone
On April 16, 1998, under Vodafone's master lease agreement with us, Vodafone
agreed to locate antennas on 122 of our existing communication sites in the
United Kingdom. The first 39 sites had been completed by the end of December
1998. This included 4 sites at which a new tower had been constructed to
replace an existing structure of limited capacity. The remaining sites are
expected to be completed by end of July 1999 and will include the construction
of a further 60 replacement towers. After their upgrade, these sites will be
able to accommodate additional tenants.
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Customers
For the twelve months ended December 31, 1998, the BBC accounted for
approximately 60.6% of CTI's consolidated revenues. This percentage has
decreased from 64.6% for the twelve months ended March 31, 1998 and is
expected to continue to decline as CTI continues to expand its site rental
business. CTI provides all four U.K. PCN/cellular operators (Cellnet, One2One,
Orange and Vodafone) with infrastructure services and also provides fixed
telecommunications operators, such as BT, Cable & Wireless Communications,
Energis and Scottish Telecom, with microwave links and backhaul
infrastructure. The following is a list of some of CTI's leading site rental
customers by industry segment.
<TABLE>
<CAPTION>
Industry Selected Customers
-------- ------------------
<S> <C>
Broadcasting......................... BBC, NTL, Virgin Radio, Talk Radio, XFM
PMR/TETRA............................ National Band 3, Dolphin
PCN.................................. Orange, One2One
Data................................. RAM Mobile Data, Cognito
Paging............................... Hutchinson, Page One
Governmental Agencies................ Ministry of Defense
Cellular............................. Vodafone, Cellnet
Public Telecommunications............ BT, Cable & Wireless Communications
Other................................ Aerial Sites, Health Authorities
Utilities............................ Welsh Water, Southern Electric
</TABLE>
Sales and Marketing
We have 20 sales and marketing personnel in the United Kingdom who identify
new revenue-generating opportunities, develop and maintain key account
relationships, and tailor service offering to meet the needs of specific
customers. An excellent relationship has been maintained with the BBC, and
successful new relationships have been developed with many of the major
broadcast and wireless carriers in the United Kingdom. We have begun to
actively cross-sell our products and services so that, for example, site
rental customers are also offered build-to-suit services.
Competition
NTL, the privatized engineering division of the IBA and now a subsidiary of
NTL Inc. (formerly International CableTel Inc.), is CTI's primary competition
in the terrestrial broadcast transmission market in the United Kingdom. NTL
provides analog transmission services to ITV, Channels 4 and 5, and S4C. It
also has been awarded the transmission contract for the new DTT multiplex
service from Digital 3 & 4 Limited, and a similar contract for the DTT service
for SDN (CTI has been awarded similar contracts for the BBC and ONdigital--
serving a total of four multiplexes compared with NTL's two). Since its
creation in 1991, NTL has diversified from its core television broadcasting
business using its transmission infrastructure to enter into the radio
transmission and telecommunications sectors.
Although CTI and NTL are direct competitors, they have reciprocal rights to
the use of each others' sites for broadcast transmission usage in order to
enable each of them to achieve the necessary country-wide coverage. This
relationship is formalized by the Site-Sharing Agreement entered into in 1991,
the time at which NTL was privatized.
NTL also offers site rental on approximately 1,000 of its sites (some of
which are managed on behalf of third parties). Like CTI, NTL offers a full
range of site-related services to its customers, including installation and
maintenance. CTI believes its towers to be at least as well situated as NTL's
and that it will be able to expand its own third-party site-sharing
penetration. CTI also believes that its penetration of this market has to date
lagged behind NTL only because of the governmental restrictions on the
commercial activities of CTI's business prior to its privatization.
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All four U.K. mobile operators own site infrastructure and lease space to
other users. Their openness to sharing with direct competitors varies by
operator. Cellnet and Vodafone have agreed to cut site costs by jointly
developing and acquiring sites in the Scottish Highlands. BT and Cable &
Wireless Communications are both major site sharing customers but also compete
by leasing their own sites to third parties. BT's position in the market is
even larger when considered in combination with its interest in Cellnet.
Several other companies compete in the market for site rental. These include
British Gas, Racal Network Systems, Aerial Sites Plc, Relcom Aerial Services
and the Royal Automobile Club. Some companies own sites initially developed
for their own networks, while others are developing sites specifically to
exploit this market.
CTI faces competition from a large number of companies in the provision of
network services. The companies include NTL, specialty consultants and
equipment manufacturers such as Nortel and Ericsson.
Properties
In the United States, the Company's interests in its tower sites are
comprised of a variety of fee interests, leasehold interests created by long-
term lease agreements, private easements and easements, licenses or rights-of-
way granted by government entities. In rural areas, a tower site typically
consists of a three- to five-acre tract, which supports towers, equipment
shelters and guy wires to stabilize the structure. Less then 3,000 square feet
are required for a self-supporting tower structure of the kind typically used
in metropolitan areas. The Company's land leases generally have five- or ten-
year terms and frequently contain one or more renewal options. Some land
leases provide "trade-out" arrangements whereby the Company allows the
landlord to use tower space in lieu of paying all or part of the land rent. As
of December 31, 1998, the Company had approximately 384 land leases. Pursuant
to the Senior Credit Facility, the Company's senior lenders have liens on a
substantial number of the Company's land leases and other property interests
in the United States.
In the United Kingdom, tower sites range from less than 400 square feet for
a small rural TV booster station to over 50 acres for a high-power radio
station. As in the United States, the site accommodates the towers, equipment
buildings or cabins and, where necessary, guy wires to support the structure.
Land is either owned freehold, which is usual for the larger sites, or is held
on long-term leases that generally have terms of 21 years or more.
Legal Proceedings
We are occasionally involved in legal proceedings that arise in the ordinary
course of business. Most of these proceedings are appeals by landowners of
zoning and variance approvals of local zoning boards. While the outcome of
these proceedings cannot be predicted with certainty, management does not
expect any pending matters to have a material adverse effect on our financial
condition or results of operations. We are currently in discussions with the
Department of Labor (the "DOL") to settle an investigation the DOL has
conducted into employment practices put into place prior to our acquisition of
CCI. Upon notification by the DOL of its investigation, the practices were
ceased. We anticipate the settlement to be approximately $200,000.
Employees
At March 1, 1999, we employed 928 people worldwide. Other than in the United
Kingdom, we are not a party to any collective bargaining agreements. In the
United Kingdom, we are party to a collective bargaining agreement with the
Broadcast, Entertainment, Cinematographic and Technicians Union. This
agreement establishes bargaining procedures relating to the terms and
conditions of employment for all of CTI's non-management staff. We have not
experienced any strikes or work stoppages, and management believes that our
employee relations are satisfactory.
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Regulatory Matters
United States
Federal Regulations. Both the FCC and FAA regulate towers used for wireless
communications transmitters and receivers. Such regulations control the siting
and marking of towers and may, depending on the characteristics of particular
towers, require registration of tower facilities. Wireless communications
devices operating on towers are separately regulated and independently
licensed based upon the particular frequency used.
The FCC, in conjunction with the FAA, has developed standards to consider
proposals for new or modified antenna structures. These standards mandate that
the FCC and the FAA consider the height of proposed antenna structures, the
relationship of the structure to existing natural or man-made obstructions and
the proximity of the antenna structures to runways and airports. Proposals to
construct or to modify existing antenna structures 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 is in compliance with the FAA's rules and is registered with
the FCC, if 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 FAA and FCC standards. Tower
owners may also bear the responsibility of notifying the FAA of any tower
lighting outage. The Company generally indemnifies its customers against any
failure to comply with applicable regulatory standards. Failure to comply with
the applicable requirements may lead to civil penalties.
The 1996 Telecom Act limits certain state and local zoning authorities'
jurisdiction over the construction, modification and placement of towers. The
new law prohibits any action that would (i) discriminate between different
providers of personal wireless services or (ii) prohibit or have the effect of
prohibiting the provision of personal wireless service. Finally, the 1996
Telecom Act requires the federal government to help licensees for wireless
communications services gain access to preferred sites for their facilities.
This may require that federal agencies and departments work directly with
licensees to make federal property available for tower facilities.
Local Regulations. 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.
Licenses Under the Communications Act of 1934. We hold, through certain of
our subsidiaries, licenses for radio transmission facilities granted by the
FCC, including licenses for common carrier microwave and commercial mobile
radio services ("CMRS"), including SMR and paging facilities, as well as
private mobile radio services ("PMRS") including industrial/business radio
facilities, which are subject to additional regulation by the FCC. We are
required to obtain the FCC's approval prior to the transfer of control of any
of our FCC licenses. Consummation of the IPO and the Roll-Up would have
resulted in a transfer of control of us under the FCC's rules and policies if,
after such transactions, over 50% of our voting stock would have been owned by
new stockholders.
We, as the parent company of the licensees of common carrier and CMRS
facilities, are also subject to Section 310(b)(4) of the Communications Act of
1934, as amended, which would limit us to a maximum of 25% foreign ownership
absent a ruling from the FCC that foreign ownership in excess of 25% is in the
public interest. In light of the World Trade Organization Agreement on Basic
Telecommunications Services ("WTO Agreement"), which took effect on February
5, 1998, the FCC has determined that such investments are generally in the
public interest if made by individuals and entities from WTO-member nations.
We are over 25% foreign owned by companies headquartered in France, the United
Kingdom and New Zealand. See "Principal
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and Selling Stockholders". Each of these nations is a signatory to the WTO
Agreement. The FCC has granted approval of up to 49.9% foreign ownership of
us, at least 25% of which will be from WTO-member nations.
United Kingdom
Telecommunications systems and equipment used for the transmission of
signals over radio frequencies have to be licensed in the United Kingdom.
These licenses are issued on behalf of the British Government by the Secretary
of State for Trade and Industry under the Telecommunications Act 1984 and the
Wireless Telegraphy Acts 1949, 1968 and 1998. CTI has a number of such
licenses under which it runs the telecommunications distribution and
transmission systems which are necessary for the provision of its transmission
services. CTI's operations are subject to comprehensive regulation under the
laws of the United Kingdom.
Licenses under the Telecommunications Act 1984
CTI has the following three licenses under the Telecommunications Act 1984:
Transmission License. The Transmission License is a renewable license to run
telecommunications systems for the transmission via wireless telegraphy of
broadcasting services. This license is for a period of at least twenty-five
years from January 23, 1997, and is CTI's principal license. Its main
provisions include:
(i) a price control condition covering the provision of all analog radio
and television transmission services to the BBC under the BBC Analog
Transmission Agreement (for an initial price of approximately (Pounds)44
million for regulated elements of the services provided by CTI under the
BBC Analog Transmission Agreement in the year ended March 31, 1997,
subject to an increase cap which is 1% below the rate of increase in the
Retail Price Index over the previous calendar year). The current price
control condition applies until March 31, 2006;
(ii) a change of control provision which requires notification of
acquisitions of interest in CTI of more than 20% by a public
telecommunications operator or any Channel 3 or Channel 5 licensee, which
acquisitions entitle the Secretary of State to revoke the license;
(iii) a site sharing requirement requiring CTI to provide space on its
towers to analog and digital broadcast transmission operators and
including a power for the Director General of Telecommunications
("OFTEL"), as the regulator, to determine prices if there is failure
between the site owner and the prospective site sharer to agree to a
price;
(iv) a fair trading provision enabling OFTEL to act against anti-
competitive behavior by the licensee; and
(v) a prohibition on undue preference or discrimination in the provision
of the services it is required to provide third parties under the
Transmission License.
OFTEL has made a determination with respect to a complaint made by Classic
FM and NTL in respect of certain charges, imposed previously by the BBC under
the Site-Sharing Agreement with NTL for the use by Classic FM of BBC radio
antennas and passed on to Classic FM by NTL. OFTEL's position is that the
Site-Sharing Agreement did not cover charges for new services to customers
such as Classic FM, thereby enabling OFTEL to intervene and determine the
appropriate rate under the "Applicable Rate" mechanism in CTI's Transmission
License. This procedure could result in the fees NTL pays to CTI for site
sharing facilities for Classic FM, currently calculated under the Site-Sharing
Agreement, being determined at a reduced rate and otherwise not being covered
by the terms of any existing contract which could lead to a diminution of
CTI's income of approximately (Pounds)300,000 per annum (equivalent to
approximately 0.4% of revenues and 1.0% of EBITDA for the fiscal year ended
March 31, 1997). CTI has applied for leave to obtain a judicial review of this
decision. In addition, CTI has made a provision of approximately (Pounds)1.9
million relating to any rate adjustment imposed by OFTEL with respect to
previous charges for Classic FM under the Site-Sharing Agreement.
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CTI is discussing with OFTEL certain amendments to CTI's Telecommunications
Act Transmission License to ensure that the price control condition
accommodates the provision by CTI of additional contractually agreed upon
services to the BBC in return for additional agreed upon payments. See "Risk
Factors--Regulatory Compliance and Approval".
The Secretary of State has designated the Transmission License a public
telecommunications operator ("PTO") license in order to reserve to himself
certain emergency powers for the protection of national security. The PTO
designation is, however, limited to this objective. CTI does not have a full
domestic PTO license and does not require one for its current activities. The
Department of Trade and Industry has, nevertheless, indicated that it would be
willing to issue CTI such a license. As a result CTI would gain wider powers
to provide services to third parties including public switched voice telephony
and satellite uplink and would grant CTI powers to build out its network over
public property (so-called "code powers").
General Telecom License. The General Telecom License is a general license to
run telecommunications systems and authorizes CTI to run all the necessary
telecommunications systems to convey messages to its transmitter sites (e.g.,
via leased circuits or using its own microwave links). The license does not
cover the provision of public switched telephony networks (which would require
a PTO license as described above).
Satellite License. The Satellite License is a license to run
telecommunications systems for the provision of satellite telecommunication
services and allows the conveyance via satellite of messages, including data
and radio broadcasting. The license excludes television broadcasting direct to
the home via satellite although distribution via satellite of television
broadcasting services which are to be transmitted terrestrially is permitted.
Licenses under the Wireless Telegraphy Acts 1949, 1968 and 1998
CTI has a number of licenses under the Wireless Telegraphy Acts 1949, 1968
and 1998, authorizing the use of radio equipment for the provision of certain
services over allocated radio frequencies including:
(i) a Broadcasting Services License in relation to the transmission
services provided to the BBC, Virgin Radio and Talk Radio;
(ii) a Fixed Point-to-Point Radio Links License;
(iii) two DAB Test and Development Licenses; and
(iv) DTT Test & Development Licenses.
All the existing licenses under the Wireless Telegraphy Acts 1949, 1968 and
1998 have to be renewed annually with the payment of a significant fee. The
BBC, Virgin Radio and Talk Radio have each contracted to pay their portion of
these fees. ONdigital is obligated under the ONdigital Digital Transmission
Contract to pay most of their portion of these fees.
Environmental Matters
Our operations are subject to foreign, federal, state and local laws and
regulations relating to the management, use, storage, disposal, emission, and
remediation of, and exposure to, hazardous and nonhazardous substances,
materials and wastes ("Environmental Laws"). 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 relating to existing or historical operations, and also could be
subject to personal injury or property damage claims relating to such
contamination. We are potentially subject to cleanup liabilities in both the
United States and the United Kingdom.
We are also subject to regulations and guidelines that impose a variety of
operational requirements relating to RF emissions. The potential connection
between RF emissions and certain negative health effects, including some forms
of cancer, has been the subject of substantial study by the scientific
community in recent years. To date, the results of these studies have been
inconclusive. Although we have not been subject to any claims
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relating to RF emissions, we have established operating procedures designed to
reduce employee exposures to RF emissions and are presently evaluating certain
of our towers and transmission equipment in the United States and the United
Kingdom to determine whether RF emission reductions are possible.
In addition, we are subject to licensing, registration and related
requirements concerning tower siting, construction and operation. In the
United States, the FCC's decision to license a proposed tower may be subject
to environmental review pursuant to the National Environmental Policy Act of
1969 ("NEPA"), which requires federal agencies to evaluate the environmental
impacts of their decisions under certain circumstances. The FCC regulations
implementing NEPA place responsibility on each applicant to investigate any
potential environmental effects of a proposed operation and to disclose any
significant effects on the environment in an environmental assessment prior to
commencing construction. In the event the FCC determines that a proposed tower
would have a significant environmental impact, the FCC would be required to
prepare an environmental impact statement. This process could significantly
delay or prevent the registration or construction of a particular tower, or
make tower construction more costly. In certain jurisdictions, local laws or
regulations may impose similar requirements.
We believe that we are in substantial compliance with all applicable
Environmental Laws. Nevertheless, there can be no assurance that the costs of
compliance with existing or future Environmental Laws will not have a material
adverse effect on our business, results of operations, or financial condition.
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THE PROPOSED TRANSACTIONS
Proposed BAM JV
On December 8, 1998, BAM, certain of the Transferring Partnerships, the
Company and CCA Investment Corp., our wholly owned indirect subsidiary
("CCAIC"), entered into the Formation Agreement to form the Proposed BAM JV to
own and operate a significant majority of BAM's towers. We will own
approximately 62.3% of the Proposed BAM JV and BAM and certain of its
affiliates will own the remaining 37.7% along with a 0.001% interest in the
joint venture's operating subsidiary. For financial reporting purposes, we
intend to consolidate the Proposed BAM JV's results of operations and
financial condition with our own.
We will manage the day-to-day operations of the Proposed BAM JV. The
Proposed BAM JV will actively seek to add additional tenants to its towers in
order to increase its revenues. The Proposed BAM JV will also construct and
own new towers that are needed by BAM's wireless communications business. See
"--Build-to-Suit Agreement" and "--Global Lease". The Proposed BAM JV will
have regional offices that will be staffed primarily with our employees to
perform marketing, billing, operations and maintenance functions.
Although the Proposed BAM JV is expected to be formed during the first
quarter of 1999, the Formation Agreement is subject to a number of significant
conditions. There can be no assurance that the Proposed BAM JV will be formed
on the terms described in this document or at all.
The following descriptions of the agreements related to the Proposed BAM JV
are summaries of the material portions of those agreements. These descriptions
are qualified in their entirety by reference to the complete texts of the
agreements, each of which is available as set forth under the heading
"Available Information".
Formation Agreement
Formation of the Proposed BAM JV. Pursuant to the Formation Agreement, CCAIC
will contribute $250.0 million in cash and approximately 15.6 million shares
of our common stock (valued at $197.0 million) to the Proposed BAM JV. BAM and
the Transferring Partnerships will transfer approximately 1,427 towers along
with related assets and liabilities to the Proposed BAM JV. The Proposed BAM
JV expects to borrow $180.0 million under a committed $250.0 million revolving
credit facility. The joint venture will make a $380.0 million cash
distribution to BAM.
Concurrently with the formation of the joint venture, BAM and the Proposed
BAM JV will enter into a master Build-to-Suit Agreement, a Global Lease and a
transitional services agreement and we will enter into a services agreement
with the Proposed BAM JV.
Terms and Conditions. In connection with its contribution of assets and
liabilities to the Proposed BAM JV, BAM is making certain representations and
warranties to the Proposed BAM JV concerning the contributed assets and
liabilities. In general, the Proposed BAM JV will have until June 30, 2000, to
raise any claims for indemnification for breaches of the representations and
warranties by BAM. However, BAM's indemnification obligations are subject to a
number of significant limitations including a per occurrence deductible of
$25,000, an aggregate deductible of $7.5 million and an absolute cap of $195.0
million.
The formation of the Proposed BAM JV is subject to a number of significant
conditions. These conditions include:
. accuracy of the representations and warranties of BAM and us;
. receipt of bank financing by the Proposed BAM JV;
. receipt of certain third party consents required for the transfer of the
tower assets to the Proposed BAM JV;
. receipt of regulatory approvals;
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. absence of litigation;
. receipt of certain environmental studies; and
. absence of any material adverse effect with respect to our business,
assets, operations, conditions (financial or otherwise) or prospects and
of our subsidiaries taken as a whole.
There can be no assurance that these conditions will be satisfied or waived.
If they are not satisfied or waived, the Proposed BAM JV may not be formed on
the terms described in this document or at all. See "Risk Factors--The
Proposed BAM JV May Not Occur".
Build-to-Suit Agreement
In connection with the formation of the Proposed BAM JV, BAM and the
Proposed BAM JV will enter into the Build-to-Suit Agreement. Pursuant to the
Build-to-Suit Agreement and subject to certain conditions, BAM and the
Proposed BAM JV have agreed that (i) the next 500 towers to be built for BAM's
wireless communications business will be constructed and owned by the Proposed
BAM JV and (ii) immediately thereafter the Proposed BAM JV will have a right
of first refusal to construct the next 200 additional towers to be built for
BAM. BAM is required to submit these 700 site proposals to the Proposed BAM JV
during the five-year period following the formation of the joint venture;
however, the five-year period will be extended for additional one-year
periods, until 700 site proposals are submitted to the Proposed BAM JV. The
Proposed BAM JV will be required to build towers in the general vicinity of
the locations proposed by BAM. Upon completion of a tower, it will become
subject to the Global Lease (as discussed below). Space not leased by BAM or
its affiliates on each tower is available for lease by the Proposed BAM JV to
third parties.
The Build-to-Suit Agreement sets out various time periods for BAM to
identify its tower needs within certain search areas, and for the Proposed BAM
JV to locate sites and to thereafter complete site acquisition and development
work, including permitting and construction.
Global Lease
In connection with the formation of the Proposed BAM JV, BAM and the
Proposed BAM JV will enter into the Global Lease. All of the approximately
1,427 towers to be acquired by the Proposed BAM JV from BAM and the
Transferring Partnerships pursuant to the Formation Agreement, and all towers
constructed by the Proposed BAM JV pursuant to the Build-to-Suit Agreement,
will be governed by the Global Lease. The average monthly rent paid by BAM on
each of the 1,427 towers contributed to the Proposed BAM JV by BAM will be
approximately $1,850. Minimum monthly rents on the towers built pursuant to
the Build-to-Suit Agreement will range from $1,250 to $1,833 depending on the
region in which the tower is located. These rents may increase based on the
amount of BAM's equipment to be installed at a site. Rents are subject to
annual increase based on the consumer price index, subject to certain
adjustments. For all sites, the initial lease term is ten years. BAM has the
right to extend any lease for three additional five-year terms and one
additional term of four years and eleven months. Each lease will automatically
renew for an option term unless BAM notifies the Proposed BAM JV at least six
months before the then current term expires. Space not leased by BAM or its
affiliates on each tower is available for lease by the Proposed BAM JV to
third parties.
Operating Agreements
In connection with the formation of the Proposed BAM JV, BAM and CCAIC will
enter into limited liability company operating agreements that will establish
and govern the limited liability companies comprising the Proposed BAM JV.
Governance. The business and affairs of the Proposed BAM JV will be managed
by its managers under the supervision of a board of representatives. Each
manager will be selected by CCAIC. Members of the board of representatives
will be selected by each of BAM and CCAIC in proportion to their ownership
interests in the Proposed BAM JV. The board of representatives initially will
have six members, with two selected by BAM and
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four selected by CCAIC. So long as BAM maintains at least a 5.0% interest in
the Proposed BAM JV, it will maintain the right to designate at least one
member of the board of representatives.
The managers will operate the Proposed BAM JV on a day-to-day basis. In
general, the managers will have the power and authority to take all necessary
or appropriate actions to conduct the Proposed BAM JV's business in accordance
with its then current business plan. Actions requiring the approval of the
board of representatives generally will be authorized upon the affirmative
vote of a majority of the members of the board of representatives. However,
the following actions will require the mutual consent of BAM and CCAIC, either
by written consent or by the approval of representatives of each of BAM and
CCAIC at a meeting of the board of representatives:
. engaging in any business other than owning, acquiring, constructing,
leasing and operating communications towers in the United States;
. taking any voluntary action that would cause the Proposed BAM JV to be
insolvent or voluntarily entering into a bankruptcy proceeding;
. incurring any debt other than the Proposed BAM JV Credit Facility and
ordinary course trade payables;
. incurring any liens;
. issuing any additional equity interests in the Proposed BAM JV;
. becoming liable with respect to contingent obligations such as
guarantees or the obligation to make take-or-pay or similar payments;
. failing to preserve the Proposed BAM JV's existence under Delaware law
or its qualification to do business in each jurisdiction in which such
qualification is necessary or desirable;
. mergers or consolidations;
. sales of assets outside the ordinary course;
. entry into contracts with affiliates except in the ordinary course and
on an arm's-length basis;
. any dividends or distributions; provided, if the Proposed BAM JV has
been dissolved and the Proposed BAM JV Credit Facility has been repaid
in full, BAM's consent will not be required;
. the determination of the methodology to be used in calculating payments
under the management agreement and the services agreement pursuant to
which the Company will manage and provide services to the Proposed BAM
JV;
. approval of the business plan;
. entry into contracts that (1) restrict the business activities of the
Proposed BAM JV in any geographic area, (2) contain exclusivity
provisions, (3) are inconsistent with any of the agreements entered into
in connection with the formation of the Proposed BAM JV or (4) provide
for the purchase or sale of goods or services involving an amount in
excess of $10.0 million per year; and
. exercising any voting rights with respect to the shares of common stock
of the Company held by the Proposed BAM JV; provided, if BAM and CCAIC
do not agree as to how the shares should be voted, the shares will be
voted pro rata with all shares of common stock of the Company voted on
the matter.
Restrictions on Transfers of Interests; Rights of First Refusal; Tag-Along
Rights. Except for transfers to wholly owned affiliates, neither BAM nor
CCAIC may transfer its interest in the Proposed BAM JV to a third party unless
it first offers its interest to the other on terms and conditions, including
price, no less favorable than the terms and conditions on which it proposes to
sell its interest to the third party. In addition, if BAM or CCAIC wishes to
transfer its interest in the Proposed BAM JV to a third party, the other party
will have the right to require the third party, as a condition to the sale, to
purchase a pro rata portion of its interest in the Proposed BAM JV on the same
terms and conditions, including price. BAM may only transfer its 0.001%
interest in the operating subsidiary of the Proposed BAM JV to its wholly
owned affiliates or in connection with a merger or consolidation transaction
to which BAM or Bell Atlantic Corporation is a party.
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Dissolution of the Proposed BAM JV. We have agreed with BAM that upon a
dissolution of the Proposed BAM JV, in satisfaction of our respective
interests in the Proposed BAM JV, we would receive all the assets and
liabilities of the Proposed BAM JV other than the approximately 15.6 million
shares of our common stock held by the Proposed BAM JV and BAM would receive
all of the shares of our common stock held by the Proposed BAM JV and a
payment from us, equal to 14.0% of the fair market value of the assets and
liabilities of the joint venture (other than our common stock), to be made in
cash or our common stock (at our election). BAM would continue to retain its
0.001% interest in the joint venture's operating subsidiary. For so long as it
retains such interest, the operations formerly included in the Proposed BAM JV
would remain subject to the operating restrictions set forth under "--
Governance". A dissolution of the Proposed BAM JV may be triggered (1) by BAM
at any time following the third anniversary of the formation of the Proposed
BAM JV and (2) by us at any time following the fourth anniversary of its
formation; however, if the we trigger the dissolution prior to the seventh
anniversary, we may be required to make additional cash payments to BAM.
Transitional Services Agreement; Services Agreement
In connection with the formation of the Proposed BAM JV, BAM and the
Proposed BAM JV are expected to enter into a transitional services agreement
pursuant to which BAM will provide the Proposed BAM JV with services necessary
to ensure a smooth transition of the business to the Proposed BAM JV. In
addition, we and the Proposed BAM JV are expected to enter into the services
agreement pursuant to which we will provide the Proposed BAM JV with certain
services.
Proposed BellSouth Transaction
On March 5, 1999, we entered into the Letter Agreement with BellSouth
Mobility Inc., BellSouth Telecommunications Inc. and certain of its
affiliates. Subject to approval by BellSouth's Board of Directors, the Letter
Agreement sets forth the terms of our agreement under which BellSouth will
sell to us, in a taxable sale pursuant to a master sublease agreement, their
1,850 wireless communications towers for $610.0 million, consisting of $430.0
million in cash and approximately 9.1 million shares of our common stock
(valued at $180.0 million), subject to adjustments. The aggregate
consideration will be subject to increase if BellSouth transfers more than
1,850 towers to us in connection with the transaction.
We will be responsible for managing, maintaining and leasing the available
space on BellSouth's wireless communications towers located throughout
Indiana, Kentucky, Louisiana, Mississippi, Alabama, Arkansas, Florida, Georgia
and Tennessee. While we will have complete responsibility for the towers, and
their monitoring and maintenance, BellSouth will continue to fully own its
communications components including switching equipment, shelters and cell
site facilities. BellSouth will pay a fee of $1,200 per month per site to us
for its services on existing and build-to-suit towers.
The transaction is expected to close in a series of closings, beginning in
the second quarter of 1999, and is expected to be fully closed no later than
eight months thereafter. In connection with our entering into the Letter
Agreement we have placed $50.0 million in an escrow account which will be
returned to us at the first stage of the multi-stage closing. There can be no
assurance, however, that the Proposed BellSouth Transaction will be
consummated on the terms described in this document or at all. See "Risk
Factors--We May Not Consummate the Proposed Transactions."
The following description of the agreements related to the Proposed
BellSouth Transaction are summaries of the material portions of those
agreements. These descriptions are qualified in their entirety by reference to
the complete text of the agreements, each of which is available as set forth
under the heading "Available Information".
Letter Agreement
General. Pursuant to the Letter Agreement, a newly formed subsidiary of
ours, that we call CCSI, will receive rights to lease, sublease, design,
develop, contract, operate, market and manage approximately 1,850 tower sites
owned by BellSouth Mobility Inc., BellSouth Telecommunications Inc. and
certain of BellSouth's
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affiliates, or to be constructed on behalf of BellSouth, in Indiana, Kentucky,
Louisiana, Mississippi, Alabama, Arkansas, Florida, Georgia and Tennessee,
which we call the Territory, in exchange for aggregate consideration of $610.0
million, consisting of $430.0 million in cash and approximately 9.1 million
shares of our common stock (valued at $180.0 million), subject to adjustments.
The terms and conditions of the sublease of the 1,850 sites by BellSouth to
CCSI are set forth in an agreement, which we call the Sublease, to be entered
into between BellSouth and CCSI and us. Further, we have agreed to enter into
a site management agreement, which we call the Site Management Agreement,
pursuant to which we will agree to provide certain management services on
sites which are not part of the 1,850 towers contemplated by the Sublease,
because of restrictions on transfer, and which will be designated by
BellSouth. The Letter Agreement further contemplates a build-to-suit agreement
to be entered into by BellSouth and CCSI pursuant to which CCSI will develop
and construct at least 500 towers in the Territory over a period of five
years, which period will be extended for an additional two-year period in the
event CCSI has not completed at least 500 tower builds within the initial
five-year time period.
The Letter Agreement provides that the transaction will require further
documentation including the preparation, acceptance and delivery of a
definitive agreement to sublease, which we call the Agreement to Sublease, the
terms of which have not yet been fully negotiated.
Consideration. Pursuant to the Letter Agreement, we will pay to BellSouth
the sum of $324,324.32 for each site leased or subleased to CCSI pursuant to
the Sublease. In the event that subleases covering the full 1,850 towers are
transferred to CCSI as contemplated by the Letter Agreement, the aggregate
consideration payable to BellSouth will consist of $430.0 million in cash and
$180.0 million in our common stock; provided, however, that we will retain the
option to increase the cash portion of the aggregate consideration by up to
$30.0 million and decrease the equity portion to not less than $150.0 million.
Such option must be exercised by us prior to the first closing. The number of
shares of our common stock included in the consideration will be approximately
9.1 million shares and was determined using the average closing price of our
common stock on the 30 trading days immediately preceding March 5, 1999, which
we call the Initial Share Price. While the Letter Agreement contemplates the
sublease by BellSouth of approximately 1,850 sites to CCSI, in the event that
additional sites are subleased to CCSI, the consideration paid for the next
250 sites will be payable in cash only. If CCSI subleases more than 2,100
sites from BellSouth in connection with the Sublease, consideration for any
additional towers will be payable in shares of our common stock.
The Letter Agreement further provides that if the average closing price of
our common stock during the 30 day period immediately preceding the first
anniversary of the final closing which we call the Subsequent Share Price is
less than the Initial Share Price, then we will, at our option, (1) pay
BellSouth cash in an amount, which we call the Make-up Amount, equal to (x)
the difference between the Initial Share Price and the Subsequent Share Price
multiplied by (y) the number of shares issued as part of the consideration
less (z) the gross proceeds from all sales of such shares prior to the first
anniversary of the final closing or (2) issue to BellSouth the number of
shares of our common stock equal to the Make-up Amount divided by the
Subsequent Share Price; in each case not to exceed $50.0 million in cash or
$75.0 million in common stock.
Pursuant to the Letter Agreement, the consideration will be subject to
adjustment based on the amount we are required to pay in calendar year 1999
for ground rent on sites contemplated by the Letter Agreement. If a post-
closing audit demonstrates that the amount we are required to pay, in
aggregate, for such ground rents exceeds $11.4 million, BellSouth will be
required to pay to CCSI an amount equal to a certain multiple of the amount by
which the rents exceed $11.4 million, not to exceed $45.0 million.
Escrow Payment. In connection with the signing of the Letter Agreement, we
deposited the amount of $50.0 million into an escrow account which we call the
BellSouth Escrow Payment. Upon approval of the Proposed BellSouth Transaction
by BellSouth's Board of Directors, BellSouth will be entitled to receive the
BellSouth Escrow Payment in full in the event that:
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. we and BellSouth fail to execute the Agreement to Sublease within 90
days of the date of the Letter Agreement (and BellSouth has negotiated
the operative documents in good faith) or
. the Agreement to Sublease is executed but the initial closing fails to
occur as a result of any breach of the Agreement to Sublease by us or
CCSI or any failure of us or CCSI to satisfy the closing conditions set
forth in the Agreement to Sublease.
Upon consummation of the first closing, the BellSouth Escrow Payment will be
returned to us. Further, if BellSouth's Board of Directors fails to approve
the Proposed BellSouth Transaction within the applicable time period, the
BellSouth Escrow Payment will be returned to us. BellSouth has agreed to seek
the approval of its Board of Directors as soon as practicable, but no later
than April 26, 1999.
In the event that BellSouth's Board of Directors does not approve the
Proposed BellSouth Transaction within 90 days of the Letter Agreement, and if
at any time within one year following expiration or termination of the Letter
Agreement BellSouth transfers, sells, assigns, leases, subleases or otherwise
disposes of all or substantially all of the tower assets contemplated by the
Letter Agreement, BellSouth will be required to pay to us an amount equal to
the greater of (i) $15.0 million or (ii) one-half of the amount by which the
total consideration received by BellSouth pursuant to such transfer, sale,
assignment, lease or sublease exceeds the total consideration that would have
been paid to BellSouth by us pursuant to the Letter Agreement.
Closings. In connection with the Letter Agreement, we and BellSouth have
agreed that the sublease of the sites pursuant to the Sublease will be
consummated in a series of closings not to exceed a period of eight months and
will include a minimum number of sites to be included in each closing, the
first of which is expected to take place on May 31, 1999. BellSouth has agreed
to use all commercially reasonable efforts to sublease approximately 250 sites
at each closing, grouped so as to be located in contiguous regions, until all
sites have been subleased prior to or at the final closing. The sites to be
included on the initial closing date will be located in Kentucky and Indiana.
Termination Right. The Letter Agreement provides that in the event that any
one of the closings contemplated by the Proposed BellSouth Transaction is not
consummated due to our or TowerCo's failure to comply with all conditions,
covenants and representations required of them, in addition to any other
remedies BellSouth may have at equity or law, BellSouth will have the right to
require us to pay to BellSouth a termination fee of $50.0 million which we
call the Termination Fee, to terminate all agreements between the parties, and
at BellSouth's option, to rescind all prior closings. If BellSouth elects to
rescind the prior closings, payment of the Termination Fee shall be made by
netting it against the amounts previously paid to BellSouth at the previous
closings, and BellSouth shall return to us any amount which is in excess of
the Termination Fee.
Sublease
Pursuant to the Letter Agreement, the parties fully and completely agreed
upon the terms of the Sublease.
General. Pursuant to the terms of the Sublease, BellSouth has agreed to
grant a lease to CCSI, pursuant to which CCSI will lease (or sublease) the
land, tower and improvements which we call the Subleased Property at each site
other than certain space reserved by BellSouth and space utilized by third
parties under existing subleases. BellSouth has agreed to lease to CCSI all
its sites in the Territory except where it is legally prohibited from doing so
and except for sites that are specifically excluded from the Sublease.
BellSouth expects that the number of sites available for sublease will be
approximately 1,850. The sites constructed pursuant to the Build to Suit
Agreement, as described below, will also be made part of and subject to the
Sublease.
Pursuant to the Sublease, CCSI will be entitled to use the Subleased
Property of each site for constructing, installing, operating, managing,
maintaining and marketing the tower and improvements on each site, including
leasing space to third party tenants. BellSouth has agreed to pay CCSI a site
maintenance charge of $1,200 per month per site, subject to an increase of
five percent (5%) per year for the first ten (10) years following the
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applicable commencement date of the sublease on such site. If, after the tenth
anniversary following each commencement date, the then current site
maintenance charge is below the market rate, then such site maintenance charge
will automatically be increased on such anniversary and each anniversary
thereafter by the consumer price index ("CPI"). If the then site maintenance
charge is above the market rate, then such site maintenance charge will be
automatically reset at ninety percent (90%) of such agreed upon market rate
and will increase on each following anniversary by the then current annual
market rate of increase for comparable properties. CCSI has agreed to pay as
rent to BellSouth the ground rents relating to each site that is leased by
BellSouth, and rent of $1.00 per year for sites that are owned by BellSouth.
In addition, CCSI has agreed to sublease available space to any party to
existing colocation agreements with BellSouth; provided that CCSI will receive
all rents and other economic benefits from the parties to such colocation
agreements.
Term. The term of the Sublease will be one hundred (100) years for sites
owned by BellSouth and, for sites leased by BellSouth, one day less than the
term of the underlying ground lease. CCSI will be responsible for negotiating
and obtaining extensions or renewals of the ground leases. In addition, if
CCSI is able to acquire a fee simple interest in a site, CCSI has agreed to
transfer such fee simple interest to BellSouth for $1.00, in which event CCSI
will pay no ground rent as of the date fee simple title vests in BellSouth.
Reserved Space. Under the Sublease, BellSouth has reserved space which we
call the Reserved Space on each site. The Reserved Space generally relates to
the portion of the site, including space on the tower, in use by BellSouth and
its affiliates. In certain circumstances and subject to certain conditions
described in the Sublease, BellSouth has the right to increase the number of
antennas on its reserved space to twelve (12), without increasing the related
site maintenance payment, on up to one hundred twenty (120) towers. BellSouth
also has the right to substitute the Reserved Space for other available space
on the tower, as well as a right of first refusal and right of substitution as
to available space which CCSI intends to sublease to any third party.
If BellSouth ceases using its Reserved Space on a site and elects to assign,
sublet or otherwise transfer the interest in the Reserved Space on such site,
CCSI will have the right to, at any time, acquire BellSouth's interest in the
applicable Reserved Space by paying to BellSouth consideration of (1) $5,000
(subject to increase based on the CPI) plus (2) a grant to BellSouth of the
right to receive up to thirty-five percent (35%) of all gross revenues payable
to CCSI in respect of such Reserved Space.
BellSouth will have the right to put to CCSI its rights in its Reserved
Space with respect to a site, and thereby add such space to the Sublease;
provided that the number of sites subject to such a put right may not exceed
the greater of one and one half percent (1 1/2%) or thirty (30) of the total
sites. In such event, BellSouth will assign to CCSI all its rights in the
Reserved Space on that site and will thereafter no longer be responsible for
the related site maintenance charge.
Withdrawal Right. After the tenth anniversary of the first closing,
BellSouth will have the right, subject to certain notice requirements, to
withdraw its rights on any site. In such case, BellSouth will assign to CCSI
all its rights, including the ground lease and any Reserved Space, with
respect to any withdrawn site and shall no longer be responsible for the
related site maintenance charge.
Termination. The Sublease may be terminated by each party in the event of
certain breaches by the other party, including the failure to timely make
required payments under the Sublease, breaches of covenants and other
agreements in the Sublease, breaches of representations and warranties and
insolvency. In the case of BellSouth's right to terminate, BellSouth may
terminate the Sublease as to an applicable site following a breach (and
failure to cure) relating to that particular site. BellSouth may terminate the
entire Sublease upon the occurrence of unwaived defaults by CCSI in respect of
more than fifty (50) sites during any consecutive five-year period.
Build to Suit Agreement
In connection with the Letter Agreement, BellSouth agreed to enter into the
Build to Suit Agreement with us and CCSI pursuant to which CCSI will develop
and construct all towers built in the Territory on behalf
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of BellSouth for a period of five years. If CCSI has not constructed at least
500 towers over the five year period following the signing of the Build to
Suit Agreement, the term of the Build to Suit Agreement will be extended for
up to an additional two years until such time as CCSI has constructed 500
towers. BellSouth will be required, pursuant to the Build to Suit Agreement,
to submit to CCSI all proposals to develop and construct tower sites within
the Territory until CCSI has completed construction of 500 towers. CCSI will
be required to develop and construct tower sites in locations that satisfy
BellSouth's engineering requirements. Upon substantial completion of a tower
site, the site will become subject to and part of the Sublease. The Build to
Suit Agreement will provide that space not reserved by BellSouth on each tower
will be available for lease by CCSI to third parties.
Site Maintenance Agreement
In connection with the Agreement to Sublease, the parties will enter into a
Site Maintenance Agreement whereby CCSI will perform certain identified
services at those sites in the Territory which are not leased or subleased to
CCSI pursuant to the Sublease and which sites are designated by BellSouth for
inclusion in the Site Maintenance Agreement. Pursuant to the Letter Agreement,
we and BellSouth have agreed that BellSouth will pay to us a site maintenance
fee of $333.00 per site per month, increased annually by the CPI, for sites
designated under the Site Maintenance Agreement. Further, the parties have
agreed that the total number of sites to be covered by the Site Management
Agreement will not exceed 100 sites.
Site Marketing Agreement
On March 25, 1998, we and BellSouth entered into the Site Marketing
Agreement pursuant to which we market BellSouth's sites located in Kentucky.
In connection with the Letter Agreement, we agreed to renew the Site Marketing
Agreement, the term of which ended on February 15, 1999, and to extend the
scope of the agreement to include the entire Territory.
Registration Rights Agreement
As a condition to the Letter Agreement, we have agreed to enter into a
registration rights agreement whereby we will grant to BellSouth certain
demand and piggyback registration rights in respect of shares of our common
stock we pay to BellSouth as consideration for the Proposed BellSouth
Transaction.
Proposed Powertel Acquisition
On March 15, 1999, we and CCP Inc., our wholly owned indirect subsidiary,
entered into the Asset Purchase Agreement with Powertel, Inc. and five of its
subsidiaries, which we refer to collectively as Powertel, pursuant to which
the parties agreed that we would purchase from Powertel approximately 650
towers and related assets and liabilities.
We will pay to Powertel aggregate consideration of $275.0 million, which we
refer to below as the Purchase Price, (subject to adjustment based on the
amount of towers actually tendered to us at closing) for the 650 towers. At
closing, Powertel will pay us a credit against the purchase price in an
aggregate amount of $383,000.00, which we call the Purchase Price Credit, as
consideration for our acceptance of certain towers containing site leases
which may require revenue received from Powertel or its affiliates to be
shared with the site lessors. We call the Purchase Price less the Purchase
Price Credit, the Closing Price. Pursuant to the Asset Purchase Agreement, we
have placed $50.0 million in escrow to be applied to the Closing Price. In the
event that Powertel has fulfilled all conditions precedent to closing and we
are unable or unwilling to deliver the balance of the Closing Price, Powertel
will receive up to the full $50.0 million as liquidated damages. See"--Asset
Purchase Agreement", "--Escrow Agreement" and "Risk Factors--We May Not
Consummate the Proposed Transactions".
Pursuant to the Asset Purchase Agreement, at closing Powertel will assign
and we will assume five master site agreements, which we call the Master Site
Agreements, pursuant to which Powertel or its affiliates will agree
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to pay us monthly rent of $1,800 per tower for continued use of space Powertel
occupies on the towers. This per tower amount is subject to increase on each
fifth anniversary of the agreement and as Powertel adds equipment to these
towers.
Although the Proposed Powertel Acquisition is expected to be consummated on
or before June 4, 1999, the Asset Purchase Agreement is subject to a number of
significant conditions. There can be no assurance that the Proposed Powertel
Acquisition will be consummated on the terms described in this document or at
all. See "Risk Factors--We May Not Consummated the Proposed Transactions".
The following descriptions of the agreements related to the Proposed
Powertel Acquisition are summaries of the material portions of those
agreements. These descriptions are qualified in their entirety by reference to
the complete text of the agreements, each of which is available as set forth
under the heading "Available Information".
Asset Purchase Agreement
Purchase Price. Pursuant to the Asset Purchase Agreement, we will pay the
Closing Price in cash on or before June 4, 1999, which we refer to as the
Closing Date, to Powertel for Powertel's tower structures, rights to tower
sites, related assets and rights under applicable governmental permits. The
purchase price is subject to adjustment up or down based on the actual number
of sites tendered at closing. The Asset Purchase Agreement provides that sites
considered defective or incomplete, which we call "Rejected Sites", will not
be tendered at closing, and consequently, the purchase price will be reduced
by an amount equal to $423,077 for each Rejected Site.
Terms and Conditions. In connection with the Proposed Powertel Acquisition,
we and Powertel are making certain representations and warranties which must
be true on the Closing Date in order for the transaction to be consummated.
Other conditions which must be satisfied on the Closing Date include:
. compliance by us and Powertel with the Asset Purchase Agreement;
. absence of litigation;
. receipt of regulatory approvals; and
. absence of any material adverse effect with respect to the Powertel
assets and assumed liabilities.
In addition, pursuant to the Asset Purchase Agreement, we have deposited
$50.0 million in cash, which we refer to as the Escrow Deposit, with SunTrust
Bank Atlanta, which we refer to as the Escrow Agent. At closing, the Escrow
Deposit will be delivered to Powertel and credited against the Closing Price.
However, we have agreed that the Escrow Deposit will be forfeited to Powertel
in the event that we are unable to receive adequate financing to consummate
the acquisition and thus are unable to close the acquisition in a timely
manner. As a condition to the Asset Purchase Agreement, we have agreed to use
our reasonable best efforts to have a registration statement relating to such
financing declared effective as expeditiously as possible. Further, upon the
occurrence of certain events, we are required to provide Powertel with
adequate written assurance that we have at least one alternative financing
source, which in Powertel's sole judgment provides it assurance that we will
have on hand a minimum of an additional $225.0 million in cash to apply to the
Purchase Price at closing. We refer to this as a Financing Assurance. Such
Financing Assurance must be received by Powertel within five days of the
occurrence of certain events including:
. our failure to file the registration statement before March 19, 1999;
. the withdrawal or abandonment of the registration statement or the
decision not to proceed with the offerings;
. our failure to commence presentations to institutional investors by May
15, 1999 or, after commencement of such presentations, termination or
abandonment of such presentations and failure to proceed to pricing of
the offerings.
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In the event we are required to provide Powertel with a Financing Assurance,
Powertel will have five days to accept or reject it. If Powertel rejects the
Financing Assurance, we will have ten days from receipt of the rejection to
deliver the $225.0 million balance of the Closing Price to the Escrow Agent,
who will deliver the entire Closing Price to Powertel at closing. However, if
we are unable or unwilling to deliver the additional sum into escrow, Powertel
will have the right to unilaterally terminate the Asset Purchase Agreement,
and receive, as its sole remedy, from the Escrow Deposit liquidated damages in
the amount of $10.0 million on or prior to May 15, 1999 or $25.0 million after
May 15, 1999 but prior to June 4, 1999. If on June 4, 1999, Powertel has
fulfilled all of its obligations and conditions precedent to closing in all
material respects and has not defaulted or breached its obligations under the
Asset Purchase Agreement, and we have failed to deliver the additional sum
into escrow or are otherwise unable or unwilling to deliver the Purchase
Price, Powertel will receive as liquidated damages the entire amount of the
Escrow Deposit.
Master Site Agreement
On the Closing Date, the parties to the Asset Purchase Agreement and certain
of Powertel's affiliates will enter into Master Site Agreements governing all
towers acquired pursuant to the Asset Purchase Agreement. Pursuant to the
Master Site Agreements, Powertel or certain affiliates will agree to continue
to lease the space it currently occupies on the towers to be acquired by us.
The monthly rent paid by Powertel for each tower will be $1,800. Such monthly
payment is subject to increase based on an agreed upon schedule if and when
Powertel adds equipment to a site. Nonetheless, the monthly rent, including
additional rents related to the addition of certain equipment, shall be
increased on each fifth anniversary of the agreement up to an amount that is
115% of the rent paid during the preceding five year period. The Master Site
Agreements provide that space not occupied by Powertel on the acquired towers
can be leased to third parties at our sole option.
Pursuant to the Master Site Agreements, the term of each tower lease will be
ten years. Powertel has the right to extend any site lease for up to three
additional five year periods. Each site lease will automatically renew for an
option term unless Powertel notifies us of its intent not to renew at least
180 days prior to the end of the then current term.
Proposed One2One Transaction
On March 5, 1999, we entered into an agreement, which we call the Framework
Agreement, with One2One, pursuant to which CTI has agreed to manage, develop
and, at its option, acquire up to 821 towers. These towers represent
substantially all the towers in One2One's 1800 MHz nationwide wireless network
in the United Kingdom. Approximately one-half of these 821 towers can
accommodate additional tenants. We expect to upgrade or replace the other
towers as demand for space on such towers arises. We believe that the cost of
upgrading or replacing any single tower will not exceed $40,000.
CTI will be responsible for managing and leasing available space on the
towers, and will receive all the income from any such third party leases. The
term of the management arrangements will be for up to 25 years. During the
three-year period following the closing, CTI will have the right, at its
option, to acquire for (Pounds)1.00 per site One2One's interest in the 821
towers, to the extent such interests can be assigned. One2One has also agreed
to include as part of the Framework Agreement, including CTI's right to
acquire sites during the three-year period, any new One2One towers constructed
during the term of the agreement.
Framework Agreement
Terms and Conditions. The 821 existing towers will be managed by CTI
pursuant to a management contract with an initial term of 10 years, which is
extendable at CTI's option for an additional 15 years. CTI will also assume
all liabilities in connection with the 821 existing towers. During the three-
year period following the closing, which we call the Option Period, One2One
will assign to CTI, at CTI's option, One2One's interest in the sites on which
the 821 existing towers are located. For sites where the underlying ground
lease is not assignable, the management contract will continue in effect. CTI
also has the right during the Option Period to assume ownership of any new
One2One towers which are built by or for One2One during the Option Period.
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Consideration. As consideration for the Framework Agreement, One2One will
receive varying rent-free periods of site use depending on the type of tower
site as follows:
. The 821 existing towers. One2One will enter into a 25 year site sharing
agreement with CTI permitting One2One to continue to occupy the 821
existing towers. This agreement will be rent-free until March 2007 (with
a retroactive adjustment to April 1998). After the expiration of this
initial period, One2One will pay to CTI an annually indexed rental fee
(based on (Pounds)3,750.0 per site index adjusted from 1999) plus a
further additional compensatory payment to CTI in the event that CTI is
chosen as the contractor with respect to fewer than 250 new One2One
sites. See "-- One2One ADC Contract".
. New One2One sites. One2One will also enter into 25 year site sharing
agreements with CTI to occupy all new One2One towers and pay CTI an
annually indexed rental fee (based on (Pounds)4,000.0 per site index
adjusted from 1999) after an initial rent-free period of fifteen years.
. 166 CTI towers currently under lease by One2One. One2One currently
occupies 166 CTI sites under a master lease agreement. This master lease
will be modified to allow One2One to occupy these sites rent-free from
April 1998 until March 2000.
The Framework Agreement is conditional upon the approvals of both One2One
and CTI's board of directors and senior creditors.
One2One ADC Contract
In connection with the Framework Agreement, CTI entered into a separate
contract with One2One, which we refer to as the ADC Contract, under which CTI
will provide acquisition, design and construction services for up to 250 new
One2One sites. If One2One requests CTI's services with respect to all 250
sites, CTI will be paid aggregate fees in excess of (Pounds)7.0 million. CTI
also believes that some of the new sites will be new builds, which are known
as greenfield sites, under the Framework Agreement, and thus CTI will be
eligible to assume ownership of these greenfield sites following their
construction, pursuant to the terms of the Framework Contract.
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THE PROPOSED OFFERINGS
At the same time we file this amendment to our exchange offer, we are filing
a Registration Statement on Form S-1 in connection with a concurrent public
underwritten offering of $475,000,000 of our Common Stock, $.01 par value, and
$300,000,000 of our % Senior Discount Notes due 2011.
We expect to use the proceeds of the Proposed Offerings to repay
indebtedness incurred to finance a portion of the Proposed BellSouth
Transaction and the Proposed Powertel Acquisition, to finance the balance of
the Proposed BellSouth Transaction and the Proposed Powertel Acquisition and
for general corporate purposes.
We cannot guarantee, however, that the Proposed Offerings will be
consummated on the terms contained in the S-1 Registration Statement or at
all. See "Risk Factors--We May Not Consummate the Proposed Transactions or the
Proposed Offerings".
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MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information, as of March 1, 1999,
with respect to persons who serve as directors or executive officers and other
key personnel of the Company:
<TABLE>
<CAPTION>
Name Age Positions with the Company
---- --- --------------------------
<S> <C> <C>
Ted B. Miller, Jr....... 47 Chief Executive Officer and Vice Chairman of the Board of
Directors
David L. Ivy............ 52 President and Director
Charles C. Green, III... 52 Executive Vice President and Chief Financial Officer
John L. Gwyn............ 50 Executive Vice President
E. Blake Hawk........... 49 Executive Vice President and General Counsel
Wesley D. Cunningham.... 39 Senior Vice President, Corporate Controller and Chief
Accounting Officer
Edward W. Wallander..... 41 Senior Vice President and Chief Information Officer
John P. Kelly........... 41 President and Chief Operating Officer of CCI
Alan Rees............... 55 Chief Operating Officer and Director of CTSH
George E. Reese......... 48 Chief Financial Officer, Secretary and Director of CTSH
Michel Azibert.......... 43 Director
Bruno Chetaille......... 44 Director
Robert A. Crown......... 44 Director
Carl Ferenbach.......... 56 Chairman of the Board of Directors
Randall A. Hack......... 51 Director
Robert F. McKenzie...... 55 Director
William A. Murphy....... 31 Director
Jeffrey H. Schutz....... 47 Director
</TABLE>
Pursuant to the Certificate of Incorporation and By-laws of the Company, the
Board of Directors, other than those directors who may be elected by holders
of any series of Preferred Stock or holders of the Class A Common Stock, are
classified into three classes of directors, denoted as Class I, Class II and
Class III. Messrs. Ferenbach, Schutz and McKenzie are Class I directors.
Messrs. Crown, Murphy and Ivy are Class II directors, and Messrs. Hack and
Miller are Class III directors. The terms of Class I, Class II and Class III
directors expire at the annual meetings of stockholders to be held in 1999,
2000 and 2001, respectively. See "Description of Capital Stock--Certificate of
Incorporation and By-laws--Classified Board of Directors and Related
Provisions". Messrs. Azibert and Chetaille were elected to the Board of
Directors by the holders of the Class A common stock upon consummation of the
Roll-Up.
Ted B. Miller, Jr. has been the Chief Executive Officer since November 1996,
Vice Chairman of the Board of Directors since August 1997 and a director of
the Company since 1995. Mr. Miller co-founded CTC in 1994. He was the
President of the Company and CTC from November 1996 to August 1997. Mr. Miller
has been the Managing Director, Chief Executive Officer of CTI since February
1997 and has served as Chairman of the Board of CTI since August 1998. In
1986, Mr. Miller founded Interstate Realty Corporation ("Interstate"), a real
estate development and consulting company, and has been its President and
Chief Executive Officer since inception. Mr. Miller is a director and/or an
officer of each wholly owned subsidiary of the Company.
David L. Ivy has been the President of the Company since August 1997, and
was elected as a director of the Company in June 1997. From October 1996 to
August 1997, he served as Executive Vice President and Chief Financial Officer
of the Company. Since 1995, he has been the President of DLI, Inc., a real
estate consulting company. From 1993 to 1995, Mr. Ivy was a senior executive
with, and later the President and Chief Operating Officer of, J. E. Robert
Companies, where he managed a joint venture with Goldman, Sachs & Co. that was
established to acquire distressed assets from financial institutions. From
1987 to 1993, Mr. Ivy served as Chairman of the Board of Directors of
Interstate. Mr. Ivy is a director of each wholly owned subsidiary of the
Company.
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Charles C. Green, III has been an Executive Vice President and Chief
Financial Officer of the Company since September 1997. Mr. Green was the
President and Chief Operating Officer of Torch Energy Advisors Incorporated
("Torch"), a major energy asset management and outsourcing company, from 1993
to 1995, and Vice Chairman of the Board of Directors and Chief Investment
Officer from 1995 to 1996. From 1992 to September 1997, he was an officer, and
later the Executive Vice President and Chief Financial Officer, of Bellwether
Exploration Company, an oil and gas exploration and production company and an
affiliate of Torch. From 1982 to 1992, Mr. Green was President, Chief
Operating Officer and Chief Financial Officer of Treptow Development Company,
a real estate development company. Mr. Green currently serves on the Board of
Directors of Teletouch Communications, Inc. He has been a Chartered Financial
Analyst since 1974. Mr. Green is a director and/or officer of each wholly
owned subsidiary of the Company.
John L. Gwyn has been an Executive Vice President of the Company since
August 1997. From February to August 1997, Mr. Gwyn served as Senior Vice
President of the Company and CTC. From 1994 to February 1997, Mr. Gwyn was a
Vice President and Director of Commercial Real Estate Asset Management of
Archon Group, L.P., a real estate asset management company and a wholly owned
subsidiary of Goldman, Sachs & Co. From 1989 to 1993, he was a Senior Vice
President of The Robert C. Wilson Company, a mortgage banking company.
E. Blake Hawk has been Executive Vice President and General Counsel since
February 1999. Mr. Hawk was an attorney with Brown, Parker & Leahy, LLP in
Houston, Texas from 1980 to 1999 and became a partner with the firm in 1986.
Mr. Hawk has been board certified in tax law by the Texas Board of Legal
Specialization since 1984 and has been a Certified Public Accountant since
1976.
Wesley D. Cunningham has been a Senior Vice President of the Company since
March 1999 and Chief Accounting Officer of the Company since April 1998. He
has been the Corporate Controller of the Company since February 1997. Mr.
Cunningham was the Assistant Corporate Controller of Drilex International
Inc., an oil field services company, from 1996 to January 1997. From 1990 to
1996, he was the Manager of Financial Reporting of Maxxam Inc., an aluminum,
forest products and real estate company. He has been a Certified Public
Accountant since 1984. Mr. Cunningham is an officer of each wholly owned
subsidiary of the Company.
Edward W. Wallander has been Senior Vice President and Chief Information
Officer of the Company since April 1998. From August 1990 to April 1998, Mr.
Wallander worked for PNC Bank in various capacities including Senior Vice
President and Chief Operating Officer of PNC Brokerage Corp. Prior to PNC
Bank, Mr. Wallander was a commercial real estate lender for Mellon Bank, N.A.
and a Certified Public Accountant for Ernst & Young, L.L.P.
John Kelly has been the President of CCI since December 1998. From January
1990 to July 1998, Mr. Kelly was the President and Chief Operating Officer of
Atlantic Cellular Company L.P. ("Atlantic Cellular"). From December 1995 to
July 1998, Mr. Kelly was also President and Chief Operating Officer of
Hawaiian Wireless, Inc., an affiliate of Atlantic Cellular. Mr. Kelly has
served on the board of directors of the Cellular Association of California as
well as the Vermont Telecommunications Application Center.
Alan Rees has been the Chief Operating Officer of CTSH and each of its
wholly owned subsidiaries since February 1997. He was elected as a director of
CTSH and each of its wholly owned subsidiaries in May 1997. From 1994 to 1997,
Mr. Rees served as the General Manager of Transmission for the broadcast
transmission division of the BBC.
George E. Reese has been the Chief Financial Officer and Secretary of CTSH
and each of its wholly owned subsidiaries since February 1997. He was elected
as a director of CTSH and each of its wholly owned subsidiaries in May 1997.
Since April 1995, Mr. Reese has served as President of Reese Ventures, Inc.,
an international investment consulting firm, which he established in 1995.
From 1972 to 1995, Mr. Reese was employed by Ernst & Young, L.L.P. where he
was named Partner In Charge of the Houston office's energy department and was
appointed Managing Partner of the firm's operations in the former Soviet
Union. Mr. Reese
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was a founder of the Council on Foreign Investment in Russia and was a
founding member of the American Chamber of Commerce in Russia.
Michel Azibert has been a director of the Company since August 1998. Mr.
Azibert has been International Director of TdF Parent since 1989 and Chief
Executive Officer of TdF since 1994. Mr. Azibert took an active role in the
preparation of the Media Law enacted in France in 1986. Pursuant to the
Governance Agreement, Mr. Azibert was elected as one of the two directors
elected by the holders of the Class A Common Stock.
Bruno Chetaille has been as a director of the Company since August 1998. Mr.
Chetaille has been Chairman and Chief Executive Officer of TdF Parent since
1992. Prior to 1992, Mr. Chetaille was a technical advisor to the President of
the French Republic for four years. Pursuant to the Governance Agreement, Mr.
Chetaille was elected as one of the two directors elected by the holders of
the Class A Common Stock.
Robert A. Crown founded Crown Communications in 1980 and was President from
its inception until December 1998. Mr. Crown is Chairman of the Board of Crown
Communication Inc. and was elected as a director of the Company in August
1997. Mr. Crown has been responsible for the initial construction in
Pittsburgh of the Cellular One system, as well as a substantial portion of the
Bell Atlantic Mobile system in Pittsburgh. He also negotiated one of the first
complete end-to-end build-outs for Nextel for the Pittsburgh MTA. Pursuant to
the Stockholders Agreement, Mr. Crown was the nominee of the Crown Parties for
election as a director of the Company. Mr. Crown is a director of CCI and each
of its wholly owned subsidiaries.
Carl Ferenbach was elected as the Chairman of the Board of Directors of the
Company in April 1997. Since its founding in 1986, Mr. Ferenbach has been a
Managing Director of Berkshire Partners LLC, a private equity investment firm
that manages five investment funds with approximately $1.6 billion of capital.
Mr. Ferenbach has also served as: a Managing Director of Berkshire Investors
LLC ("Berkshire Investors") since its formation in 1996; a Managing Director
of Third Berkshire Managers LLC ("Third Berkshire Managers"), the general
partner of Third Berkshire Associates Limited Partnership ("Third Berkshire
Associates"), the general partner of Berkshire Fund III, A Limited Partnership
(Berkshire Fund III), since its formation in 1997 (and was previously an
individual general partner of Berkshire Fund III since its formation in 1992);
and a Managing Director of Fourth Berkshire Associates LLC ("Fourth Berkshire
Associates") the general partner of Berkshire Fund IV, Limited Partnership
("Berkshire Fund IV, collectively with Berkshire Fund III and Berkshire
Investors, the "Berkshire Group") since formation in 1996. In addition, Mr.
Ferenbach currently serves on the Board of Directors of Wisconsin Central
Transportation Corporation, Tranz Rail Limited, English, Welsh & Scottish
Railway Limited, Australian Transport Network Limited and U.S. Can
Corporation. Pursuant to the Stockholders Agreement, Mr. Ferenbach was the
nominee of Berkshire Group for election as a director of the Company.
Randall A. Hack was elected as a director of the Company in February 1997.
Since January 1995, Mr. Hack has been a member of Nassau Capital L.L.C., an
investment management firm. From 1990 to 1994, he was the President and Chief
Executive Officer of Princeton University Investment Company, which manages
the endowment for Princeton University. Mr. Hack also serves on the Board of
Directors of several private companies. Pursuant to the Stockholders
Agreement, Mr. Hack was the nominee of Nassau Group for election as a director
of the Company.
Robert F. McKenzie was elected as a director of the Company in 1996. From
1990 to 1994, Mr. McKenzie was the Chief Operating Officer and a director of
OneComm, Inc., a mobile communications provider that he helped found in 1990.
From 1980 to 1990, he held general management positions with Northern Telecom,
Inc. and was responsible for the marketing and support of its Meridian
Telephone Systems and Distributed Communications networks to businesses
throughout the western United States. Mr. McKenzie also serves on the Board of
Directors of Centennial Communications Corporation.
William A. Murphy has been a director of the Company since August 1998. Mr.
Murphy has been a Director of Mergers & Acquisitions at Salomon Smith Barney
since 1997. From 1990 to 1997, Mr. Murphy held various positions in Mergers &
Acquisitions with Salomon Smith Barney.
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Jeffrey H. Schutz was elected as a director of the Company in 1995. Mr.
Schutz has been a General Partner of Centennial Fund IV and Centennial Fund V,
each a venture capital investing fund, since 1994 and 1996, respectively. Mr.
Schutz also serves on the Board of Directors of Preferred Networks, Inc. and
several other private companies. Pursuant to the Stockholders Agreement, Mr.
Schutz was the nominee of Centennial Group for election as a director of the
Company.
Board Committees
The Company's Board of Directors has an Executive Committee, a Compensation
Committee, a Finance and Audit Committee and a Nominating and Corporate
Governance Committee. The Executive Committee, composed of Messrs. Azibert,
Crown, Ferenbach, Hack, Miller and Schutz, acts in lieu of the full Board in
emergencies or in cases where immediate and necessary action is required and
the full Board cannot be assembled. The Compensation Committee, composed of
Messrs. Ferenbach, McKenzie and Schutz, establishes salaries, incentives and
other forms of compensation for executive officers and administers incentive
compensation and benefit plans provided for employees. The Finance and Audit
Committee, composed of Messrs. Hack, McKenzie and Murphy, reviews the
Company's audit policies and oversees the engagement of the Company's
independent auditors, as well as developing financing strategies for the
Company and approving outside suppliers to implement these strategies. The
Nominating and Corporate Governance Committee, composed of Messrs. Azibert,
Ferenbach, McKenzie and Miller, is responsible for nominating new Board
members and for an annual review of Board performance. Pursuant to the
Stockholders Agreement, the holders of the Class A Common Stock have the right
to appoint at least one member to each of the Executive and Nominating and
Corporate Governance Committees.
Directors' Compensation and Arrangements
All non-management directors of the Company receive compensation for their
service as directors ($15,000 and options for 5,000 shares of common stock per
year), and are reimbursed for expenses incidental to attendance at such
meetings. In September 1997, CCIC's Board of Directors approved a fee of
$150,000 per annum to the Berkshire Group (half of which is to be paid by CTI)
for general consulting services and for the services of Mr. Ferenbach as
Chairman of the Board. In addition, Mr. McKenzie received approximately
$10,000 in 1996 for specific consulting assignments requested by the Chief
Executive Officer. Messrs. Ferenbach and Schutz are indemnified by the
respective entities which they represent on CCIC's Board of Directors.
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Executive Compensation
The following table sets forth the cash and non-cash compensation paid by or
incurred on behalf of the Company to its Chief Executive Officer and the four
other executive officers (collectively, the "named executive officers") for
each of the three years ended December 31, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Number of
Securities All Other
Underlying Compen-
Options/ sation
Name and Principal Position Year Salary ($) Bonus ($) SARs (#)(a) ($)
--------------------------- ---- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Ted B. Miller, Jr........... 1998 $325,000 $300,000 3,013,000 $ --
Chief Executive Officer and 1997 281,575 626,250 625,000 --
Vice Chairman of the Board
of Directors 1996 152,600 75,000 -- --
David L. Ivy................ 1998 $225,000 $150,000 1,455,000 $ --
President and Director 1997 200,000 300,000 250,000 --
1996 37,500(b) -- 175,000 35,000(c)
Charles C. Green, III ...... 1998 $235,000 $ 56,250 940,000 $ --
Executive Vice President and 1997 75,000(d) -- 250,000 --
Chief Financial Officer 1996 -- -- -- --
John L. Gwyn................ 1998 $185,000 $131,250 250,000 $ --
Executive Vice President 1997 160,424(e) -- 225,000 --
1996 -- -- -- --
Alan Rees................... 1998 $225,722(f) $ -- 718,307 $ --
Chief Operating Officer and 1997 225,722 84,646 -- --
Director of CTSH 1996 -- -- -- --
</TABLE>
- --------
(a) All awards are for options to purchase the number of shares of common
stock indicated.
(b) Mr. Ivy began working for CCIC on October 1, 1996, at an annual salary of
$150,000.
(c) Mr. Ivy worked as a consultant to CCIC from May 1996 to September 1996
before joining the Company as an employee in October 1996.
(d) Mr. Green began working for CCIC on September 1, 1997, at an annual salary
of $225,000.
(e) Mr. Gwyn began working for CCIC on February 3, 1997, at an annual salary
of $175,000.
(f) Mr. Rees began working for CTSH on February 28, 1997 at an annual salary
of $225,722.
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<PAGE>
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term(a)
----------------------------------------------- -----------------------
Number of
Securities % of Total
Underlying Options/
Options/ SARs
SARs Granted to Exercise
Granted Employees in or Base Expiration
Name (#) Fiscal Year Price ($/Sh) Date 5% ($) 10% ($)
---- ---------- ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ted B. Miller, Jr....... 700,000 5.2% $ 2.31 1/23/08
328,000 2.4 7.50 1/28/08
210,000 1.6 5.78 4/23/08
140,000 1.0 2.31 4/23/08
1,035,000 7.7 13.00 7/1/08
600,000 4.5 7.50 7/1/08
David L. Ivy............ 280,000 2.1% $ 2.31 1/23/08
225,000 1.6 7.50 1/28/08
70,000 0.5 2.31 4/24/08
545,000 0.4 13.00 7/1/08
335,000 0.2 7.50 7/1/08
Charles C. Green, III... 75,000 0.5% $ 7.50 1/28/08
350,000 2.5 7.50 7/1/08
515,000 3.8 13.00 7/1/08
John L. Gwyn............ 40,000 0.3% $ 7.50 1/28/08
175,000 1.3 13.00 7/1/08
35,000 .2 7.50 7/1/08
Alan Rees............... 116,666 0.9% $ 2.31 1/30/08
116,666 0.9 3.00 1/30/08
116,667 0.9 3.90 1/30/08
28,308 0.2 0.00 5/19/08
90,000 0.7 7.50 7/1/08
250,000 1.9 13.00 7/1/08
</TABLE>
- --------
(a) The potential realizable value assumes a per-share market price at the
time of the grant to be approximately equal to the exercise price with an
assumed rate of appreciation of 5% and 10%, respectively, compounded
annually for 10 years.
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<PAGE>
The following table details the December 31, 1998 year end estimated value of
each named executive officer's unexercised stock options. All unexercised
options are to purchase the number of shares of common stock indicated.
Aggregated Option/SAR Exercises In Last Fiscal Year
And Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/ In-the-Money Options/
SARs at Year-End(#) SARs at Year-End ($)
Shares Acquired Value Exercisable (E)/ Exercisable (E)/
Name on Exercise (#) Realized ($) Unexercisable (U)(a) Unexercisable (U)(b)
---- --------------- ------------ ---------------------- ---------------------
<S> <C> <C> <C> <C>
Ted B. Miller, Jr....... -- -- 2,868,000(E) $ (E)
1,115,000(U) (U)
David L. Ivy............ -- -- 1,275,000(E) (E)
605,000(U) (U)
Charles C. Green, III... -- -- 675,000(E) (E)
515,000(U) (U)
John L. Gwyn............ -- -- 170,500(E) (E)
304,500(U) (U)
Alan Rees............... -- -- 118,308(E) (E)
599,999(U) (U)
</TABLE>
- --------
(a) The estimated value of exercised in-the-money stock options held at the
end of 1998 assumes a per-share fair market value of $ and per-share
exercise prices of $.40, $2.40, $4.20 and as applicable.
Severance Agreements
The Company has entered into severance agreements (the "Severance
Agreements") with Messrs. Miller, Ivy, Green, Gwyn, Rees, Reese and Hawk (the
"Executives"). Pursuant to the Severance Agreements, the Company is required
to provide severance benefits to the Executives if they are terminated by the
Company without Cause (as defined in the Severance Agreements) or the
Executives terminate with Good Reason (as defined in the Severance Agreements)
(collectively, a "Qualifying Termination"). The Severance Agreements provide
for enhanced severance benefits if the Executives incur a Qualifying
Termination within the two-year period following a Change in Control (as
defined in the Severance Agreements) of the Company (the "Change in Control
Period"). Upon a Qualifying Termination that does not occur during the Change
in Control Period, an eligible Executive is entitled to (i) a lump sum payment
equal to two times the sum of his base salary and annual bonus, (ii) continued
coverage under specified welfare benefit programs for two years and (iii)
immediate vesting of any outstanding options and restricted stock awards. Upon
a Qualifying Termination during the Change in Control Period, an eligible
Executive is entitled to (i) receive a lump sum payment equal to three times
the sum of his base salary and annual bonus, (ii) continued coverage under
specified welfare benefit programs for three years and (iii) immediate vesting
of any outstanding options and restricted stock awards.
Crown Arrangements
The Company and Mr. Crown have entered into a Memorandum of Understanding
and a related Services Agreement. Pursuant to the Services Agreement, Mr.
Crown has agreed to continue to serve in a consulting capacity to (and as
Chairman of) CCI for a two-year period expiring on December 9, 2000, and the
Company has agreed, for such two-year period, to pay Mr. Crown cash
compensation of $300,000 annually, along with certain executive perquisites.
At the end of such two-year period, the Company will pay Mr. Crown a severance
benefit of $300,000. At the time of entering to the Memorandum of
Understanding, the Company also agreed to vest all of Mr. Crown's existing
stock options; to immediately grant Mr. Crown options to purchase 50,000
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<PAGE>
shares of common stock at $7.50 per share; and, upon the closing of the IPO,
to grant Mr. Crown options to purchase 625,000 shares of common stock at the
price to public in the IPO ($13.00 per share).
Stock Option Plans
1995 Stock Option Plan
The Company has adopted the 1995 Stock Option Plan, which was reamended on
July 1, 1998 (the "1995 Stock Option Plan"). The purpose of the 1995 Stock
Option Plan is to advance the interests of the Company by providing additional
incentives and motivations which help the Company to attract, retain and
motivate employees, directors and consultants. The description set forth below
summarizes the general terms of the 1995 Stock Option Plan and the options
granted pursuant to the 1995 Stock Option Plan.
Pursuant to the 1995 Stock Option Plan, the Company can grant options to
purchase up to 18,000,000 shares of common stock. Options granted under the
1995 Stock Option Plan may either be incentive stock options ("ISOs") under
Section 422 of the Code or nonqualified stock options. The price at which a
share of common stock may be purchased upon exercise of an option granted
under the 1995 Stock Option Plan will be determined by the Board of Directors
and, in the case of nonqualified stock options, may be less than the fair
market value of the common stock on the date that the option is granted. The
exercise price may be paid in cash, in shares of common stock (valued at fair
market value at the date of exercise), in option rights (valued at the excess
of the fair market value of the common stock at the date of exercise over the
exercise price) or by a combination of such means of payment, as may be
determined by the Board.
Employees, directors or consultants of the Company (including its
subsidiaries and affiliates) are eligible to receive options under the 1995
Stock Option Plan (although only certain employees are eligible to receive
ISOs). The 1995 Stock Option Plan is administered by the Board and the Board
is authorized to interpret and construe the 1995 Stock Option Plan. Subject to
the terms of the 1995 Stock Option Plan, the Board is authorized to select the
recipients of options from among those eligible, to establish the number of
shares that may be issued under each option and to take any actions
specifically contemplated or necessary or advisable for the administration of
the 1995 Stock Option Plan.
No options may be granted under the 1995 Stock Option Plan after July 31,
2005, which is ten years from the date the 1995 Stock Option Plan was
originally adopted and approved by the Board and stockholders of the Company.
The 1995 Stock Option Plan will remain in effect until all options granted
under the 1995 Stock Option Plan have been exercised or expired. The Board, in
its discretion, may terminate the 1995 Stock Option Plan at any time with
respect to any shares of common stock for which options have not been granted.
The 1995 Stock Option Plan may be amended by the Board without the consent of
the stockholders of the Company, other than as to a material increase in
benefits, an increase in the number of shares that may be subject to options
under the 1995 Stock Option Plan or a change in the class of individuals
eligible to receive options under the 1995 Stock Option Plan. However, no
change in any option previously granted under the 1995 Stock Option Plan may
be made which would impair the rights of the holder of such option without the
approval of the holder.
Pursuant to the 1995 Stock Option Plan, options are exercisable during the
period specified in each option agreement or certificate; provided, however,
that no option is exercisable later than ten years from the date the option is
granted. Options generally have been exercisable over a period of ten years
from the grant date and vested in equal installments over a four or five year
period of service with the Company as an employee. A change in control
generally accelerates the vesting of options granted to employees and some of
the options vest upon the achievement of specific business goals or
objectives. An option generally must be exercised within 12 months of a holder
ceasing to be involved with the Company as an employee, director or consultant
as a result of death and within three months if the cessation is for other
reasons; however, these periods can be extended by decision of the Board
(other than in the case of an ISO). Shares of common stock subject to
forfeited or terminated options again become available for option awards. The
Board may, subject to certain restrictions in the 1995 Stock Option Plan (and,
in the case of an ISO, in Section 422 of the Code), extend or accelerate the
vesting or exercisability of an option or waive restrictions in an option
agreement or certificate.
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<PAGE>
The 1995 Stock Option Plan provides that the total number of shares covered
by the 1995 Stock Option Plan, the number of shares covered by each option,
and the exercise price per share under each option will be proportionately
adjusted in the event of a recapitalization, stock split, dividend, or a
similar transaction.
No grant of any option will constitute realized taxable income to the
grantee. Upon exercise of a nonqualified option, the holder will recognize
ordinary income in an amount equal to the excess of the fair market value of
the stock received over the exercise price paid therefor and the tax basis in
any shares of common stock received pursuant to the exercise of such option
will be equal to the fair market value of the shares on the exercise date if
the exercise price is paid in cash. The Company will generally have a
deduction in parity with the amount realized by the holder. The Company has
the right to deduct and withhold applicable taxes relating to taxable income
realized by the holder upon exercise of a nonqualified option and may withhold
cash, shares or any combination in order to satisfy or secure its withholding
tax obligation. An ISO is not subject to taxation as income to the employee at
the date of grant or exercise and the Company does not get a business
deduction as to an ISO; provided, the stock is not sold within two years after
the ISO was granted and one year after the ISO was exercised. The ISO is
effectively taxed at capital gain rates upon the sale of the stock by the
employee. However, if the stock acquired upon exercise of an ISO is sold
within two years of the ISO grant date or one year exercise of the date, then
it is taxed the same as a Nonqualified Option. Upon the exercise of an ISO,
the difference between the value of the stock and the exercise price is
recognized as a preference item for alternative minimum tax purposes.
As of December 31, 1998, options to purchase a total of 13,082,220 shares of
common stock have been granted. Options for 572,825 shares of common stock
have been exercised, options for 282,750 shares have been forfeited and
options for 12,226,645 shares remain outstanding. The outstanding options are
for (i) 345,000 shares with an exercise price of $0.40 per share, (ii) 43,750
shares with an exercise price of $1.20 per share, (iii) 50,000 shares with an
exercise price of $1.60 per share, (iv) 175,000 shares with an exercise price
of $2.40 per share, (v) 5,385 shares with an exercise price of $3.09 per
share, (vi) 5,385 shares with an exercise price of $4.03 per share, (vii)
1,630,625 shares with an exercise price of $4.20 per share, (viii) 23,135
shares with an exercise price of $4.76 per share, (ix) 5,385 shares with an
exercise price of $5.24 per share, (x) 28,000 shares with an exercise price of
$5.97 per share; (xi) 107,200 shares with an exercise price of $6.00 per
share, (xii) 5,633,030 shares with an exercise price of $7.50 per share,
(xiii) 28,000 shares with an exercise price of $7.77 per share, (xiv) 28,000
shares with an exercise price of $10.08 per share, (xv) 75,000 shares with an
exercise price of $11.31 per share, (xvi) 75,000 shares with an exercise price
of $11.50 per share, (xvii) 125,000 shares with an exercise price of $11.94
per share, (xviii) 253,750 shares with an exercise price of $12.50 per share
and (xix) 3,590,000 shares with an exercise price of $13.00 per share. The
options exercisable at $0.40 per share are fully vested and held by Ted B.
Miller, Jr. Vested and exercisable options also include options for (i) 43,750
shares at $1.20 per share, (ii) 50,000 shares at $1.60 per share, (iii)
175,000 shares at $2.40 per share, (iv) 1,463,625 shares at $4.20 per share,
(v) 23,135 shares at $4.76 per share, (vi) 107,200 shares at $6.00 per share,
(vii) 2,805,630 shares at $7.50 per share, (viii) 128,750 shares at $12.50 per
share and (ix) 90,000 shares at $13.00 per share. Except for the options for
23,135 shares with an exercise price of $4.76 per share and options for
3,036,250 shares with an exercise price of $7.50, the exercise prices for all
of the options were equal to or in excess of the estimated fair value of the
common stock at the dates on which the numbers of shares and the exercise
prices were determined; as such, in accordance with the "intrinsic value based
method" of accounting for stock options, the Company did not recognize
compensation cost related to the grant of these options. The options for
23,135 shares with an exercise price of $4.76 were issued in 1998 in exchange
for services received from nonemployees; as such, the Company will account for
the issuance of these options in 1998 based on the fair value of the services
received. Options for 3,036,250 shares granted at an exercise price of $7.50
per share (which is below the estimated fair market value at the date of
grant) were included in the group of options which vested at the consummation
of the initial public offering of common stock. The Company will account for
these options in 1998 based upon the fair market value of services received.
The remaining options for 2,731,230 shares granted at an exercise price of
$7.50 per share (which is below the estimated fair market value at the date of
grant) were granted in 1998 and generally are taken into account and vest over
five years. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Compensation Charges Related to Stock Option
Grants".
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<PAGE>
Between January 1, 1998 and December 31, 1998, the Company granted to its
executive officers and directors options for a total of 2,240,500 shares at an
exercise price of $7.50 and 3,235,000 shares at an exercise price of $13.00
under the 1995 Stock Option Plan. Mr. Miller received options for 928,000
shares, Mr. Ivy received options for 560,000 shares, Mr. Green received
options for 425,000 shares, Mr. Gwyn received options for 75,000 shares, Mr.
Rees received options for 90,000 shares, Mr. Crown received options for
137,500 shares and Mr. McKenzie received 25,000 shares, in each case at an
exercise price of $7.50 per share. Mr. Miller received options for 1,035,000
shares, Mr. Ivy received options for 545,000 shares, Mr. Green received
options for 515,000 shares, Mr. Gwyn received options for 175,000 shares, Mr.
Rees received options for 250,000 shares, Mr. Crown received options for
625,000 shares, Messrs. Ferenbach, Hack and Schutz each received options for
25,000 shares and Messrs. Azibert, Chetaille and Murphy each received options
for 5,000 shares, in each case at an exercise price of $13.00 per share.
The options granted include ISOs for 627,750 shares with an exercise price
of $7.50 per share. As of December 31, 1998, ISOs for 81,250 shares have been
forfeited and none of the outstanding ISOs are exercisable.
CTSH Stock Option Plans
CTSH has established certain stock option plans for the benefit of its
employees (the "CTSH Stock Option Plans"). Upon consummation of the Roll-Up in
August 1998, all of the outstanding options to purchase shares of capital
stock of CTSH ("CTSH Options") granted pursuant to the CTSH Stock Option Plans
were converted into and replaced by options to purchase shares of the
Company's common stock ("CCIC Options"). The Company's Board of Directors has
adopted each of the CTSH Option Plans. Options granted under the CTSH Stock
Options Plans may be adjusted at the discretion of the Company or, in the case
of options granted under the CTSH Share Bonus Plan (as defined), the CTSH
Trustee (as defined) to take into account any variation of the share capital
of the Company subject to the written confirmation of the auditors of the
Company that the adjustment in their opinion is fair and reasonable. The
description set forth below summarizes the general terms of each of the
various plans that constitute the CTSH Stock Options Plans.
Included in CTI's operating expenses for the nine months ended September 30,
1998 are noncash compensation charges for (Pounds)2.5 million ($4.2 million)
related to the issuance of stock options to certain executives and employees.
CTSH All Employee Share Option Scheme. All outstanding options granted
pursuant to the Castle Transmission Services (Holdings) Ltd. All Employee
Share Option Scheme (the "CTSH All Employee Plan") are vested. These options
may only be exercised in full and on one occasion. Outstanding options granted
pursuant to the CTSH All Employee Plan will lapse if not exercised by the
earlier of (i) the first anniversary of the option holder's death, (ii) six
months following the termination of the option holder's employment with the
Company, (iii) six months following the earlier of (a) a change of control of
the Company, (b) the sanctioning by the U.K. courts of a compromise or
arrangement pursuant to U.K. Companies Act 1985 section 425 that affects the
common stock of the Company, (c) a person becoming bound or entitled to
acquire the common stock of the Company under U.K. Companies Act 1985 sections
428-430 or (d) notice of a general meeting of the stockholders of the Company
at which a resolution will be proposed for the purpose of a voluntary winding-
up of the Company (each of the foregoing, a "Corporate Event"), (iv) the
option holder being adjudicated bankrupt under U.K. law, (v) the surrender of
the option or (vi) the seventh anniversary of the grant. At the time of the
Roll-up there were outstanding options to purchase 285,250 shares of common
stock at a price of $2.37 per share, of which an initial refundable deposit of
$1.20 per share has already been paid by each participant. No additional
options will be granted under the CTSH All Employee Plan in the future.
CTSH Management Plan. All outstanding options granted pursuant to the Castle
Transmission Services (Holdings) Ltd. Unapproved Share Option Scheme (the
"CTSH Management Plan") will vest on the earlier of (i) March 1, 2000 or, if
the option holder was not an Eligible Employee (as defined in the CTSH
Management
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<PAGE>
Plan) on March 1, 1997, the third anniversary of the date on which the option
was granted, (ii) the death of the option holder, (iii) the termination of the
option holder's employment with the Company (other than a termination for
cause, or the voluntary resignation of the option holder), (iv) a Corporate
Event or (v) the sale of the subsidiary or business of the Company in which
the option holder is employed. Once vested, these options may be exercised in
whole or in part at the discretion of the option holder prior to the lapsing
of the option. All options granted pursuant to the CTSH Management Plan will
lapse on the earlier of (i) the first anniversary of the option holder's
death, (ii) six months after the termination of the option holder's employment
with the Company (other than a termination for cause, or the voluntary
resignation of the option holder), (iii) immediately upon any other
termination of employment, (iv) six months following a Corporate Event, (v)
the option holder being adjudicated bankrupt under U.K. law, (vi) the
surrender of the option, (vii) failure to satisfy any performance condition
established by the board of directors of CTI or (viii) the seventh anniversary
of the grant of the option. Currently, there are outstanding options to
purchase 1,649,844 shares of common stock at prices ranging from (Pounds)1.43
($2.39) to (Pounds)6.04 ($10.08) per share. No additional options will be
granted under the CTSH Management Plan in the future.
CTSH Bonus Share Plan. In connection with the Castle Transmission Services
(Holdings) Ltd. Bonus Share Plan (the "CTSH Bonus Share Plan"), CTSH has
executed the Employee Benefit Trust (the "CTSH Trust"), a discretionary
settlement for the benefit of past and present CTI employees, directors and
their families. CTI employees and directors are able to participate in the
CTSH Bonus Share Plan by foregoing a portion of their annual bonuses awarded
by the Company in consideration for options to purchase shares of the
Company's common stock held by the CTSH Trust at predetermined prices per
share depending upon the year in which the investment is made. The
predetermined price for 1997 investment was (Pounds)13.00 ($21.70) per unit
(each of which will be converted into seven shares of common stock upon
consummation of the Roll-Up), and the CTI board has determined that the
predetermined price for any investment in 1998 and 1999 will be (Pounds)16.90
($28.21) and (Pounds)21.97 ($36.68) respectively.
All outstanding options granted pursuant to the CTSH Bonus Share Plan are
vested and may be exercised in whole or in part at the discretion of the
option holder prior to the lapsing of the option. All options will lapse on
the earlier of (i) the first anniversary of the option holder's death, (ii)
six months after the termination of the option holder's employment with the
Company, (iii) six months following a Corporate Event, (iv) the option holder
being adjudicated bankrupt under U.K. law, (v) the surrender of the option or
(vi) the seventh anniversary of the grant of the option. In order to satisfy
the demand created by the exercise of options granted pursuant to the CTSH
Bonus Share Plan, the CTSH Trustee has been granted a call option by the
Company ("the U.K. Option Agreement") to purchase up to 149,709 shares of
common stock from the Company at a price of (Pounds)1.86 ($3.11) per share,
the funds for which are to be contributed to the CTSH Trust by CTSH (which has
already provided for such payment in its financial statements). Currently
there are outstanding options to purchase 149,709 shares of common stock from
the CTSH Trustee for a nominal sum upon exercise. Following the Offering, CTI
employees and directors will continue to be able to effectively invest a
proportion of their annual bonuses in common stock of the Company under the
CTSH Bonus Share Plan for the fiscal years 1998 and 1999. Thereafter, no
additional options will be granted under the CTSH Share Bonus Plan. Grants
under the CTSH Bonus Share Plan are determined by converting monetary awards
into options to purchase shares at predetermined prices.
CTSH Option Grants to Certain Executives. In January and April of 1998, CTSH
granted options to purchase a total of 300,000 ordinary shares and 299,700,000
preference shares of CTSH to Ted B. Miller, Jr., David L. Ivy and George E.
Reese. These options are vested in full and have converted into options to
purchase 1,890,000 shares of the Company's common stock at an exercise price
of (Pounds)1.43 and 210,000 shares of the Company's common stock at an
exercise price of (Pounds)3.57. Upon the Roll-Up, the exercise prices were set
in U.S. dollars at $2.31 for the (Pounds)1.43 exercise price and $5.96 for the
(Pounds)3.57 exercise price.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1995 Investments
On January 11, 1995, Ted B. Miller, Jr. and Edward C. Hutcheson, Jr.
(collectively, the "Initial Stockholders") acquired 1,350,000 shares of CTC
Class A Common Stock, par value $.01 per share, for $270,000. Also, on January
11, 1995, pursuant to a Securities Purchase and Loan Agreement, dated as of
January 11, 1995, among CTC, Centennial Fund IV, Berkshire Fund III, A Limited
Partnership (via Berkshire Fund III Investment Corp.), and certain trusts and
natural persons which are now members of Berkshire Investors LLC
(collectively, the "Berkshire Fund III Group") and J. Landis Martin
(collectively, the "CTC Purchasers"), CTC issued to the CTC Purchasers (i)
1,350,000 shares of CTC Class B Common Stock, par value $.01 per share, for
$270,000, (ii) 730,380 shares of CTC Series A Convertible Preferred Stock, par
value $.01 per share, for $4,382,280 and (iii) $3,867,720 principal amount of
CTC Convertible Secured Subordinated Notes for $3,867,720. As of February
1997, all the CTC Convertible Secured Subordinated Notes had been converted
into 644,620 shares of Company Series A Convertible Preferred Stock. The
proceeds received on January 11, 1995 were used by the Company for the
acquisition of towers and ancillary assets from PCI and for working capital.
Pursuant to a Securities Exchange Agreement (the "Securities Exchange
Agreement"), dated as of April 27, 1995, among the Company, CTC, the Initial
Stockholders and the CTC Purchasers, such parties effectively made CCIC the
holding company of CTC and converted some of the obligations of CTC into
capital stock of CCIC. Transactions pursuant to the Securities Exchange
Agreement included (i) Centennial Fund IV transferring 208,334 shares of CTC
Series A Convertible Preferred Stock to Berkshire Fund III Group in exchange
for $1,250,004 principal amount of CTC Convertible Secured Subordinated Notes,
(ii) Berkshire Fund III Group and J. Landis Martin converting all remaining
CTC Convertible Secured Subordinated Notes held by them ($742,452 principal
amount) into 123,742 shares of CTC Series A Convertible Preferred Stock, (iii)
each of the outstanding shares of capital stock of CTC being exchanged for one
share of similar stock of CCIC and (iv) the remaining CTC Convertible Secured
Subordinated Notes ($3,125,268 principal amount) becoming convertible into
shares of CCIC Series A Convertible Preferred Stock, par value $.01 per share
("Series A Convertible Preferred Stock") (all of which notes were subsequently
converted in February 1997).
As a result of the exchange of CTC capital stock for CCIC capital stock,
each Initial Stockholder received 675,000 shares of Existing Class A Common
Stock, par value $.01 per share, of CCIC, Centennial Fund IV received
1,080,000 shares of Common Stock and 145,789 shares of Series A Convertible
Preferred Stock, Mr. Martin received 41,666 shares of Series A Convertible
Preferred Stock and Berkshire Fund III Group received 270,000 shares of Common
Stock and 666,667 shares of Series A Convertible Preferred Stock. In July 21,
1995, Robert F. McKenzie became a party by amendment to the Securities
Exchange Agreement and received 8,333 shares of Series A Preferred Stock.
1996 Investments
Pursuant to a Securities Purchase Agreement, dated as of July 15, 1996,
among the Company, Berkshire Fund III Group, Centennial Fund IV, J. Landis
Martin, Edward C. Hutcheson, Jr. and Robert F. McKenzie, the Company privately
placed 864,568 shares of its Series B Convertible Preferred Stock, par value
$.01 per share ("Series B Convertible Preferred Stock"), for an aggregate
purchase price of $10,374,816. Berkshire Fund III Group paid $6,000,000 for
500,000 shares, Centennial Fund IV paid $3,724,812 for 310,401 shares, Mr.
Martin paid $500,004 for 41,667 shares, Mr. Hutcheson paid $99,996 for 8,333
shares and Mr. McKenzie paid $50,004 for 4,167 shares. The proceeds received
on July 15, 1996 were used for (i) the purchase of the towers and microwave
and SMR businesses from Motorola in Puerto Rico, (ii) an option payment
relating to the acquisition of TEA and TeleStructures and (iii) working
capital.
1997 Investments
Pursuant to a Securities Purchase Agreement, dated as of February 14, 1997,
among the Company, Centennial Fund V and Centennial Entrepreneurs Fund V, L.P.
(collectively, the "Centennial Fund V
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Investors"), Berkshire Fund IV, Limited Partnership (via Berkshire Fund IV
Investment Corp.), and certain trusts and natural persons which are members of
Berkshire Investors LLC (collectively, the "Berkshire Fund IV Group" and,
together with Berkshire Fund III Group, the "Berkshire Partners Group"), PNC
Venture Corp., Nassau Capital Partners II L.P. ("Nassau Capital"), NAS
Partners I L.L.C. ("NAS Partners"), Fay, Richwhite Communications Limited
("Fay Richwhite"), J. Landis Martin and Robert F. McKenzie, the Company
privately placed 3,529,832 shares of its Series C Convertible Preferred Stock,
par value $.01 per share ("Series C Convertible Preferred Stock"), for an
aggregate purchase price of $74,126,472. Centennial Fund V Investors paid
$15,464,001 for 736,381 shares, Berkshire Fund IV Group paid $21,809,991 for
1,038,571 shares, PNC Venture Corp. paid $6,300,000 for 300,000 shares, Nassau
Group paid an aggregate of $19,499,991 for 928,571 shares, Fay Richwhite paid
$9,999,990 for 476,190 shares, Mr. Martin paid $999,999 for 47,619 shares and
Mr. McKenzie paid $52,500 for 2,500 shares. The proceeds received on February
14, 1997 were used by the Company to fund a portion of its investment in CTI.
In March 1997, Edward C. Hutcheson, Jr. exercised stock options for 345,000
shares of Common Stock. The Company repurchased these shares and 308,435
shares of his Existing Class A Common Stock for $3,422,118.
In May 1997, in connection with the Company's acquisition of the stock of
TeleStructures, TEA and TeleShare, Inc. (the "TEA Companies"), the Company
issued 535,710 shares of Common Stock to the shareholders of the TEA
Companies: 241,070 shares to Bruce W. Neurohr, 241,070 shares to Charles H.
Jones and 53,570 shares to Terrel W. Pugh.
In June 1997, Messrs. Miller and Ivy received special bonuses, related to
their services in structuring and negotiating the CTI Investment, including
arranging the consortium partners who participated with the Company in the CTI
transaction, of $600,000 and $300,000, respectively.
In August 1997, Robert A. Crown and Barbara Crown sold the assets of Crown
Communications to, and merged CNSI and CMSI with, subsidiaries of the Company.
As consideration for these transactions, the Crowns received a cash payment of
$25.0 million, a promissory note of the Company aggregating approximately
$76.2 million, approximately $2.3 million to pay certain taxes (part of which
amount was paid in September 1997 as a dividend to stockholders of record of
CNSI on August 14, 1997), and 7,325,000 shares of Common Stock. In addition,
the Company assumed approximately $26.0 million of indebtedness of the Crown
Business. The Company repaid the Seller Note in full on October 31, 1997.
Robert A. Crown and Barbara Crown are both parties to the Stockholders
Agreement and are subject to its restrictions.
Pursuant to a Securities Purchase Agreement, dated as of August 13, 1997,
among the Company, American Home Assurance Company ("AHA"), New York Life
Insurance Company ("New York Life"), The Northwestern Mutual Life Insurance
Company ("Northwestern Mutual"), PNC Venture Corp., J. Landis Martin and
affiliates of AHA, the Company privately placed of 292,995 shares of its
Senior Convertible Preferred Stock for an aggregate purchase price of
$29,299,500, together with warrants to purchase 585,990 shares of Common Stock
at $7.50 per share (subject to adjustment, including weighted average
antidilution adjustments). AHA and its affiliates paid $15,099,500 for 150,995
shares and warrants to purchase 301,990 shares of Common Stock. New York Life
and Northwestern Mutual each paid $6,000,000 for 60,000 shares and warrants to
purchase 120,000 shares of Common Stock. PNC Venture Corp. paid $2,000,000 for
20,000 shares and warrants to purchase 40,000 shares of Common Stock. Mr.
Martin paid $200,000 for 2,000 and warrants to purchase 4,000 shares of Common
Stock. The proceeds received on August 13, 1997 were used by the Company to
fund a portion of the Crown Merger and working capital.
Pursuant to a Securities Purchase Agreement, dated as of October 31, 1997,
among the Company, Berkshire Partners Group, Centennial Fund V Investors,
Nassau Group, Fay Richwhite, Harvard Private Capital Holdings, Inc.
("Harvard"), Prime VIII, L.P. ("Prime") and the prior purchasers of Senior
Convertible Preferred Stock
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(other than affiliates of AHA), an additional 364,500 shares of Senior
Convertible Preferred Stock were issued for an aggregate purchase price of
$36,450,000, together with warrants to purchase 729,000 shares of Common Stock
at $7.50 per share (subject to adjustment, including weighted average
antidilution adjustments). Berkshire Partners Group paid $3,500,000 for 35,000
shares and warrants to purchase 70,000 shares of Common Stock. Centennial V
Investors paid $1,000,000 for 10,000 shares and warrants to purchase 20,000
shares of Common Stock. Nassau Group and Fay Richwhite each paid $2,500,000
for 25,000 shares and warrants to purchase 50,000 shares of Common Stock.
Harvard paid $14,950,000 for 149,500 shares and warrants to purchase 299,000
shares of Common Stock. Prime paid $5,000,000 for 50,000 shares and warrants
to purchase 100,000 shares of Common Stock. AHA paid $1,500,000 for 15,000
shares and warrants to purchase 30,000 shares of Common Stock. New York Life
paid $300,000 for 3,000 shares and warrants to purchase 6,000 shares of Common
Stock. Northwestern Mutual paid $4,000,000 for 40,000 shares and warrants to
purchase 80,000 shares of Common Stock. PNC Venture Corp. paid $1,000,000 for
10,000 shares and warrants to purchase 20,000 shares of Common Stock. J.
Landis Martin paid $200,000 for 2,000 shares and warrants to purchase 4,000
shares of Common Stock.
Other Transactions
Robert J. Coury, a former director of Crown Communication, and Crown
Communication were party to a management consulting agreement beginning in
October 1997 through January 1999. Pursuant to a Memorandum of Understanding
dated July 3, 1998, the compensation payable pursuant to such consulting
agreement was increased to $20,000 per month and Mr. Coury was granted options
to purchase 60,000 shares of Common Stock at $7.50 per share. See
"Management--Executive Compensation--Crown Arrangements". The Company has
recorded a noncash compensation charge of $0.3 million related to the issuance
of these stock options. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Compensation Charges Related to Stock
Option Grants". In connection with the Crown Merger, Mr. Coury acted as
financial advisor to the Crowns and received a fee for such services, paid by
the Crowns.
The Company leases office space in a building formerly owned by its Vice
Chairman and Chief Executive Officer. Lease payments for such office space
amounted to $313,008, $130,000, $50,000 and $22,000 for the years ended
December 31, 1998, 1997 and 1996, respectively. The amount of space leased
increased from 6,497 square feet at $23.80 per square foot (or $154,836 in
annual rent) to 19,563 square feet at $16.00 per square foot (or $313,008 in
annual rent) pursuant to a lease agreement effective November 1, 1997. The
lease term is for a period of five years with an option to terminate in the
third year or to renew at $18.40 per square foot. Interstate Realty
Corporation, a company owned by the Company's Vice Chairman and Chief
Executive Officer, received a commission of $62,000 in connection with this
new lease.
Crown Communication leases its equipment storage and handling facility in
Pittsburgh from Idlewood Road Property Company ("Idlewood"), a Pennsylvania
limited partnership. HFC Development Corp., a Pennsylvania corporation owned
by Mr. Crown's parents, is the general partner of Idlewood. The annual rent
for the property is $180,000.
On August 10, 1998, Michel Azibert, who was elected as a director of the
Company in August 1998, acquired 50,000 shares of Common Stock from an
existing stockholder of the Company for $6.26 per share pursuant to a purchase
right assigned to him by the Company. The Company recorded a noncash
compensation charge of $0.3 million related to the transfer of the purchase
right. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Compensation Charges Related to Stock Option Grants".
On February 28, 1997, CTI and TdF Parent entered into the CTI Services
Agreement pursuant to which TdF Parent agreed to provide certain consulting
services to CTI in consideration for a minimal annual fee of (Pounds)400,000
($665,120) and reimbursement for reasonable out-of-pocket expenses. TdF Parent
has agreed to, among
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other things, provide the services of ten executives or engineers to CTI on a
part-time basis and to provide a benchmarking review of CTI. In addition, TdF
Parent has agreed to provide additional services relating to research,
development and professional training on terms (including as to price) to be
determined.
The term of the CTI Services Agreement is expected to be extended for four
additional years (to February 28, 2004) and thereafter will be terminable on
12-month's prior notice given by CTI to TdF after February 28, 2003.
In connection with the financing arrangements relating to the Proposed JV,
the Company paid an aggregate of $100,000 to Centennial Fund IV, L.P.,
Centennial Fund V, L.P. and Centennial Entrepreneurs Fund V, L.P.
The Company and Mr. Crown have entered into a Memorandum of Understanding
and a related Services Agreement. Pursuant to the Services Agreement, Mr.
Crown agreed to continue to serve in a consulting capacity to (and as Chairman
of) CCI for a two-year period ending December 9, 2000, and the Company has
agreed, for such two-year period, to pay Mr. Crown cash compensation of
$300,000 annually, along with certain executive perquisites. At the end of the
two-year period, the Company will pay Mr. Crown a severance benefit of
$300,000.
Agreements with TdF Related to the Roll-Up
Governance Agreement
On August 21, 1998, the Company TdF and DFI entered into a Governance
Agreement (the "Governance Agreement") to provide for certain rights and
obligations of the Company, TdF and DFI with respect to the governance of the
Company.
Super-Majority Voting Requirements
In general, until August 21, 2003, a super majority vote of the Company's
Board of Directors is required for the Company or any of its subsidiaries to
take any of the following actions:
. amendments to the certificate of incorporation or by-laws;
. acquisitions or investments of more than $20.0 million;
. dispositions for more than $20.0 million;
. significant strategic alliances;
. the incurrence of debt unless certain leverage ratios have been met;
. any transaction with a party to the Stockholders Agreement or any
affiliate of the Company;
. the issuance of any equity securities;
. any transaction that would result in any person holding 50% or more of
the Company's voting securities or equity interests;
. any sale of all or substantially all of the Company's assets;
. any action by the Company relating to its dissolution or bankruptcy; and
. any amendments to the Company's Rights Plan.
TdF Veto Rights
In general, until August 21, 2003, TdF's consent will be required for the
Company or any of its subsidiaries to take any of the following actions:
. significant acquisitions or investments;
. strategic alliances with certain third parties; and
. significant dispositions.
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In addition, until August 21, 2008, TdF's consent generally will be required
for the Company or any of its subsidiaries to take any of the following
actions:
. amendments to the certificate of incorporation or bylaws;
. the issuance of any new class of security or of additional shares of
Class A Common Stock;
. any transaction that would result in any person holding 50% or more of
the Company's voting securities or equity interests;
. any sale of all or substantially all of the Company's assets; and
. the issuance to any person of equity securities representing 25% or more
of the Company outstanding equity securities.
TdF Preemptive Rights
Except in certain circumstances, if the Company issues any equity securities
(other than equity that is mandatorily exchangeable for debt, such as the
Exchangeable Preferred Stock) to any person, it must offer TdF the right to
purchase, at the same cash price and on the same other terms proposed, up to
the amount of such equity securities as would be necessary for TdF and its
affiliates to maintain their consolidated ownership percentage in the Company.
See "Risk Factors".
TdF Standstill; Transfer Restrictions; Voting
TdF and its affiliates will not, without the prior written consent of the
Board; (1) acquire beneficial ownership of any voting securities of the
Company if their ownership interest would be greater than the Relevant
Percentage; (2) propose that TdF or any of its affiliates enter into any
business combination involving the Company; (3) make any "solicitation" of
"proxies" (as such terms are used in Regulation 14A promulgated under the
Exchange Act) to vote or consent with respect to any voting securities of the
Company in opposition to the recommendation of a super majority vote of the
Board; (4) except in accordance with the terms of the Stockholders Agreement,
seek election to or seek to place a representative on the Board or seek the
removal of any member of the Board; (5) (A) solicit, seek to effect, negotiate
with or provide nonpublic information to any other person with respect to or
(B) otherwise make any public announcement or proposal with respect to, any
form of business combination (with any person) involving a change of control
of the Company or the acquisition of a substantial portion of the voting
securities and/or equity securities or assets of the Company or any subsidiary
of the Company; or (6) publicly disclose any intention, plan or arrangement,
or provide advice or assistance to any person, inconsistent with the
foregoing.
In general, if TdF or any of its affiliates seek to transfer 5% or more of
the voting securities of the Company, the Company will have the right to
purchase all, or any part in excess of such 5%, of such voting securities for
cash at the price at which they are to be transferred. These limitations do
not apply to certain transactions including underwritten public offerings and
sales under Rule 144.
Whenever TdF has the right to vote any voting securities of the Company and
a "proxy-contest" exists or any proposal for the election of any member to the
Board has received a negative vote, which in either case, had been recommended
by a super majority vote of the Board, TdF has agreed to vote all of its
voting securities of the Company in the manner recommended by a super majority
vote of the Board.
The standstill, transfer restriction and voting provisions described above
will cease to apply on or before August 21, 2003. In addition, the standstill
and voting provisions will be suspended during any period from the date of the
commencement by any person (other than TdF or any of its affiliates) of an
unsolicited offer to the date of closing, abandonment or termination of all
such offers (including any offer commence by TdF or any member of the TdF
Group following such suspension) and will thereafter be reinstated as in
effect prior to the commencement of any such unsolicited offer.
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TdF CTSH Option
If (1) the Board overrides a veto by TdF of a business combination or (2) an
unsolicited offer by any person (other than TdF or any of its affiliates) has
commenced or occurred, TdF will have the option (the "CTSH Option") to (x)
acquire for cash all of the CTSH shares beneficially owned by the Company at
their fair market value or (y) sell for cash to the Company all of the CTSH
shares and warrants beneficially owned by TdF at their fair market value.
Immediately prior to the consummation of any business combination or
unsolicited offer, TdF may require the Company to purchase one-half of the
shares of Class A Common Stock held by TdF and its affiliates for cash at the
offer price per share of Common Stock pursuant to the business combination or
unsolicited offer.
Put and Call Rights
TdF Put Right. TdF will have the right to require the Company (1) to
purchase all (except for one CTSH Ordinary Share) of the CTSH Shares
beneficially owned by TdF and its affiliates in exchange for shares of Class A
Common Stock at the Exchange Ratio and (2) to issue in exchange for the TdF
CTSH Warrants for a number of shares of Class A Common Stock at the Exchange
Ratio and 100,000 shares of Class A Common Stock, subject to adjustment in
certain circumstances.
Company Call Right. On August 21, 2000, unless the weighted average price
per share of Common Stock over the five trading days immediately preceding
August 21, 2000, is less than or equal to $12 (as adjusted for any stock split
or similar transaction), the Company will have the right to require TdF to
transfer and deliver to the Company all (except for one CTSH Ordinary Share)
of the TdF CTSH Shares and the TdF CTSH Warrants beneficially owned by TdF and
its affiliates in exchange for a number of shares of Class A Common Stock at
the Exchange Ratio and 100,000 shares of Class A Common Stock, subject to
adjustment in certain circumstances.
Stockholders Agreement
On August 21, 1998, the Company entered into the Stockholders Agreement (the
"Stockholders Agreement") with certain stockholders of the Company (the
"Stockholders") to provide for the certain rights and obligations of the
Company and the Stockholders with respect to the governance of the Company and
the Stockholders' shares of Common Stock or Class A Common Stock, as the case
may be.
Governance
Board Representation. (i) So long as the TdF Group holds at least 5.0% of
the Company's common stock, TdF will have the right to appoint one director
and generally will have the right to appoint two directors; (ii) so long as
Robert A. Crown, Barbara Crown, certain trusts established by them and their
permitted transferees (the "Crown Group") has beneficial ownership of at least
555,555 shares of common stock, the Crown Group will have the right to elect
one director (the "Crown Designee"); (iii) so long as Ted B. Miller, Jr. and
his permitted transferees (the "Initial Stockholder Group") maintains an
ownership interest, they will have the right to elect one director (the
"Initial Stockholder Designee"); (iv) the Chief Executive Officer of the
Company will have the right to elect one director (the "CEO Designee"); (v) so
long as the ownership interest of Centennial Fund IV, L.P., Centennial Fund V,
L.P., Centennial Entrepreneurs Fund V, L.P., their affiliates and respective
partners (the "Centennial Group") is at least 5.0%, the Centennial Group will
have the right to elect one director (the "Centennial Designee"); (vi) so long
as the ownership interest of the Berkshire Group is at least 5.0%, the
Berkshire Group will have the right to elect one director (the "Berkshire
Designee"); (vii) so long as the ownership interest of Nassau Capital Partners
II, L.P., NAS Partners I, L.L.C., their affiliates and their respective
partners (the "Nassau Group") is not less than the ownership interest of the
Nassau Group immediately following the closing of the IPO, the Nassau Group
will have the right to elect one director (the "Nassau Designee"); and (viii)
all directors other than the Designees ("General Directors") will be nominated
in accordance with the Certificate of Incorporation and By-laws.
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Solicitation and Voting of Shares. With respect to each meeting of
stockholders of the Company at which directors are to be elected, the Company
will use its best efforts to solicit from the stockholders of the Company
eligible to vote in the election of directors proxies in favor of the nominees
selected in accordance with the provisions of the Stockholders Agreement
(including without limitation the inclusion of each director nominee in
management's slate of nominees and in the proxy statement prepared by
management of the Company in respect of each annual meeting, vote or action by
written consent).
Each Stockholder will vote its shares in favor of the election of the
persons nominated pursuant to the provisions described in "--Board
Representation" above to serve the Board and against the election of any other
person nominated to be a director.
Committees of the Board. Each of the Nominating and Corporate Governance
Committee and the Executive Committee will contain, so long as TdF is
Qualified at least one TdF Designee.
Registration Rights; Tag-Along Rights
Subject to certain exceptions, limitations and the suspension of such rights
by the Company under certain conditions, the Stockholders have been granted
certain piggy-back registration rights, demand registration rights, S-3
registration rights and tag-along rights with respect to their shares of
Common Stock.
Subject to certain exceptions, if at any time Stockholders holding at least
2% of the voting securities of the Company (the "Initiating Stockholder(s)")
determine to sell or transfer 2% or more of the voting securities then
issuable or outstanding to a third party who is not an affiliate of any of the
Initiating Stockholders, Stockholders may have the opportunity and the right
to sell to the purchasers in such proposed transfer (upon the same terms and
conditions as the Initiating Stockholders) up to that number of Shares owned
by such Stockholder equaling the product of (i) a fraction, the numerator of
which is the number of Shares owned by such Stockholder as of the date of such
proposed transfer and the denominator of which is the aggregate number of
Shares owned by the Initiating Stockholders and by all Stockholders exercising
tag-along rights multiplied by (ii) the number of securities to be offered.
CTSH Shareholders' Agreement
On August 21, 1998, CCIC, TdF and CTSH entered into a Shareholders'
Agreement to govern the relationship between CCIC and TdF as Shareholders of
CTSH (the "CTSH Shareholders' Agreement).
Corporate Governance. The Board of CTSH will be comprised of six directors,
of which CCIC and TdF will each have the right to appoint and remove two
directors with the remaining two directors to be mutually agreed upon by CCIC
and TdF. CCIC has the right to nominate the chairman, chief executive officer,
chief operating officer and chief financial officer of CTSH, subject to
approval buy a super majority vote of the Board of CCIC.
The affirmative vote of a majority of the Board, including a director
nominated by CCIC and a director nominated by TdF, is necessary for the
adoption of a resolution. Further, the prior written consent of each of CCIC
and TdF, in their capacities as shareholders, is required for the following
actions, among others, significant acquisitions and dispositions; issuance of
new shares; entry into transactions with shareholders, except pursuant to the
CTI Services Agreement and/or the CTI Operating Agreement; entry into new
lines of business; capital expenditures outside the budget; entry into banking
and other financing facilities; entry into joint venture arrangements; payment
of dividends, except for (1) dividends payable in respect of CTSH's redeemable
preferred shares and (2) dividends permitted by CTSH's financing facilities;
and establishing a public market for CTSH shares. Similar governance
arrangements also apply to CTSH's subsidiaries.
If either CCIC or TdF vetoes a transaction (either at Board or shareholder
level), the other shareholder is entitled to pursue that transaction in its
own right and for its own account.
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Transfer Provisions. Subject to certain exceptions, neither CCIC nor TdF may
transfer any interest in shares held in CTSH to a third party. Transfers of
shares to affiliated companies are permitted, subject to certain conditions.
No shares may be transferred if such transfer would (a) entitle the BBC to
terminate either of the BBC contracts, (b) subject CTSH to possible revocation
of its licenses under the Telecommunications Act 1984 or the Wireless
Telegraphy Acts 1949, 1968 and 1998 or (c) cause CCIC or TdF to be in breach
of the Commitment Agreement between the Company, TdF, TdF Parent and the BBC
(under which the Company and TdF have agreed to maintain certain minimum
ownership levels in CTSH for a period of five years). See "Business--U.K.
Operations--Significant Contracts--BBC Commitment Agreement".
In addition, shares may be sold to a third party, subject to a right of
first refusal by the other party, after the later of (a) the second
anniversary of the closing of the Roll-up, and (b) the expiration of the
period for the completion of the TdF Put Right (as defined) or the Company
Call Right (as defined). If CCIC purchases TdF's shares pursuant to such right
of first refusal, it may elect (instead of paying the consideration in cash)
to discharge the consideration by issuing its Common Stock at a discount of
15% to its market value. If the right of first refusal is not exercised, the
selling shareholder must procure and offer on the same terms for the shares
held by the other party. If the Company elects to issue Common Stock to TdF
pursuant to the right of first refusal, TdF will be entitled to certain demand
registration rights and tag along rights.
TdF Put Right. TdF has the right to put its shares of CTSH to CCIC for cash
(the "TdF Put Right") if there is a change of control of CCIC. Such right is
exercisable if (a) TdF has not exchanged its shares pursuant to the Governance
Agreement by the second anniversary of the closing of the Roll-Up, or (b)
prior to the second anniversary of the closing of the Roll-Up, if TdF has
ceased to be Qualified for the purposes of the Governance Agreement.
The consideration payable on the exercise of the TdF Put Right will be an
amount agreed between CCIC and TdF or, in the absence of agreement, the fair
market value as determined by an independent appraiser.
TdF Exit Right. TdF also has the right after the earlier of (a) the second
anniversary of the closing of the Roll-Up, or (b) TdF ceasing to be Qualified
for purposes of the Governance Agreement, to require CCIC, upon at least six
months' notice, to purchase all, but not less than all, of the shares it
beneficially owns in CTSH (the "TdF Exit Right").
The consideration to be paid to TdF, and the manner in which it is
calculated, upon exercise of the TdF Exit Right is substantially the same as
described upon exercise of the TdF Put Right.
CCIC is entitled to discharge the consideration payable on the exercise of
the TdF Exit Right either in cash or by issuing Common Stock to TdF at a
discount of 15% to its market value. If CCIC elects to issue Common Stock to
TdF on the exercise of the TdF Exit Right, TdF will be entitled to certain
demand registration rights and tag-along rights.
CCIC Deadlock Right. CCIC has the right to call TdF's shares of CTSH,
subject to certain procedural requirements, for cash if, after the third
anniversary of the closing of the Roll-Up, TdF refuses on three occasions
during any consecutive six-month period to agree to the undertaking by CTSH of
certain types of transactions (including acquisitions and disposals) that
would fall within CTSH's core business (the "CCIC Deadlock Right"). The
consideration due on the exercise of the CCIC Deadlock Right is payable in
cash, the fair market value of the TdF interest to be determined in the same
manner described above upon exercise of the TdF Put or Exit Rights.
CCIC Shotgun Right. Provided that TdF has not, pursuant to the Governance
Agreement, exchanged its share ownership in CTSH for shares of CCIC, CCIC may
(a) by notice expiring on August 21, 2003, or (b) at any time within 45 days
of CCIC becoming aware of a TdF Change of Control (as defined in the
Governance Agreement) offer to purchase TdF's shares in CTSH. TdF is required
to either sell its shares or agree to purchase CCIC's shares in CTSH at the
same price contained in CCIC's offer for TdF's shares of CTSH.
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The consummation of any transfer of shares between CCIC and TdF pursuant to
any of the transfer provisions described above is subject to the fulfillment
of certain conditions precedent, including obtaining all necessary
governmental and regulatory consents.
Termination. The Shareholders' Agreement terminates if either CCIC or TdF
ceases to be qualified. CCIC remains qualified on the condition that it holds
at least 10% of the share capital of CTSH.
CTI Services Agreement
On February 28, 1997, CTI and TdF Parent entered into a Services Agreement
pursuant to which TdF Parent agreed to provide certain consulting services to
CTI in consideration for a minimum annual fee of (Pounds)400,000 ($665,120)
and reimbursement for reasonable out-of-pocket expenses. This agreement was
amended and restated on August 21, 1998 (the "CTI Services Agreement"). TdF
Parent has agreed to, among other things, provide the services of ten
executives or engineers to CTI on a part-time basis and to provide a
benchmarking review of CTI. In addition, TdF Parent has agreed to provide
additional services relating to research, development and professional
training on terms (including as to price) to be determined. Following February
28, 2003, the CTI Services Agreement will be terminable on 12-month's prior
notice given by CTI to TdF.
CTI Operating Agreement
The following summary of the terms of the CTI Operating Agreement is subject
to the negotiation of definitive documentation, although the Company expects
such agreement to have the general terms described herein. Under the CTI
Operating Agreement (the "CTI Operating Agreement"), the Company will be
permitted to develop business opportunities relating to terrestrial wireless
communications (including the transmission of radio and television
broadcasting) anywhere in the world except the United Kingdom. CTI will be
permitted to develop such business opportunities solely in the United Kingdom.
The Company and TdF also intend to establish, pursuant to the CTI Operating
Agreement, a joint venture to develop digital terrestrial transmission
services in the United States. See "Business--U.S. Operations--Network
Services--Broadcast Site Rental and Services".
The CTI Operating Agreement will also establish a framework for the
provision of business support and technical services to the Company and its
subsidiaries (other than CTI) in connection with the development of any
international business by the Company. TdF will have the right, if called upon
to do so by the Company or CTSH, to provide all or part of such services to
the Company and its subsidiaries (other than CTI) in connection with the
provision of broadcast transmission services.
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PRINCIPAL STOCKHOLDERS
The table below sets forth certain information, as of March 1, 1999, with
respect to the beneficial ownership of capital stock by (1) each person whom
we know to be the beneficial owner of more than 5% of any class or series of
our capital stock, (2) each of our directors and executive officers and all
directors and executive officers as a group and (3) this table also gives
effect to shares that may be acquired pursuant to options and warrants, as
described in the footnotes below.
<TABLE>
<CAPTION>
Shares Percentage
Beneficially of Total
Executive Officers and Owned Voting
Directors(a) Title of Class Number(b) Percent Power(c)
- ---------------------- -------------- ------------ ------- ----------
<S> <C> <C> <C> <C>
Ted B. Miller, Jr. ...... Common Stock(d) 4,036,097 4.7 4.1
David L. Ivy............. Common Stock(e) 1,395,000 1.7 1.5
Charles C. Green, III.... Common Stock(f) 675,000 * *
John L. Gwyn............. Common Stock(g) 173,000 * *
John P. Kelly(h)......... Common Stock -- -- --
E. Blake Hawk............ Common Stock -- -- --
Alan Rees(i)............. Common Stock(j) 188,308 * *
Robert A. Crown(k)....... Common Stock(l) 5,782,500 7.0 6.1
Michel Azibert(m)........ Common Stock(n) 60,000 * *
Bruno Chetaille(o)....... Common Stock(p) 10,000 * *
Carl Ferenbach(q)........ Common Stock(r) 20,740,805 24.9 21.9
Randall A. Hack(s)....... Common Stock(t) 5,085,080 6.1 5.4
Robert F. McKenzie(u).... Common Stock(v) 202,500 * *
William A. Murphy(w)..... Common Stock(x) 10,000 * *
Jeffrey H. Schutz(y)..... Common Stock(z) 9,842,040 11.8 10.4
Directors and Executive
Officers as a group
(15 persons total)...... Common Stock(aa) 48,200,330 58.5 51.5
Berkshire(bb)
Berkshire Fund III, A
Limited Partnership..... Common Stock(cc) 6,095,450 7.3 6.5
Berkshire Fund IV,
Limited Partnership..... Common Stock(dd) 12,996,055 15.6 13.8
Berkshire Investors LLC.. Common Stock(ee) 1,619,300 1.9 1.7
Candover(ff)
Candover Investments,
plc..................... Common Stock 2,329,318 2.8 2.5
Candover (Trustees)
Limited................. Common Stock 208,317 * *
Candover Partners
Limited................. Common Stock 8,792,565 10.6 9.3
Centennial(gg)
Centennial Fund IV,
L.P.(hh)................ Common Stock 5,965,340 7.2 6.3
Centennial Fund V,
L.P.(ii)................ Common Stock 3,731,285 4.5 3.9
Centennial Entrepreneurs
Fund V, L.P.(jj)........ Common Stock 115,415 * *
Nassau(kk)
Nassau Capital Partners
II, L.P................. Common Stock(ll) 5,023,825 6.0 5.3
NAS Partners I, L.L.C.... Common Stock(mm) 31,255 * *
Digital Future
Investments B.V.(nn).... Class A Common Stock 11,340,000 100.0 12.0
</TABLE>
- --------
* Less than 1%.
(a) Except as otherwise indicated, the address of each person in this table is
c/o Crown Castle International Corp., 510 Bering Drive, Suite 500,
Houston, TX 77057.
(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, warrants or convertible stock exercisable or convertible within
60 days of the date hereof are deemed outstanding for purposes of
determining the total number of outstanding shares for such person and are
not deemed outstanding for such purpose for all other stockholders. To the
best of the Company's knowledge, except as otherwise indicated, beneficial
ownership includes sole voting and dispositive power with respect to all
shares.
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<PAGE>
(c) In determining Percentage of Total Voting Power, shares of Common Stock
that may be acquired upon conversion of the Class A Common Stock into
shares of Common Stock are taken into account.
(d) Includes options for 2,868,000 shares of Common Stock. A trust for the
benefit of Mr. Miller's children holds 99,995 shares of Common Stock.
(e) Includes options for 1,275,000 shares of Common Stock.
(f) Represents options for 675,000 shares of Common Stock.
(g) Includes options for 170,500 shares of Common Stock.
(h) Mr. Kelly's principal business address is c/o Crown Communication Inc.,
375 Southpointe Blvd., Canonsburg, PA 19317.
(i) Mr. Rees's principal business address is c/o Castle Transmission
International Ltd., Warwick Technology Park, Heathcote Lane, Warwick
CV346TN, United Kingdom.
(j) Includes options for 118,308 shares of Common Stock.
(k) Mr. Crown's principal business address is c/o Crown Communication Inc.,
375 Southpointe Blvd., Canonsburg, PA 19317.
(l) Includes 1,939,375 shares of Common Stock owned by Mr. Crown, 1,749,375
shares of Common Stock owned by his spouse, over which she has sole voting
and dispositive power, 125,000 shares of Common Stock that are jointly
owned, 915,625 shares of Common Stock owned by a grantor retained annuity
trust for Mr. Crown, 915,625 shares of Common Stock owned by a grantor
retained annuity trust for Ms. Crown and options for 137,500 shares of
Common Stock.
(m) Mr. Azibert's principal business address is c/o TeleDiffusion de France
International S.A., 10 Rue d'Oradour sur Glane, 75732 Paris 15 France.
(n) Includes options for 10,000 shares of Common Stock.
(o) Mr. Chetaille's principal business address is c/o TeleDiffusion de France
International S.A., 10 Rue d'Oradour sur Glane, 75732 Paris 15 France.
(p) Represents options for 10,000 shares of Common Stock.
(q) Mr. Ferenbach's principal business address is c/o Berkshire Partners LLC,
One Boston Place, Suite 3300, Boston, MA 02108.
(r) Represents options for 30,000 shares of Common Stock and 20,710,805 shares
of Common Stock beneficially owned by members of the Berkshire Group. Mr.
Ferenbach disclaims beneficial ownership of such shares, except to the
extent of his pecuniary interest therein.
(s) Mr. Hack's principal business address is c/o Nassau Capital LLC, 22
Chambers St., Princeton, NJ 08542.
(t) Represents options for 30,000 shares of Common Stock and 5,055,080 shares
of Common Stock beneficially owned by members of the Nassau Group. Mr.
Hack disclaims beneficial ownership of such shares.
(u) Mr. McKenzie's principal business address is P.O. Box 1133, 1496 Bruce
Creek Road, Eagle, CO 81631.
(v) Includes options for 109,375 shares of Common Stock.
(w) Mr. Murphy's principal business address is c/o Salomon Smith Barney,
Victoria Plaza, 111 Buckingham Palace Road, London, England.
(x) Represents options for 10,000 shares of Common Stock.
(y) Mr. Schutz's principal business address is c/o The Centennial Funds, 1428
Fifteenth Street, Denver, CO 80202-1318. Mr. Schutz is a general partner
of each of Holdings IV and Holdings V. However, neither Mr. Schutz nor any
other general partner of either Holdings IV or Holdings V, acting alone,
has voting or investment power with respect to the Company's securities
directly beneficially held by Centennial Fund IV, Centennial Fund V and
Centennial Entrepreneurs Fund, and, as a result, Mr. Schutz disclaims
beneficial ownership of the Company's securities directly beneficially
owned by such funds, except to the extent of his pecuniary interest
therein.
(z) Represents options for 30,000 shares of Common Stock and 9,812,040 shares
of Common Stock beneficially owned by members of the Centennial Group. Mr.
Schutz disclaims beneficial ownership of such shares.
(aa) Includes options for 5,523,683 shares of Common Stock and warrants for
120,000 shares of Common Stock.
(bb) Berkshire Group has approximately 22.0% of the total voting power of
Common Stock. Carl Ferenbach, Chairman of the Board of Directors of the
Company and a director of the Company, is a Managing Director of
Berkshire Investors; a Managing Director of Third Berkshire Managers the
general partner of Third Berkshire Associates, the general partner of
Berkshire Fund III; and a Managing Director of Fourth Berkshire
Associates, the general partner of Berkshire Fund IV. The principal
business address of the Berkshire Group is c/o Berkshire Partners LLC,
One Boston Place, Suite 3300, Boston, MA 02108-401.
(cc) Includes warrants for 35,935 shares of Common Stock.
(dd) Includes warrants for 29,255 shares of Common Stock.
(ee) Includes warrants for 4,810 shares of Common Stock.
(ff) Candover Group has approximately 12.0% of the total voting power of
Common Stock. G. Douglas Fairservice is a Director of each entity in the
Candover Group. The principal business address of Candover Partners is 20
Old Bailey, London EC4M 7LM, United Kingdom.
(gg) Centennial Fund IV, Centennial Fund V and Centennial Enterpreneurs Fund
collectively have had approximately 10.4% of the total voting power of
Common Stock.
(hh) Holdings IV is the sole general partner of Centennial Fund IV, and,
accordingly, Holdings IV may be deemed to control Centennial Fund IV and
possess indirect beneficial ownership of the securities of the Company
directly beneficially held by Fund IV. The principal business address of
Centennial Fund IV and Holdings IV is 1428 Fifteenth Street, Denver,
Colorado 80202-1318.
(ii) Holdings V is the sole general partner of Centennial Fund V, and,
accordingly, Holdings V may be deemed to control Centennial Fund V and
possess indirect beneficial ownership of the securities of the Company
directly beneficially held by Centennial Fund V. The Common Stock
indicated as held by Centennial Fund V includes 19,400 shares obtainable
upon exercise of warrants. The principal business address of Centennial
Fund V and Holdings V is 1428 Fifteenth Street, Denver, Colorado 80202-
1318.
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<PAGE>
(jj) Holdings V is the sole general partner of Centennial Entrepreneurs Fund
V, and, accordingly, may be deemed to control Centennial Entrepreneurs
Fund V and possess indirect beneficial ownership of the securities of the
Company directly beneficially held by Centennial Entrepreneurs Fund V.
The Common Stock indicated as held by Centennial Entrepreneurs Fund V
includes 600 shares obtainable upon exercise of warrants. The principal
business address of Centennial Entrepreneurs V is 1428 Fifteenth Street,
Denver, Colorado 80202-1318.
(kk) Nassau Group has approximately 5.3% of the total voting power of Common
Stock. Randall Hack, a director of the Company, is a member of Nassau
Capital L.L.C., an affiliate of Nassau Group. The principal business
address of Nassau Capital Partners II, L.P. is 22 Chambers Street,
Princeton, NJ 08542.
(ll) Includes warrants for 49,690 shares of Common Stock.
(mm) Includes warrants for 310 shares of Common Stock.
(nn) Digital Future Investments B.V. is an affiliate of TeleDiffusion de
France International S.A. TdF will retain ownership of 20% of the shares
of capital stock of CTSH. Pursuant to the Share Exchange Agreement and
subject to certain conditions, TdF has the right to exchange its shares
of capital stock of CTSH for 17,443,500 shares of Class A Common Stock of
the Company (which is convertible into 17,443,500 shares of Common
Stock). DFI currently has 12.0% of the total voting power of Common
Stock. Combined, TdF and DFI would have 25.7% of the Voting Power of
Common Stock. The principal business address of DFI is c/o TeleDiffusion
de France International S.A., 10 Rue d'Oradour sur Glane, 75732 Paris 15
France.
130
<PAGE>
DESCRIPTION OF SECURITIES
This description of the securities being offered has five parts:
. Description of the Exchangeable Preferred Stock;
. Description of the Exchange Debentures;
. Certain Definitions;
. Book-Entry, Delivery and Form; and
. Registration Rights and Liquidated Damages.
You should read all five parts of this Description of Securities for a
description of the provisions of the instruments governing the securities, the
form in which the securities are expected to be issued and certain mechanics
for trading of the securities. Although this description is provided for your
reference, you are strongly encouraged to read the Certificate of Designations
governing the Exchangeable Preferred Stock, and the Exchange Indenture
governing the Exchange Debentures for the complete terms and provisions of the
securities being offered. In addition, you should be aware that the General
Corporation Law of the State of Delaware also governs the Exchangeable
Preferred Stock and the ability of the Company to pay dividends on the
Exchangeable Preferred Stock. See "Description of Capital Stock" and "Risk
Factors--Ability to Pay Dividends on the Exchangeable Preferred Stock".
Description of the Exchangeable Preferred Stock
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions". In this description, the word "Company"
refers only to Crown Castle International Corp. and not to any of its
subsidiaries.
The Old Preferred Stock was and the New Preferred Stock will be issued under
a Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions Thereof (the "Certificate of Designations"), a
copy of which is filed as an exhibit to the Registration Statement of which
this Prospectus is a part.
The following description is a summary of the material provisions of the
Certificate of Designations and does not restate that agreement in its
entirety. We urge you to read the Certificate of Designations because it, and
not this description, defines your rights as holders of the Exchangeable
Preferred Stock. Copies of the Certificate of Designations are available as
set forth below under the subheading "Additional Information". This
description is qualified in its entirety by reference to the Company's Amended
and Restated Certificate of Incorporation, which will include the Certificate
of Designations and the definitions therein of certain terms used below.
The Certificate of Designations authorized the Company to issue 400,000
shares of Exchangeable Preferred Stock with a liquidation preference of $1,000
per share (the "Liquidation Preference"). The Old Preferred Stock was and the
New Preferred Stock will, when issued, be fully paid and nonassessable and
Holders will have no preemptive rights in connection therewith.
The liquidation preference of the Exchangeable Preferred Stock is not
necessarily indicative of the price at which shares of the Exchangeable
Preferred Stock will actually trade at or after the time of their issuance,
and the Exchangeable Preferred Stock may trade at prices below its liquidation
preference. The market price of the Exchangeable Preferred Stock can be
expected to fluctuate with changes in the financial markets and economic
conditions, the financial condition and prospects of the Company and other
facts that generally influence the market prices of securities.
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<PAGE>
As of the Issue Date, all of our subsidiaries other than (1) CTSH and its
subsidiaries and (2) Crown Castle Investment Corp. and Crown Castle Investment
Corp. (II) and their subsidiaries, through which we intend to hold our
interest in the Proposed JV, were "Restricted Subsidiaries". However, under
the circumstances described below under the subheading "Certain Covenants--
Restricted Payments," we will be permitted to designate certain of our other
subsidiaries as "Unrestricted Subsidiaries". Unrestricted Subsidiaries will
not be subject to most of the restrictive covenants in the Certificate of
Designations.
Transfer Agent
The transfer agent for the Exchangeable Preferred Stock is ChaseMellon
Shareholder Services, L.L.C. unless and until a successor is selected by the
Company (the "Transfer Agent").
Ranking
The Exchangeable Preferred Stock ranks senior in right of payment to all
classes or series of the Company's capital stock as to dividends and upon
liquidation, dissolution or winding up of the Company.
Without the consent of the Holders of at least two-thirds of the then
outstanding Exchangeable Preferred Stock, the Company may not authorize,
create (by way of reclassification or otherwise) or issue:
(1) any class or series of capital stock of the Company ranking senior to
the Exchangeable Preferred Stock ("Senior Securities");
(2) any obligation or security convertible or exchangeable into, or
evidencing a right to purchase, shares of any class or series of Senior
Securities.
Notwithstanding the foregoing, the Company may, without the consent of the
Holders of the Exchangeable Preferred Stock, authorize, create (by way of
reclassification or otherwise) or issue:
(1) any class or series of capital stock of the Company ranking on a
parity with the Exchangeable Preferred Stock ("Parity Securities"); or
(2) any obligation or security convertible or exchangeable into, or
evidencing a right to purchase, shares of any class or series of Parity
Securities.
Dividends
When the Board of Directors declares dividends out of legally available
Company funds, the Holders of the Exchangeable Preferred Stock, who are
Holders of record as of the preceding March 1, June 1, September 1, and
December 1 (each, a "Record Date"), will be entitled to receive cumulative
preferential dividends at the rate per share of 12 3/4% per annum. Dividends
on the Exchangeable Preferred Stock will be payable quarterly in arrears on
March 15, June 15, September 15 and December 15 of each year (each, a
"Dividend Payment Date"), commencing on March 15, 1999.
On or prior to December 15, 2003, the Company may, at its option, pay
dividends:
(1) in cash; or
(2) in additional fully-paid and non-assessable shares of Exchangeable
Preferred Stock (including fractional stock) having an aggregate
Liquidation Preference equal to the amount of such dividends.
After December 15, 2003, the Company will pay dividends in cash only. The
Company does not expect to pay any dividends in cash before December 15, 2003.
Dividends payable on the Exchangeable Preferred Stock will be:
(1) computed on the basis of a 360-day year comprised of twelve 30-day
months; and
(2) accrue on a daily basis.
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For a discussion of certain federal income tax considerations relevant to
the payment of dividends on the Exchangeable Preferred Stock, see "Certain
Federal Income Tax Considerations--Dividends on Exchangeable Preferred Stock".
Dividends on the Exchangeable Preferred Stock will accrue whether or not:
(1) the Company has earnings or profits;
(2) there are funds legally available for the payment of such dividends;
or
(3) dividends are declared.
Dividends will accumulate to the extent they are not paid on the Dividend
Payment Date for the quarterly period to which they relate. Accumulated unpaid
dividends will accrue dividends at the rate of 12 3/4% per annum. The Company
must take all actions required or permitted under Delaware law to permit the
payment of dividends on the Exchangeable Preferred Stock.
For any dividend period, the Company will not declare or pay upon, or set
any sum apart for the payment of dividends upon any outstanding Exchangeable
Preferred Stock unless it has declared and paid upon, or declared and set
apart a sufficient sum for the payment of dividends upon, all outstanding
Exchangeable Preferred Stock for all preceding dividend periods.
Unless the Company has declared and paid upon, or declared and set apart a
sufficient sum for the payment of, full cumulative dividends on all
outstanding Exchangeable Preferred Stock due for all past dividend periods,
then:
(1) no dividend (other than a dividend payable solely in stock of any
class of stock ranking junior to the Exchangeable Preferred Stock as to the
payment of dividends and as to rights in liquidation, dissolution or
winding up of the affairs of the Company (any such stock, "Junior
Securities")) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any Junior Securities;
(2) no other distribution shall be declared or made upon, or any sum set
apart for the payment of any distribution upon, any Junior Securities;
(3) no Junior Securities shall be purchased, redeemed or otherwise
acquired or retired for value (excluding an exchange for other Junior
Securities) by the Company or any of its Restricted Subsidiaries;
(4) no warrants, rights, calls or options to purchase any Junior
Securities shall be directly or indirectly issued by the Company or any of
its Restricted Subsidiaries; and
(5) no monies shall be paid into or set apart or made available for a
sinking or other like fund for the purchase, redemption or other
acquisition or retirement for value of any Junior Securities by the Company
or any of its Restricted Subsidiaries.
Holders of the Exchangeable Preferred Stock will not be entitled to any
dividends, whether payable in cash, property or stock, in excess of the full
cumulative dividends as herein described.
In addition, the Senior Discount Notes Indenture contains restrictions on
the ability of the Company to pay dividends on the Exchangeable Preferred
Stock. Moreover, existing Indebtedness and anticipated future Indebtedness of
our subsidiaries and joint ventures restricts or will restrict our access to
the cash flow of those entities. Any future agreements relating to
Indebtedness to which the Company or any of its Subsidiaries becomes a party
may contain similar restrictions and provisions. See "Risk Factors--
Substantial Leverage; Restrictions Imposed by the Terms of Our Indebtedness"
and "Risk Factors--Holding Company Structure; Dependence on Dividends to Meet
Cash Requirements or Pay Dividends".
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Voting Rights
Holders of record of the Exchangeable Preferred Stock will have no voting
rights, except as required by law and as provided in the Certificate of
Designations. Under the Certificate of Designations, the number of members of
the Company's Board of Directors will immediately and automatically increase
by two, and the Holders of a majority of the outstanding Exchangeable
Preferred Stock, voting separately as a class together with holders of all
other Parity Securities having similar voting rights, may elect two members to
the Board of Directors of the Company, upon the occurrence of any of the
following events (each, a "Voting Rights Triggering Event"):
(1) the accumulation of accrued and unpaid dividends on the outstanding
Exchangeable Preferred Stock (or after December 15, 2003, such dividends
are not paid in cash) in an amount equal to six full quarterly dividends
(whether or not consecutive);
(2) failure by the Company or any of its Restricted Subsidiaries to
comply with any mandatory redemption obligation with respect to the
Exchangeable Preferred Stock, the failure to make an Asset Sale Offer or
Change of Control Offer in accordance with the provisions of the
Certificate of Designations and/or the failure to repurchase Exchangeable
Preferred Stock pursuant to such offers;
(3) failure by the Company to make a Change of Control Offer or to
repurchase any Exchangeable Preferred Stock pursuant to a Change of Control
Offer in reliance on the last paragraph under the caption "Repurchase at
the Option of Holders--Change of Control" or failure by the Company to make
an Asset Sale Offer or to repurchase any Exchangeable Preferred Stock
pursuant to an Asset Sale Offer in reliance on the last paragraph under the
caption "Repurchase at the Option of Holders--Asset Sales";
(4) failure by the Company or any of its Restricted Subsidiaries to
comply with any of the other covenants or agreements set forth in the
Certificate of Designations and the continuance of such failure for 30
consecutive days after notice to the Company by Holders of record of the
Exchangeable Preferred Stock representing 25% of the outstanding shares of
the Exchangeable Preferred Stock;
(5) defaults under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Significant Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the Closing Date, which default (i) is caused
by a failure to pay the principal amount of such Indebtedness at final
maturity after giving effect to any applicable grace period (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $20.0 million or more; or
(6) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries.
The term of office of the directors elected as a result of a Voting Rights
Triggering Event will continue until all dividends in arrears on the
Exchangeable Preferred Stock are paid in full and all other Voting Rights
Triggering Events have been cured or waived, at which time the term of office
of any such directors shall terminate.
In addition, as provided above under "--Ranking," the Company may not
authorize, create (by way of reclassification or otherwise) or issue any
Senior Securities (other than Disqualified Stock), or any obligation or
security convertible into or evidencing the right to purchase Senior
Securities (other than Disqualified Stock), without the consent of the Holders
of at least two-thirds of the then outstanding Exchangeable Preferred Stock,
in each case, voting as a single class.
Under Delaware law, holders of preferred stock are entitled to vote as a
class upon a proposed amendment to the certificate of incorporation if the
amendment would (a) increase or decrease the par value of the shares of that
class of preferred stock or (b) alter or change the powers, preferences or
special rights of the shares of that class of preferred stock in a way that
would affect the holders of that preferred stock adversely.
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Exchange
On any Dividend Payment Date, the Company may exchange all and not less than
all of the shares of then outstanding Exchangeable Preferred Stock for the
Company's 12 3/4% Exchange Debentures due 2010 (the "Exchange Debentures") if:
(1) on the date of the exchange, there are no accumulated and unpaid
dividends on the Exchangeable Preferred Stock (including the dividend
payable on that date) or other contractual impediments to the exchange;
(2) there are sufficient legally available funds;
(3) the exchange does not immediately cause:
(a) a Default (as defined in the Exchange Indenture); and
(b) a default or event of default under any material instrument governing
Indebtedness of the Company, including without limitation the Senior
Discount Notes, outstanding at the time;
(4) the Exchange Indenture has been qualified under the Trust Indenture
Act, if qualification is required at the time of exchange; and
(5) the Company has delivered a written opinion to the Exchange Trustee
(as defined herein) stating that all conditions to the exchange have been
satisfied.
The Senior Discount Notes Indenture currently restricts the exchange of the
Exchangeable Preferred Stock and may restrict the Company's ability to
exchange the Exchangeable Preferred Stock in the future. See "Description of
Certain Indebtedness--The Notes". In addition, existing Indebtedness and
anticipated future Indebtedness of our subsidiaries and joint ventures
restricts or will restrict our access to the cash flow from those entities.
Any future agreements relating to Indebtedness to which we or any of our
subsidiaries or joint ventures become a party may contain similar restrictions
and provisions. See "Risk Factors--Holding Company Structure; Dependence on
Dividends to Meet Cash Requirements or Pay Dividends".
Upon any exchange pursuant to the preceding paragraph, and subject to the
second succeeding sentence of this paragraph, holders of outstanding
Exchangeable Preferred Stock will be entitled to receive:
(1) $1.00 principal amount of Exchange Debentures for each $1.00 of the
aggregate Liquidation Preference; plus
(2) without duplication, any accrued and unpaid dividends.
The Exchange Debentures will be:
(1) issued in registered form, without coupons;
(2) issued in principal amounts of $1,000 and integral multiples thereof
to the extent possible; and
(3) issuable in principal amounts less than $1,000 so that each holder of
Exchangeable Preferred Stock will receive interests representing the entire
amount of Exchange Debentures to which such holder's share of Exchangeable
Preferred Stock entitle such holder, provided that the Company may pay cash
in lieu of issuing an Exchange Debenture having a principal amount less
than $1,000.
For a description of the Exchange Debentures, see "--Description of the
Exchange Debentures".
The Company or a Company representative will send notice of the intention to
exchange by first class mail, postage prepaid, to each Holder of record of
Exchangeable Preferred Stock at its registered address not more than 60 days
nor less than 30 days prior to the Exchange Date. In addition to any
information required by law or
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by the applicable rules of any exchange upon which Exchangeable Preferred
Stock may be listed or admitted to trading, the notice will state:
(1) the Exchange Date;
(2) the place or places where certificates for such stock are to be
surrendered for exchange, including any procedures applicable to exchanges
to be accomplished through book-entry transfers; and
(3) that dividends on the Exchangeable Preferred Stock to be exchanged
will cease to accrue on the Exchange Date.
If notice of any exchange has been properly given, and if on or before the
Exchange Date the Exchange Debentures have been duly executed and
authenticated and an amount in cash or additional Exchangeable Preferred Stock
(as applicable) equal to all accrued and unpaid dividends, if any, thereon to
the Exchange Date has been deposited with the Transfer Agent, then on and
after the close of business on the Exchange Date:
(1) the Exchangeable Preferred Stock to be exchanged will no longer be
considered outstanding and may subsequently be issued in the same manner as
the other authorized but unissued preferred stock, including as Parity
Securities, but not as the same class as the Exchangeable Preferred Stock;
and
(2) all rights of the Holders as stockholders of the Company will cease,
except their right to receive upon surrender of their certificates the
Exchange Debentures and all accrued and unpaid dividends, if any, thereon
to the Exchange Date.
Mandatory Redemption
On December 15, 2010 (the "Mandatory Redemption Date"), the Company will be
required to redeem (subject to it having sufficient legally available funds)
all outstanding Exchangeable Preferred Stock at a price in cash equal to the
Liquidation Preference, plus accrued and unpaid dividends, if any, to the date
of redemption. The Company will not be required to make sinking fund payments
with respect to the Exchangeable Preferred Stock. The Company must take all
actions required or permitted under Delaware law to permit such redemption.
The Senior Discount Notes Indenture currently restricts the redemption of
the Exchangeable Preferred Stock. See "Description of Certain Indebtedness--
The Notes". In addition, existing Indebtedness and anticipated future
Indebtedness of our subsidiaries and joint ventures restricts or will restrict
our access to the cash flow from those entities. Any future agreements
relating to Indebtedness to which we or any of our subsidiaries become a party
may contain similar restrictions and provisions. See "Risk Factors--Holding
Company Structure; Dependence on Dividends to Meet Cash Requirements or Pay
Dividends".
Optional Redemption
During the first 36 months after the Issue Date, the Company may on any one
or more occasions redeem up to 35% of the aggregate Liquidation Preference of
the Exchangeable Preferred Stock then outstanding at a redemption price of
112.750% of the Liquidation Preference thereof, plus accrued and unpaid
dividends and Liquidated Damages thereon, if any, to the redemption date, with
the net cash proceeds of one or more Public Equity Offerings or Strategic
Equity Investments; provided that:
(1) at least $130.0 million aggregate Liquidation Preference of
Exchangeable Preferred Stock remains outstanding immediately after the
occurrence of such redemption (excluding Exchangeable Preferred Stock held
by the Company and its Subsidiaries); and
(2) the redemption must occur within 60 days of the date of the closing
of the Public Equity Offering or Strategic Equity Investment.
Except pursuant to the preceding paragraph, the Exchangeable Preferred Stock
will not be redeemable at the Company's option prior to December 15, 2003.
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On or after December 15, 2003, the Company may redeem all or any part of the
Exchangeable Preferred Stock upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of the Liquidation
Preference) set forth below plus accrued and unpaid dividends and Liquidated
Damages thereon, if any, to the applicable redemption date, if redeemed during
the twelve-month period beginning on December 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.............................................................. 106.375%
2004.............................................................. 104.781%
2005.............................................................. 103.188%
2006.............................................................. 101.594%
2007 and thereafter............................................... 100.000%
</TABLE>
The Senior Discount Notes Indenture currently restricts the redemption of
the Exchangeable Preferred Stock and additional indebtedness may restrict the
Company's ability to redeem the Exchangeable Preferred Stock in the future.
See "Description of Certain Indebtedness".
Selection and Notice
If less than all of the Exchangeable Preferred Stock is to be redeemed at
any time, the Transfer Agent will select Exchangeable Preferred Stock for
redemption as follows:
(1) if the Exchangeable Preferred Stock is listed, in compliance with the
requirements of the principal national securities exchange on which the
Exchangeable Preferred Stock is listed; or
(2) if the Exchangeable Preferred Stock is not so listed, on a pro rata
basis, by lot or by such method as the Transfer Agent shall deem fair and
appropriate.
No Exchangeable Preferred Stock with a Liquidation Preference of $1,000 or
less shall be redeemed in part. Notices of redemption shall be mailed by first
class mail at least 30 but not more than 60 days before the redemption date to
each Holder of Exchangeable Preferred Stock to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any Exchangeable Preferred Stock is to be redeemed in part only, the
notice of redemption that relates to that Exchangeable Preferred Stock shall
state the portion of the Liquidation Preference thereof to be redeemed. A new
certificate with an aggregate Liquidation Preference equal to the unredeemed
portion of the original certificate evidencing Exchangeable Preferred Stock
presented for redemption will be issued in the name of the Holder thereof upon
cancellation of the original certificate. Exchangeable Preferred Stock called
for redemption becomes due on the date fixed for redemption. On and after the
redemption date, dividends cease to accrue on Exchangeable Preferred Stock or
portions thereof called for redemption.
Liquidation Rights
Each Holder of the Exchangeable Preferred Stock will be entitled to payment,
out of the assets of the Company available for distribution, of an amount
equal to the Liquidation Preference per Exchangeable Preferred Stock held by
such Holder, plus accrued and unpaid dividends, if any, to the date fixed for
liquidation, dissolution, winding up or reduction or decrease in capital
stock, before any distribution is made on any Junior Securities, including,
without limitation, common stock of the Company, upon any:
(1) voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company; or
(2) reduction or decrease in the Company's capital stock resulting in a
distribution of assets to the holders of any class or series of the
Company's capital stock (a "reduction or decrease in capital stock").
After payment in full of the Liquidation Preference and all accrued
dividends, if any, to which Holders of Exchangeable Preferred Stock are
entitled, such Holders may not further participate in any distribution of
assets
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of the Company. However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Company nor the
consolidation or merger of the Company with or into one or more corporations
will be a voluntary or involuntary liquidation, dissolution or winding up of
the Company or reduction or decrease in capital stock, unless such sale,
conveyance, exchange or transfer is in connection with a liquidation,
dissolution or winding up of the business of the Company or reduction or
decrease in capital stock.
The Certificate of Designations will not contain any provision requiring
funds to be set aside to protect the Liquidation Preference of the
Exchangeable Preferred Stock, although such Liquidation Preference will be
substantially in excess of the par value of the Exchangeable Preferred Stock.
Repurchase at the Option of Holders
Change of Control
If a Change of Control occurs, each Holder of Exchangeable Preferred Stock
will have the right to require the Company to repurchase all or any part (but
not any fractional shares) of such Holder's Exchangeable Preferred Stock
pursuant to the offer described below (the "Change of Control Offer"). In the
Change of Control Offer, the Company will offer a payment in cash equal to
101% of the aggregate Liquidation Preference of Exchangeable Preferred Stock
repurchased plus accrued and unpaid dividends and Liquidated Damages thereon,
if any (subject to the right of Holders of record on the relevant record date
to receive dividends and Liquidated Damages, if any, due on the relevant
dividend payment date), to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company will
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Exchangeable
Preferred Stock on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Certificate of Designations and described in such notice.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Exchangeable Preferred Stock or portions
thereof properly tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Exchangeable Preferred Stock or portions
thereof so tendered; and
(3) deliver or cause to be delivered to the Transfer Agent the
Exchangeable Preferred Stock so accepted together with an Officers'
Certificate stating the aggregate Liquidation Preference of Exchangeable
Preferred Stock or portions thereof being purchased by the Company.
The Company will promptly mail to each Holder of Exchangeable Preferred
Stock so tendered the Change of Control Payment for such Exchangeable
Preferred Stock, and the Transfer Agent will promptly authenticate and mail
(or cause to be transferred by book entry) to each Holder a new certificate
representing the Exchangeable Preferred Stock equal in Liquidation Preference
to any unpurchased portion of the Exchangeable Preferred Stock surrendered, if
any.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Certificate of Designations are applicable.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer. To the extent that the provisions
of any such securities laws or securities regulations conflict with the
provisions of the covenant described above, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the covenant described above by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control,
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although it is possible that the Company would decide to do so in the future.
Subject to the limitations discussed below, the Company could, in the future,
enter into certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Certificate of Designations, but that could increase the amount of
Indebtedness outstanding at such time or otherwise affect the Company's
capital structure. Restrictions on the ability of the Company to incur
additional Indebtedness are contained in the covenants described under "--
Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock". Such restrictions can only be waived with the consent of the Holders
of a majority in Liquidation Preference of the Exchangeable Preferred Stock
then outstanding. Except for the limitations contained in such covenants,
however, the Certificate of Designations will not contain any covenants or
provisions that may afford holders of the Exchangeable Preferred Stock
protection in the event of certain highly leveraged transactions.
The Senior Discount Notes Indenture currently prohibits the Company from
repurchasing any Exchangeable Preferred Stock. In addition, existing
Indebtedness and anticipated future Indebtedness of the Company's subsidiaries
and joint ventures restricts or will restrict the Company's access to the cash
flow from its subsidiaries and joint ventures. Any future agreements relating
to Indebtedness to which the Company or any of its subsidiaries or joint
ventures becomes a party may contain similar restrictions and provisions. In
the event that a Change of Control occurs at a time when the Company is
prohibited or prevented from repurchasing Exchangeable Preferred Stock, the
Company could seek the consent of the applicable lenders to allow such
repurchase or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from repurchasing the
Exchangeable Preferred Stock. In such case, the Company's failure to purchase
tendered Exchangeable Preferred Stock would constitute a Voting Rights
Triggering Event. Future Indebtedness of the Company and its Subsidiaries may
contain prohibitions on the repurchase of the Exchangeable Preferred Stock and
on the occurrence of certain events that would constitute a Change of Control
or may require such Indebtedness to be repurchased upon a Change of Control.
Finally, the Company's ability to pay cash to the Holders of Exchangeable
Preferred Stock following the occurrence of a Change of Control may be limited
by the Company's then existing financial resources, including its ability to
access the cash flow of its Subsidiaries. See "Risk Factors--Repurchase of the
Exchangeable Preferred Stock or the Exchange Debentures Upon a Change of
Control" and "Risk Factors--Holding Company Structure; Dependence on Dividends
to Meet Cash Requirements or Pay Dividends". There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Certificate of Designations applicable to a Change of Control
Offer made by the Company and purchases all Exchangeable Preferred Stock
validly tendered and not withdrawn under such Change of Control Offer. The
provisions under the Certificate of Designations relative to the Company's
obligation to make an offer to repurchase the Exchangeable Preferred Stock as
a result of a Change of Control may be waived or modified with the written
consent of the Holders of a majority in Liquidation Preference of the
Exchangeable Preferred Stock then outstanding.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Exchangeable
Preferred Stock to require the Company to repurchase such Exchangeable
Preferred Stock as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of the Company and its Subsidiaries
taken as a whole to another Person or group may be uncertain.
Notwithstanding the foregoing, the Certificate of Designations will provide
that the Company may not repurchase any Exchangeable Preferred Stock pursuant
to this provision unless such repurchase complies with the restricted payments
covenant contained in the Senior Discount Notes Indenture; provided that if
the Company
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does not make a Change of Control Offer or does not repurchase any
Exchangeable Preferred Stock pursuant to a Change of Control Offer, then such
failure shall constitute a Voting Rights Triggering Event.
Asset Sales
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Transfer Agent) of the
assets or Equity Interests issued or sold or otherwise disposed of; and
(2) except in the case of a Tower Asset Exchange, at least 75% of the
consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to be
cash:
(1) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Exchangeable Preferred Stock or any
guarantee thereof) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases the Company or
such Restricted Subsidiary from further liability; and
(2) any securities, notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are converted by
the Company or such Restricted Subsidiary into cash within 20 days of the
applicable Asset Sale (to the extent of the cash received).
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Restricted Subsidiary may apply such Net
Proceeds to:
(1) reduce any Indebtedness of the Company;
(2) reduce any Indebtedness of any of the Company's Restricted
Subsidiaries;
(3) the acquisition of all or substantially all the assets of a Permitted
Business;
(4) the acquisition of Voting Stock of a Permitted Business from a Person
that is not a Subsidiary of the Company; provided, that, after giving
effect thereto, the Company or its Restricted Subsidiary owns a majority of
such Voting Stock and designates such Permitted Business as a Restricted
Subsidiary; or
(5) the making of a capital expenditure or the acquisition of other long-
term assets that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Certificate of
Designations.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company will be required to make an offer to all holders of
Senior Discount Notes and may be required to make such offer to holders of
other Indebtedness of the Company then outstanding (a "Senior Asset Sale
Offer") to purchase the maximum principal amount of the Senior Discount Notes
and such other Indebtedness, if applicable, that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount or accreted value thereof, as the case may be, plus accrued
and unpaid interest to the date of purchase, in accordance with the procedures
set forth in the Senior Discount Notes Indenture and in the instruments
governing such other Indebtedness. To the extent that the aggregate amount of
Senior Discount Notes and such other Indebtedness tendered pursuant to a
Senior Asset Sale Offer is less than the remaining Excess Proceeds ("Remaining
Excess Proceeds") and the sum of (A) such amount of
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Remaining Excess Proceeds and (B) the Remaining Excess Proceeds from any
subsequent Senior Asset Sale Offers exceeds $3.0 million, the Company will be
required to make an offer to all Holders of Exchangeable Preferred Stock and
all holders of Parity Securities containing provisions similar to those set
forth in the Certificate of Designations with respect to offers to purchase
with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the
maximum Liquidation Preference of Exchangeable Preferred Stock and such Parity
Securities that may be purchased out of such Remaining Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the Liquidation Preference
thereof plus accrued and unpaid dividends and Liquidated Damages thereon, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive dividends and Liquidated Damages, if any, due
on the relevant Dividend Payment Date), in accordance with the procedures set
forth in the Certificate of Designations and such Parity Securities. To the
extent that any Remaining Excess Proceeds remain after consummation of an
Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by the Certificate of Designations. If the aggregate
Liquidation Preference of Exchangeable Preferred Stock and such Parity
Securities tendered into such Asset Sale Offer surrendered by Holders thereof
exceeds the amount of Remaining Excess Proceeds, the Transfer Agent shall
select the Exchangeable Preferred Stock and such Parity Securities to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
The Asset Sale provisions described above will be applicable whether or not
any other provisions of the Certificate of Designations are applicable. The
Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Asset Sale Offer. To the extent that the provisions of any
such securities laws or securities regulations conflict with the provisions of
the covenant described above, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the covenant described above by virtue thereof.
The Senior Discount Notes Indenture currently prohibits the Company form
repurchasing any Exchangeable Preferred Stock. In addition, existing
Indebtedness and anticipated future Indebtedness of our subsidiaries and joint
ventures restricts or will restrict our access to the cash flow from those
entities. Any future agreements relating to Indebtedness to which we or any of
our subsidiaries or joint ventures become a party may contain similar
restrictions and provisions.
Notwithstanding the foregoing, the Certificate of Designations will provide
that the Company may not repurchase any Exchangeable Preferred Stock pursuant
to this provision unless such repurchase complies with the restricted payments
covenant contained in the Senior Discount Notes Indenture; provided that if
the Company does not make an Asset Sale Offer or does not repurchase any
Exchangeable Preferred Stock pursuant to an Asset Sale Offer, then such
failure shall constitute a Voting Rights Triggering Event.
Certain Covenants
Restricted Payments
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of the Company's Junior Securities or any warrants, options or
other rights to acquire Junior Securities (other than any debt security
that is convertible into, or exchangeable for, Junior Securities) or any of
the Company's Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) or to the
direct or indirect holders of the Company's Junior Securities or any
warrants, options or other rights to acquire Junior Securities (other than
any debt security that is convertible into, or exchangeable for, Junior
Securities) or any of the Company's Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company
or to the Company or a Restricted Subsidiary of the Company);
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(2) purchase, redeem or otherwise acquire or retire for value (including
without limitation, in connection with any merger or consolidation
involving the Company) any Junior Securities of the Company or any
warrants, options or other rights to acquire Junior Securities (other than
any debt security that is convertible into, or exchangeable for, Junior
Securities) or any Equity Interests of any direct or indirect parent of the
Company (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company and other than the Exchangeable
Preferred Stock); or
(3) make any Restricted Investment, (all such payments and other actions
set forth in clauses (1) through (3) above being collectively referred to
as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Voting Rights Triggering Event shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) the Company would have been permitted to incur at least $1.00 of
additional indebtedness pursuant to the Debt to Adjusted Consolidated Cash
Flow Ratio test set forth in the first paragraph of the covenant described
below under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock"; provided that the Company and its Restricted Subsidiaries
will not be required to comply with this clause (2) in order to make any
Restricted Investment; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (2) and (3) of the next succeeding paragraph), is less than the
sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the Issue Date to the end of the Company's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit); plus
(b) 100% of the aggregate net cash proceeds received by the Company
since the Issue Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock and except to the extent such net cash proceeds are
used to incur new Indebtedness outstanding pursuant to clause (10) of
the second paragraph of the covenant described below under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock") or from
the issue or sale of Disqualified Stock or debt securities of the
Company that have been converted into such Equity Interests (other than
Equity Interests (or Disqualified Stock or convertible debt securities)
sold to a Subsidiary of the Company and other than Disqualified Stock
or convertible debt securities that have been converted into
Disqualified Stock); plus
(c) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B)
the initial amount of such Restricted Investment; plus
(d) to the extent that any Unrestricted Subsidiary of the Company and
all of its Subsidiaries are designated as Restricted Subsidiaries after
the Issue Date, the lesser of (A) the fair market value of the
Company's Investments in such Subsidiaries as of the date of such
designation, or (B) the sum of (x) the fair market value of the
Company's Investments in such Subsidiaries as of the date on which such
Subsidiaries were originally designated as Unrestricted Subsidiaries
and (y) the amount of any Investments made in such Subsidiaries
subsequent to such designation (and treated as Restricted Payments) by
the Company or any Restricted Subsidiary; provided that:
(i) in the event the Unrestricted Subsidiaries designated as
Restricted Subsidiaries are CTSH and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair market
value of the Company's Investments in such Subsidiaries shall mean
the amount by which the fair market
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value of all such Investments exceeds 34.3% of the fair market value
of CTSH and its Subsidiaries as a whole; and
(ii) in the event the Unrestricted Subsidiaries designated as
Restricted Subsidiaries are CCAIC and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair market
value of the Company's Investments in such Subsidiaries shall mean
the amount by which the fair market value of all such Investments
exceeds $250.0 million; plus
(e) 50% of any dividends received by the Company or a Restricted
Subsidiary after the Issue Date from an Unrestricted Subsidiary of
the Company, to the extent that such dividends were not otherwise
included in Consolidated Net Income of the Company for such period.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Certificate of Designations;
(2) the making of any Investment or the redemption, repurchase,
retirement, defeasance or other acquisition of any Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the sale after
the Issue Date (other than to a Subsidiary of the Company) of, any Equity
Interests of the Company (other than any Disqualified Stock); provided that
such net cash proceeds are not used to incur new Indebtedness pursuant to
clause (10) of the second paragraph of the covenant described below under
the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock"); and provided further that, in each such case, the amount of any
such net cash proceeds that are so utilized shall be excluded from clause
(3) (b) of the preceding paragraph;
(3) the payment of any dividend by a Restricted Subsidiary of the Company
to the holders of its Equity Interests on a pro rata basis; or
(4) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary
of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of the Issue
Date; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed (a)
$500,000 in any twelve-month period and (b) $5.0 million in the aggregate.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Voting Rights
Triggering Event; provided that in no event shall the businesses operated by
the Company's Restricted Subsidiaries as of November 20, 1997 be transferred
to or held by an Unrestricted Subsidiary. For purposes of making such
determination, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to the fair market value
of such Investments at the time of such designation. Such designation will
only be permitted if such Restricted Payment would be permitted at such time
and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary if such designation would not cause a
Voting Rights Triggering Event.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or the
applicable Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. The fair market value of any property, assets or
Investments required by this covenant to be determined shall be determined by
the Board of Directors whose resolution with respect thereto shall be
delivered to the Transfer Agent.
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Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company will not issue any Disqualified Stock and will not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock and the Company's Restricted
Subsidiaries may incur Indebtedness if, in each case, the Company's Debt to
Adjusted Consolidated Cash Flow Ratio at the time of incurrence of such
Indebtedness or the issuance of such Disqualified Stock, after giving pro
forma effect to such incurrence or issuance as of such date and to the use of
proceeds therefrom as if the same had occurred at the beginning of the most
recently ended four full fiscal quarter period of the Company for which
internal financial statements are available, would have been no greater than
7.5 to 1.
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following items of Indebtedness or to the issuance of
any of the following items of Disqualified Stock or preferred stock
(collectively, "Permitted Debt"):
(1) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness (including Indebtedness under Credit Facilities) in an
aggregate principal amount (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
and its Restricted Subsidiaries thereunder) at any one time outstanding not
to exceed the greater of (x) $200.0 million less the aggregate amount of
all Net Proceeds of Asset Sales applied to repay Indebtedness under a
Credit Facility pursuant to the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales" and (y) 70% of the
Eligible Receivables that are outstanding as of such date of incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the issuance by the Company of preferred stock represented by the
Exchangeable Preferred Stock and the incurrence by the Company of
Indebtedness represented by the Exchange Debentures;
(4) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (4), not to exceed $10.0 million at any one time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund
Indebtedness of the Company or any of its Restricted Subsidiaries or
Disqualified Stock of the Company (other than intercompany Indebtedness)
that was permitted by the Certificate of Designations to be incurred under
the first paragraph hereof or clauses (2) or (3) or this clause (5) of this
paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, that (A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Restricted Subsidiary and (B)
any sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be;
(7) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate
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Indebtedness that is permitted by the terms of the Certificate of
Designations to be outstanding or currency exchange risk;
(8) the guarantee by the Company or any of its Restricted Subsidiaries of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of the Certificate of
Designations;
(9) the incurrence by the Company or any of its Restricted Subsidiaries
of Acquired Debt in connection with the acquisition of assets or a new
Subsidiary and the incurrence by the Company's Restricted Subsidiaries of
Indebtedness as a result of the designation of an Unrestricted Subsidiary
as a Restricted Subsidiary; provided that, in the case of any such
incurrence of Acquired Debt, such Acquired Debt was incurred by the prior
owner of such assets or such Restricted Subsidiary prior to such
acquisition by the Company or one of its Restricted Subsidiaries and was
not incurred in connection with, or in contemplation of, such acquisition
by the Company or one of its Restricted Subsidiaries; and provided further
that, in the case of any incurrence pursuant to this clause (9), as a
result of such acquisition by the Company or one of its Restricted
Subsidiaries, the Company's Debt to Adjusted Consolidated Cash Flow Ratio
at the time of incurrence of such Acquired Debt, after giving pro forma
effect to such incurrence as if the same had occurred at the beginning of
the most recently ended four full fiscal quarter period of the Company for
which internal financial statements are available, would have been less
than the Company's Debt to Adjusted Consolidated Cash Flow Ratio for the
same period without giving pro forma effect to such incurrence;
(10) the incurrence by the Company of Indebtedness not to exceed, at any
one time outstanding, the sum of (i) 2.0 times the aggregate net cash
proceeds plus (ii) 1.0 times the fair market value of non-cash proceeds
(evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Transfer Agent), in each case, from
the issuance and sale, other than to a Subsidiary, of Equity Interests
(other than Disqualified Stock) of the Company since the Issue Date (less
the amount of such proceeds used to make Restricted Payments as provided in
clause (3)(b) of the first paragraph or clause (2) of the second paragraph
of the covenant described above under the caption "--Restricted Payments");
provided that such Indebtedness does not mature prior to the Stated
Maturity of the Exchangeable Preferred Stock and the Weighted Average Life
to Maturity of such Indebtedness is longer than that of the Exchangeable
Preferred Stock; and
(11) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness and/or the issuance by the Company of
Disqualified Stock in an aggregate principal amount, accreted value or
liquidation preference, as applicable, at any time outstanding, not to
exceed an amount equal to $100.0 million less the aggregate amount of all
Investments made pursuant to clause (12) of the definition of Permitted
Investments; provided that, notwithstanding the foregoing, the aggregate
principal amount, accreted value or liquidation preference, as applicable,
permitted to be incurred or issued pursuant to this clause (11) shall not
be reduced to less than $25.0 million.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Permitted Debt described in clauses (1) through (11) above or is entitled
to be incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify (or later reclassify in whole or in
part) such item of Indebtedness in any manner that complies with this
covenant. Accrual of interest, accretion or amortization of original issue
discount and the payment of interest in the form of additional Indebtedness
will not be deemed to be an incurrence of Indebtedness for purposes of this
covenant.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions to the Company or any
of its Restricted Subsidiaries on its Capital Stock or with respect to any
other interest or participation in, or measured by, its profits;
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(2) pay any indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(3) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(4) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries.
However, the foregoing restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness or Indebtedness under the Senior Credit
Facility, in each case as in effect on the Issue Date, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive, taken as a whole,
with respect to such dividend and other payment restrictions than those
contained in the applicable series of Existing Indebtedness or in the
Senior Credit Facility, in each case as in effect on the Issue Date;
(2) encumbrances and restrictions applicable to any Unrestricted
Subsidiary, as the same are in effect as of the date on which such
Subsidiary becomes a Restricted Subsidiary, and as the same may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced; provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings
are no more restrictive, taken as a whole, with respect to such dividend
and other payment restrictions than those contained in the applicable
series of Indebtedness of such Subsidiary as in effect on the date on which
such Subsidiary becomes a Restricted Subsidiary;
(3) any Indebtedness (incurred in compliance with the covenant under the
heading "--Incurrence of Indebtedness and Issuance of Preferred Stock") or
any agreement pursuant to which such Indebtedness is issued if the
encumbrance or restriction applies only in the event of a payment default
or default with respect to a financial covenant contained in such
Indebtedness or agreement and such encumbrance or restriction is not
materially more disadvantageous to the holders of the Exchangeable
Preferred Stock than is customary in comparable financings (as determined
by the Company) and the Company determines that any such encumbrance or
restriction will not materially affect the Company's ability to pay
dividends or the Liquidation Preference on the Exchangeable Preferred
Stock;
(4) the Certificate of Designations;
(5) applicable law;
(6) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the
Certificate of Designations to be incurred;
(7) by reason of customary non-assignment provisions in leases or
licenses entered into in the ordinary course of business;
(8) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (4) in the prior paragraph on the property so acquired;
(9) the provisions of agreements governing Indebtedness incurred pursuant
to clause (4) of the second paragraph of the covenant described above under
the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock";
(10) any agreement for the sale of a Restricted Subsidiary that restricts
that Restricted Subsidiary pending its sale;
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(11) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(12) Liens that limit the right of the debtor to transfer the assets
subject to such Liens;
(13) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements; and
(14) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless:
(1) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under the
Exchangeable Preferred Stock and the Certificate of Designations;
(3) immediately after such transaction no Voting Rights Triggering Event
exists; and
(4) except in the case of a merger of the Company with or into a Wholly
Owned Restricted Subsidiary of the Company and except in the case of a
merger entered into solely for the purpose of reincorporating the Company
in another jurisdiction,
(a) in the case of a merger or consolidation in which the Company is
the surviving corporation, the Company's Debt to Adjusted Consolidated
Cash Flow Ratio, at the time of such transaction after giving pro forma
effect thereto as if such transaction had occurred at the beginning of
the most recently ended four full fiscal quarter period of the Company
for which internal financial statements are available, would have been
less than the Company's Debt to Adjusted Consolidated Cash Flow Ratio
for the same period without giving pro forma effect to such
transaction, or
(b) in the case of any other such transaction the Debt to Adjusted
Consolidated Cash Flow of the entity or Person formed by or surviving
any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made, at the time of such transaction after
giving pro forma effect thereto as if such transaction had occurred at
the beginning of the most recently ended four full fiscal quarter
period of such entity or Person for which internal financial statements
are available, would have been less than the Company's Debt to Adjusted
Consolidated Cash Flow Ratio for the same period without giving pro
forma effect to such transaction; provided that for purposes of
determining the Debt to Adjusted Consolidated Cash Flow Ratio of any
such entity or Person for purposes of this clause (b) such entity or
Person shall be substituted for the Company in the definition of Debt
to Adjusted Consolidated Cash Flow Ratio and the defined terms included
therein under the caption "--Certain Definitions".
Transactions with Affiliates
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or purchase any property or assets
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from, or enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person; and
(2) the Company delivers to the Transfer Agent:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and
therefore will not be subject to the provisions of the prior paragraph:
(1) any employment arrangements with any executive officer of the Company
or a Restricted Subsidiary that is entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and
consistent with compensation arrangements of similarly situated executive
officers at comparable companies engaged in Permitted Businesses;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of directors fees in an aggregate annual amount not to exceed
$25,000 per Person;
(4) Restricted Payments that are permitted by the provisions of the
Certificate of Designations described above under the caption "--Restricted
Payments";
(5) the issuance or sale of Equity Interests (other than Disqualified
Stock) of the Company; and
(6) transactions pursuant to the provisions of the Governance Agreement,
the Rights Agreement, the Stockholders' Agreement, the CTSH Shareholders'
Agreement, the CTI Services Agreement, the CTI Operating Agreement and the
Crown Transition Agreements, as the same are in effect on the Issue Date.
Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries
The Company:
(1) will not, and will not permit any Restricted Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Restricted Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Restricted Subsidiary of the
Company); and
(2) will not permit any Restricted Subsidiary of the Company to issue any
of its Equity Interests (other than, if necessary, shares of its Capital
Stock constituting directors' qualifying shares) to any Person other than
to the Company or a Wholly Owned Restricted Subsidiary of the Company,
unless, in each such case: (a) as a result of such transfer, conveyance,
sale, lease or other disposition or issuance such Restricted Subsidiary no
longer constitutes a Subsidiary and (b) the cash Net Proceeds from such
transfer, conveyance, sale, lease or other disposition or issuance are applied
in accordance with the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales".
Senior Subordinated Debt
So long as any Exchangeable Preferred Stock is outstanding, the Company
shall not incur any Indebtedness, other than the Exchange Debentures and New
Exchange Debentures, that is expressly made subordinated in right
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of payment to any Senior Debt unless such Indebtedness, by its terms and by
the terms of any agreement or instrument pursuant to which such Indebtedness
is outstanding, is expressly made pari passu with, or subordinate in right of
payment to, the Exchange Debentures pursuant to provisions substantially
similar to those contained in the Exchange Indenture; provided that the
foregoing limitations shall not apply to distinctions between categories of
Senior Debt that exist by reason of any Liens or Guarantees arising or created
in respect of some but not all Senior Debt.
Business Activities
The Company will not, and will not permit any Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not
be material to the Company and its Subsidiaries taken as a whole.
Reports
Whether or not required by the rules and regulations of the Securities and
Exchange Commission (the "Commission"), so long as any Exchangeable Preferred
Stock is outstanding, the Company will furnish to the Holders of Exchangeable
Preferred Stock:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of the
Company and its consolidated Subsidiaries (showing in reasonable detail, in
the footnotes to the financial statements and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" (in each
case to the extent not prohibited by the Commission's rules and
regulations), (a) the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company and (b) the Tower Cash Flow for the most recently completed fiscal
quarter and the Adjusted Consolidated Cash Flow for the most recently
completed four-quarter period) and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants;
and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports,
in each case within the time periods specified in the Commission's rules
and regulations.
In addition, following the consummation of the exchange offer contemplated
by the Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request.
Transfer and Exchange
A Holder may transfer or exchange Exchangeable Preferred Stock in accordance
with the Certificate of Designations. The Registrar and the Transfer Agent may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law. The Company is not required to transfer or exchange any
shares of Exchangeable Preferred Stock selected for redemption. Also, the
Company is not required to transfer or exchange any share of Exchangeable
Preferred Stock for a period of 15 days before a selection of Exchangeable
Preferred Stock to be redeemed.
The registered Holder of a share of Exchangeable Preferred Stock will be
treated as the owner of it for all purposes.
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Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Certificate of
Designations or the Exchangeable Preferred Stock may be amended or
supplemented with the consent of the Holders of at least a majority in
aggregate Liquidation Preference of the Exchangeable Preferred Stock then
outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Exchangeable
Preferred Stock), and any existing default or compliance with any provision of
the Certificate of Designations or the Exchangeable Preferred Stock may be
waived with the consent of the Holders of a majority in aggregate Liquidation
Preference of the then outstanding Exchangeable Preferred Stock (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Exchangeable Preferred Stock).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any shares of Exchangeable Preferred Stock held by a non-
consenting Holder):
(1) alter the voting rights with respect to the Exchangeable Preferred
Stock or reduce the number of shares of Exchangeable Preferred Stock whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the Liquidation Preference of or change the Mandatory
Redemption Date of any Exchangeable Preferred Stock or alter the provisions
with respect to the redemption (but not any required repurchase in
connection with an Asset Sale Offer or Change of Control Offer) of the
Exchangeable Preferred Stock;
(3) reduce the rate of or change the time for payment of dividends on any
Exchangeable Preferred Stock;
(4) waive a default in the payment of dividends on the Exchangeable
Preferred Stock;
(5) make any Exchangeable Preferred Stock payable in any form or money
other than that stated in the Certificate of Designations;
(6) waive a redemption payment (but not any payment upon a required
repurchase in connection with an Asset Sale Offer or Change of Control
Offer) with respect to any Exchangeable Preferred Stock; or
(7) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of
Exchangeable Preferred Stock, the Company may (to the extent permitted by
Delaware law) amend or supplement the Certificate of Designations:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Exchangeable Preferred Stock in
addition to or in place of certificated Exchangeable Preferred Stock;
(3) to provide for the assumption of the Company's obligations to Holders
of Exchangeable Preferred Stock in the case of a merger or consolidation;
or
(4) to make any change that would provide any additional rights or
benefits to the Holders of Exchangeable Preferred Stock or that does not
adversely affect the legal rights under the Certificate of Designations of
any such Holder.
Reissuance
Exchangeable Preferred Stock redeemed or otherwise acquired by the Company
will assume the status of authorized but unissued preferred stock and may
thereafter be reissued in the same manner as the other authorized but unissued
preferred stock, including as Parity Securities, but not as the same class as
the Exchangeable Preferred Stock.
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Description of the Exchange Debentures
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions". In this description, the word "Company"
refers only to Crown Castle International Corp. and not to any of its
subsidiaries.
The Exchange Debentures will, if and when issued, be issued pursuant to an
Indenture (the "Exchange Indenture") between the Company and United States
Trust Company of New York, as trustee (the "Trustee"). The terms of the
Exchange Debentures include those stated in the Exchange Indenture and those
made part of the Exchange Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
The following description is a summary of the material provisions of the
Exchange Indenture. It does not restate the Exchange Indenture in its
entirety. We urge you to read the Exchange Indenture because it, and not this
description, defines your rights as holders of these Exchange Debentures.
Copies of the proposed form of Exchange Indenture are available as set forth
below under the subheading "Additional Information".
These Exchange Debentures:
. will be general unsecured obligations of the Company;
. will be subordinated in right of payment to all existing and future
Senior Debt of the Company; and
. will be senior in right of payment to all existing and future
subordinated Indebtedness of the Company other than future subordinated
Indebtedness that ranks on a parity with the Exchange Debentures.
As of September 30, 1998, we had total Senior Debt of approximately $232.8
million. As indicated above and as discussed in detail below under the
subheading "Subordination", payments on the Exchange Debentures will be
subordinated to the prior payment in full in cash or Cash Equivalents (other
than cash equivalents of the type referred to in clauses (3) and (4) of the
definition thereof) of all Senior Debt. The Exchange Indenture will permit us
to incur additional Senior Debt. In addition, our only significant asset is
the outstanding capital stock of our subsidiaries, and we rely on payments
from our subsidiaries to be able to meet our obligations. In the event of a
bankruptcy, liquidation or reorganization of any of our subsidiaries, such
subsidiaries would pay the holders of their debt and their trade creditors
before they would be able to distribute any of their assets to us.
As of the Issue Date, all of our subsidiaries (other than CTSH and its
subsidiaries and Crown Castle Investment Corp. and its subsidiaries) will be
"Restricted Subsidiaries". However, under the circumstances described below
under the subheading "Certain Covenants--Restricted Payments", we will be
permitted to designate certain of our other Subsidiaries as "Unrestricted
Subsidiaries". Unrestricted Subsidiaries will not be subject to most of the
restrictive covenants in the Exchange Indenture.
Principal, Maturity and Interest
The Company will issue Exchange Debentures in denominations of $1,000 and
integral multiples of $1,000. The Exchange Debentures will mature on December
15, 2010.
Interest on these Exchange Debentures will accrue at the rate of 12 3/4% per
annum and will be payable semi-annually in arrears on June 15 and December 15.
The Company will make each interest payment to the Holders of record of these
Exchange Debentures on the immediately preceding June 1 and December 1.
On or prior to December 15, 2003, the Company may, at its option, pay
interest:
(1) in cash; or
(2) in additional Exchange Debentures having an aggregate principal
amount equal to the amount of such interest.
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After December 15, 2003, the Company will pay interest in cash only. The
Company does not expect to pay any interest in cash before December 15, 2003.
Interest on these Exchange Debentures will accrue from the date of original
issuance or, if interest has already been paid, from the date it was most
recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Methods of Receiving Payments on the Exchange Debentures
If a Holder has given wire transfer instructions to the Company, the Company
will make all principal, premium and interest and Liquidated Damages, if any,
payments on those Exchange Debentures in accordance with those instructions.
All other payments on these Exchange Debentures will be made at the office or
agency of the Paying Agent and Registrar within the City and State of New York
unless the Company elects to make interest payments by check mailed to the
Holders at their address set forth in the register of Holders.
Paying Agent and Registrar for the Exchange Debentures
The Exchange Trustee will initially act as Paying Agent and Registrar. The
Company may change the Paying Agent or Registrar without prior notice to the
Holders of the Exchange Debentures, and the Company or any of its Subsidiaries
may act as Paying Agent or Registrar.
Transfer and Exchange
A Holder may transfer or exchange Exchange Debentures in accordance with the
Exchange Indenture. The Registrar and the Exchange Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Exchange Indenture. The Company is not
required to transfer or exchange any Senior Subordinated Exchange Debenture
selected for redemption. Also, the Company is not required to transfer or
exchange any Senior Subordinated Exchange Debenture for a period of 15 days
before a selection of Exchange Debentures to be redeemed.
The registered Holder of a Senior Subordinated Exchange Debenture will be
treated as the owner of it for all purposes.
Subordination
The payment of principal, premium, interest, Liquidated Damages, if any, and
any other Obligations on, or relating to, the Exchange Debentures will be
subordinated to the prior payment in full in cash or Cash Equivalents (other
than cash equivalents of the type referred to in clauses (3) and (4) of the
definition thereof) of all Senior Debt of the Company.
The holders of Senior Debt will be entitled to receive payment in full in
cash or Cash Equivalents (other than cash equivalents of the type referred to
in clauses (3) and (4) of the definition thereof) of all Obligations due in
respect of Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) before the
Holders of Exchange Debentures will be entitled to receive any payment or
distribution of any kind or character with respect to any Obligations on, or
relating to, the Exchange Debentures (except that Holders of Exchange
Debentures may receive and retain Permitted Junior Securities and payments
made from the trust described under the caption "--Legal Defeasance and
Covenant Defeasance" so long as the deposit of amounts therein satisfied the
relevant conditions specified in the Exchange Indenture at the time of such
deposit), in the event of any distribution to creditors of the Company:
(1) in a liquidation or dissolution of the Company;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property;
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(3) in an assignment for the benefit of creditors; or
(4) in any marshalling of the Company's assets and liabilities.
The Company also may not make any payment or distribution of any kind or
character with respect to any Obligations on, or with respect to, the Exchange
Debentures or acquire any of the Exchange Debentures for cash or property or
otherwise (except in Permitted Junior Securities or from the trust described
under the caption "--Legal Defeasance and Covenant Defeasance") if:
(1) a payment default on Designated Senior Debt occurs and is continuing
beyond any applicable period of grace; or
(2) any other default occurs and is continuing on Designated Senior Debt
that permits holders of the Designated Senior Debt to accelerate its
maturity immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable
grace periods and the Exchange Trustee receives a notice of such default (a
"Payment Blockage Notice") from the holders of such Designated Senior Debt
or their Representative.
Payments on the Exchange Debentures may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default
is cured or waived; or
(2) in case of a nonpayment default, upon the earlier of (x) the date on
which all nonpayment defaults are cured or waived, (y) 179 days after the
date of delivery of the applicable Payment Blockage Notice or (z) the date
on which the Exchange Trustee receives notice from the holders of such
Designated Senior Debt or their Representative rescinding the Payment
Blockage Notice, unless the maturity of any Designated Senior Debt has been
accelerated.
No new Payment Blockage Notice may be delivered by the holders of any
Designated Senior Debt or their Representative unless and until 360 days have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Exchange Trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 90 consecutive days.
The Company must promptly notify holders of Senior Debt if payment of the
Exchange Debentures are accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of the Company, Holders of
Exchange Debentures may recover less ratably than creditors of the Company who
are holders of Senior Debt. See "Risk Factors--Subordination of the
Exchangeable Preferred Stock".
Optional Redemption
During the first 36 months after the Issue Date, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of
Exchange Debentures then outstanding at a redemption price of 112.750% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
one or more Public Equity Offerings or Strategic Equity Investments; provided
that:
(1) at least $162.5 million aggregate principal amount of Exchange
Debentures remains outstanding immediately after the occurrence of such
redemption (excluding Exchange Debentures held by the Company and its
Subsidiaries); and
(2) the redemption must occur within 60 days of the date of the closing
of the Public Equity Offering or Strategic Equity Investment.
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Except pursuant to the preceding paragraph, the Exchange Debentures will not
be redeemable at the Company's option prior to December 15, 2003.
On or after December 15, 2003, the Company may redeem all or any part of the
Exchange Debentures upon not less than 30 nor more than 60 days' notice, at
the redemption prices (expressed as percentages of the principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on December 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.............................................................. 106.375%
2004.............................................................. 104.781%
2005.............................................................. 103.188%
2006.............................................................. 101.594%
2007 and thereafter............................................... 100.000%
</TABLE>
The Senior Discount Notes Indenture currently restricts the redemption of
the Exchange Debentures and additional indebtedness may restrict the Company's
ability to redeem the Exchange Debentures in the future. See "Description of
Certain Indebtedness".
Selection and Notice
If less than all of the Exchange Debentures are to be redeemed at any time,
the Exchange Trustee will select Exchange Debentures for redemption as
follows:
(1) if the Exchange Debentures are listed, in compliance with the
requirements of the principal national securities exchange on which the
Exchange Debentures are listed; or
(2) If the Exchange Debentures are not so listed, on a pro rata basis, by
lot or by such method as the Exchange Trustee shall deem fair and
appropriate.
No Senior Subordinated Exchange Debenture of $1,000 or less shall be
redeemed in part. Notices of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each Holder
of Exchange Debentures to be redeemed at its registered address. Notices of
redemption may not be conditional.
If any Exchange Debentures are to be redeemed in part only, the notice of
redemption that relates to that Exchange Debentures shall state the portion of
the principal amount thereof to be redeemed. A new certificate with an
aggregate principal amount equal to the unredeemed portion of the original
certificate evidencing Exchange Debentures presented for redemption will be
issued in the name of the Holder thereof upon cancellation of the original
certificate. Exchange Debentures called for redemption become due on the date
fixed for redemption. On and after the redemption date, interest ceases to
accrue on Exchange Debentures or portions thereof called for redemption.
Mandatory Redemption
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Exchange Debentures.
Repurchase at the Option of Holders
Change of Control
If a Change of Control occurs, each Holder of Exchange Debentures will have
the right to require the Company to repurchase all or any part (but not any
fractional shares) of such Holder's Exchange Debentures
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pursuant to the offer described below (the "Change of Control Offer"). In the
Change of Control Offer, the Company will offer a payment in cash equal to
101% of the aggregate principal amount of Exchangeable Preferred Stock
repurchased plus accrued and unpaid interest and Liquidated Damages thereon,
if any (subject to the right of Holders of record on the relevant record date
to receive dividends and Liquidated Damages, if any, due on the relevant
dividend payment date), to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company will
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Exchange
Debentures on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Exchange Indenture and described in such notice.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Exchange Debentures or portions thereof
properly tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Exchange Debentures or portions thereof
so tendered; and
(3) deliver or cause to be delivered to the Exchange Trustee the Exchange
Debentures so accepted together with an Officers' Certificate stating the
aggregate principal amount of Exchange Debentures or portions thereof being
purchased by the Company.
The Company will promptly mail to each Holder of Exchange Debentures so
tendered the Change of Control Payment for such Exchange Debentures, and the
Exchange Trustee will promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new certificate representing the
Exchange Debentures equal in principal amount to any unpurchased portion of
the Exchange Debentures surrendered, if any.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Exchange Indenture are applicable. The
Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer. To the extent that the provisions
of any such securities laws or securities regulations conflict with the
provisions of the covenant described above, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the covenant described above by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the
limitations discussed below, the Company could, in the future, enter into
certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Exchange Indenture, but that could increase the amount of Indebtedness
outstanding at such time or otherwise affect the Company's capital structure.
Restrictions on the ability of the Company to incur additional Indebtedness
are contained in the covenants described under "--Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock". Such restrictions
can only be waived with the consent of the Holders of a majority in principal
amount of the Exchange Debentures then outstanding. Except for the limitations
contained in such covenants, however, the Exchange Indenture will not contain
any covenants or provisions that may afford holders of the Exchange Debentures
protection in the event of certain highly leveraged transactions.
The Senior Discount Notes Indenture currently prohibits the Company from
repurchasing any Exchange Debentures. In addition, existing Indebtedness and
anticipated future Indebtedness of the Company's subsidiaries and joint
ventures restricts or will restrict the Company's access to the cash flow from
its subsidiaries and joint ventures. Any future agreements relating to
Indebtedness to which the Company or any of its subsidiaries or joint ventures
become a party may contain similar restrictions and provisions. In the event
that a Change of Control occurs at a time when the Company is prohibited or
prevented from repurchasing Exchange Debentures,
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the Company seek the consent of the applicable lenders to allow such
repurchase or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from repurchasing the Exchange
Debentures. In such case, the Company's failure to purchase tendered Exchange
Debentures would constitute an Event of Default under the Exchange Indenture
which would, in turn, constitute a default under the Senior Discount Notes
Indenture. Future Indebtedness of the Company and its Subsidiaries may contain
prohibitions on the repurchase of the Exchange Debentures and on the
occurrence of certain events that would constitute a Change of Control or may
require such Indebtedness to be repurchased upon a Change of Control. Finally,
the Company's ability to pay cash to the Holders of Exchange Debentures
following the occurrence of a Change of Control may be limited by the
Company's then existing financial resources, including its ability to access
the cash flow of its Subsidiaries. See "Risk Factors--Repurchase of the
Exchangeable Preferred Stock or the Exchange Debentures Upon a Change of
Control" and "Risk Factors--Holding Company Structure; Dependence on Dividends
to Meet Cash Requirements or Pay Dividends". There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Exchange Indenture applicable to a Change of Control Offer made
by the Company and purchases all Exchange Debentures validly tendered and not
withdrawn under such Change of Control Offer. The provisions under the
Exchange Indenture relative to the Company's obligation to make an offer to
repurchase the Exchange Debentures as a result of a Change of Control may be
waived or modified with the written consent of the Holders of a majority in
principal amount of the Exchange Debentures then outstanding.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Exchange
Debentures to require the Company to repurchase such Exchange Debentures as a
result of a sale, lease, transfer, conveyance or other disposition of less
than all of the assets of the Company and its Subsidiaries taken as a whole to
another Person or group may be uncertain.
Asset Sales
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Exchange Trustee) of the
assets or Equity Interests issued or sold or otherwise disposed of; and
(2) except in the case of a Tower Asset Exchange, at least 75% of the
consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to be
cash:
(1) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Exchange Debentures or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to
a customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability; and
(2) any securities, notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are converted by
the Company or such Restricted Subsidiary into cash within 20 days of the
applicable Asset Sale (to the extent of the cash received).
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Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Restricted Subsidiary may apply such Net
Proceeds to:
(1) reduce any Indebtedness of the Company that constitutes Senior Debt;
(2) reduce any Indebtedness of any of the Company's Restricted
Subsidiaries;
(3) the acquisition of all or substantially all the assets of a Permitted
Business;
(4) the acquisition of Voting Stock of a Permitted Business from a Person
that is not a Subsidiary of the Company; provided, that, after giving
effect thereto, the Company or its Restricted Subsidiary owns a majority of
such Voting Stock and designates such Permitted Business as a Restricted
Subsidiary; or
(5) the making of a capital expenditure or the acquisition of other long-
term assets that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Exchange Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company will be required to make an offer to all holders of
Senior Discount Notes and may be required to make such offer to holders of
other Senior Debt of the Company then outstanding (a "Senior Asset Sale
Offer") to purchase the maximum principal amount of the Senior Discount Notes
and such other Senior Debt, if applicable, that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount or accreted value thereof, as the case may be, plus accrued
and unpaid interest to the date of purchase, in accordance with the procedures
set forth in the Senior Discount Notes Indenture and in the instruments
governing such other Senior Debt. To the extent that the aggregate amount of
Senior Discount Notes and such other Senior Debt tendered pursuant to a Senior
Asset Sale Offer is less than the remaining Excess Proceeds ("Remaining Excess
Proceeds") and the sum of (A) such amount of Remaining Excess Proceeds and (B)
the Remaining Excess Proceeds from any subsequent Senior Asset Sale Offers
exceeds $3.0 million, the Company will be required to make an offer to all
Holders of Exchange Debentures and all holders of other senior subordinated
Indebtedness of the Company containing provisions similar to those set forth
in the Exchange Indenture with respect to offers to purchase with the proceeds
of sales of assets (an "Asset Sale Offer") to purchase the maximum principal
amount of Exchange Debentures and such other senior subordinated Indebtedness
of the Company that may be purchased out of the Remaining Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest and Liquidated Damages, if any, due
on the relevant interest payment date), in accordance with the procedures set
forth in the Exchange Indenture and such other senior subordinated
Indebtedness of the Company. To the extent that any Remaining Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by the Exchange
Indenture. If the aggregate principal amount of Exchange Debentures and such
other senior subordinated Indebtedness of the Company tendered into such Asset
Sale Offer surrendered by Holders thereof exceeds the amount of Remaining
Excess Proceeds, the Exchange Trustee shall select the Exchange Debentures and
such other senior subordinated Indebtedness to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
The Asset Sale provisions described above will be applicable whether or not
any other provisions of the Exchange Indenture are applicable. The Company
will comply, to the extent applicable, with the requirements of Section 14(e)
of the Exchange Act and any other securities laws or regulations applicable to
any Asset Sale Offer. To the extent that the provisions of any such securities
laws or securities regulations conflict with the provisions of the covenant
described above, the Company will comply with the applicable securities laws
and regulations and will not be deemed to have breached its obligations under
the covenant described above by virtue thereof.
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The Senior Discount Notes Indenture currently prohibits the Company form
repurchasing any Exchange Debentures. In addition, existing Indebtedness and
anticipated future Indebtedness of our subsidiaries and joint ventures
restricts or will restrict our access to the cash flow from those entities.
Any future agreements relating to Indebtedness to which we or any of our
subsidiaries or joint ventures become a party may contain similar restrictions
and provisions.
Certain Covenants
Restricted Payments
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of the Company's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Company's or any
of its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Company or to the Company or a Restricted
Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including
without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company (other than any such Equity Interests owned
by the Company or any Restricted Subsidiary of the Company and other than
the Exchangeable Preferred Stock);
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Exchange Debentures, except a payment of interest or
the payment of principal at Stated Maturity; or
(4) make any Restricted Investment, (all such payments and other actions
set forth in clauses (1) through (4) above being collectively referred to
as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default shall have occurred and be continuing or would occur as a
consequence thereof; and
(2) the Company would have been permitted to incur at least $1.00 of
additional indebtedness pursuant to the Debt to Adjusted Consolidated Cash
Flow Ratio test set forth in the first paragraph of the covenant described
below under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock"; provided that the Company and its Restricted Subsidiaries
will not be required to comply with this clause (2) in order to make any
Restricted Investment; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (2), (3) and (4) of the next succeeding paragraph), is less than
the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the Issue Date to the end of the Company's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit); plus
(b) 100% of the aggregate net cash proceeds received by the Company
since the Issue Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock and except to the extent such net cash proceeds are
used to incur new Indebtedness outstanding pursuant to clause (10) of
the second paragraph of the covenant described below under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock") or from
the issue or sale of Disqualified Stock or debt securities of the
Company that have been converted into
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such Equity Interests (other than Equity Interests (or Disqualified
Stock or convertible debt securities) sold to a Subsidiary of the
Company and other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified Stock); plus
(c) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B)
the initial amount of such Restricted Investment; plus
(d) to the extent that any Unrestricted Subsidiary of the Company and
all of its Subsidiaries are designated as Restricted Subsidiaries after
the Issue Date, the lesser of (A) the fair market value of the
Company's Investments in such Subsidiaries as of the date of such
designation, or (B) the sum of (x) the fair market value of the
Company's Investments in such Subsidiaries as of the date on which such
Subsidiaries were originally designated as Unrestricted Subsidiaries
and (y) the amount of any Investments made in such Subsidiaries
subsequent to such designation (and treated as Restricted Payments) by
the Company or any Restricted Subsidiary; provided that:
(i) in the event the Unrestricted Subsidiaries designated as
Restricted Subsidiaries are CTSH and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair market
value of the Company's Investments in such Subsidiaries shall mean
the amount by which the fair market value of all such Investments
exceeds 34.3% of the fair market value of CTSH and its Subsidiaries
as a whole; and
(ii) in the event the Unrestricted Subsidiaries designated as
Restricted Subsidiaries are CCAIC and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair market
value of the Company's Investments in such Subsidiaries shall mean
the amount by which the fair market value of all such Investments
exceeds $250.0 million; plus
(e) 50% of any dividends received by the Company or a Restricted
Subsidiary after the Issue Date from an Unrestricted Subsidiary of the
Company, to the extent that such dividends were not otherwise included
in Consolidated Net Income of the Company for such period.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Exchange Indenture;
(2) the making of any Investment or the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated
Indebtedness or Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the sale after the Issue Date (other than to a
Subsidiary of the Company) of, any Equity Interests of the Company (other
than any Disqualified Stock); provided that such net cash proceeds are not
used to incur new Indebtedness pursuant to clause (x) of the second
paragraph of the covenant described below under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock"); and provided further
that, in each such case, the amount of any such net cash proceeds that are
so utilized shall be excluded from clause (3) (b) of the preceding
paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the Company
to the holders of its common Equity Interests on a pro rata basis; or
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary
of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of the Issue
Date; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed (a)
$500,000 in any twelve-month period and (b) $5.0 million in the aggregate.
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The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the businesses operated by the Company's
Restricted Subsidiaries as of November 20, 1997 be transferred to or held by
an Unrestricted Subsidiary. For purposes of making such determination, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid in cash) in the Subsidiary so designated will be deemed
to be Restricted Payments at the time of such designation and will reduce the
amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if such designation would not cause a Default.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or the
applicable Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. The fair market value of any property, assets or
Investments required by this covenant to be determined shall be determined by
the Board of Directors whose resolution with respect thereto shall be
delivered to the Exchange Trustee.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, incur any Indebtedness (including Acquired Debt)
and that the Company will not issue any Disqualified Stock and will not permit
any of its Restricted Subsidiaries to issue any shares of preferred stock;
provided, that the Company may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock and the Company's Restricted Subsidiaries
may incur Indebtedness if, in each case, the Company's Debt to Adjusted
Consolidated Cash Flow Ratio at the time of incurrence of such Indebtedness or
the issuance of such Disqualified Stock, after giving pro forma effect to such
incurrence or issuance as of such date and to the use of proceeds therefrom as
if the same had occurred at the beginning of the most recently ended four full
fiscal quarter period of the Company for which internal financial statements
are available, would have been no greater than 7.5 to 1.
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following items of Indebtedness or to the issuance of
any of the following items of Disqualified Stock or preferred stock
(collectively, "Exchange Debentures Permitted Debt"):
(1) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness (including Indebtedness under Credit Facilities) in an
aggregate principal amount (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
and its Restricted Subsidiaries thereunder) at any one time outstanding not
to exceed the greater of (x) $200.0 million less the aggregate amount of
all Net Proceeds of Asset Sales applied after the Issue Date to repay
Indebtedness under a Credit Facility pursuant to the covenant described
above under the caption "--Repurchase at the Option of Holders--Asset
Sales" and (y) 70% of the Eligible Receivables that are outstanding as of
such date of incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by the Company of Indebtedness represented by the
Exchange Debentures;
(4) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (4), not to exceed $10.0 million at any one time outstanding;
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(5) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund
Indebtedness of the Company or any of its Restricted Subsidiaries or
Disqualified Stock of the Company (other than intercompany Indebtedness)
that was permitted by the Exchange Indenture to be incurred under the first
paragraph hereof or clauses (2) or (3) or this clause (5) of this
paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, that (i) if the Company is the obligor
on such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the
Exchange Debentures and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary and (B) any sale
or other transfer of any such Indebtedness to a Person that is not either
the Company or a Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(7) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of the Exchange Indenture to be outstanding
or currency exchange risk;
(8) the guarantee by the Company or any of its Restricted Subsidiaries of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of the Exchange
Indenture;
(9) the incurrence by the Company or any of its Restricted Subsidiaries
of Acquired Debt in connection with the acquisition of assets or a new
Subsidiary and the incurrence by the Company's Restricted Subsidiaries of
Indebtedness as a result of the designation of an Unrestricted Subsidiary
as a Restricted Subsidiary; provided that, in the case of any such
incurrence of Acquired Debt, such Acquired Debt was incurred by the prior
owner of such assets or such Restricted Subsidiary prior to such
acquisition by the Company or one of its Restricted Subsidiaries and was
not incurred in connection with, or in contemplation of, such acquisition
by the Company or one of its Restricted Subsidiaries; and provided further
that, in the case of any incurrence pursuant to this clause (9), as a
result of such acquisition by the Company or one of its Restricted
Subsidiaries, the Company's Debt to Adjusted Consolidated Cash Flow Ratio
at the time of incurrence of such Acquired Debt, after giving pro forma
effect to such incurrence as if the same had occurred at the beginning of
the most recently ended four full fiscal quarter period of the Company for
which internal financial statements are available, would have been less
than the Company's Debt to Adjusted Consolidated Cash Flow Ratio for the
same period without giving pro forma effect to such incurrence;
(10) the incurrence by the Company of Indebtedness not to exceed, at any
one time outstanding, the sum of (i) 2.0 times the aggregate net cash
proceeds plus (ii) 1.0 times the fair market value of non-cash proceeds
(evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Exchange Trustee), in each case,
from the issuance and sale, other than to a Subsidiary, of Equity Interests
(other than Disqualified Stock) of the Company since the Issue Date (less
the amount of such proceeds used to make Restricted Payments as provided in
clause (3)(b) of the first paragraph or clause (2) of the second paragraph
of the covenant described above under the caption "--Restricted Payments");
provided that such Indebtedness does not mature prior to the Stated
Maturity of the Exchange Debentures and the Weighted Average Life to
Maturity of such Indebtedness is longer than that of the Exchange
Debentures; and
(11) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness and/or the issuance by the Company of
Disqualified Stock in an aggregate principal amount, accreted value or
liquidation preference, as applicable, at any time outstanding, not to
exceed an amount equal to $100.0 million less the aggregate amount of all
Investments made pursuant to clause (12) of the definition of Permitted
Investments; provided that, notwithstanding the foregoing, the aggregate
principal amount,
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accreted value or liquidation preference, as applicable, permitted to be
incurred or issued pursuant to this clause (11) shall not be reduced to
less than $25.0 million.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Exchange Debentures Permitted Debt described in clauses (1) through (11)
above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Company shall, in its sole discretion, classify (or later
reclassify in whole or in part) such item of Indebtedness in any manner that
complies with this covenant. Any Indebtedness incurred pursuant to clause (1)
of the second paragraph under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock" in the Certificate of Designations will be deemed
to have been incurred under clause (1) above on the Exchange Date. Accrual of
interest, accretion or amortization of original issue discount and the payment
of interest in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this covenant.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to
(1) pay dividends or make any other distributions to the Company or any
of its Restricted Subsidiaries on its Capital Stock or with respect to any
other interest or participation in, or measured by, its profits;
(2) pay any indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(3) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(4) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries.
However, the foregoing restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness or Indebtedness under the Senior Credit
Facility, in each case as in effect on the Issue Date, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive, taken as a whole,
with respect to such dividend and other payment restrictions than those
contained in the applicable series of Existing Indebtedness or in the
Senior Credit Facility, in each case as in effect on the Issue Date;
(2) encumbrances and restrictions applicable to any Unrestricted
Subsidiary, as the same are in effect as of the date on which such
Subsidiary becomes a Restricted Subsidiary, and as the same may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced; provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings
are no more restrictive, taken as a whole, with respect to such dividend
and other payment restrictions than those contained in the applicable
series of Indebtedness of such Subsidiary as in effect on the date on which
such Subsidiary becomes a Restricted Subsidiary;
(3) any Indebtedness (incurred in compliance with the covenant under the
heading "--Incurrence of Indebtedness and Issuance of Preferred Stock") or
any agreement pursuant to which such Indebtedness is issued if the
encumbrance or restriction applies only in the event of a payment default
or default with respect to a financial covenant contained in such
Indebtedness or agreement and such encumbrance or restriction is not
materially more disadvantageous to the holders of the Exchange Debentures
than is customary in comparable financings (as determined by the Company)
and the Company determines that any such encumbrance or restriction will
not materially affect the Company's ability to pay dividends or the
Liquidation Preference on the Exchange Debentures;
(4) the Exchange Indenture and the Exchange Debentures;
(5) applicable law;
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(6) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Exchange
Indenture to be incurred;
(7) by reason of customary non-assignment provisions in leases or
licenses entered into in the ordinary course of business;
(8) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (4) in the prior paragraph on the property so acquired;
(9) the provisions of agreements governing Indebtedness incurred pursuant
to clause (4) of the second paragraph of the covenant described above under
the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock";
(10) any agreement for the sale of a Restricted Subsidiary that restricts
that Restricted Subsidiary pending its sale;
(11) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(12) Liens that limit the right of the debtor to transfer the assets
subject to such Liens;
(13) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements; and
(14) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless:
(1) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under the
Exchange Debentures and the Exchange Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Exchange Trustee;
(3) immediately after such transaction no Default exists; and
(4) except in the case of a merger of the Company with or into a Wholly
Owned Restricted Subsidiary of the Company and except in the case of a
merger entered into solely for the purpose of reincorporating the Company
in another jurisdiction, the Company or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will, at the time of such transaction
after giving pro forma effect thereto as if such transaction had occurred
at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to
Adjusted Consolidated Cash Flow Ratio test set forth in the first paragraph
of the covenant described above under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock".
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Transactions with Affiliates
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or purchase any property or assets from, or
enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person; and
(2) the Company delivers to the Exchange Trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and
therefore will not be subject to the provisions of the prior paragraph:
(1) any employment arrangements with any executive officer of the Company
or a Restricted Subsidiary that is entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and
consistent with compensation arrangements of similarly situated executive
officers at comparable companies engaged in Permitted Businesses;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of directors fees in an aggregate annual amount not to exceed
$25,000 per Person;
(4) Restricted Payments that are permitted by the provisions of the
Exchange Indenture described above under the caption "--Restricted
Payments";
(5) the issuance or sale of Equity Interests (other than Disqualified
Stock) of the Company; and
(6) transactions pursuant to the provisions of the Governance Agreement,
the Rights Agreement, the Stockholders' Agreement, the CTSH Shareholders'
Agreement, the CTI Services Agreement, the CTI Operating Agreement and the
Crown Transition Agreements, as the same are in effect on the Issue Date.
Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries
The Company:
(1) will not, and will not permit any Restricted Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Restricted Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Restricted Subsidiary of the
Company); and
(2) will not permit any Restricted Subsidiary of the Company to issue any
of its Equity Interests (other than, if necessary, shares of its Capital
Stock constituting directors' qualifying shares) to any Person other than
to the Company or a Wholly Owned Restricted Subsidiary of the Company,
unless, in each such case: (a) as a result of such transfer, conveyance,
sale, lease or other disposition or issuance such Restricted Subsidiary no
longer constitutes a Subsidiary and (b) the cash Net Proceeds from such
transfer, conveyance, sale, lease or other disposition or issuance are applied
in accordance with the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales".
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Senior Subordinated Debt
So long as any Exchange Debentures are outstanding, the Company will not
incur any Indebtedness that is expressly made subordinated in right of payment
to any Senior Debt unless such Indebtedness, by its terms and by the terms of
any agreement or instrument pursuant to which such Indebtedness is
outstanding, is expressly made pari passu with, or subordinate in right of
payment to, the Exchange Debentures pursuant to provisions substantially
similar to those contained in the Exchange Indenture; provided that the
foregoing limitations shall not apply to distinctions between categories of
Senior Debt that exist by reason of any Liens or Guarantees arising or created
in respect of some but not all Senior Debt.
Business Activities
The Company will not, and will not permit any Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not
be material to the Company and its Subsidiaries taken as a whole.
Reports
Whether or not required by the rules and regulations of the Securities and
Exchange Commission (the "Commission"), so long as any Exchange Debentures are
outstanding, the Company will furnish to the Holders of Exchange Debentures:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of the
Company and its consolidated Subsidiaries (showing in reasonable detail, in
the footnotes to the financial statements and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" (in each
case to the extent not prohibited by the Commission's rules and
regulations), (a) the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company and (b) the Tower Cash Flow for the most recently completed fiscal
quarter and the Adjusted Consolidated Cash Flow for the most recently
completed four-quarter period) and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants;
and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports,
in each case within the time periods specified in the Commission's rules
and regulations.
In addition, following the consummation of the exchange offer contemplated
by the Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request.
Transfer and Exchange
A Holder may transfer or exchange Exchange Debentures in accordance with the
Exchange Indenture. The Registrar and the Exchange Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law. The Company is not required to transfer or exchange any
Senior Subordinated Exchange Debenture selected for redemption. Also, the
Company is not required to transfer or exchange any Senior Subordinated
Exchange Debenture for a period of 15 days before a selection of Exchange
Debentures to be redeemed.
The registered Holder of a Senior Subordinated Exchange Debenture will be
treated as the owner of it for all purposes.
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Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Exchange
Indenture or the Exchange Debentures may be amended or supplemented with the
consent of the Holders of a majority of the aggregate principal amount of the
Exchange Debentures then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Exchange Debentures) or, if no Exchange Debentures are outstanding, the
holders of a majority in Liquidation Preference of the Exchangeable Preferred
Stock then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for,
Exchangeable Preferred Stock), and any existing default or compliance with any
provision of the Exchange Indenture or the Exchange Debentures may be waived
with the consent of the Holders of a majority of the aggregate principal
amount of the then outstanding Exchange Debentures (including consents
obtained in connection with a tender offer or exchange offer for Exchange
Debentures) or, if no Exchange Debentures are outstanding, the holders of a
majority in Liquidation Preference of the Exchangeable Preferred Stock then
outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Exchangeable
Preferred Stock).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Exchange Debentures held by a non-consenting Holder):
(1) reduce the principal amount of Exchange Debentures whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Senior
Subordinated Exchange Debenture or alter the provisions with respect to the
redemption (but not any required repurchase in connection with an Asset
Sale Offer or Change of Control Offer) of the Exchange Debentures;
(3) reduce the rate of or change the time for payment of interest on any
Senior Subordinated Exchange Debenture;
(4) waive a Default in the payment of principal of or premium, if any, or
interest on the Exchange Debentures (except a rescission of acceleration of
the Exchange Debentures by the Holders of a majority in aggregate principal
amount of the Exchange Debentures and a waiver of the payment default that
resulted from such acceleration);
(5) make any Senior Subordinated Exchange Debenture payable in money
other than that stated in the Exchange Debentures;
(6) make any change in the provisions of the Exchange Indenture relating
to waivers of past Defaults or the rights of Holders of Exchange Debentures
to receive payments of principal of or premium, if any, or interest on the
Exchange Debentures;
(7) waive a redemption payment (but not any payment upon a required
repurchase in connection with an Asset Sale Offer or Change of Control
Offer) with respect to any Senior Subordinated Exchange Debenture;
(8) except as provided under the caption "--Legal Defeasance and Covenant
Defeasance" or in accordance with the terms of any Subsidiary Guarantee,
release a Subsidiary Guarantor from its obligations under its Subsidiary
Guarantee or make any change in a Subsidiary Guarantee that would adversely
affect the Holders of the Exchange Debentures; or
(9) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Exchange
Debentures, the Company and the Exchange Trustee may amend or supplement the
Exchange Indenture or the Exchange Debentures:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Exchange Debentures in addition to or
in place of certificated Exchange Debentures;
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(3) to provide for the assumption of the Company's obligations to Holders
of Exchange Debentures in the case of a merger or consolidation;
(4) to make any change that would provide any additional rights or
benefits to the Holders of Exchange Debentures or that does not adversely
affect the legal rights under the Exchange Indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the Exchange Indenture under the Trust
Indenture Act.
Events of Default and Remedies
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Exchange Debentures;
(2) default in payment when due of the principal of or premium, if any,
on the Exchange Debentures;
(3) failure by the Company or any of its Subsidiaries for 30 days after
notice to comply with the provisions described under the caption "--Certain
Covenants--Merger, Consolidation or Sale of Assets" or failure by the
Company to consummate a Change of Control Offer or Asset Sale Offer in
accordance with the provisions of the Exchange Indenture applicable
thereto;
(4) failure by the Company or any of its Subsidiaries for 60 days after
notice to comply with any of its other agreements in the Exchange Indenture
or the Exchange Debentures;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Significant Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the Issue Date, which default (a) is caused by
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $20.0 million or more;
(6) failure by the Company or any of its Significant Subsidiaries to pay
final judgments aggregating in excess of $20.0 million, which judgments are
not paid, discharged or stayed for a period of 60 consecutive days; or
(7) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Exchange Trustee or
the Holders of at least 25% of the aggregate principal amount of the then
outstanding Exchange Debentures may declare all the Exchange Debentures to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, with
respect to the Company, all outstanding Exchange Debentures will become due
and payable without further action or notice. Holders of the Exchange
Debentures may not enforce the Exchange Indenture or the Exchange Debentures
except as provided in the Exchange Indenture. Subject to certain limitations,
Holders of a majority of the aggregate principal amount of the then
outstanding Exchange Debentures may direct the Exchange Trustee in its
exercise of any trust or power.
The Holders of a majority of the aggregate principal amount of the Exchange
Debentures then outstanding by notice to the Exchange Trustee may on behalf of
the Holders of all of the Exchange Debentures waive any existing Default or
Event of Default and its consequences under the Exchange Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Exchange Debentures.
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The Exchange Indenture provides that if a Default occurs and is continuing
and is known to the Exchange Trustee, the Exchange Trustee must mail to each
holder of the Exchange Debentures notice of the Default within 90 days after
it occurs. Except in the case of a Default in the payment of principal of or
interest on any Senior Subordinated Exchange Debenture, the Exchange Trustee
may withhold notice if and so long as a committee of its trust officers
determines that withholding notice is not opposed to the interest of the
holders of the Exchange Debentures. In addition, the Company is required to
deliver to the Exchange Trustee, within 90 days after the end of each fiscal
year, a certificate indicating whether the signers thereof know of any Default
that occurred during the previous year. The Company is also required to
deliver to the Exchange Trustee, forthwith after the occurrence thereof,
written notice of any event that would constitute a Default, the status
thereof and what action the Company is taking or proposes to take in respect
thereof.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Exchange Debentures, the Exchange Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
of Exchange Debentures by accepting a Senior Subordinated Exchange Debenture
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Exchange Debentures. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Exchange Debentures
("Legal Defeasance") except for:
(1) the rights of Holders of outstanding Exchange Debentures to receive
payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages on such Exchange Debentures when such payments are due
from the trust referred to below;
(2) the Company's obligations with respect to the Exchange Debentures
concerning issuing temporary Exchange Debentures, registration of Exchange
Debentures, mutilated, destroyed, lost or stolen Exchange Debentures and
the maintenance of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Exchange
Trustee and the Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Exchange Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Exchange Indenture ("Covenant Defeasance") and thereafter
any omission to comply with such obligations shall not constitute a Default or
Event of Default with respect to the Exchange Debentures. In the event
Covenant Defeasance occurs, certain events (not including non-payment and
bankruptcy, receivership, rehabilitation and insolvency events with respect to
the Company) described under "--Events of Default and Remedies" will no longer
constitute an Event of Default with respect to the Exchange Debentures.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Exchange Trustee, in
trust, for the benefit of the Holders of the Exchange Debentures, cash in
United States dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages on the
outstanding Exchange Debentures on the stated maturity or on the applicable
redemption
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date, as the case may be, and the Company must specify whether the Exchange
Debentures are being defeased to maturity or to a particular redemption
date;
(2) in the case of Legal Defeasance, the Company shall have delivered to
the Exchange Trustee an opinion of counsel in the United States reasonably
acceptable to the Exchange Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the Issue Date, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders of
the outstanding Exchange Debentures will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered
to the Exchange Trustee an opinion of counsel in the United States
reasonably acceptable to the Exchange Trustee confirming that the Holders
of the outstanding Exchange Debentures will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or
insofar as Events of Default from bankruptcy or insolvency events with
respect to the Company are concerned, at any time in the period ending on
the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Exchange Indenture) to which the
Company or any of its Restricted Subsidiaries is a party or by which the
Company or any of its Restricted Subsidiaries is bound;
(6) the Company must have delivered to the Exchange Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(7) the Company must deliver to the Exchange Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Exchange Debentures over the other
creditors of the Company with the intent of defeating, hindering, delaying
or defrauding creditors of the Company or others; and
(8) the Company must deliver to the Exchange Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Concerning the Exchange Trustee
The Exchange Indenture contains certain limitations on the rights of the
Exchange Trustee, should it become a creditor of the Company, to obtain
payment of claims in certain cases, or to realize on certain property received
in respect of any such claim as security or otherwise. The Exchange Trustee
will be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.
The Holders of a majority of the aggregate principal amount of the then
outstanding Exchange Debentures will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the Exchange Trustee, subject to certain exceptions. The Exchange Indenture
provides that in case an Event of Default shall occur (which shall not be
cured), the Exchange Trustee will be required, in the exercise of its power,
to use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the Exchange Trustee will be under no obligation
to exercise any of its rights or powers under the Exchange Indenture at the
request of any Holder of Exchange Debentures, unless such Holder shall have
offered to the Exchange Trustee security and indemnity satisfactory to it
against any loss, liability or expense.
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Additional Information
Anyone who receives this Prospectus may obtain a copy of the Certificate of
Designations, the Exchange Indenture and the Registration Rights Agreement
without charge by writing to Crown Castle International Corp., 510 Bering
Drive, Suite 500, Houston, Texas 77057, Attention: Chief Financial Officer.
Certain Definitions
Set forth below are certain defined terms used in the Certificate of
Designations and the Exchange Indenture. Reference is made to the Certificate
of Designations and the Exchange Indenture for a full disclosure of all such
terms, as well as any other capitalized terms used herein for which no
definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness or Disqualified Stock of any other Person existing at
the time such other Person is merged with or into or became a Subsidiary of
such specified Person, including, without limitation, Indebtedness incurred
in connection with, or in contemplation of, such other Person merging with
or into or becoming a Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Adjusted Consolidated Cash Flow" has the meaning given to such term in the
definition of "Debt to Adjusted Consolidated Cash Flow Ratio".
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback)
provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken
as a whole will be governed by the provisions of the Certificate of
Designations or the Exchange Indenture, as applicable, described above
under the respective captions "--Repurchase at the Option of Holders--
Change of Control" and/or the provisions described above under the
respective captions "--Repurchase at the Option of Holders--Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset
Sale covenant; and
(2) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Subsidiaries
(other than directors' qualifying shares or shares required by applicable
law to be held by a Person other than the Company or a Restricted
Subsidiary), in the case of either clause (1) or (2), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing, the following items shall not be
deemed to be Asset Sales:
(1) a transfer of assets by the Company to a Restricted Subsidiary or
by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary;
(2) an issuance of Equity Interests by a Subsidiary to the Company or
to another Restricted Subsidiary;
(3) a Restricted Payment that is permitted by the covenant described
above under the respective captions "--Certain Covenants--Restricted
Payments";
(4) grants of leases or licenses in the ordinary course of business;
and
(5) disposals of Cash Equivalents.
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"Berkshire Group" means Berkshire Fund III, A Limited Partnership, Berkshire
Fund IV, Limited Partnership, Berkshire Investors LLC and Berkshire Partners
LLC.
"Broker-Dealer" means any broker or dealer registered under the Exchange
Act.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than six months from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities
of six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits, in
each case with any lender party to the Senior Credit Facility or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group and in each case
maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1)-(5) of this
definition.
"CCAIC" means CCA Investment Corp., which is an indirect wholly owned
Subsidiary of the Company and was formed to hold the Company's Equity
Interests in Crown Atlantic Holding Company LLC.
"Centennial Group" means Centennial Fund IV, L.P., Centennial Fund V, L.P.
and Centennial Entrepreneurs Fund V, L.P.
"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Restricted Subsidiaries, taken as a whole to any "person" (as such term
is used in Section 13(d)(3) of the Exchange Act) other than a Principal or
a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of
the Company;
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(3) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their Related Parties,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly
or indirectly, of more than 50% of the Voting Stock of the Company
(measured by voting power rather than number of shares); provided that
transfers of Equity Interests in the Company between or among the
beneficial owners of the Company's Equity Interests and/or Equity Interests
in CTSH, in each case as of November 20, 1997, will not be deemed to cause
a Change of Control under this clause (3) so long as no single Person
together with its Affiliates acquires a beneficial interest in more of the
Voting Stock of the Company than is at the time collectively beneficially
owned by the Principals and their Related Parties;
(4) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; or
(5) the Company consolidates with, or merges with or into, any Person, or
any Person consolidates with, or merges with or into, the Company, in any
such event pursuant to a transaction in which any of the outstanding Voting
Stock of the Company is converted into or exchanged for cash, securities or
other property, other than any such transaction where (x) the Voting Stock
of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified
Stock) of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance) or (y) the
Principals and their Related Parties own a majority of such outstanding
shares after such transaction.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus:
(1) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision
for taxes was included in computing such Consolidated Net Income; plus
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income; plus
(3) depreciation, amortization (including amortization of goodwill and
other intangibles and other non- cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income; minus
(4) non-cash items increasing such Consolidated Net Income for such
period (excluding any items that were accrued in the ordinary course of
business), in each case on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of any date
of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries; plus
(2) the total amount of Indebtedness of any other Person, to the extent
that such Indebtedness has been Guaranteed by the referent Person or one or
more of its Restricted Subsidiaries; plus
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(3) the aggregate liquidation value of all Disqualified Stock of such
Person and all preferred stock of Restricted Subsidiaries of such Person,
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(1) the Net Income (but not loss) of any Person other than the Company
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person or a
Restricted Subsidiary thereof;
(2) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(3) the cumulative effect of a change in accounting principles shall be
excluded; and
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded whether or not distributed to the Company or one of its Restricted
Subsidiaries.
"Consolidated Tangible Assets" means, with respect to the Company, the total
consolidated assets of the Company and its Restricted Subsidiaries, less the
total intangible assets of the Company and its Restricted Subsidiaries, as
shown on the most recent internal consolidated balance sheet of the Company
and such Restricted Subsidiaries calculated on a consolidated basis in
accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue Date;
(2) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election; or
(3) is a designee of a Principal or was nominated by a Principal.
"Credit Facilities" means one or more debt facilities (including, without
limitation, the Senior Credit Facility) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables
to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"Crown Transition Agreements" means collectively (i) the Crown Memorandum of
Understanding among the Company, Robert A. Crown and Barbara A. Crown, dated
as of July 2, 1998, (ii) the Crown Services Agreement between the Company and
Robert A. Crown, dated as of July 2, 1998 and (iii) the Registration Rights
Crown Side Letter Agreement, among the Company, Robert A. Crown and Barbara A.
Crown, dated as of August 18, 1998.
"CTI" means Castle Transmission International Limited.
"CTI Operating Agreement" means the memorandum of understanding among the
Company, CTSH, CTI and TdF, dated as of August 21, 1998, relating to the
development of certain business opportunities outside of the United States and
the provision of certain business support and technical services in connection
therewith.
"CTI Services Agreement" means the amended and restated services agreement
between CTI and TdF, dated as of August 21, 1998, relating to the provisions
of certain services to CTI.
"CTSH" means Castle Transmission Services (Holdings) Ltd and its successors.
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"CTSH Shareholders' Agreement" means the agreement entered into by the
Company, CTSH and TdF, dated as of August 21, 1998, to govern the relationship
between the Company and TdF as shareholders of CTSH.
"Debt to Adjusted Consolidated Cash Flow Ratio"means, as of any date of
determination, the ratio of:
(1) the Consolidated Indebtedness of the Company as of such date to
(2) the sum of (a) the Consolidated Cash Flow of the Company for the four
most recent full fiscal quarters ending immediately prior to such date for
which internal financial statements are available, less the Company's Tower
Cash Flow for such four-quarter period, plus (b) the product of four times
the Company's Tower Cash Flow for the most recent quarterly period (such
sum being referred to as "Adjusted Consolidated Cash Flow"),
in each case determined on a pro forma basis after giving effect to all
acquisitions or dispositions of assets made by the Company and its
Subsidiaries from the beginning of such four-quarter period through and
including such date of determination (including any related financing
transactions) as if such acquisitions and dispositions had occurred at the
beginning of such four-quarter period. For purposes of making the computation
referred to above, (i) acquisitions that have been made by the Company or any
of its Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the reference period
or subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the reference period and
Consolidated Cash Flow for such reference period shall be calculated without
giving effect to clause (ii) of the proviso set forth in definition of
Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to Calculation Date, shall be excluded.
"Default" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"Designated Senior Debt" with respect to the Exchange Debentures means:
(1) any Indebtedness under or in respect of the Senior Credit Facility;
(2) any Indebtedness outstanding under the Senior Discount Notes
Indenture; and
(3) any other Senior Debt permitted under the Exchange Indenture the
principal amount of which is $25.0 million or more and that has been
designated by the Company in the instrument or agreement relating to the
same as "Designated Senior Debt".
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the
Holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Exchangeable Preferred Stock or Exchange
Debentures mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "--Certain Covenants--Restricted Payments".
"Eligible Indebtedness" means any Indebtedness other than (i) Indebtedness
in the form of, or represented by, bonds or other securities or any guarantee
thereof and (ii) Indebtedness that is, or may be, quoted, listed or purchased
and sold on any stock exchange, automated trading system or over-the-counter
or other securities market (including, without prejudice to the generality of
the foregoing, the market for securities eligible for resale pursuant to Rule
144A under the Securities Act).
"Eligible Receivables" means the accounts receivable (net of any reserves
and allowances for doubtful accounts in accordance with GAAP) of the Company
and its Restricted Subsidiaries that are not more than 60
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days past their due date and that were entered into in the ordinary course of
business on normal payment terms as shown on the most recent internal
consolidated balance sheet of the Company and such Restricted Subsidiaries,
all calculated on a consolidated basis in accordance with GAAP.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Date" means the date on which the Company exchanges all but not
less than all of the Exchangeable Preferred Stock for Exchange Debentures.
"Exchange Offer" means exchange and issuance by the Company of New Preferred
Stock or New Exchange Debentures, as the case may be, which shall be
registered pursuant to a Registration Statement, in an amount equal to (i) the
aggregate Liquidation Preference of all shares of Exchangeable Preferred Stock
that are tendered by the Holders thereof or (ii) the aggregate principal
amount of all Exchange Debentures that are tendered by the Holders thereof, as
the case may be, in connection with such exchange and issuance.
"Exchange Offer Registration Statement" means the Registration Statement
relating to the Exchange Offer, including the related Prospectus.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the Issue Date, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Governance Agreement" means the agreement among the Company, TdF and its
affiliates, dated as of August 21, 1998, to provide for certain rights and
obligations of the Company, TdF and its affiliates with respect to the
management of the Company.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency exchange rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property; or
(6) representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person whether
or not such Indebtedness is assumed by such Person (the amount
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of such Indebtedness as of any date being deemed to be the lesser of the value
of such property or assets as of such date or the principal amount of such
Indebtedness of such other Person so secured) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date shall be (i)
the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company or a Restricted Subsidiary of the Company issues any of its Equity
Interests such that, in each case, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of the covenant described above under the respective
captions "--Certain Covenants--Restricted Payments".
"Issue Date" means the closing date for the sale and original issuance of
the Exchangeable Preferred Stock.
"Joint Venture Operating Agreement" means the Crown Atlantic Holding Company
LLC Operating Agreement to be entered into by the Company and BAM,
substantially in the form attached to the Certificate of Designations.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Nassau Group" means Nassau Capital Partners II, L.P. and NAS Partners I,
L.L.C.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or
any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain or loss, together with any related provision
for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of
any non- cash consideration received in any Asset Sale), net of:
(1) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof;
(2) taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements);
(3) amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under a Credit Facility) secured by a Lien on the
asset or assets that were the subject of such Asset Sale;
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(4) all distributions and other payments required to be made to minority
interest holders in Restricted Subsidiaries as a result of such Asset Sale;
(5) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale and
(6) without duplication, any reserves that the Company's Board of
Directors determines in good faith should be made in respect of the sale
price of such asset or assets for post closing adjustments; provided that
in the case of any reversal of any reserve referred to in clause (5) or (6)
above, the amount so reserved shall be deemed to be Net Proceeds from an
Asset Sale as of the date of such reversal.
"New Exchange Debentures" means the Company's 12 3/4% Exchange Debentures
due 2010 issued pursuant to the Exchange Indenture (i) in the Exchange Offer
or (ii) in connection with a resale of Exchange Debentures in reliance on a
Shelf Registration Statement.
"New Preferred Stock" means the Company's 12 3/4% Exchangeable Preferred
Stock due 2010 issued pursuant to the Certificate of Designations (i) in the
Exchange Offer or (ii) in connection with a resale of Exchangeable Preferred
Stock in reliance on a Shelf Registration Statement.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable (as a guarantor or otherwise), or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of the Company or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries (except that this clause (3) will not apply to any
Indebtedness incurred by CTSH and its Subsidiaries prior to August 21,
1998).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means any business conducted by the Company, its
Restricted Subsidiaries or CTSH and its Subsidiaries on the Issue Date and any
other business related, ancillary or complementary to any such business.
"Permitted Investments" means:
(1) Liens securing Senior Debt;
(2) any Investment in the Company or in a Restricted Subsidiary of the
Company;
(3) any Investment in Cash Equivalents;
(4) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company;
(5) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the respective captions
"--Repurchase at the Option of Holders--Asset Sales";
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(6) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;
(7) receivables created in the ordinary course of business;
(8) loans or advances to employees made in the ordinary course of
business not to exceed $1.0 million at any one time outstanding;
(9) securities and other assets received in settlement of trade debts or
other claims arising in the ordinary course of business;
(10) purchases of additional Equity Interests in CTSH for cash pursuant
to the Governance Agreement as the same is in effect on the Issue Date for
aggregate cash consideration not to exceed $20.0 million since the Issue
Date;
(11) the Investment of up to an aggregate of $100.0 million of the net
proceeds from the sale of the Exchangeable Preferred Stock (i) to be used
to consummate the formation of the Crown Atlantic Holding Company LLC joint
venture with BAM or (ii) if the Company does not consummate the formation
of the Crown Atlantic Holding Company LLC joint venture with BAM, in one or
more other Subsidiaries of the Company (which may be Unrestricted
Subsidiaries of the Company), each of which derives or expects to derive a
majority of its revenues from one or more Permitted Businesses (each such
Investment being measured as of the date made and without giving effect to
subsequent changes in value).
(12) Additional Investments with the net proceeds from the sale of the
Exchangeable Preferred Stock in an aggregate amount equal to (x) the gross
proceeds from the sale of the Exchangeable Preferred Stock, minus (y) the
aggregate amount of Investments made or permitted to be made pursuant to
clause (11) of this paragraph, minus (z) the aggregate amount of
Indebtedness incurred and/or Disqualified Stock issued pursuant to clause
(11) of the second paragraph under the caption "Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock" (each such
Investment being measured as of the date made and without giving effect to
subsequent changes in value).
(13) other Investments in Permitted Businesses not to exceed an amount
equal to $10.0 million plus 10% of the Company's Consolidated Tangible
Assets at any one time outstanding (each such Investment being measured as
of the date made and without giving effect to subsequent changes in value).
"Permitted Junior Securities" means Equity Interests in the Company or debt
securities that are subordinated to all Senior Debt (and any debt securities
issued in exchange for Senior Debt) to substantially the same extent as, or to
a greater extent than, the Exchange Debentures are subordinated to Senior Debt
pursuant to the Exchange Indenture.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries or Disqualified Stock of the Company
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund other Indebtedness of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness)
or Disqualified Stock of the Company; provided that:
(1) the principal amount, initial accreted value or liquidation
preference, as applicable, of such Permitted Refinancing Indebtedness does
not exceed the principal amount, accreted value or liquidation preference,
as applicable, of, plus accrued interest or accumulated dividends on, the
Indebtedness or Disqualified Stock so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of expenses and prepayment
premiums incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Exchange
Debentures, such Permitted Refinancing Indebtedness is subordinated in
right of payment to, the Exchange Debentures on terms at least as favorable
to the Holders
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of Exchange Debentures as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded or such
Disqualified Stock is issued by the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principals" means Berkshire Group, Centennial Group, Nassau Group, TdF and
any Related Party of the foregoing.
"Prospectus" means the prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by
reference into such Prospectus.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Registration Rights Agreement" means the registration rights agreement to
be entered into by the Company on or before the Issue relating to the
registration of the Exchangeable Preferred Stock and the Exchange Debentures
with the Commission.
"Registration Statement" means any registration statement of the Company
relating to an offering of New Preferred Stock or New Exchange Debentures, as
the case may be, that is filed pursuant to the provisions of the Registration
Rights Agreement, and includes the Prospectus included therein, all amendments
and supplements thereto (including post-effective amendments) and all exhibits
and material incorporated by reference therein.
"Related Party" with respect to any Principal means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary of such
Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, members, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist
of such Principal and/or such other Persons referred to in the immediately
preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rights Agreement" means the agreement between the Company and ChaseMellon
Shareholders Services, L.L.C., as rights agent, dated as of August 21, 1998,
relating to the dividend declared by the Company consisting of the right to
purchase 1/1000th of a share of the Company's Series A Participating
Cumulative Preferred Stock, par value $.01 per share.
"Senior Credit Facility" means that certain Amended and Restated Loan
Agreement, dated as of July 10, 1998, by and among Key Corporate Capital Inc.
and PNC Bank, National Association, as arrangers and agents for the financial
institutions listed therein, and Crown Communication Inc. and Crown Castle
International Corp. de Puerto Rico, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced
or refinanced from time to time.
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"Senior Debt" means:
(1) all Indebtedness outstanding under the Senior Credit Facility and all
Hedging Obligations (including guarantees thereof) with respect thereto of
the Company, whether outstanding on the Issue Date or thereafter incurred;
(2) all Indebtedness outstanding under the Senior Discount Notes or any
Guarantees thereof, as the case may be;
(3) any other Indebtedness permitted to be incurred by the Company or any
of its Restricted Subsidiaries under the terms of the Certificate of
Designations or the Exchange Indenture, as applicable, unless the
instrument under which such Indebtedness is incurred expressly provides
that it is on a parity with or subordinated in right of payment to the
Exchange Debentures; and
(4) all Obligations with respect to the preceding clauses (1), (2) and
(3) (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable
law).
Notwithstanding anything to the contrary in the foregoing, Senior Debt will
not include:
(1) any liability for federal, state, local or other taxes owed or owing
by the Company or the Restricted Subsidiaries;
(2) any Indebtedness of the Company or any Restricted Subsidiary to any
of its Subsidiaries;
(3) any trade payables;
(4) any Indebtedness that is incurred in violation of the Certificate of
Designations or the Exchange Indenture, as applicable (but only to the
extent so incurred); or
(5) any Capitalized Lease Obligations.
"Senior Discount Notes Indenture" means that certain Indenture, dated as of
November 20, 1997, governing the Company's 105/8% Senior Discount Notes due
2007.
"Exchangeable Preferred Stock" means (i) the 12 3/4% Exchangeable Preferred
Stock due 2010 of the Company issued on the Issue Date, (ii) any and all
additional fully-paid and non-assessable shares of 12 3/4% Exchangeable
Preferred Stock due 2010 of the Company issued after the Issue Date as payment
of dividends in accordance with the provisions under the caption "Description
of Exchangeable Preferred Stock--Dividends" and (iii) any and all shares of
New Preferred Stock.
"Exchange Debentures" means (i) the 12 3/4% Exchange Debentures due 2010 of
the Company issued on the Exchange Date, (ii) any and all additional 12 3/4%
Exchange Debentures due 2010 of the Company issued after the Exchange Date as
payment of interest in accordance with the provisions under the caption
"Description of Senior Subordinated Debentures--Principal, Maturity and
Interest" and (iii) any and all shares of New Exchange Debentures.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means, with respect to any Person, any Restricted
Subsidiary of such Person that would be a "significant subsidiary" of such
Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof, except that all references to "10 percent" in Rule 1-02(w)(1), (2) and
(3) shall mean "5 percent" and that all Unrestricted Subsidiaries of the
Company shall be excluded from all calculations under Rule 1-02(w).
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original
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documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"Stockholders' Agreement" means the agreement among the Company and certain
stockholders of the Company, dated as of August 21, 1998, to provide for
certain rights and obligations of the Company and such stockholders with
respect to the governance of the Company and such stockholders' shares of
Common Stock and/or Class A Common Stock of the Company.
"Strategic Equity Investment" means a cash contribution to the common equity
capital of the Company or a purchase from the Company of common Equity
Interests (other than Disqualified Stock), in either case by or from a
Strategic Equity Investor and for aggregate cash consideration of at least
$50.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted Business
whose Total Equity Market Capitalization exceeds $1.0 billion.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the
only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TdF" means TeleDiffusion de France International S.A.
"Total Equity Market Capitalization" of any Person means, as of any day of
determination, the sum of:
(1) the product of (A) the aggregate number of outstanding primary shares
of common stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into,
shares of common stock of such person) multiplied by (B) the average
closing price of such common stock listed on a national securities exchange
or the Nasdaq National Market System over the 20 consecutive business days
immediately preceding such day; plus
(2) the liquidation value of any outstanding shares of preferred stock of
such Person on such day.
"Tower Asset Exchange" means any transaction in which the Company or one of
its Restricted Subsidiaries exchanges assets for Tower Assets and/or cash or
Cash Equivalents where the fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Transfer Agent and/or the Exchange Trustee, as appropriate) of the Tower
Assets and cash or Cash Equivalents received by the Company and its Restricted
Subsidiaries in such exchange is at least equal to the fair market value of
the assets disposed of in such exchange.
"Tower Assets" means wireless transmission towers and related assets that
are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of the
Company and its Restricted Subsidiaries for such period that is directly
attributable to site rental revenue or license fees paid to lease or sublease
space on communication sites owned or leased by the Company, all determined on
a consolidated basis and in accordance with GAAP. Tower Cash Flow will not
include revenue or expenses attributable to non-site rental services provided
by the Company or any of its Restricted Subsidiaries to lessees of
communication sites or revenues derived from the sale of assets.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
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(2) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of the
Company;
(3) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of the Company or any of its Restricted Subsidiaries.
Any such designation by the Board of Directors shall be evidenced to the
Transfer Agent and the Exchange Trustee by filing with the Transfer Agent and
the Exchange Trustee a certified copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the covenant
described above under the respective captions""--Certain Covenants--Restricted
Payments". If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of the Certificate of
Designations and the Exchange Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenants described above under the
respective captions "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock," the Company shall be in default of such
covenant). The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i)
such Indebtedness is permitted under the covenant described above under the
respective captions "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference
period, and (ii) no Default would occur or be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or series or class of preferred stock at any date, the number of years
obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal or liquidation preference, including payment
at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness or the
aggregate liquidation preference of the then outstanding preferred stock,
as the case may be.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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BOOK-ENTRY, DELIVERY AND FORM
The new preferred stock will be represented by one or more certificates in
registered, global form without interest coupons (collectively, the "Global
Certificates"). The Global Certificates will be deposited upon issuance with
the Transfer Agent as custodian for DTC, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the Global Certificates may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Certificates may not be
exchanged for exchangeable preferred stock in certificated form except in the
limited circumstances described below. See "--Depositary Procedures--Exchange
of Book-Entry Exchangeable Preferred Stocks for Certificated Securities."
Except in the limited circumstances described below, owners of beneficial
interests in the Global Certificates will not be entitled to receive physical
delivery of certificated securities (as defined below). Transfers of
beneficial interest in the Global Certificates will be subject to the
applicable rules and procedures of DTC and its direct or indirect
participants, which may change from time to time.
Initially, the exchange agent will act as paying agent and registrar. The
exchangeable preferred stock may be presented for registration of transfer and
exchange at the offices of the registrar.
Depository Procedures
The following description of the operations and procedures of DTC are
provided solely as a matter of convenience. These operations and procedures
are solely within the control of the respective settlement systems and are
subject to changes by them from time to time. We take no responsibility for
these operations and procedures and urges investors to contact the system or
their participants directly to discuss these matters.
DTC is a limited-purpose trust company created to hold securities for its
participating organizations (collectively, the "Participants") and to
facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers
(including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers of ownership
interests in, each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
Pursuant to procedures established by DTC:
(1) upon deposit of the Global Certificates, DTC will credit the accounts
of Participants designated by the Initial Purchasers with portions of the
principal amount of the Global Certificates; and
(2) ownership of such interests in the Global Certificates will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interest in the Global Certificates).
Investors in the Global Certificates may hold their interests therein
directly through DTC, if they are Participants in such system, or indirectly
through organizations (including Euroclear and Cedel Bank) which are
Participants in such system. Investors in the Regulation S Global Certificates
must initially hold their interests therein through Euroclear or Cedel Bank,
if they are participants in such systems, or indirectly through organizations
which are participants in such systems. After the expiration of the Restricted
Period (but not earlier), investors may also hold interests in the Regulation
S Global Certificates through organizations other than Euroclear and Cedel
Bank that are Participants in the DTC system. Euroclear and Cedel Bank will
hold interests
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in the Regulation S Global Certificates on behalf of their Participants
through customers' securities accounts in their respective names on the books
of their respective depositaries, which are Morgan Guaranty Trust Company of
New York, Brussels office, as operator of Euroclear, and Citibank, N.A. as
operator of Cedel. The depositaries, in turn, will hold such interests in the
Regulation S Global Certificates in customers' securities accounts in the
depositaries' names on the books of DTC. All interests in a Global
Certificate, including those held through Euroclear or Cedel Bank, may be
subject to the procedures and requirements of DTC. Those interests held by
Euroclear or Cedel Bank may be also be subject to the procedures and
requirements of such system.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interest in a Global Certificate to such persons may be
limited to that extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants and certain banks, the
ability of a person having a beneficial interest in a Global Certificate to
pledge such interest to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests. For
certain other restrictions on the transferability of the Preferred Stock or
the Exchange Debentures, as applicable, see "--Exchange of Book-Entry
Securities for Certificated Securities", "--Exchange of Certificated
Securities for Book-Entry Securities" and "--Exchanges between Regulation S
Certificates and Rule 144A Certificates."
Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having beneficial interests in a Global Certificate to pledge such interests
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
Except as described below, owners of interest in the Global Certificates
will not have exchangeable preferred stock or exchange debentures, as
applicable, registered in their names, will not receive physical delivery of
exchangeable preferred stock or exchange debentures, as applicable, in
certificated form and will not be considered the registered owners or
"Holders" thereof under the certificate of designations or the exchange
indenture, as applicable, for any purpose.
Payments in respect of the principal of, and premium, if any, liquidated
damages, if any, and interest on a Global Certificate registered in the name
of DTC or its nominee will be payable to DTC in its capacity as the registered
Holder under the certificate of designations or the exchange indenture, as
applicable. Under the terms of the certificate of designations and the
exchange indenture, we and the transfer agent or exchange trustee, as
applicable, will treat the persons in whose names the exchangeable preferred
stock or exchange debentures, as applicable, including the Global
Certificates, are registered as the owners thereof for the purpose of
receiving such payments and for any and all other purposes whatsoever.
Consequently, neither we, the transfer agent or the exchange trustee nor any
of their respective agents has or will have any responsibility or liability
for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interest in the Global Certificates, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or
Indirect Participant's records relating to the beneficial ownership
interests in the Global Certificates; or
(2) any other matter relating to the actions and practices of DTC or any
of its Participants or Indirect Participants.
DTC's current practice, upon receipt of any payment in respect of securities
such as the exchangeable preferred stock (including dividends) or the exchange
debentures (including principal and interest), as applicable, is to credit the
accounts of the relevant Participants with the payment on the payment date, in
amounts proportionate to their respective holdings in the principal amount of
beneficial interest in the relevant security as shown on the records of DTC
unless DTC has reason to believe it will not receive payment on such payment
date.
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Payments by the Participants and the Indirect Participants to the beneficial
owners of exchangeable preferred stock or exchange debentures, as applicable,
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will
not be the responsibility of DTC, the transfer agent, the exchange trustee or
us. None of us, the transfer agent or the exchange trustee will be liable for
any delay by DTC or any of its Participants in identifying the beneficial
owners of the exchangeable preferred stock or exchange debentures, as
applicable, and we, the transfer agent and the exchange trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel Bank participants,
interests in the Global Certificates are expected to be eligible to trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity
in such interests will, therefore, settle in immediately available funds,
subject in all cases to the rules and procedures of DTC and its Participants.
See "--Same Day Settlement and Payment".
DTC will take any action permitted to be taken by a holder of exchangeable
preferred stock or exchange debentures, as applicable, only at the direction
of one or more Participants to whose account DTC has credited the interests in
the Global Certificates and only in respect of such portion of the aggregate
principal amount of the exchangeable preferred stock or exchange debentures,
as applicable, as to which such Participant or Participants has or have given
such direction. However, if there is an Event of Default under the exchange
debentures, DTC reserves the right to exchange the Global Certificates for
legended Securities in certificated form, and to distribute such Certificates
to its Participants.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Certificates among Participants in DTC, Euroclear
and Cedel Bank, they are under no obligation to perform or to continue to
perform such procedures, and such procedures may be discontinued at any time.
None of the us, the transfer agent or the exchange trustee nor any of our or
respective agents will have any responsibility for the performance by DTC,
Euroclear or Cedel Bank or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Exchange of Book-Entry Certificates for Certificated Securities
A Global Certificate is exchangeable for definitive certificates in
registered certificated form ("Certificated Securities") if:
(1) DTC:
(a) notifies us that it is unwilling or unable to continue as
depositary for the Global Certificate and we fail to appoint a
successor depositary; or
(b) has ceased to be a clearing agency registered under the Exchange
Act and we fail to appoint a successor depositary;
(2) we, at our option, notify the exchange trustee in writing that it
elects to cause the issuance of the exchangeable preferred stock or
exchange debentures, as applicable, in certificate form; or
(3) there shall have occurred and be continuing (a) a Voting Rights
Triggering Event with respect to the exchangeable preferred stock or (b) a
Default or Event of Default with respect to the exchange debentures.
In addition, beneficial interests in a Global Certificate may be exchanged
for Certificated Certificates upon request but only upon prior written notice
given to the exchange trustee by or on behalf of DTC in accordance with the
exchange indenture. In all cases, certificated securities delivered in
exchange for any Global Certificate or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested
by or on behalf of the depositary (in accordance with its customary
procedures) and will bear the applicable restrictive legend referred to in
"Notice to Investors," unless we determine otherwise in compliance with
applicable law.
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Exchange of Certificated Securities for Book-Entry Securities
Certificates issued in certificated form may not be exchanged for beneficial
interests in any Global Certificate unless the transferor first delivers to
the transfer agent or the exchange trustee, as applicable, a written
certificate (in the form provided in the certificate of designations or the
exchange indenture) to the effect that such transfer will comply with the
appropriate transfer restrictions applicable to such certificate.
Same Day Settlement and Payment
The certificate of designation or the exchange indenture, as applicable,
require that payments in respect of the Certificates represented by the Global
Certificates (including Liquidation Preference, dividends, principal, premium,
interest and Liquidated Damages) be made by wire transfer of immediately
available funds to the accounts specified by the Global Certificate Holder.
With respect to Certificated Securities, we will make all such payments by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof or, if no such account is specified, by mailing a check to
each such Holder's registered address. The certificates represented by the
Global Certificates are expected to be eligible to trade in the PORTAL market
and to trade in the Depositary's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such Certificates will,
therefore, be required by the Depositary to be settled in immediately
available funds. We expect that secondary trading in any certificated
certificates will also be settled in immediately available funds.
Registration Rights and Liquidated Damages
Holders of the new preferred stock are not entitled to any registration
rights with respect to the new preferred stock. We and the initial purchasers
entered into the Registration Rights Agreement for the benefit of the holders
of transfer restricted securities on the closing date. Pursuant to the
Registration Rights Agreement, we agreed to file with the Commission the
Exchange Offer Registration Statement on the appropriate form under the
Securities Act with respect to the new preferred stock. The registration
statement of which this prospectus is a part constitutes the Exchange Offer
Registration Statement. The Registration Rights Agreement provides that if (i)
we are not required to file the Exchange Offer Registration Statement or
permitted to consummate the exchange offer because the exchange offer is not
permitted by applicable law or Commission policy or (ii) any Holder of
transfer restricted securities notifies us prior to the 20th day following
consummation of the exchange offer that (A) it is prohibited by law or
Commission policy from participating in the exchange offer or (B) that it may
not resell the new preferred stock acquired by it in the exchange offer to the
public without delivering a prospectus and the prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales or (C) that it is a broker-dealer and owns preferred stock acquired
directly from us or our affiliate, we will file with the Commission a shelf
registration statement to cover resales of the preferred stock by the Holders
thereof, subject to such Holders satisfying certain conditions relating to the
provision of information in connection with the shelf registration statement.
We have agreed that we will use all commercially reasonable efforts to cause
any such shelf registration statement to be declared effective as promptly as
possible by the Commission. For purposes of the foregoing, "transfer
restricted securities" means each old preferred stock until (i) the date on
which such old preferred stock has been exchanged by a person other than a
broker-dealer for a new preferred stock in the exchange offer, (ii) following
the exchange by a broker-dealer in the exchange offer of an old preferred
stock for a new preferred stock, the date on which such new preferred stock is
sold to a purchaser who receives from such broker-dealer on or prior to the
date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such old preferred stock has
been effectively registered under the Securities Act and disposed of in
accordance with the shelf registration statement or (iv) the date on which
such old preferred stock is distributed to the public pursuant to Rule 144
under the Act.
The Registration Rights Agreement provides that (i) we will file an Exchange
Offer Registration Statement with the Commission on or prior to 60 days after
the closing date, (ii) we will use all commercially reasonable efforts to have
the Exchange Offer Registration Statement declared effective by the Commission
on or prior to 150 days after the closing date, (iii) unless the exchange
offer would not be permitted by applicable law or
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Commission policy, we will commence the exchange offer and use our best
efforts to issue on or prior to 30 business days after the date on which the
Exchange Offer Registration Statement was declared effective by the
Commission, new preferred stock in exchange for all old preferred stock
tendered prior thereto in the exchange offer and (iv) if obligated to file the
shelf registration statement, we will use our best efforts to file the shelf
registration statement with the Commission on or prior to 45 days after such
filing obligation arises and to cause the shelf registration to be declared
effective by the Commission on or prior to 90 days after such obligation
arises. If (a) we fail to file any of the registration statements required by
the Registration Rights Agreement on or before the date specified for such
filing, (b) any of such Registration Statements is not declared effective by
the Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), or (c) we fail to consummate the exchange offer
within 30 business days of the Effectiveness Target Date with respect to the
exchange offer registration statement, or (d) the shelf registration statement
or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales of
transfer restricted securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then we will pay liquidated
damages to each Holder of exchangeable preferred stock, with respect to the
first 90-day period immediately following the occurrence of the first
Registration Default in an amount equal to $.05 per week per $1,000 of the
liquidation preference of the exchangeable preferred stock held by such
Holder. The amount of the liquidated damages will increase by an additional
$.05 per week per $1,000 of the liquidation preference of the exchangeable
preferred stock with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages for all Registration Defaults of $.50 per week per $1,000 of the
liquidation preference of the exchangeable preferred stock. We will pay all
accrued liquidated damages on each interest payment date to the Holders of
record on the immediately preceding record date by wire transfer of
immediately available funds, in the case of the Holder of global preferred
stock, and to Holders of certificated securities by wire transfer to the
accounts specified by them or by mailing checks to their registered addresses
if no such accounts have been specified. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease.
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DESCRIPTION OF CAPITAL STOCK
The following summary does not purport to be complete and is subject to the
detailed provisions of, and qualified in its entirety by reference to, the
Certificate of Incorporation, the Certificate of Designations, the By-laws,
the Governance Agreement, the CTSH Shareholders Agreement and the
Stockholders' Agreement, and to the applicable provisions of the Delaware
General Corporation Law (the "DGCL").
General
The authorized capital stock of the Company consists of 600,000,000 shares
of Common Stock, par value $.01 per share (the "Common Stock"), 90,000,000
shares of Class A Common Stock, par value $.01 per share (the "Class A Common
Stock"), and 10,000,000 shares of Preferred Stock, par value $.01 per share.
There are 94,905,902 shares of Common Stock outstanding, 11,340,000 shares of
Class A Common Stock outstanding and 201,063 shares of 12 3/4% Senior
Exchangeable Preferred Stock due 2010.
Common Stock
Voting Rights
Each share of Common Stock is entitled to one vote. The Common Stock votes
together as a single class on all matters presented for a vote of the
stockholders, except as provided under the DGCL. All the outstanding shares of
Common Stock are held by directors, executive officers, other employees and
affiliates of the Company or its subsidiaries.
Dividends
Each share of Common Stock is entitled to receive dividends if, as and when
declared by the Board of Directors out of funds legally available therefor,
subject to approval of certain holders of the Senior Convertible Preferred
Stock.
Liquidation Rights
In the event of the dissolution of the Company, after satisfaction of
amounts payable to creditors and distribution to the holders of outstanding
Senior Convertible Preferred Stock, if any, of amounts to which they may be
preferentially entitled, holders of Common Stock are entitled to share ratably
in the assets available for distribution to the stockholders.
Other Provisions
There are no preemptive rights to subscribe for any additional securities
which the Company may issue, and there are no redemption provisions or sinking
fund provisions applicable to the Common Stock. All outstanding shares of
Common Stock are legally issued, fully paid and nonassessable.
Class A Common Stock
Voting Rights
Each share of Class A Common Stock is entitled to one vote for each such
share on all matters presented to the stockholders, except with respect to the
election of directors. The holders of the shares of Class A Common Stock vote,
except as provided under the DGCL, together with the holders of the Common
Stock and any other class or series of stock of the Company accorded such
general voting rights, as a single class.
So long as TdF is Qualified, holders of shares of Class A Common Stock
voting as a separate class have the right to elect two directors to the Board
of Directors of the Company; provided, however, that if TdF is not Qualified,
so long as the ownership interest of the TdF Group is at least 5%, holders of
Class A Common Stock voting as a separate class have the right to elect one
director.
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The holders of Class A Common Stock, subject to certain limitations
described in "The Roll-Up--Governance Agreement--Governance Limitations", have
a Veto over certain significant actions, described in "Governance--Veto
Rights", taken by the Company.
Convertibility
Each share of Class A Common Stock is convertible, at the option of its
record holder, into one share of Common Stock at any time.
In the event of any transfer of any share of Class A Common Stock to any
Person other than an Affiliate (as defined in Rule 12b-2 of the Exchange Act),
such share of Class A Common Stock automatically converts, without any further
action, into one share of Common Stock; provided, however, and subject to
certain conditions described in the Certificate of Incorporation, that a
holder of shares of Class A Common Stock may pledge such holder's shares to a
financial institution pursuant to a bona fide pledge of such shares of Class A
Common Stock as collateral security for any indebtedness or other obligation
of any Person due to the pledgee or its nominee.
Further, each share of Class A Common Stock automatically converts into one
share of Common Stock on the first date on which the ownership interest of TdF
Group is less than 5%.
Other Provisions
Pursuant to the Governance Agreement, so long as it remains Qualified, TdF
has anti-dilutive rights in connection with maintaining a certain percentage
of voting power in the Company and, accordingly, the Company may not, subject
to certain exceptions relating primarily to compensation of directors and
employees, issue, sell or transfer additional securities (except for the IPO)
unless TdF is offered the right to purchase, at the same price, an amount such
that it would maintain such percentage of voting power in the Company. All
outstanding shares of Class A Common Stock are legally issued, fully paid and
nonassessable.
Preferred Stock
Pursuant to the Certificate of Incorporation, the Company may issue up to
10,000,000 shares of Preferred Stock in one or more series. The Board of
Directors has the authority, without any vote or action by the stockholders
(other than any rights of TdF under the Governance Agreement), to create one
or more series of Preferred Stock up to the limited of the Company's
authorized but unissued shares of Preferred Stock and to fix the designations,
preferences, rights, qualifications, limitations and restrictions thereof,
including the voting rights, dividend rights, dividend rate, conversion
rights, terms of redemption (including sinking fund provisions), redemption
price or prices, liquidation preferences and the number of shares constituting
any series. See "Risk Factors--Anti-Takeover Provisions".
Senior Preferred Warrants
In connection with the offering of the Senior Convertible Preferred Stock in
August 1997 and October 1997, the Company issued warrants to purchase an
aggregate of 1,314,990 shares of Common Stock at a price of $7.50 per share.
Certificate of Incorporation and By-laws
Stockholders' rights and related matters are governed by the DGCL, the
Certificate of Incorporation and the By-laws. Certain provisions of the
Certificate of Incorporation and By-laws, which are summarized below, may have
the effect, either alone or in combination with each other, of discouraging or
making more difficult a tender offer or takeover attempt that is opposed by
the Company's Board of Directors but that a stockholder might consider to be
in its best interest. Such provisions may also adversely affect prevailing
market prices for the Common Stock. The Company believes that such provisions
are necessary to enable the Company to develop its
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business in a manner that will foster its long-term growth without disruption
caused by the threat of a takeover not deemed by the Board of Directors to be
in the best interests of the Company and its stockholders.
Classified Board of Directors and Related Provisions
The Certificate of Incorporation provides that the directors of the Company,
other than those directors who may be elected by holders of any series of
Preferred Stock or holders of the Class A Common Stock, initially are to be
divided into three classes of directors, initially consisting of three, three
and four directors. One class of directors, initially consisting of three
directors, will be elected for a term expiring at the annual meeting of
shareholders to be held in 1999, another class initially consisting of three
directors will be elected for a term expiring at the annual meeting of
stockholders to be held in 2000, and another class initially consisting of
four directors shall be initially elected for a term expiring at the annual
meeting of stockholders in 2001. The classified board provisions will prevent
a party who acquires control of a majority of the outstanding Voting Stock of
the Company from obtaining control of the Board of Directors until the second
annual stockholders meeting following the date such party obtains the
controlling interest. The provisions of the Certificate of Incorporation
relating to the classified nature of the Company's Board of Directors may not
be amended without the affirmative vote of the holders of at least 80% of the
voting power of the Company's outstanding Voting Stock. "Voting Stock" is
defined in the Certificate of Incorporation as the outstanding shares of
capital stock of the Company entitled to vote in a general vote of
stockholders of the Corporation as a single class with shares of Common Stock
of the Company, which shares of capital stock include the shares of Class A
Common Stock.
No Stockholder Action by Written Consent; Special Meeting
The Certificate of Incorporation prohibits stockholders (other than holders
of Class A Common Stock with respect to matters upon which such holders are
entitled to vote as a separate class) from taking action by written consent in
lieu of an annual or special meeting and, thus, stockholders may only take
action at an annual or special meeting called in accordance with the By-laws.
The By-laws provide that special meetings of stockholders may only be called
by the Secretary of the Company at the direction of the Board of Directors
pursuant to a resolution adopted by the Board.
These provisions could have the effect of delaying consideration of a
stockholder proposal until the next annual meeting. The provisions would also
prevent the holders of a majority of the voting power of the capital stock of
the Company entitled to vote from unilaterally using the written consent
procedure to take stockholder action.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
The By-laws establish advance notice procedures with regard to stockholder
proposals and the nomination, other than by or at the direction of the Board
of Directors, of candidates for election as directors. These procedures
provide that the notice of stockholder proposals and stockholder nominations
for the election of directors at an annual meeting must be in writing and
received by the Secretary no less than 90 days nor more than 120 days prior to
the first anniversary of the preceding year's annual meeting; provided,
however, that with respect to the annual meeting to be held in 1999, the
anniversary date shall be deemed to be April 1, 1999; provided further that in
the event that the date of the annual meeting is advanced by more than 30
days, or delayed by more than 90 days, from such anniversary date, notice by
the stockholder to be timely must be delivered not earlier than the 120th day
prior to such annual meeting and not later than the close of business on the
later of the 90th day prior to such annual meeting or the 10th day following
the day on which public disclosure of the date of the annual meeting was made.
The notice of nominations for the election of directors must set forth certain
information with respect to the stockholder giving the notice and with respect
to each nominee.
By requiring advance notice of nominations by stockholders, the foregoing
procedures will afford the Board of Directors an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed
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necessary or desirable by the Board of Directors, to inform stockholders about
such qualifications. By requiring advance notice of other proposed business,
such procedures will provide the Board of Directors with an opportunity to
inform stockholders, prior to such meetings, of any business proposed to be
conducted at such meetings, together with any recommendations as to the Board
of Directors' position regarding action to be taken with respect to such
business, so that stockholders can better decide whether to attend such a
meeting or to grant a proxy regarding the disposition of any such business.
Dilution
The Certificate of Incorporation provides that the Board of Directors is
authorized to create and issue, whether or not in connection with the issuance
and sale of any of its stock or other securities or property, rights entitling
the holders to purchase from the Company shares of stock or other securities
of the Company or any of other corporation, recognizing that, under certain
circumstances, the creation and issuance of such rights could have the effect
of discouraging third parties from seeking, or impairing their right to seek,
to acquire a significant portion of the outstanding securities of the Company,
to engage in any transaction which might result in a change of control of the
corporation or to enter into any agreement, arrangement or understanding with
another party to accomplish the foregoing or for the purpose of acquiring,
holding, voting or disposing of any securities of the Company.
Indemnification
The Certificate of Incorporation and By-laws provide that the Company shall
indemnify each director or officer of the Company to the fullest extent
permitted by law.
Amendments
The Certificate of Incorporation and By-laws provide that the Company may at
any time and from time to time, amend, alter, change or repeal any provision
contained in the Certificate of Incorporation or a Preferred Stock
designation; provided, however, the affirmative vote of the holders of at
least 80% of the voting power of the then outstanding Voting Stock, voting
together as a single class, is required to amend, repeal or adopt any
provision inconsistent with certain provisions of the Certificate of
Incorporation, including the provisions referred to above relating to the
classification of the Board of Directors, prohibiting stockholder action by
written consent, and prohibiting the calling of special meetings by
stockholders.
The By-laws may be amended by either the holders of 80% of the voting power
of the Voting Stock or by the majority of the Board; provided that the Board
may alter, amend or repeal or adopt new By-laws in conflict with certain
provisions thereof by a two-thirds vote of the entire Board.
Rights Plan
Rights
The Board of Directors of the Company has declared a dividend of one right
(the "Rights") for each outstanding share of Common Stock and each outstanding
share of Class A Common Stock. The Rights will be issued to the holders of
record of Common Stock and Class A Common Stock outstanding on the date of the
consummation of the IPO (the "Issuance Date"), and with respect to Common
Stock and Class A Common Stock issued thereafter until the Distribution Date
(as defined below), and, in certain circumstances, with respect to Common
Stock and Class A Common Stock issued after the Distribution Date. Each Right,
when it becomes exercisable as described below, will entitle the registered
holder to purchase from the Company one one-thousandth (1/1000th) of a share
of Series A Participating Cumulative Preferred Stock (the "Preferred Shares")
at a price of $110.00 per (1/1000th) of a share, subject to adjustment in
certain circumstances (the "Purchase Price"). The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between
the Company and the Rights Agent named therein. The Rights will not be
exercisable until the Distribution Date and will expire on the tenth annual
anniversary of the Rights Agreement (the "Expiration
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Date"), unless earlier redeemed by the Company. Until a Right is exercised,
the holder thereof, as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends with respect to the Rights or the Preferred Shares relating thereto.
Distribution Date
Under the Rights Agreement, the Distribution Date is the earlier of (i) such
time as the Company learns that a person or group (including any affiliate or
associate of such person or group) has acquired, or has obtained the right to
acquire, beneficial ownership of more than 15% of the outstanding voting
securities of the Company (such person or group being an "Acquiring Person"),
subject to the exceptions relating to the TDF Group and the Berkshire Group
described in the paragraph below, unless provisions preventing accidental
triggering of the distribution of the Rights apply, and (ii) the close of
business on such date, if any, as may be designated by the Board of Directors
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer for more than 15% or more of the
outstanding shares of Voting Securities.
Each member of the TdF Group will not otherwise be considered an Acquiring
Person if (a) during the first five years following the adoption of the Rights
Agreement, the aggregate ownership interest of the TdF Group does not exceed
25% (or 30% if the Board so elects) of the outstanding Voting Securities or
(b) thereafter, the aggregate ownership interest of the TdF Group does not
exceed the lesser of (i) 25% or 30%, as applicable, of the Voting Securities
then outstanding and (ii) the greater of (x) the aggregate interest of the TdF
Group as of the fifth anniversary of the Rights Agreement and (y) 15% of the
then outstanding Voting Securities. Each member of the Berkshire Group will
not otherwise be deemed an Acquiring Person if the aggregate ownership
interest of the Berkshire Group does not exceed the greater of (a) the
aggregate ownership interest of the Berkshire Group upon the execution of the
Rights Agreement, reduced by an amount equal to any disposition of Voting
Securities following the date the Rights Agreement is executed and (b) 15% of
the outstanding Voting Securities.
Triggering Event and Effect of Triggering Event
At such time as there is an Acquiring Person, the Rights will entitle each
holder (other than such Acquiring Person) of a Right to purchase, at the
Purchase Price, that number of one-thousandths (1/1000ths) of a Preferred
Share equivalent to the number of shares of Common Stock that at the time of
such event would have a market value of twice the Purchase Price.
In the event the Company is acquired in a merger or other business
combination by an Acquiring Person or an affiliate or associate of an
Acquiring Person that is a publicly traded corporation or 50% or more of the
Company's assets or assets representing 50% or more of the Company's revenues
or cash flow are sold, leased, exchanged or otherwise transferred (in one or
more transactions) to an Acquiring Person or an affiliate or associate of an
Acquiring Person that is a publicly traded corporation, each Right will
entitle its holder (other than Rights beneficially owned by such Acquiring
Person or its affiliates or associates) to purchase, for the Purchase Price,
that number of common shares of such corporation which at the time of the
transaction would have a market value or, in certain circumstances, book value
of twice the Purchase Price. In the event the Company is acquired in a merger
or other business combination by an Acquiring Person or an affiliate or
associate of an Acquiring Person that is not a publicly traded entity or 50%
or more of the Company's assets or assets representing 50% or more of the
Company's revenues or cash flow are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to an Acquiring Person or affiliate
or associate of an Acquiring Person that is not a publicly traded entity, each
right will entitle its holder (subject to the next paragraph) to purchase, for
the Purchase Price, at such holder's option, (i) that number of shares of the
surviving corporation in the transaction with such entity (which surviving
corporation could be the Company) which at the time of the transaction would
have a book value of twice the Purchase Price, (ii) that number of shares of
the ultimate parent of or entity controlling such surviving corporation which
at the time of the transaction would have a book value of twice the Purchase
Price or (iii) if such entity has an affiliate which has publicly traded
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common shares, that number of common shares of such affiliate which at the
time of the transaction would have market value of twice the Purchase Price.
Any Rights that are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) will be null and void
and nontransferable and any holder of any such right (including any purported
transferee or subsequent holder) will be unable to exercise or transfer any
such Right.
Redemption
At any time prior to the earlier of (i) such time as a person or group
becomes an Acquiring Person and (ii) the Expiration Date, the Board of
Directors may redeem the Rights in whole, but not in part, at a price (in cash
or Common Stock or other securities of the Company deemed by the Board of
Directors to be at least equivalent in value) of $.01 per Right (which amount
shall be subject to adjustment as provided in the Rights Agreement) (the
"Redemption Price"). Immediately upon the action of the Board of Directors
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
In addition, at any time after there is an Acquiring Person, the Board of
Directors may elect to exchange each Right for consideration per Right
consisting of one-half of the securities that would be issuable at such time
upon exercise of one Right pursuant to the terms of the Rights Agreement.
Amendment
At any time prior to the Distribution Date, the Company may, without the
approval of any holder of any Rights, supplement or amend any provision of the
Rights Agreement (including, without limitation, the date on which the
Expiration Date or Distribution Date shall occur, the definition of Acquiring
Person, the time during which the Rights may be redeemed or the terms of the
Preferred Shares), except that no supplement or amendment shall be made which
reduces the Redemption Price (other than pursuant to certain adjustments
therein).
Certain Effects of the Rights Plan
The Rights plan is designed to protect stockholders of the Company in the
event of unsolicited offers to acquire the Company and other coercive takeover
tactics which, in the opinion of the Board of Directors, could impair its
ability to represent stockholder interests. The provisions of the Rights Plan
may render an unsolicited takeover of the Company more difficult or less
likely to occur or might prevent such a takeover, even though such takeover
may offer the Company's stockholders the opportunity to sell their stock at a
price above the prevailing market rate and may be favored by a majority of the
stockholders of the Company.
Section 203 of the Delaware General Corporation Law
Section 203 of the DGCL prohibits certain transactions between a Delaware
corporation and an "interested stockholder", which is defined as a person who,
together with any affiliates and/or associates of such person, beneficially
owns, directly or indirectly, 15% or more of the outstanding voting shares of
a Delaware corporation. This provision prohibits certain business combinations
(defined broadly to include mergers, consolidations, sales or other
dispositions of assets having an aggregate value of 10% or more of the
consolidated assets of the corporation, and certain transactions that would
increase the interested stockholder's proportionate share ownership in the
corporation) between an interested stockholder and a corporation for a period
of three years after the date the interested stockholder acquired its stock,
unless: (i) the business combination is approved by the corporation's Board of
Directors prior to the date the interested stockholder acquired shares; (ii)
the interested stockholder acquired at least 85% of the voting stock of the
corporation in the transaction in which it became an interested stockholder;
or (iii) the business combination is approved by a majority of the Board of
Directors and by the affirmative vote of two-thirds of the outstanding voting
stock owned by disinterested stockholders at an annual or special meeting. A
Delaware corporation, pursuant to a provision in its certificate of
incorporation or
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by-laws, may elect not to be governed by Section 203 of the DGCL. The
Certificate of Incorporation does not exclude the Company from the
restrictions imposed by Section 203 of the DGCL and, as a result, the Company
will be subject to its provisions upon consummation of the IPO.
Under certain circumstances, Section 203 of the DGCL makes it more difficult
for a person who could be an "interested stockholder" to effect various
business combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. The Certificate of Incorporation of the Company does not exclude
the Company from the restrictions imposed under Section 203 of the DGCL. It is
anticipated that the provisions of Section 203 of the DGCL may encourage
companies interested in acquiring the Company to negotiate in advance with the
Board of Directors, since the stockholder approval requirement would be
avoided if a majority of the directors then in office approves, prior to the
date on which a stockholder becomes an interested stockholder, either the
business combination or the transaction which results in the stockholder
becoming an interested stockholder.
Limitations of Directors' Liability
The Certificate of Incorporation provides that no director of the Company
will be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director except for liability: (1)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (2) for acts of omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) under Section 174 of
the DGCL, or (4) for any transaction from which the director derived an
improper personal benefit. The effect of these provisions will be to eliminate
the rights of the Company and its stockholders (through stockholders'
derivatives suits on behalf of the Company) to recover monetary damages
against a director for breach of fiduciary duty as a director (including
breaches resulting from grossly negligent behavior), except in the situations
described above. These provisions will not limit the liability of directors
under federal securities laws and will not affect the availability of
equitable remedies such as an injunction or rescission based upon a director's
breach of his duty of care.
Transfer Agent
The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
Senior Credit Facility
Pursuant to the Amended and Restated Loan Agreement dated as of July 10,
1998, two wholly owned subsidiaries of CCIC, CCI and Crown Castle
International Corp. de Puerto Rico ("CCIC(PR)") (collectively, the
"Borrowers"), have entered into the Senior Credit Facility with a group of
banks and other financial institutions led by Key Corporate Capital Inc.
("KeyCorp") and PNC Bank, National Association, as arrangers and agents. The
following summary of certain provisions of the Senior Credit Facility does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the provisions of the Senior Credit Facility.
The Senior Credit Facility provides for revolving credit loans in an
aggregate principal amount not to exceed $100.0 million, for working capital
needs, acquisitions and general corporate purposes. The Senior Credit Facility
includes a $5.0 million sublimit available for the issuance of letters of
credit. As of March 1, 1999, CCI and its subsidiaries had unused borrowing
availability under the Senior Credit Facility of $54.0 million.
The loan commitment under the Senior Credit Facility reduces by $5.0 million
commencing March 31, 2001 and by $5.0 million each calendar quarter thereafter
until December 31, 2004, when the Senior Credit Facility matures. In addition,
the Senior Credit Facility provides for mandatory reduction of the loan
commitment and mandatory prepayment with the (i) net proceeds of certain asset
sales, (ii) net proceeds of certain required capital contributions to CCI by
CCIC relating to the proceeds from the sale of equity, convertible or debt
securities, subject to certain exceptions, (iii) net proceeds of any unused
insurance proceeds and (iv) a percentage of the excess cash flow of the
Borrowers, commencing with the calendar year ending December 31, 2000.
The Borrowers' obligations under the Senior Credit Facility are guaranteed
by each direct and indirect majority owned subsidiary of CCI and are also
secured by (i) a pledge by the Borrowers of all of the outstanding capital
stock of each of their respective direct subsidiaries and (ii) a perfected
first priority security interest in substantially all of the personal property
of the Borrowers and their subsidiaries. In addition, the Senior Credit
Facility is guaranteed on a limited recourse basis by CCIC, limited in
recourse to the collateral pledged by CCIC (the capital stock of CCI). The
capital stock of CTSH will not be pledged to secure the Senior Credit
Facility.
The loans under the Senior Credit Facility will bear interest, at the
Borrowers' option, at either (A) a "base rate" equal to KeyCorp's prime
lending rate plus an applicable spread ranging from 0% to 1.5% (determined
based on a leverage ratio) or (B) a "LIBOR rate" plus an applicable spread
ranging from 1.0% to 3.25% (determined based on a leverage ratio). Following
the occurrence and during the continuance of an event of default under the
Senior Credit Facility, the loans will bear interest at the "base rate" plus
3.5%.
The Senior Credit Facility contains a number of covenants that, among other
things, restrict the ability of the Borrowers and their respective
subsidiaries to dispose of assets, incur additional indebtedness, incur
guaranty obligations, repay subordinated indebtedness except in accordance
with the subordination provisions, pay dividends or make capital
distributions, create liens on assets, enter into leases, make investments,
make acquisitions, engage in mergers or consolidations, make capital
expenditures, engage in certain transactions with subsidiaries and affiliates
and otherwise restrict corporate activities. In addition, the Senior Credit
Facility will require compliance with certain financial covenants, including
requiring the Borrowers and their respective subsidiaries to maintain a
maximum ratio of indebtedness to operating cash flow, a minimum ratio of
operating cash flow to fixed charges, a minimum ratio of operating cash flow
to projected debt service and a minimum ratio of operating cash flow to
interest expense. CCIC does not expect that such covenants will materially
impact the ability of the Borrowers and their respective subsidiaries to
operate their respective businesses.
Pursuant to the terms of the Senior Credit Facility, CCI is entitled to pay
dividends or make distributions to CCIC in order to permit CCIC to pay its
out-of-pocket costs for corporate development and overhead and to pay cash
interest on certain indebtedness of CCIC (including the Notes); provided that
the amount of such dividends or distributions does not exceed (i) $6.0 million
in any year ending on or prior to October 31, 2002 or (ii) $33.0
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million in any year thereafter. The Senior Credit Facility also allows CCI to
pay dividends or distribute cash to CCIC to the extent required to pay taxes
allocable to the Borrowers and their respective subsidiaries. All of the
above-mentioned dividends or distributions, however, including dividends or
distributions that are intended to pay interest on the Notes, may not be made
by CCI so long as any default or event of default exists under the Senior
Credit Facility.
The Senior Credit Facility contains customary events of default, including
the failure to pay principal when due or any interest or other amount that
becomes due within two days after the due date thereof, any representation or
warranty being made by the Borrowers that is incorrect in any material respect
on or as of the date made, a default in the performance of any negative
covenants or a default in the performance of certain other covenants or
agreements for a period of thirty days, default in certain other indebtedness,
certain insolvency events and certain change of control events. In addition, a
default under the Notes Indenture will result in a default under the Senior
Credit Facility.
CTI Credit Facility
Pursuant to the Loan Amendment Agreement dated May 21, 1997 (the "CTI Credit
Facility"), among CTI, as borrower, CTSH, as guarantor, Credit Suisse First
Boston, as arranger and agent ("CSFB"), and J.P. Morgan Securities Ltd., as
co-arranger ("JPM"), CTI's (Pounds)162.5 million term and revolving loan
facilities (the "Old Facilities") were amended to a (Pounds)64.0 million
revolving loan facility. The following summary of certain provisions of the
CTI Credit Facility does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of the CTI Credit
Facility.
The CTI Credit Facility provides for revolving credit loans in an aggregate
principal amount not to exceed (Pounds)64.0 million to finance capital
expenditures in respect of digital terrestrial television with up to
(Pounds)46.5 million of such amount available for working capital needs and
for general corporate purposes. As of March 1, 1999, CTI and its subsidiaries
had unused borrowing availability under the CTI Credit Facility of
approximately (Pounds)24.0 million ($39.9 million).
The loan commitment under the CTI Credit Facility will be automatically
reduced to zero in three equal semi-annual installments commencing on May 31,
2001 and ending on May 31, 2002, when the CTI Credit Facility matures. In
addition, the CTI Credit Facility provides for mandatory cancellation of all
or part of the loan commitment and mandatory prepayment (i) with an amount
equal to the net proceeds of certain asset sales and (ii) upon the
consummation of an initial public offering or the listing on any stock
exchange of the shares of CTI, CTSH or CCIC.
CTI's and CTSH's obligations under the CTI Credit Facility are secured by
fixed and floating charges over all of their respective assets. The loans
under the CTI Credit Facility will bear interest at a "LIBOR rate" plus 0.85%
and a spread related to the lenders' cost of making the CTI Credit Facility
available to CTI.
The CTI Credit Facility contains a number of covenants that, among other
things, restrict the ability of CTI to dispose of assets, incur additional
indebtedness, incur guaranty obligations, repay subordinated indebtedness
except in accordance with the subordination provisions, pay dividends or make
capital distributions, create liens on assets, make investments, make
acquisitions, engage in certain transactions with subsidiaries and affiliates
and otherwise restrict corporate activities. In addition, the CTI Credit
Facility will require compliance with certain financial covenants, including
requiring CTI to maintain a maximum ratio of indebtedness to EBITDA, a minimum
ratio of EBITDA to interest expense, and a minimum tangible net worth. CCIC
does not expect that such covenants will materially impact the ability of CTI
to operate its business.
The CTI Credit Facility contains customary events of default, including the
failure to pay principal or any interest or any other amount that becomes due
within three business days after the due date thereof, any representation or
warranty being made by CTI that is untrue or misleading on the date made, a
default in the performance of any of its covenants under the CTI Credit
Facility (unless, if such default is capable of remedy,
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such default is cured within 14 days of CTI becoming aware of such default),
default in certain other indebtedness, certain insolvency events and certain
change of control events.
On July 17, 1998, the lenders (acting through Credit Suisse First Boston, as
agent) under the CTI Credit Facility waived a provision in the CTI Credit
Facility that would have required the repayment of the CTI Credit Facility
concurrently with the listing of the Company's Common Stock.
The 10 5/8% Notes
On November 20, 1997, the Company privately placed $251.0 million principal
amount at maturity ($150,010,150 initial accreted value) of its 10 5/8% Senior
Discount 10 5/8% Notes due 2007 (the "10 5/8% Notes"). The following is a
summary of certain terms of the 10 5/8% Notes and is qualified in its entirety
by reference to the indenture governing the 10 5/8% Notes (the "10 5/8% Notes
Indenture") relating to the 10 5/8% Notes. A copy of the 10 5/8% Notes
Indenture has been filed with the Registration Statement of which this
Prospectus forms a part.
The 10 5/8% Notes are unsecured senior obligations of the Company, and will
rank pari passu in right of payment with all existing and future senior
indebtedness of the Company and will be senior to future subordinated
indebtedness of the Company. The 10 5/8% Notes mature on November 15, 2007.
The 10 5/8% Notes will accrete in value until November 15, 2002. Thereafter,
cash interest will accrue on the 10 5/8% Notes at the rate of 10.625% per
annum and will be payable semi-annually, commencing on May 15, 2003.
Except as stated below, the 10 5/8% Notes are not redeemable prior to
November 15, 2002. Thereafter, the 10 5/8% Notes are redeemable at the option
of the Company, in whole or in part, at any time or from time to time, at a
premium which is at a fixed percentage that declines to par on or after
November 15, 2005, in each case together with accrued and unpaid interest, if
any, to the date of redemption. In the event the Company consummates a public
equity offering or certain strategic equity investments prior to November 15,
2000, the Company may, at its option, use all or a portion of the proceeds
from such offering to redeem up to 35% of the original aggregate principal
amount at maturity of the 10 5/8% Notes at a redemption price equal to
110.625% of the accreted value of the 10 5/8% Notes to be redeemed, plus
accrued and unpaid interest, if any, thereon to the redemption date, provided
at least 65% of the original aggregate principal amount at maturity of the 10
5/8% Notes remains outstanding after each such redemption.
Upon the occurrence of a Change of Control (as defined in the 10 5/8% Notes
Indenture), each holder of 10 5/8% Notes has the right to require the Company
to purchase all or a portion of such holder's 10 5/8% Notes at a price equal
to 101% of the aggregate principal amount thereof, together with accrued and
unpaid interest to the date of purchase.
The 10 5/8% Notes Indenture contains certain covenants, including covenants
that limit (i) indebtedness, (ii) restricted payments, (iii) distributions
from restricted subsidiaries, (iv) transactions with affiliates, (v) sales of
assets and subsidiary stock (including sale and leaseback transactions), (vi)
dividend and other payment restrictions affecting restricted subsidiaries, and
(vii) mergers or consolidations.
The CTI Bonds
On May 21, 1997, a subsidiary of CTSH issued (Pounds)125.0 million aggregate
principal amount of its 9% Guaranteed Bonds due 2007 (the "CTI Bonds"). The
CTI Bonds are listed on the Luxembourg Stock Exchange. The following is a
summary of certain terms of the Bonds and is qualified in its entirety by
reference to the trust deed dated May 21, 1997 (the "Trust Deed") relating to
the Bonds. A copy of the Trust Deed has been filed with the Registration
Statement of which this Prospectus forms a part.
The Bonds constitute direct, general and unconditional guaranteed
obligations of the subsidiary of CTSH and rank pari passu with all other
present and future unsecured and unsubordinated obligations of such
subsidiary. The CTI Bonds are guaranteed jointly and severally by CTI and
CTSH. The CTI Bonds will mature on March 30, 2007. Interest on the Bonds is
payable annually in arrears on March 30 in each year, the first payment having
been made on March 30, 1998.
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The CTI Bonds may be redeemed at the option of the Company in whole or in
part, at any time or from time to time, at the greater of their principal and
such price as will provide a gross redemption yield 0.5% per annum above the
gross redemption yield of the benchmark gilt plus, in either case, accrued and
unpaid interest.
Upon the occurrence of a Put Event (as defined in the Trust Deed), each
holder of CTI Bonds has the right to require such subsidiary to purchase all
or a portion of such holder's CTI Bonds at a price equal to 101% of the
aggregate principal amount thereof, together with accrued and unpaid interest
to the date of purchase.
The Trust Deed contains certain covenants, including covenants that limit
(i) indebtedness, (ii) restricted payments, (iii) distributions from
restricted subsidiaries, (iv) transactions with affiliates, (v) sales of
assets and subsidiary stock, (vi) dividend and other payment restrictions
affecting restricted subsidiaries, and (vii) mergers or consolidations.
Proposed BAM JV Credit Facility
Key Corporate Capital Inc. ("KeyCorp") has committed, subject to formation
of the joint venture and certain other conditions, to provide the Proposed BAM
JV with a revolving credit facility not to exceed $250.0 million. The
following summary of certain provisions of the proposed loan facility (the
"Proposed BAM JV Credit Facility") does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the provisions
of the Proposed BAM JV Credit Facility.
The Proposed BAM JV Credit Facility provides for revolving credit loans in
an aggregate principal amount not to exceed $250.0 million, $180.0 million of
which is expected to be drawn in connection with the formation of the Proposed
BAM JV, and the balance of which will be used for acquisition and construction
of tower facilities, capital expenditures, working capital needs and general
corporate purposes. The borrowing base until September 30, 2001, is based on a
multiple of test operating cash flow. On September 30, 2001 (the "Conversion
Date"), the borrowing base test will be eliminated and the amount of the
facility will be decreased to the borrowing base as of that date. The Proposed
BAM JV Credit Facility includes a $25.0 million sublimit available for the
issuance of letters of credit.
The amount of the facility after the Conversion Date will be reduced on a
quarterly basis until March 31, 2006, when the Proposed BAM JV Credit Facility
matures. The annual percentage reduction in this loan commitment is 3.0% in
2001 (two quarters), 7.5% in 2002, 22.5% in 2003, 26.0% in 2004, 32.0% in 2005
and 9.0% in 2006 (one quarter). In addition, the Proposed BAM JV Credit
Facility provides for mandatory reduction of the loan commitment and mandatory
prepayment with the (1) net proceeds of certain asset sales, (2) 50% of
capital contributions to Holdco subject to certain significant exceptions
including capital expenditures pursuant to the Build-to-Suit Agreement, (3)
net proceeds of any unused insurance proceeds and (4) a percentage of the
excess cash flow of the Proposed BAM JV, commencing with the calendar year
ending December 31, 2001.
The Proposed BAM JV's obligations under the Proposed BAM JV Credit Facility
are secured by (1) a pledge of the membership interest in the Proposed BAM JV
and (2) a perfected first priority security interest in the Proposed BAM JV's
interest in tenant leases including the Global Lease. The Proposed BAM JV
Credit Facility contractually permits the Proposed BAM JV to pay maintenance,
operating, ground lease and other expenses and costs relating to the tower
facilities out of the tower rentals whether or not an event of default has
occurred.
The loans under the Proposed BAM JV Credit Facility will bear interest, at
the Proposed BAM JV's option, at either (A) a "base rate" equal to KeyCorp's
prime lending rate plus an applicable spread ranging from 0% to 1.25%
(determined based on a leverage ratio) or (B) a "LIBOR rate" plus an
applicable spread ranging from 1.0% to 2.875% (determined based on a leverage
ratio). The Proposed BAM JV must hedge approximately 50% of its variable
interest rate obligations for a period of two years. Following the occurrence
of and during the continuance of an event of default under the Proposed BAM JV
Credit Facility, the loans will bear interest at the "base rate" plus 4.875%.
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The Proposed BAM JV Credit Facility will contain a number of covenants that,
among other things, restrict the ability of the Proposed BAM JV to dispose of
assets, incur additional indebtedness, incur guaranty obligations, repay
subordinated indebtedness except in accordance with the subordination
provisions, pay dividends or make capital distributions, create liens on
assets, enter into leases, make investments, make acquisitions, engage in
mergers or consolidations, make capital expenditures, engage in certain
transactions with subsidiaries and affiliates and otherwise restrict company
activities. In addition, the Proposed BAM JV Credit Facility will require
compliance with certain financial covenants, including requiring the Proposed
BAM JV to maintain a minimum ratio of operating cash flow to indebtedness, a
minimum ratio of operating cash flow to fixed charges, a minimum ratio of
operating cash flow to projected debt service and a minimum ratio of operating
cash flow to interest expense. The Proposed BAM JV does not expect that such
covenants will materially impact its ability to operate its business.
The Proposed BAM JV Credit Facility contains customary events of default,
including the failure to pay principal when due or any interest or other
amount that becomes due within two days after the due date thereof, any
representation or warranty being made by the Proposed BAM JV that is incorrect
in any material respect on or as of the date made, a default in the
performance of any negative covenants or a default in the performance of
certain other covenants or agreements (including the Formation Agreement) for
a period of days, default in certain other indebtedness, certain insolvency
events and certain change of control events. During the first two years of the
Proposed BAM JV Credit Facility, capital contributions can cure an operating
cash flow default and certain other covenant and agreement defaults.
CCIC Term Loan Facility
Pursuant to a Term Loan Agreement dated as of March 15, 1999, the Company
has entered into a credit facility (the "Term Loan Facility") with a group of
banks and other financial institutions led by Goldman Sachs Credit Partners
L.P., Salomon Brothers Holding Company Inc. and Credit Suisse First Boston. As
of March 16, 1999, the Company had borrowed $100.0 million under the Term Loan
Facility to fund or refinance its escrow payments made in connection with the
Proposed Powertel Acquisition and the Proposed BellSouth Transaction. The
following summary of the Term Loan Facility does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
provisions of the Term Loan Facility.
The Term Loan Facility provides for term loans in an aggregate principal
amount not to exceed $100.0 million. The loans under the Term Loan Facility
mature on November 30, 2007 and bear interest at an increasing rate based on
LIBOR as set forth in the Term Loan Agreement, but in no event shall the
interest on such loans exceed 16%. At any time the Company may, at its option,
prepay the term loans without penalty or premium. Subject to limited
exceptions, the Term Loan Facility requires the Company to prepay the loans
without penalty or premium with the proceeds of (1) any offering of debt or
equity securities, (2) the incurrence of other debt (other than debt under the
Senior Credit Facility), (3) asset sales for cash consideration, or with a
fair market value, in excess of $1.0 million, (4) any recovery of amounts
deposited in escrow in connection with the Proposed Powertel Acquisition and
the Proposed BellSouth Transaction and (5) amounts reserved for the Proposed
BAM JV if the Formation Agreement expires or is otherwise terminated.
The Term Loan Agreement contains covenants substantially identical to the
covenants contained in the Company's 10 5/8% Notes. At any time on or after
March 16, 2000, the lenders under the Term Loan Agreement may exchange their
term loans for an equal aggregate principal amount of the Company's Senior
Exchange Notes due 2007. These exchange notes will be issued pursuant to an
indenture dated as of March 15, 1999, between the Company and United States
Trust Company of New York, as trustee. These exchange notes will have the same
maturity as the term loans and will bear interest at the rate in effect with
respect to the term loans on the date of exchange. The covenants contained in
the exchange note indenture will be substantially identical to the covenants
contained in the certificate of designations governing the Company's 12 3/4%
Senior Exchangeable Preferred Stock due 2011, with additional covenants
restricting the incurrence of liens and sale-leaseback transactions.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain U.S. federal income tax
consequences of the exchange offer to holders of old preferred stock, but does
not purport to be a complete analysis of all potential tax effects. The
summary set forth below is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), regulations of the Treasury Department, administrative
rulings and pronouncements of the Internal Revenue Service and judicial
decisions, all of which are subject to change, possibly with retroactive
effect. This summary does not purport to address all the U.S. federal income
tax consequences that may be applicable to particular holders, including
dealers in securities, financial institutions, insurance companies and tax-
exempt organizations. In addition, this summary does not consider the effect
of any foreign, state, local, gift, estate or other tax laws that may be
applicable to a particular holder. This summary applies only to a holder that
acquired old preferred stock at original issue for cash and holds old
preferred stock as a "capital asset" within the meaning of Section 1221 of the
Code. Holders of old preferred stock considering the exchange offer should
consult their own tax advisors concerning the U.S. federal income tax
consequences in light of their particular situations as well as any
consequences arising under the laws of any other taxing jurisdiction.
An exchange of old preferred stock for new preferred stock pursuant to the
exchange offer will not be treated as a taxable exchange or other taxable
event for U.S. federal income tax purposes. Accordingly, holders of old
preferred stock who exchange their old preferred stock for new preferred stock
will not recognize income, gain or loss for U.S. federal income tax purposes
and any such holder will have the same adjusted tax basis and holding period
in the new preferred stock as it had in the old preferred stock immediately
before the exchange.
THE FOREGOING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
DOES NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR HOLDER'S
SITUATION OR STATUS. ACCORDINGLY, EACH HOLDER OF OLD PREFERRED STOCK SHOULD
CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE
EXCHANGE OFFER TO IT, INCLUDING THOSE UNDER STATE, FOREIGN AND OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new preferred stock for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such new preferred stock. This
prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of new preferred stock
received in exchange for old preferred stock where such old preferred stock
were acquired as a result of market-making activities or other trading
activities. We have agreed that for a period of 180 days after the expiration
date, we will make available a prospectus meeting the requirements of the
Preferred Stock Act to any broker-dealer for use in connection with any such
resale. In addition, until , all dealers effecting transactions in the new
preferred stock may be required to deliver a prospectus.
We will not receive any proceeds from any sale of new preferred stock by
broker-dealers. New preferred stock received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the new preferred stock or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such new preferred stock. Any
broker-dealer that resells new preferred stock that were received by it for
its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new preferred stock may be deemed to be
an "underwriter" within the meaning of the Preferred Stock Act and any profit
on any such resale of new preferred stock and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation
under the Preferred Stock Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Preferred Stock Act.
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<PAGE>
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Cravath, Swaine
& Moore, New York, New York.
INDEPENDENT AUDITORS
The consolidated financial statements and schedule of the Company at
December 31, 1997 and 1998, and for each of the three years in the period
ended December 31, 1998, the financial statements of the Home Service
Transmission business of the BBC at March 31, 1996 and for the year ended
March 31, 1996 and the period from April 1, 1996 to February 27, 1997 and the
consolidated financial statements of CTI at March 31, 1997 and December 31,
1997 and for the period from February 28, 1997 to March 31, 1997 and the
period from April 1, 1997 to December 31, 1997 have been included herein in
reliance upon the report of KPMG LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm
as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Commission. Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at its offices at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such reports and other information concerning
the Company are also available for inspection at the offices of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006. In addition, the
Commission maintains an Internet site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants, including the Company, that file electronically with the
Commission.
Anyone who receives this Prospectus may obtain a copy of any of the
agreements summarized herein without charge by writing to Crown Castle
International Corp., 510 Bering Drive, Suite 500, Houston, TX 77057,
Attention: Secretary.
201
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CROWN CASTLE INTERNATIONAL CORP.
Report of KPMG LLP, Independent Certified Public Accountants.............. F-2
Consolidated Balance Sheet as of December 31, 1997 and 1998............... F-3
Consolidated Statement of Operations and Comprehensive Loss for each of
the three years in the period ended December 31, 1998.................... F-4
Consolidated Statement of Cash Flows for each of the three years in the
period ended December 31, 1998........................................... F-5
Consolidated Statement of Stockholders' Equity (Deficit) for each of the
three years in the period ended December 31, 1998........................ F-6
Notes to Consolidated Financial Statements for each of the three years in
the period ended December 31, 1998....................................... F-7
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND THE BBC HOME SERVICE
TRANSMISSION BUSINESS
Report of KPMG, Chartered Accountants..................................... F-32
Profit and Loss Accounts of the BBC Home Service Transmission business for
the Year ended March 31, 1996 and the Period from April 1, 1996 to
February 27, 1997 and the Consolidated Profit and Loss Accounts of Castle
Transmission Services (Holdings) Ltd for the Period from February 28,
1997 to March 31, 1997 and for the Period from April 1, 1997 to December
31, 1997................................................................. F-33
Balance Sheet of the BBC Home Service Transmission business at March 31,
1996 and Consolidated Balance Sheets of Castle Transmission Services
(Holdings) Ltd at March 31, 1997 and at
December 31, 1997........................................................ F-34
Cash Flow Statements of the BBC Home Service Transmission business for the
Year ended March 31, 1996 and the Period from April 1, 1996 to February
27, 1997 and the Consolidated Cash Flow Statements of Castle Transmission
Services (Holdings) Ltd for the Period from February 28, 1997 to March
31, 1997 and for the Period from April 1, 1997 to December 31, 1997...... F-35
Reconciliation of Movements in Corporate Funding of the BBC Home Service
Transmission business for the Year ended March 31, 1996 and the Period
from April 1, 1996 to February 27, 1997 and Consolidated Reconciliation
of Movements in Shareholders' Funds of Castle Transmission Services
(Holdings) Ltd for the Period from February 28, 1997 to March 31, 1997
and for the Period from April 1, 1997 to December 31, 1997............... F-36
Notes to the Consolidated Financial Statements............................ F-37
BELL ATLANTIC MOBILE TOWER OPERATIONS
Report of KPMG LLP, Independent Certified Public Accountants.............. F-60
Statement of Net Assets as of December 31, 1998........................... F-61
Statements of Revenues and Direct Expenses for each of the two years in
the period ended December 31, 1998....................................... F-62
Notes to Financial Statements for each of the two years in the period
ended December 31, 1998.................................................. F-63
POWERTEL TOWER OPERATIONS
Report of KPMG LLP, Independent Certified Public Accountants.............. F-65
Statement of Net Assets as of December 31, 1998........................... F-66
Statement of Revenues and Direct Expenses for the year ended December 31,
1998..................................................................... F-67
Notes to financial Statements for the year ended December 31, 1998........ F-68
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Crown Castle International Corp.:
We have audited the accompanying consolidated balance sheets of Crown Castle
International Corp. and subsidiaries as of December 31, 1997 and 1998, and the
related consolidated statements of operations and comprehensive loss, cash
flows and stockholders' equity (deficit) for each of the years in the three-
year period ended December 31, 1998. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Crown
Castle International Corp. and subsidiaries as of December 31, 1997 and 1998,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1998, in conformity with generally
accepted accounting principles.
KPMG LLP
Houston, Texas
February 24, 1999
F-2
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands of dollars, except share amounts)
<TABLE>
<CAPTION>
December 31,
--------------------
1997 1998
ASSETS -------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................. $ 55,078 $ 296,450
Receivables:
Trade, net of allowance for doubtful accounts of $177
and $1,535 at December 31, 1997 and 1998,
respectively........................................ 9,264 32,130
Other................................................ 811 4,290
Inventories........................................... 1,322 6,599
Prepaid expenses and other current assets............. 681 2,647
-------- ----------
Total current assets................................. 67,156 342,116
Property and equipment, net............................. 81,968 592,594
Investments in affiliates............................... 59,082 2,258
Goodwill and other intangible assets, net of accumulated
amortization of $3,997 and $20,419 at December 31, 1997
and 1998, respectively................................. 152,541 569,740
Deferred financing costs and other assets, net of
accumulated amortization of $743 and $1,722 at December
31, 1997 and 1998, respectively........................ 10,644 16,522
-------- ----------
$371,391 $1,523,230
======== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable...................................... $ 7,760 $ 46,020
Accrued interest...................................... -- 15,677
Accrued compensation and related benefits............. 1,792 5,188
Deferred rental revenues and other accrued
liabilities.......................................... 2,398 26,002
-------- ----------
Total current liabilities............................ 11,950 92,887
Long-term debt.......................................... 156,293 429,710
Other liabilities....................................... 607 22,823
-------- ----------
Total liabilities.................................... 168,850 545,420
-------- ----------
Commitments and contingencies (Note 12)
Minority interests -- 39,185
Redeemable preferred stock, $.01 par value; 10,000,000
shares authorized:
12 3/4% Senior Exchangeable Preferred Stock; shares
issued: December 31, 1997--none and December 31,
1998-- 200,000 (stated at mandatory redemption and
aggregate liquidation value)......................... -- 201,063
Senior Convertible Preferred Stock; shares issued:
December 31, 1997--657,495 and December 31, 1998--
none (stated at redemption value; aggregate
liquidation value of $68,916)........................ 67,948 --
Series A Convertible Preferred Stock; shares issued:
December 31, 1997--1,383,333 and December 31, 1998--
none (stated at redemption and aggregate liquidation
value)............................................... 8,300 --
Series B Convertible Preferred Stock; shares issued:
December 31, 1997--864,568 and December 31, 1998--
none (stated at redemption and aggregate liquidation
value)............................................... 10,375 --
Series C Convertible Preferred Stock; shares issued:
December 31, 1997--3,529,832 and December 31, 1998--
none (stated at redemption and aggregate liquidation
value)............................................... 74,126 --
-------- ----------
Total redeemable preferred stock..................... 160,749 201,063
-------- ----------
Stockholders' equity:
Common stock, $.01 par value; 690,000,000 shares
authorized:
Class A Common Stock; shares issued: December 31,
1997--1,041,565 and December 31, 1998--none.......... 2 --
Class B Common Stock; shares issued: December 31,
1997--9,367,165 and December 31, 1998--none.......... 19 --
Common Stock; shares issued: December 31, 1997--none
and December 31, 1998--83,123,873.................... -- 831
Class A Common Stock; shares issued: December 31,
1997--none and December 31, 1998--11,340,000 -- 113
Additional paid-in capital.............................. 58,248 795,153
Cumulative foreign currency translation adjustment...... 562 1,690
Accumulated deficit..................................... (17,039) (60,225)
-------- ----------
Total stockholders' equity........................... 41,792 737,562
-------- ----------
$371,391 $1,523,230
======== ==========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1996 1997 1998
------ -------- --------
<S> <C> <C> <C>
Net revenues:
Site rental and broadcast transmission........... $5,615 $ 11,010 $ 75,028
Network services and other....................... 592 20,395 38,050
------ -------- --------
6,207 31,405 113,078
------ -------- --------
Operating expenses:
Costs of operations (exclusive of depreciation
and amortization):
Site rental and broadcast transmission......... 1,292 2,213 26,254
Network services and other..................... 8 13,137 21,564
General and administrative....................... 1,678 6,824 23,571
Corporate development............................ 1,324 5,731 4,625
Non-cash compensation charges.................... -- -- 12,758
Depreciation and amortization.................... 1,242 6,952 37,239
------ -------- --------
5,544 34,857 126,011
------ -------- --------
Operating income (loss)............................ 663 (3,452) (12,933)
Other income (expense):
Equity in earnings (losses) of unconsolidated
affiliate....................................... -- (1,138) 2,055
Interest and other income (expense).............. 193 1,951 4,220
Interest expense and amortization of deferred
financing costs................................. (1,803) (9,254) (29,089)
------ -------- --------
Loss before income taxes and minority interests.... (947) (11,893) (35,747)
Provision for income taxes......................... (10) (49) (374)
Minority interests................................. -- -- (1,654)
------ -------- --------
Net loss........................................... (957) (11,942) (37,775)
Dividends on preferred stock....................... -- (2,199) (5,411)
------ -------- --------
Net loss after deduction of dividends on preferred
stock............................................. $ (957) $(14,141) $(43,186)
====== ======== ========
Net loss........................................... $ (957) $(11,942) $(37,775)
Other comprehensive income:
Foreign currency translation adjustments......... -- 562 1,128
------ -------- --------
Comprehensive loss................................. $ (957) $(11,380) $(36,647)
====== ======== ========
Loss per common share--basic and diluted........... $(0.27) $ (2.27) $ (1.02)
====== ======== ========
Common shares outstanding--basic and diluted (in
thousands)........................................ 3,503 6,238 42,518
====== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands of dollars)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss......................................... $ (957) $(11,942) $(37,775)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization................... 1,242 6,952 37,239
Amortization of deferred financing costs and
discounts on long-term debt.................... 55 2,159 17,910
Non-cash compensation charges................... -- -- 12,758
Minority interests.............................. -- -- 1,654
Equity in losses (earnings) of unconsolidated
affiliate...................................... -- 1,138 (2,055)
Changes in assets and liabilities, excluding the
effects of acquisitions:
Increase in accounts payable................... 323 1,824 15,373
Increase (decrease) in deferred rental revenues
and other liabilities......................... 219 (240) 5,847
Increase (decrease) in accrued interest........ 306 (396) 5,835
Decrease (increase) in receivables............. (1,695) 1,353 (7,450)
Increase in inventories, prepaid expenses and
other assets.................................. (23) (1,472) (4,360)
------- -------- --------
Net cash provided by (used for) operating
activities................................... (530) (624) 44,976
------- -------- --------
Cash flows from investing activities:
Capital expenditures............................. (890) (18,035) (138,759)
Acquisitions of businesses, net of cash
acquired........................................ (10,925) (33,962) (10,489)
Investments in affiliates........................ (2,101) (59,487) --
------- -------- --------
Net cash used for investing activities........ (13,916) (111,484) (149,248)
------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of capital stock.......... 10,503 139,867 339,929
Net borrowings (payments) under revolving credit
agreements...................................... 11,000 (6,223) 9,212
Incurrence of financing costs.................... (180) (7,798) (3,010)
Purchase of capital stock........................ -- (2,132) (883)
Proceeds from issuance of long-term debt......... -- 150,010 --
Principal payments on long-term debt............. (130) (113,881) --
------- -------- --------
Net cash provided by financing activities..... 21,193 159,843 345,248
------- -------- --------
Effect of exchange rate changes on cash........... -- -- 396
------- -------- --------
Net increase in cash and cash equivalents......... 6,747 47,735 241,372
Cash and cash equivalents at beginning of year.... 596 7,343 55,078
------- -------- --------
Cash and cash equivalents at end of year.......... $ 7,343 $ 55,078 $296,450
======= ======== ========
Supplementary schedule of noncash investing and
financing activities:
Conversion of stockholder's Convertible Secured
Subordinated Notes to Series A Convertible
Preferred Stock................................. -- $ 3,657 --
Amounts recorded in connection with acquisitions
(see Note 2):
Fair value of net assets acquired, including
goodwill and other intangible assets........... 10,958 197,235 431,453
Issuance of common stock........................ -- 57,189 420,964
Issuance of long-term debt...................... -- 78,102 --
Assumption of long-term debt.................... -- 27,982 --
Amounts due to seller........................... 33 -- --
Supplemental disclosure of cash flow information:
Interest paid.................................... $ 1,442 $ 7,533 $ 6,276
Income taxes paid................................ -- 26 446
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands of dollars, except share amounts)
<TABLE>
<CAPTION>
Class A Class B Class A
Common Stock Common Stock Common Stock Common Stock
---------------------- ---------------------- ---------------------- ---------------------
Additional
Paid-In
Shares ($.01 Par) Shares ($.01 Par) Shares ($.01 Par) Shares ($.01 Par) Capital
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January
1, 1996.......... 1,350,000 $ 3 1,433,330 $ 3 -- $ -- -- $ -- $ 634
Issuances of
capital stock... -- -- 55,000 -- -- -- -- -- 128
Net loss........ -- -- -- -- -- -- -- -- --
---------- ------- ---------- -------- ---------- ---- ---------- ---- --------
Balance, December
31, 1996......... 1,350,000 3 1,488,330 3 -- -- -- -- 762
Issuances of
capital stock... -- -- 8,228,835 17 -- -- -- -- 57,696
Purchase of
capital stock... (308,435) (1) (350,000) (1) -- -- -- -- (210)
Foreign currency
translation
adjustments..... -- -- -- -- -- -- -- -- --
Dividends on
preferred
stock........... -- -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- --
---------- ------- ---------- -------- ---------- ---- ---------- ---- --------
Balance, December
31, 1997......... 1,041,565 2 9,367,165 19 -- -- -- -- 58,248
Conversion of
preferred stock
to Common
Stock........... -- -- -- -- 38,517,865 385 -- -- 164,712
Conversion of
Class A Common
Stock and Class
B Common
Stock to Common
Stock........... (1,041,565) (2) (9,367,165) (19) 10,953,625 109 -- -- (88)
Issuances of
capital stock... -- -- -- -- 33,793,453 338 11,340,000 113 560,779
Purchase of
capital stock... -- -- -- -- (141,070) (1) -- -- (882)
Non-cash
compensation
charges......... -- -- -- -- -- -- -- -- 12,384
Foreign currency
translation
adjustments..... -- -- -- -- -- -- -- -- --
Dividends on
preferred
stock........... -- -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- --
---------- ------- ---------- -------- ---------- ---- ---------- ---- --------
Balance, December
31, 1998......... -- $ -- -- $ -- 83,123,873 $831 11,340,000 $113 $795,153
========== ======= ========== ======== ========== ==== ========== ==== ========
<CAPTION>
Cumulative
Foreign
Currency
Translation Accumulated
Adjustment Deficit Total
----------- ----------- ---------
<S> <C> <C> <C>
Balance, January
1, 1996.......... $ -- $ (21) $ 619
Issuances of
capital stock... -- -- 128
Net loss........ -- (957) (957)
----------- ----------- ---------
Balance, December
31, 1996......... -- (978) (210)
Issuances of
capital stock... -- -- 57,713
Purchase of
capital stock... -- (1,920) (2,132)
Foreign currency
translation
adjustments..... 562 -- 562
Dividends on
preferred
stock........... -- (2,199) (2,199)
Net loss........ -- (11,942) (11,942)
----------- ----------- ---------
Balance, December
31, 1997......... 562 (17,039) 41,792
Conversion of
preferred stock
to Common
Stock........... -- -- 165,097
Conversion of
Class A Common
Stock and Class
B Common
Stock to Common
Stock........... -- -- --
Issuances of
capital stock... -- -- 561,230
Purchase of
capital stock... -- -- (883)
Non-cash
compensation
charges......... -- -- 12,384
Foreign currency
translation
adjustments..... 1,128 -- 1,128
Dividends on
preferred
stock........... -- (5,411) (5,411)
Net loss........ -- (37,775) (37,775)
----------- ----------- ---------
Balance, December
31, 1998......... $1,690 $(60,225) $737,562
=========== =========== =========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Crown Castle
International Corp. and its majority and wholly owned subsidiaries,
collectively referred to herein as the "Company." All significant intercompany
balances and transactions have been eliminated in consolidation. Certain
reclassifications have been made to the prior year's financial statements to
be consistent with the presentation in the current year.
The Company owns, operates and manages wireless communications sites and
broadcast transmission networks. The Company also provides complementary
services to its customers, including network design, radio frequency
engineering, site acquisition, site development and construction, antenna
installation and network management and maintenance. The Company's
communications sites are located throughout the United States, in Puerto Rico
and in the United Kingdom. In the United States and Puerto Rico, the Company's
primary business is the leasing of antenna space to wireless operators under
long-term contracts. In the United Kingdom, the Company's primary business is
the operation of television and radio broadcast transmission networks; the
Company also leases antenna space to wireless operators in the United Kingdom.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities as of the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Summary of Significant Accounting Policies
Cash Equivalents
Cash equivalents consist of highly liquid investments with original
maturities of three months or less.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method.
Property and Equipment
Property and equipment is stated at cost, net of accumulated depreciation.
Depreciation is computed utilizing the straight-line method at rates based
upon the estimated useful lives of the various classes of assets. Additions,
renewals and improvements are capitalized, while maintenance and repairs are
expensed. Upon the sale or retirement of an asset, the related cost and
accumulated depreciation are removed from the accounts and any gain or loss is
recognized.
In March 1995, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
("SFAS 121"). SFAS 121 requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. SFAS 121 was effective for fiscal years beginning after December
15, 1995. The adoption of SFAS 121 by the Company in 1996 did not have a
material impact on its consolidated financial statements.
F-7
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Goodwill and Other Intangible Assets
Goodwill and other intangible assets represents the excess of the purchase
price for an acquired business over the allocated value of the related net
assets (see Note 2). Goodwill is amortized on a straight-line basis over a
twenty year life. Other intangible assets (principally the value of existing
site rental contracts at Crown Communications) are amortized on a straight-
line basis over a ten year life. The carrying value of goodwill and other
intangible assets will be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of the acquired assets may
not be recoverable. If the sum of the estimated future cash flows
(undiscounted) expected to result from the use and eventual disposition of an
asset is less than the carrying amount of the asset, an impairment loss is
recognized. Measurement of an impairment loss is based on the fair value of
the asset.
Deferred Financing Costs
Costs incurred to obtain financing are deferred and amortized over the
estimated term of the related borrowing. At December 31, 1997, other accrued
liabilities includes $1,160,000 of such costs related to the issuance of the
Company's 10 5/8% Senior Discount Notes.
Revenue Recognition
Site rental revenues are recognized on a monthly basis under lease or
management agreements with terms ranging from 12 months to 25 years. Broadcast
transmission revenues are recognized on a monthly basis under transmission
contracts with terms ranging from 8 years to 12 years.
Network services revenues from site development, construction and antennae
installation activities are recognized under a method which approximates the
completed contract method. This method is used because these services are
typically completed in three months or less and financial position and results
of operations do not vary significantly from those which would result from use
of the percentage-of-completion method. These services are considered complete
when the terms and conditions of the contract or agreement have been
substantially completed. Costs and revenues associated with installations not
complete at the end of a period are deferred and recognized when the
installation becomes operational. Any losses on contracts are recognized at
such time as they become known.
Network services revenues from design, engineering, site acquisition, and
network management and maintenance activities are recognized under service
contracts with customers which provide for billings on a time and materials,
cost plus profit, or fixed price basis. Such contracts typically have terms
from six months to two years. Revenues are recognized as services are
performed with respect to the time and materials contracts. Revenues are
recognized using the percentage-of-completion method for cost plus profit and
fixed price contracts, measured by the percentage of contract costs incurred
to date compared to estimated total contract costs. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined.
Corporate Development Expenses
Corporate development expenses represent costs incurred in connection with
acquisitions and development of new business initiatives.
Income Taxes
The Company accounts for income taxes using an asset and liability approach,
which requires the recognition of deferred income tax assets and liabilities
for the expected future tax consequences of events that
F-8
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
have been recognized in the Company's financial statements or tax returns.
Deferred income tax assets and liabilities are determined based on the
temporary differences between the financial statement and tax bases of assets
and liabilities using enacted tax rates.
Per Share Information
Per share information is based on the weighted-average number of common
shares outstanding during each period for the basic computation and, if
dilutive, the weighted-average number of potential common shares resulting
from the assumed conversion of outstanding stock options, warrants and
convertible preferred stock for the diluted computation.
A reconciliation of the numerators and denominators of the basic and diluted
per share computations is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1996 1997 1998
------ -------- --------
(In thousands of
dollars,
except per share
amounts)
<S> <C> <C> <C>
Net loss........................................ $ (957) $(11,942) $(37,775)
Dividends on preferred stock.................... -- (2,199) (5,411)
------ -------- --------
Net loss applicable to common stock for basic
and diluted computations....................... $ (957) $(14,141) $(43,186)
====== ======== ========
Weighted-average number of common shares
outstanding during the period for basic and
diluted computations (in thousands)............ 3,503 6,238 42,518
====== ======== ========
Loss per common share--basic and diluted........ $(0.27) $ (2.27) $ (1.02)
====== ======== ========
</TABLE>
The calculations of common shares outstanding for the diluted computations
exclude the following potential common shares as of December 31, 1998: (i)
options to purchase 16,585,197 shares of common stock at exercise prices
ranging from $-0- to $17.625 per share; (ii) warrants to purchase 1,314,990
shares of common stock at an exercise price of $7.50 per share; and (iii)
shares of Castle Transmission Services (Holdings) Ltd ("CTI") stock which are
convertible into 17,443,500 shares of common stock. The inclusion of such
potential common shares in the diluted per share computations would be
antidilutive since the Company incurred net losses for each of the three years
in the period ended December 31, 1998.
Foreign Currency Translation
CTI uses the British pound as the functional currency for its operations.
The Company translates CTI's results of operations using the average exchange
rate for the period, and translates CTI's assets and liabilities using the
exchange rate at the end of the period. The cumulative effect of changes in
the exchange rate is recorded as a translation adjustment in stockholders'
equity.
Financial Instruments
The carrying amount of cash and cash equivalents approximates fair value for
these instruments. The estimated fair value of the 10 % Senior Discount Notes
and the 9% Guaranteed Bonds is based on quoted market prices, and the
estimated fair value of the other long-term debt is determined based on the
current rates offered for similar borrowings. The estimated fair value of the
interest rate swap agreement is based on the amount that
F-9
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
the Company would receive or pay to terminate the agreement at the balance
sheet date. The estimated fair values of the Company's financial instruments,
along with the carrying amounts of the related assets (liabilities), are as
follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1998
------------------ ------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Cash and cash equivalents............. $ 55,078 $ 55,078 $296,450 $296,450
Long-term debt........................ (156,293) (161,575) (429,710) (443,379)
Interest rate swap agreement.......... -- (97) -- (47)
</TABLE>
The Company's interest rate swap agreement is used to manage interest rate
risk. The net settlement amount resulting from this agreement is recognized as
an adjustment to interest expense. The Company does not hold or issue
derivative financial instruments for trading purposes.
Stock Options
In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). SFAS 123
establishes alternative methods of accounting and disclosure for employee
stock-based compensation arrangements. The Company has elected to continue the
use of the "intrinsic value based method" of accounting for its employee stock
option plans (see Note 9). This method does not result in the recognition of
compensation expense when employee stock options are granted if the exercise
price of the options equals or exceeds the fair market value of the stock at
the date of grant. See Note 9 for the disclosures required by SFAS 123.
Recent Accounting Pronouncements
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, Reporting Comprehensive Income ("SFAS 130"). SFAS 130 establishes
standards for the reporting and display of comprehensive income in a company's
financial statements. Comprehensive income includes all changes in a company's
equity accounts (including net income or loss) except investments by, or
distributions to, the company's owners. Items which are components of
comprehensive income (other than net income or loss) include foreign currency
translation adjustments, minimum pension liability adjustments and unrealized
gains and losses on certain investments in debt and equity securities. The
components of comprehensive income must be reported in a financial statement
that is displayed with the same prominence as other financial statements. SFAS
130 is effective for fiscal years beginning after December 15, 1997. The
Company has adopted the requirements of SFAS 130 in its financial statements
for 1998.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information
("SFAS 131"). SFAS 131 establishes standards for the way that public companies
report, in their annual financial statements, certain information about their
operating segments, their products and services, the geographic areas in which
they operate and their major customers. SFAS 131 also requires that certain
information about operating segments be reported in interim financial
statements. SFAS 131 is effective for periods beginning after December 15,
1997. The Company has adopted the requirements of SFAS 131 in its financial
statements for the year ended December 31, 1998 (see Note 13).
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5 requires
that costs of start-up activities be charged to expense as incurred and
broadly defines such
F-10
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
costs. The Company has deferred certain costs incurred in connection with
potential business initiatives and new geographic markets, and SOP 98-5 will
require that such deferred costs be charged to results of operations upon its
adoption. SOP 98-5 is effective for fiscal years beginning after December 15,
1998. The Company will adopt the requirements of SOP 98-5 as of January 1,
1999. The cumulative effect of the change in accounting principle for the
adoption of SOP 98-5 will result in a charge to results of operations in the
Company's financial statements for the three months ending March 31, 1999; it
is currently estimated that such charge will amount to approximately
$2,300,000.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS
133"). SFAS 133 requires that derivative instruments be recognized as either
assets or liabilities in the consolidated balance sheet based on their fair
values. Changes in the fair values of such derivative instruments will be
recorded either in results of operations or in other comprehensive income,
depending on the intended use of the derivative instrument. The initial
application of SFAS 133 will be reported as the effect of a change in
accounting principle. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The Company will adopt the requirements
of SFAS 133 in its financial statements for the three months ending March 31,
2000. The Company has not yet determined the effect that the adoption of SFAS
133 will have on its consolidated financial statements.
2. Acquisitions
During the three years in the period ended December 31, 1998, the Company
consummated a number of business acquisitions which were accounted for using
the purchase method. Results of operations and cash flows of the acquired
businesses are included in the consolidated financial statements for the
periods subsequent to the respective dates of acquisition.
Motorola, Inc. ("Motorola")
On June 28, 1996, the Company acquired fifteen telecommunications towers and
related assets, and assets related to specialized mobile radio and microwave
services, from Motorola in Puerto Rico. The purchase price consisted of
$9,919,000 in cash. Motorola provided certain management services related to
these assets for a period of ninety days after the closing date. Management
fees for such services amounted to $57,000 for the year ended December 31,
1996.
Other Acquisitions
During 1996, the Company acquired a number of other telecommunications
towers and related equipment from various sellers. The aggregate total
purchase price for these acquisitions of $1,039,000 consisted of $1,006,000 in
cash and a $33,000 payable to a seller.
TEA Group Incorporated and TeleStructures, Inc. (collectively, "TEA")
On May 12, 1997, the Company acquired all of the common stock of TEA. TEA
provides telecommunications site selection, acquisition, design and
development services. The purchase price of $14,215,000 consisted of
$8,120,000 in cash (of which $2,001,000 was paid in 1996 as an option
payment), promissory notes payable to the former stockholders of TEA totaling
$1,872,000, the assumption of $1,973,000 in outstanding debt and 535,710
shares of the Company's Class B Common Stock valued at $2,250,000 (the
estimated fair value of such common stock on that date). The Company
recognized goodwill of $9,568,000 in connection with this acquisition. The
Company repaid the promissory notes with a portion of the proceeds from the
issuance of its 10 5/8% Senior Discount Notes (see Note 5).
F-11
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Crown Communications ("CCM"), Crown Network Systems, Inc. ("CNS") and Crown
Mobile Systems, Inc. ("CMS") (collectively, "Crown")
On July 11, 1997, the Company entered into an asset purchase and merger
agreement with the owners of Crown. On August 15, 1997, such agreement was
amended and restated, and the Company acquired (i) substantially all of the
assets, net of outstanding liabilities, of CCM and (ii) all of the outstanding
common stock of CNS and CMS. Crown provides network services, which includes
site selection and acquisition, antenna installation, site development and
construction, network design and site maintenance, and owns and operates
telecommunications towers and related assets. The purchase price of
$185,021,000 consisted of $27,843,000 in cash, a short-term promissory note
payable to the former owners of Crown for $76,230,000, the assumption of
$26,009,000 in outstanding debt and 7,325,000 shares of the Company's Class B
Common Stock valued at $54,939,000 (the estimated fair value of such common
stock on that date). The Company recognized goodwill and other intangible
assets of $146,103,000 in connection with this acquisition. The Company
financed the cash portion of the purchase price with proceeds from the
issuance of redeemable preferred stock (see Note 8), and repaid the promissory
note with proceeds from the issuance of additional redeemable preferred stock
and borrowings under the Senior Credit Facility (see Note 5).
In 1997, the Company organized Crown Communication Inc. ("CCI," a Delaware
corporation) as a wholly owned subsidiary to own the net assets acquired from
CCM and the common stock of CNS and CMS. In January 1998, the Company merged
Castle Tower Corporation ("CTC," a wholly owned operating subsidiary) with and
into CCI, establishing CCI as the principal domestic operating subsidiary of
the Company.
CTI
On April 24, 1998, the Company entered into a share exchange agreement with
certain shareholders of CTI pursuant to which certain of CTI's shareholders
agreed to exchange their shares of CTI for shares of the
Company. On August 18, 1998, the exchange was consummated and the Company's
ownership of CTI increased from approximately 34.3% to 80%. The Company issued
20,867,700 shares of its Common Stock and 11,340,000 shares of its Class A
Common Stock, with such shares valued at an aggregate of $418,700,000 (based
on the price per share to the public in the Company's initial public offering
as discussed in Note 9). The Company recognized goodwill of $344,204,000 in
connection with this transaction, which was accounted for as an acquisition
using the purchase method. CTI's results of operations and cash flows are
included in the consolidated financial statements for the period subsequent to
the date the exchange was consummated.
Pro Forma Results of Operations (Unaudited)
The following unaudited pro forma summary presents consolidated results of
operations for the Company as if (i) the TEA and Crown acquisitions had been
consummated as of January 1, 1997 and (ii) the share exchange with CTI's
shareholders had been consummated as of January 1 for both 1997 and 1998.
Appropriate adjustments have been reflected for depreciation and amortization,
interest expense, amortization of deferred financing costs, income taxes and
certain nonrecurring income and expenses recorded by the Company in connection
with the investment in CTI in 1997 (see Note 4). The pro forma information
does not necessarily reflect the actual results that would have been achieved,
nor is it necessarily indicative of future consolidated results for the
Company.
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1997 1998
------------ ------------
(In thousands of dollars,
except per share amounts)
<S> <C> <C> <C>
Net revenues................................. $ 180,936 $ 210,041
Net loss..................................... (34,601) (46,517)
Loss per common share--basic and diluted..... (0.60) (0.72)
</TABLE>
F-12
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Agreement with Nextel Communications, Inc. ("Nextel")
On July 11, 1997, the Company entered into an agreement with Nextel (the
"Nextel Agreement") whereby the Company has the option to purchase up to 50 of
Nextel's existing towers which are located in Texas, Florida and the
metropolitan areas of Denver, Colorado and Philadelphia, Pennsylvania. As of
February 24, 1999, the Company had purchased 49 of such towers for an
aggregate price of $11,019,000 in cash.
Millennium Communications Limited ("Millennium")
On October 8, 1998, the Company acquired all of the outstanding shares of
Millennium. Millennium develops, owns and operates telecommunications towers
and related assets in the United Kingdom. On the date of acquisition,
Millennium owned 102 tower sites. Millennium is being operated as a subsidiary
of CTI. The purchase price of $14,473,000 consisted of $9,813,000 in cash, the
repayment of $2,396,000 in outstanding debt and 358,678 shares of the
Company's common stock valued at $2,264,000 (the market value of such common
stock on that date).
Agreement with Bell Atlantic Mobile ("BAM")
On December 8, 1998, the Company entered into an agreement with BAM to form
a joint venture ("Crown Atlantic") to own and operate a significant majority
of BAM's towers. Upon formation of Crown Atlantic (which is currently expected
to occur in March 1999), (i) the Company will contribute to Crown Atlantic
$250,000,000 in cash and 15,575,046 shares of its Common Stock in exchange for
a 62.3% ownership interest in Crown Atlantic, (ii) Crown Atlantic will borrow
$180,000,000 under a committed $250,000,000 revolving credit facility, and
(iii) BAM will contribute to Crown Atlantic approximately 1,427 towers in
exchange for a cash distribution of $380,000,000 from Crown Atlantic and a
37.7% ownership interest in Crown Atlantic. Upon dissolution of
Crown Atlantic, BAM would receive (i) the shares of the Company's Common Stock
contributed to Crown Atlantic and (ii) a payment (either in cash or in shares
of the Company's Common Stock, at the Company's election) equal to 14.0% of
the fair market value of Crown Atlantic's other net assets; the Company would
then receive the remaining assets and liabilities of Crown Atlantic. The
Company will account for its investment in Crown Atlantic as an acquisition
using the purchase method, and will include Crown Atlantic's results of
operations and cash flows in the Company's consolidated financial statements
for periods subsequent to formation.
3. Property and Equipment
The major classes of property and equipment are as follows:
<TABLE>
<CAPTION>
Estimated December 31,
Useful -----------------
Lives 1997 1998
---------- ------- --------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Land and buildings......................... 0-50 years $ 1,930 $ 58,767
Telecommunications towers and broadcast
transmission equipment.................... 5-20 years 76,847 532,907
Transportation and other equipment......... 3-10 years 4,379 11,452
Office furniture and equipment............. 5-7 years 3,664 12,248
------- --------
86,820 615,374
Less: accumulated depreciation............. (4,852) (22,780)
------- --------
$81,968 $592,594
======= ========
</TABLE>
Depreciation expense for the years ended December 31, 1997 and 1998 was
$2,886,000 and $20,638,000, respectively. Accumulated depreciation on
telecommunications towers and broadcast transmission equipment
F-13
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
was $4,136,000 and $15,995,000 at December 31, 1997 and 1998, respectively. At
December 31, 1998, minimum rentals receivable under existing operating leases
for towers are as follows: years ending December 31, 1999--$183,244,000;
2000--$187,311,000; 2001--$185,097,000; 2002--$179,641,000; 2003--
$171,329,000; thereafter--$667,731,000.
4. Investments in Affiliates
Investment in CTI
On February 28, 1997, the Company used a portion of the net proceeds from
the sale of the Series C Convertible Preferred Stock (see Note 8) to purchase
an ownership interest of approximately 34.3% in CTI (a company incorporated
under the laws of England and Wales). The Company led a consortium of
investors which provided the equity financing for CTI. The funds invested by
the consortium were used by CTI to purchase, through a wholly owned
subsidiary, the domestic broadcast transmission division of the British
Broadcasting Corporation (the "BBC"). The cost of the Company's investment in
CTI amounted to approximately $57,542,000. The Company accounted for its
investment in CTI utilizing the equity method of accounting prior to the
consummation of the share exchange agreement with CTI's shareholders in August
1998 (see Note 2).
In March 1997, as compensation for leading the investment consortium, the
Company received a fee from CTI amounting to approximately $1,165,000. This
fee was recorded as other income by the Company when received. In addition,
the Company received approximately $1,679,000 from CTI as reimbursement for
costs incurred prior to the closing of the purchase from the BBC.
In June 1997, as compensation for the successful completion of the
investment in CTI and certain other acquisitions and investments, the Company
paid bonuses to two of its executive officers totaling $913,000. These bonuses
are included in corporate development expenses on the Company's consolidated
statement of operations.
Summarized financial information for CTI is as follows (for periods in which
the Company accounted for CTI utilizing the equity method):
<TABLE>
<CAPTION>
December 31,
1997
-------------
(In thousands
of dollars)
-------------
<S> <C>
Current assets.................................................... $ 37,510
Property and equipment, net....................................... 341,737
Goodwill, net..................................................... 76,029
---------
$ 455,276
=========
Current liabilities............................................... $ 48,103
Long-term debt.................................................... 237,299
Other liabilities................................................. 3,453
Redeemable preferred stock........................................ 174,944
Stockholders' equity (deficit).................................... (8,523)
---------
$ 455,276
=========
</TABLE>
F-14
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Ten Months
Ended Eight Months
December 31, Ended August
1997 31, 1998
------------ ------------
(In thousands of dollars)
<S> <C> <C>
Net revenues..................................... $103,531 $97,228
Operating expenses............................... 86,999 78,605
-------- -------
Operating income................................. 16,532 18,623
Interest and other income........................ 553 725
Interest expense and amortization of deferred
financing costs................................. (20,404) (13,378)
Provision for income taxes....................... -- --
-------- -------
Net income (loss)................................ $ (3,319) $(5,970)
======== =======
</TABLE>
5. Long-term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1998
------------ ------------
(In thousands of dollars)
<S> <C> <C>
Senior Credit Facility........................... $ 4,700 $ 5,500
10 5/8% Senior Discount Notes due 2007, net of
discount........................................ 151,593 168,099
CTI Credit Facility.............................. -- 55,177
9% Guaranteed Bonds due 2007..................... -- 200,934
------------ ------------
$ 156,293 $ 429,710
============ ============
</TABLE>
Senior Credit Facility
CTC had a credit agreement with a bank (as amended, the "Bank Credit
Agreement") which consisted of secured revolving lines of credit (the
"Revolving Credit Facility") and a $2,300,000 term note (the "Term Note"). On
January 17, 1997, the Bank Credit Agreement was amended to: (i) increase the
available borrowings under the Revolving Credit Facility to $50,000,000; (ii)
repay the Term Note, along with accrued interest thereon, with borrowings
under the Revolving Credit Facility; and (iii) extend the termination date for
the Bank Credit Agreement to December 31, 2003. Available borrowings under the
Revolving Credit Facility were generally to be used to construct new towers
and to finance a portion of the purchase price for towers and related assets.
The amount of available borrowings was determined based on the current
financial performance (as defined) of: (i) the assets to be acquired; and (ii)
assets acquired in previous acquisitions. In addition, up to $5,000,000 of
borrowing availability under the Revolving Credit Facility could be used for
letters of credit.
In October 1997, the Bank Credit Agreement was amended to (i) increase the
available borrowings to $100,000,000; (ii) include the lending bank under
Crown's bank credit agreement as a participating lender; and (iii) extend the
maturity date to December 31, 2004 (as amended, the "Senior Credit Facility").
On October 31, 1997, additional borrowings under the Senior Credit Facility,
along with the proceeds from the October issuance of Senior Preferred Stock
(see Note 8), were used to repay (i) the promissory note payable to the former
stockholders of Crown and (ii) the outstanding borrowings under Crown's bank
credit agreement (see Note 2). In November 1997, the Company repaid all of the
outstanding borrowings under the Senior Credit Facility with a portion of the
proceeds from the issuance of its 10 5/8% Senior Discount Notes (as discussed
below). Upon the merger of CTC into CCI in January 1998, CCI became the
primary borrower under the Senior Credit Facility. In December 1998, the
Company again repaid all of the outstanding borrowings under the Senior Credit
Facility
F-15
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
with a portion of the proceeds from the issuance of its 12 3/4% Senior
Exchangeable Preferred Stock (see Note 8). As of December 31, 1998,
approximately $77,570,000 of borrowings was available under the Senior Credit
Facility, of which $5,000,000 was available for letters of credit. There were
no letters of credit outstanding as of December 31, 1998.
The amount of available borrowings under the Senior Credit Facility will
decrease by $5,000,000 at the end of each calendar quarter beginning on March
31, 2001 until December 31, 2004, at which time any remaining borrowings must
be repaid. Under certain circumstances, CCI may be required to make principal
prepayments under the Senior Credit Facility in an amount equal to 50% of
excess cash flow (as defined), the net cash proceeds from certain asset sales
or the net cash proceeds from certain sales of equity or debt securities by
the Company.
The Senior Credit Facility is secured by substantially all of the assets of
CCI and the Company's pledge of the capital stock of CCI and its subsidiaries.
In addition, the Senior Credit Facility is guaranteed by the Company.
Borrowings under the Senior Credit Facility bear interest at a rate per annum,
at the Company's election, equal to the bank's prime rate plus 1.5% or a
Eurodollar interbank offered rate (LIBOR) plus 3.25% (9.25% and 8.32%,
respectively, at December 31, 1998). The interest rate margins may be reduced
by up to 2.25% (non-cumulatively) based on a financial test, determined
quarterly. As of December 31, 1998, the financial test permitted a reduction
of 1.5% in the interest rate margin for prime rate borrowings and 2.25% in the
interest rate margin for LIBOR borrowings. Interest on prime rate loans is due
quarterly, while interest on LIBOR loans is due at the end of the period (from
one to three months) for which such LIBOR rate is in effect. The Senior Credit
Facility requires CCI to maintain certain financial covenants and places
restrictions on CCI's ability to, among other things, incur debt and liens,
pay dividends, make capital expenditures, dispose of assets, undertake
transactions with affiliates and make investments.
10 5/8% Senior Discount Notes due 2007 (the "Notes")
On November 25, 1997, the Company issued $251,000,000 aggregate principal
amount of the Notes for cash proceeds of $150,010,000 (net of original issue
discount). The Company used a portion of the net proceeds from the sale of the
Notes to (i) repay all of the outstanding borrowings, including accrued
interest thereon, under the Senior Credit Facility; (ii) repay the promissory
notes payable, including accrued interest thereon, to the former stockholders
of TEA (see Note 2); (iii) repay certain indebtedness, including accrued
interest thereon, from a prior acquisition; and (iv) repay outstanding
installment debt assumed in connection with the Crown acquisition (see Note
2).
The Notes will not pay any interest until May 15, 2003, at which time semi-
annual interest payments will commence and become due on each May 15 and
November 15 thereafter. The maturity date of the Notes is November 15, 2007.
The Notes are net of unamortized discount of $99,407,000 and $82,901,000 at
December 31, 1997 and 1998, respectively.
The Notes are redeemable at the option of the Company, in whole or in part,
on or after November 15, 2002 at a price of 105.313% of the principal amount
plus accrued interest. The redemption price is reduced annually until November
15, 2005, after which time the Notes are redeemable at par. Prior to November
15, 2000, the Company may redeem up to 35% of the aggregate principal amount
of the Notes, at a price of 110.625% of the accreted value thereof, with the
net cash proceeds from a public offering of the Company's common stock.
The Notes are senior indebtedness of the Company; however, they are
unsecured and effectively subordinate to the liabilities of the Company's
subsidiaries, which include outstanding borrowings under the Senior Credit
Facility, the CTI Credit Facility and the CTI Bonds. The indenture governing
the Notes (the "Indenture") places
F-16
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
restrictions on the Company's ability to, among other things, pay dividends
and make capital distributions, make investments, incur additional debt and
liens, issue additional preferred stock, dispose of assets and undertake
transactions with affiliates. As of December 31, 1998, the Company was
effectively precluded from paying dividends on its capital stock under the
terms of the Indenture.
Reporting Requirements Under the Indenture (Unaudited)
The following information (as such capitalized terms are defined in the
Indenture) is presented solely as a requirement of the Indenture; such
information is not intended as an alternative measure of financial position,
operating results or cash flow from operations (as determined in accordance
with generally accepted accounting principles). Furthermore, the Company's
measure of the following information may not be comparable to similarly titled
measures of other companies.
Upon consummation of the share exchange with CTI's shareholders (see Note
2), which increased the Company's ownership interest in CTI to 80%, the
Company designated CTI as an Unrestricted Subsidiary. In addition, the net
proceeds from the Company's initial public offering of common stock (see Note
9) were placed into a newly formed subsidiary that was also designated as an
Unrestricted Subsidiary. Prior to these transactions, the Company did not have
any Unrestricted Subsidiaries. Summarized financial information for (i) the
Company and its Restricted Subsidiaries and (ii) the Company's Unrestricted
Subsidiaries is as follows:
<TABLE>
<CAPTION>
December 31, 1998
----------------------------------------------------
Company and
Restricted Unrestricted Consolidation Consolidated
Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------- ------------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Cash and cash
equivalents............ $ 41,785 $ 254,665 $ -- $ 296,450
Other current assets.... 19,585 26,081 -- 45,666
Property and equipment,
net.................... 165,205 427,389 -- 592,594
Investments in
Unrestricted
Subsidiaries........... 744,941 -- (744,941) --
Goodwill and other
intangible assets,
net.................... 143,729 426,011 -- 569,740
Other assets, net....... 15,440 3,340 -- 18,780
---------- ---------- --------- ----------
$1,130,685 $1,137,486 $(744,941) $1,523,230
========== ========== ========= ==========
Current liabilities..... $ 17,653 $ 75,234 $ -- $ 92,887
Long-term debt.......... 173,599 256,111 -- 429,710
Other liabilities....... 808 22,015 -- 22,823
Minority interests...... -- 39,185 -- 39,185
Redeemable preferred
stock.................. 201,063 -- -- 201,063
Stockholders' equity.... 737,562 744,941 (744,941) 737,562
---------- ---------- --------- ----------
$1,130,685 $1,137,486 $(744,941) $1,523,230
========== ========== ========= ==========
</TABLE>
F-17
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Three Months Ended December 31, 1998 Year Ended December 31, 1998
-------------------------------------- --------------------------------------
Company and Company and
Restricted Unrestricted Consolidated Restricted Unrestricted Consolidated
Subsidiaries Subsidiaries Total Subsidiaries Subsidiaries Total
------------ ------------ ------------ ------------ ------------ ------------
(In thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Net revenues............ $ 17,030 $43,787 $60,817 $ 55,023 $58,055 $113,078
Costs of operations
(exclusive of
depreciation and
amortization).......... 7,069 18,117 25,186 23,446 24,372 47,818
General and
administrative......... 6,883 1,666 8,549 21,153 2,418 23,571
Corporate development... 1,787 -- 1,787 4,625 -- 4,625
Non-cash compensation
charges................ 523 874 1,397 9,907 2,851 12,758
Depreciation and
amortization........... 4,879 15,255 20,134 16,921 20,318 37,239
-------- ------- ------- -------- ------- --------
Operating income
(loss)................. (4,111) 7,875 3,764 (21,029) 8,096 (12,933)
Equity in earnings of
unconsolidated
affiliate.............. -- -- -- 2,055 -- 2,055
Interest and other
income (expense)....... (285) 2,212 1,927 1,101 3,119 4,220
Interest expense and
amortization of
deferred financing
costs.................. (5,823) (5,685) (11,508) (21,727) (7,362) (29,089)
Provision for income
taxes (156) -- (156) (374) -- (374)
Minority interests...... -- (1,326) (1,326) -- (1,654) (1,654)
-------- ------- ------- -------- ------- --------
Net loss................ $(10,375) $ 3,076 $(7,299) $(39,974) $ 2,199 $(37,775)
======== ======= ======= ======== ======= ========
</TABLE>
Tower Cash Flow and Adjusted Consolidated Cash Flow for the Company and its
Restricted Subsidiaries is as follows:
<TABLE>
<CAPTION>
(In
thousands
of
dollars)
---------
<S> <C>
Tower Cash Flow, for the three months ended December 31, 1998...... $ 3,868
========
Consolidated Cash Flow, for the twelve months ended December 31,
1998.............................................................. $ 6,001
Less: Tower Cash Flow, for the twelve months ended December 31,
1998.............................................................. (14,811)
Plus: four times Tower Cash Flow, for the three months ended
December 31, 1998................................................. 15,472
--------
Adjusted Consolidated Cash Flow, for the twelve months ended
December 31, 1998................................................. $ 6,662
========
</TABLE>
CTI Credit Facility
CTI has a credit agreement with a syndicate of banks (as amended, the "CTI
Credit Facility") which consists of a (Pounds)64,000,000 (approximately
$106,419,000) secured revolving line of credit. Available borrowings under the
CTI Credit Facility are generally to be used to finance capital expenditures
and for working capital and general corporate purposes. As of December 31,
1998, approximately $51,243,000 of borrowings was available under the CTI
Credit Facility.
The loan commitment under the CTI Credit Facility will be automatically
reduced to zero in three equal semi-annual installments beginning on May 31,
2001 until May 31, 2002, when the CTI Credit Facility matures. Under certain
circumstances, CTI may be required to make principle prepayments from the
proceeds of certain asset sales.
F-18
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The CTI Credit Facility is secured by substantially all of CTI's assets.
Borrowings under the CTI Credit Facility bear interest at a rate per annum
equal to a Eurodollar interbank offered rate (LIBOR) plus 0.85% (approximately
6.99% at December 31, 1998). Interest is due at the end of the period (from
one to six months) for which such LIBOR rate is in effect. The CTI Credit
Facility requires CTI to maintain certain financial covenants and places
restrictions on CTI's ability to, among other things, incur debt and liens,
pay dividends, make capital expenditures, dispose of assets, undertake
transactions with affiliates and make investments.
9% Guaranteed Bonds due 2007 ("CTI Bonds")
CTI has issued (Pounds)125,000,000 (approximately $207,850,000) aggregate
principal amount of the CTI Bonds. Interest payments on the CTI Bonds are due
annually on each March 30. The maturity date of the CTI Bonds is March 30,
2007. The CTI Bonds are stated net of unamortized discount.
The CTI Bonds are redeemable, at the option of CTI, in whole or in part at
any time, at the greater of their principal amount and such a price as will
provide a gross redemption yield 0.5% per annum above the gross redemption
yield on the benchmark gilt plus, in either case, accrued and unpaid interest.
Under certain circumstances, each holder of the CTI Bonds has the right to
require CTI to repurchase all or a portion of such holder's CTI Bonds at a
price equal to 101% of their aggregate principal amount plus accrued and
unpaid interest.
The CTI Bonds are guaranteed by CTI; however, they are unsecured and
effectively subordinate to the outstanding borrowings under the CTI Credit
Facility. The trust deed governing the CTI Bonds places restrictions on CTI's
ability to, among other things, pay dividends and make capital distributions,
make investments, incur additional debt and liens, dispose of assets and
undertake transactions with affiliates.
Restricted Net Assets of Subsidiaries
Under the terms of the Senior Credit Facility, the CTI Credit Facility and
the CTI Bonds, the Company's subsidiaries are limited in the amount of
dividends which can be paid to the Company. For CCI, the amount of such
dividends is limited to (i) $6,000,000 per year until October 31, 2002, and
$33,000,000 per year thereafter, and (ii) an amount to pay income taxes
attributable to the Company's Restricted Subsidiaries. CTI is effectively
precluded from paying dividends. The restricted net assets of the Company's
subsidiaries totaled approximately $826,321,000 at December 31, 1998.
Interest Rate Swap Agreement
The interest rate swap agreement had an outstanding notional amount of
$17,925,000 at January 29, 1997 (inception) and terminated on February 24,
1999. The Company paid a fixed rate of 6.28% on the notional amount and
received a floating rate based on LIBOR. This agreement effectively changed
the interest rate on $17,925,000 of borrowings under the Senior Credit
Facility from a floating rate to a fixed rate of 6.28% plus the applicable
margin. The Company does not believe there is any significant exposure to
credit risk due to the creditworthiness of the counterparty. In the event of
nonperformance by the counterparty, the Company's loss would be limited to any
unfavorable interest rate differential.
F-19
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Income Taxes
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Years Ended December
31,
------------------------
1996 1997 1998
----- ------- --------
(In thousands of
dollars)
<S> <C> <C> <C>
Current:
State............................................ $ -- $ -- $ 365
Puerto Rico...................................... 10 49 9
----- ------- --------
$ 10 $ 49 $ 374
===== ======= ========
A reconciliation between the provision for income taxes and the amount
computed by applying the federal statutory income tax rate to the loss before
income taxes is as follows:
<CAPTION>
Years Ended December
31,
------------------------
1996 1997 1998
----- ------- --------
(In thousands of
dollars)
<S> <C> <C> <C>
Benefit for income taxes at statutory rate......... $(322) $(4,044) $(12,154)
Stock-based compensation........................... -- -- 2,844
Amortization of intangible assets.................. -- 478 604
State and foreign taxes, net of federal tax
benefit........................................... -- -- 247
Expenses for which no federal tax benefit was
recognized........................................ 5 28 151
Puerto Rico taxes.................................. 10 49 9
Acquisition costs.................................. -- -- (675)
Foreign earnings not subject to tax................ -- -- (584)
Changes in valuation allowances.................... 315 3,650 9,944
Other.............................................. 2 (112) (12)
----- ------- --------
$ 10 $ 49 $ 374
===== ======= ========
</TABLE>
F-20
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The components of the net deferred income tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1998
------------ -------------
(In thousands of dollars)
<S> <C> <C>
Deferred income tax liabilities:
Property and equipment........................... $ 2,487 $ 6,045
Puerto Rico earnings............................. 75 84
Intangible assets................................ 276 --
Other............................................ 38 --
------------ -------------
Total deferred income tax liabilities.......... 2,876 6,129
------------ -------------
Deferred income tax assets:
Net operating loss carryforwards................. 6,800 19,071
Noncompete agreement............................. 37 464
Intangible assets................................ -- 351
Accrued liabilities.............................. -- 68
Other............................................ -- 45
Receivables allowance............................ 6 41
Valuation allowances............................. (3,967) (13,911)
------------ -------------
Total deferred income tax assets, net.......... 2,876 6,129
------------ -------------
Net deferred income tax liabilities................ $ -- $ --
============ =============
</TABLE>
Valuation allowances of $3,967,000 and $13,911,000 were recognized to offset
net deferred income tax assets as of December 31, 1997 and 1998, respectively.
At December 31, 1998, the Company has net operating loss carryforwards of
approximately $56,000,000 which are available to offset future federal taxable
income. These loss carryforwards will expire in 2010 through 2018. The
utilization of the loss carryforwards is subject to certain limitations.
7. Minority Interests
Minority interests represent the minority stockholder's interest in CTI.
8. Redeemable Preferred Stock
Exchangeable Preferred Stock
On December 16, 1998, the Company issued 200,000 shares of its 12 3/4%
Senior Exchangeable Preferred Stock due 2010 (the "Exchangeable Preferred
Stock") at a price of $1,000 per share (the liquidation preference per share).
The net proceeds received by the Company from the sale of such shares amounted
to approximately $193,000,000 (after underwriting discounts of $7,000,000 but
before other expenses of the offering, which amounted to approximately
$8,059,000). A portion of the net proceeds was used to repay outstanding
borrowings under the Senior Credit Facility of $73,750,000, and the remaining
net proceeds are currently invested in short-term investments.
The holders of the Exchangeable Preferred Stock are entitled to receive
cumulative dividends at the rate of 12 3/4% per share, compounded quarterly on
each March 15, June 15, September 15 and December 15 of each
F-21
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
year, beginning on March 15, 1999. On or before December 15, 2003, the Company
has the option to pay dividends in cash or in additional shares of
Exchangeable Preferred Stock. After December 15, 2003, dividends are payable
only in cash.
The Company is required to redeem all outstanding shares of Exchangeable
Preferred Stock on December 15, 2010 at a price equal to the liquidation
preference plus accumulated and unpaid dividends. On or after December 15,
2003, the shares are redeemable at the option of the Company, in whole or in
part, at a price of 106.375% of the liquidation preference. The redemption
price is reduced on an annual basis until December 15, 2007, at which time the
shares are redeemable at the liquidation preference. Prior to December 15,
2001, the Company may redeem up to 35% of the Exchangeable Preferred Stock, at
a price of 112.75% of the liquidation preference, with the net proceeds from
certain public equity offerings. The shares of Exchangeable Preferred Stock
are exchangeable, at the option of the Company, in whole but not in part, for
12 3/4% Senior Subordinated Exchange Debentures due 2010.
The Company's obligations with respect to the Exchangeable Preferred Stock
are subordinate to all indebtedness of the Company (including the Notes), and
are effectively subordinate to all debt and liabilities of the Company's
subsidiaries (including the Senior Credit Facility, the CTI Credit Facility
and the CTI Bonds). The certificate of designations governing the Exchangeable
Preferred Stock places restrictions on the Company's ability to, among other
things, pay dividends and make capital distributions, make investments, incur
additional debt and liens, issue additional preferred stock, dispose of assets
and undertake transactions with affiliates.
Senior Preferred Stock
In August 1997, the Company issued 292,995 shares of its Senior Convertible
Preferred Stock (the "Senior Preferred Stock") at a price of $100 per share.
The net proceeds received by the Company from the sale of such shares amounted
to approximately $29,266,000, most of which was used to pay the cash portion
of the purchase price for Crown (see Note 2). In October 1997, the Company
issued an additional 364,500 shares of its Senior Preferred Stock at a price
of $100 per share. The net proceeds received by the Company from the sale of
such shares amounted to $36,450,000. This amount, along with borrowings under
the Senior Credit Facility, was used to repay the promissory note from the
Crown acquisition (see Note 2).
The holders of the Senior Preferred Stock were entitled to receive
cumulative dividends at the rate of 12.5% per share, compounded annually. At
the option of the holder, each share of Senior Preferred Stock (plus any
accrued and unpaid dividends) was convertible, at any time, into shares of the
Company's common stock at a conversion price of $7.50 (subject to adjustment
in the event of an underwritten public offering of the Company's common
stock). At the date of issuance of the Senior Preferred Stock, the Company
believes that its conversion price represented the estimated fair value of the
common stock on that date. In July 1998, all of the shares of Senior Preferred
Stock were converted into shares of common stock (see Note 9).
The purchasers of the Senior Preferred Stock were also issued warrants to
purchase an aggregate 1,314,990 shares of the Company's common stock at an
exercise price of $7.50 per share (subject to adjustment in the event of an
underwritten public offering of the Company's common stock). The warrants are
exercisable, in whole or in part, at any time until August and October of
2007. At the date of issuance of the warrants, the Company believes that the
exercise price represented the estimated fair value of the common stock on
that date. As such, the Company has not assigned any value to the warrants in
its consolidated financial statements.
Series Preferred Stock
The holders of the Company's Series A Convertible Preferred Stock (the
"Series A Preferred Stock"), the Series B Convertible Preferred Stock (the
"Series B Preferred Stock") and the Series C Convertible Preferred Stock (the
"Series C Preferred Stock") (collectively, the "Series Preferred Stock") were
entitled to receive
F-22
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
dividends, if and when declared, at the same rate as dividends were declared
and paid with respect to the Company's common stock. Each of the outstanding
shares of Series Preferred Stock was automatically converted into five shares
of common stock upon consummation of the Company's initial public offering
(see Note 9).
In February and April of 1997, the Company issued 3,529,832 shares of its
Series C Preferred Stock at a price of $21.00 per share. The net proceeds
received by the Company from the sale of the Series C Preferred Stock amounted
to approximately $74,024,000. A portion of this amount was used to purchase
the ownership interest in CTI (see Note 4).
9. Stockholders' Equity
Common Stock
On August 18, 1998, the Company consummated its initial public offering of
common stock at a price to the public of $13 per share (the "IPO"). The
Company sold 12,320,000 shares of its common stock and received proceeds of
$151,043,000 (after underwriting discounts of $9,117,000 but before other
expenses of the IPO, which amounted to approximately $4,116,000). The net
proceeds from the IPO are currently invested in short-term investments.
In anticipation of the IPO, the Company (i) amended and restated the 1995
Stock Option Plan to, among other things, authorize the issuance of up to
18,000,000 shares of common stock pursuant to awards made thereunder and (ii)
approved an amendment to its certificate of incorporation to increase the
number of authorized shares of common and preferred stock to 690,000,000
shares and 10,000,000 shares, respectively, and to effect a five-for-one stock
split for the shares of common stock then outstanding. The effect of the stock
split has been presented retroactively in the Company's consolidated financial
statements for all periods presented.
In July 1998, all of the holders of the Company's Senior Convertible
Preferred Stock converted such shares into an aggregate of 9,629,200 shares of
the Company's common stock. Upon consummation of the IPO, all of the holders
of the Company's then-existing shares of Class A Common Stock, Class B Common
Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock and Series C Convertible Preferred Stock converted such shares into an
aggregate of 39,842,290 shares of the Company's common stock.
In March 1997, the Company repurchased, and subsequently retired, 814,790
shares of its common stock from a member of the Company's Board of Directors
at a cost of approximately $3,422,000. Of this amount, $1,311,000 was recorded
as compensation cost and is included in corporate development expense on the
Company's consolidated statement of operations. In August 1998, the Company
repurchased, and subsequently retired, 141,070 shares of its common stock from
a former employee at a cost of approximately $883,000.
Class A Common Stock
Upon consummation of the share exchange agreement with CTI's shareholders
(see Note 2), an affiliate of CTI's remaining minority shareholder received
all of the currently outstanding shares of the Company's Class A Common Stock.
Each share of Class A Common Stock is convertible, at the option of its holder
at any time, into one share of Common Stock. The holder of the Class A Common
Stock is entitled to one vote per share on all matters presented to a vote of
the Company's shareholders, except with respect to the election of directors.
The holder of the Class A Common Stock, voting as a separate class, has the
right to elect up to two members of the Company's Board of Directors. The
shares of Class A Common Stock also provide certain governance and anti-
dilutive rights.
F-23
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Compensation Charges Related to Stock Option Grants
During the period from April 24, 1998 through July 15, 1998, the Company
granted options to employees and executives for the purchase of 3,236,980
shares of its common stock at an exercise price of $7.50 per share. Of such
options, options for 1,810,730 shares vested upon consummation of the IPO and
the remaining options for 1,426,250 shares will vest at 20% per year over five
years, beginning one year from the date of grant. In addition, the Company has
assigned its right to repurchase shares of its common stock from a stockholder
(at a price of $6.26 per share) to two individuals (including a newly-elected
director) with respect to 100,000 of such shares. Since the granting of these
options and the assignment of these rights to repurchase shares occurred
subsequent to the date of the share exchange agreement with CTI's shareholders
and at prices substantially below the price to the public in the IPO, the
Company has recorded a non-cash compensation charge related to these options
and shares based upon the difference between the respective exercise and
purchase prices and the price to the public in the IPO. Such compensation
charge will total approximately $18.4 million, of which approximately $10.6
million was recognized upon consummation of the IPO (for such options and
shares which vested upon consummation of the IPO), and the remaining $7.8
million is being recognized over five years (approximately $1.6 million per
year) through the second quarter of 2003. An additional $1.6 million in non-
cash compensation charges will be recognized through the third quarter of 2001
for stock options issued to certain members of CTI's management prior to the
consummation of the share exchange.
Stock Options
In 1995, the Company adopted the Crown Castle International Corp. 1995 Stock
Option Plan (as amended, the "1995 Stock Option Plan"). Up to 18,000,000
shares of the Company's common stock were reserved for awards granted to
certain employees, consultants and non-employee directors of the Company and
its subsidiaries or affiliates. These options generally vest over periods of
up to five years from the date of grant (as determined by the Company's Board
of Directors) and have a maximum term of ten years from the date of grant.
Upon consummation of the share exchange agreement with CTI's shareholders
(see Note 2), the Company adopted each of the various CTI stock option plans.
All outstanding options to purchase shares of CTI under such plans have been
converted into options to purchase shares of the Company's common stock. Up to
4,392,451 shares of the Company's common stock were reserved for awards
granted under the CTI plans, and these options generally vest over periods of
up to three years from the date of grant.
F-24
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A summary of awards granted under the various stock option plans is as
follows for the years ended December 31, 1996, 1997 and 1998:
<TABLE>
<CAPTION>
1996 1997 1998
------------------- -------------------- ---------------------
Weighted- Weighted- Weighted-
Average Average Average
Number of Exercise Number of Exercise Number of Exercise
Shares Price Shares Price Shares Price
--------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of year...... 825,000 $0.53 1,050,000 $0.89 3,694,375 $4.69
Options granted......... 225,000 2.22 3,042,500 5.46 9,024,720 10.02
Options outstanding
under CTI stock option
plans.................. -- -- -- -- 4,367,202 2.74
Options exercised....... -- -- (363,125) 0.53 (216,650) 4.89
Options forfeited....... -- -- (35,000) 1.20 (284,450) 5.72
--------- --------- ----------
Options outstanding at
end of year............ 1,050,000 0.89 3,694,375 4.69 16,585,197 7.06
========= ========= ==========
Options exercisable at
end of year............ 721,250 0.43 728,875 2.49 7,615,649 4.75
========= ========= ==========
</TABLE>
In November 1996, options which were granted in 1995 for the purchase of
690,000 shares were modified such that those options became fully vested. In
August 1998, certain outstanding options became fully or partially vested upon
consummation of the IPO. A summary of options outstanding as of December 31,
1998 is as follows:
<TABLE>
<CAPTION>
Weighted-
Average
Number of Remaining Number of
Exercise Options Contractual Options
Prices Outstanding Life Exercisable
-------- ----------- ----------- -----------
<S> <C> <C> <C>
$ -0- to $ 0.40 677,108 7.0 years 494,709
1.20 to 1.60 123,750 7.1 years 123,750
2.37 to 3.09 3,316,600 7.8 years 2,266,600
4.01 to 6.00 2,607,621 8.2 years 1,833,960
7.50 to 7.77 5,694,692 9.3 years 2,821,630
10.04 to 12.50 450,426 9.9 years --
13.00 3,590,000 9.6 years 75,000
17.63 125,000 10.0 years --
---------- ---------
16,585,197 9.1 years 7,615,649
========== =========
</TABLE>
The weighted-average fair value of options granted during the years ended
December 31, 1996, 1997 and 1998 was $0.50, $1.30 and $4.54, respectively. The
fair value of each option was estimated on the date of grant using the Black-
Scholes option-pricing model and the following weighted-average assumptions
about the options (the minimum value method was used prior to the IPO):
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Risk-free interest rate......................... 6.4% 6.1% 5.38%
Expected life................................... 4.0 years 4.5 years 3.6 years
Expected volatility............................. 0% 0% 0% to 30%
Expected dividend yield......................... 0% 0% 0%
</TABLE>
F-25
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The exercise prices for options granted during the years ended December 31,
1996 and 1997 were equal to or in excess of the estimated fair value of the
Company's common stock at the date of grant. As such, no compensation cost was
recognized for stock options during those years (see Note 1 and "Compensation
Charges Related to Stock Option Grants"). If compensation cost had been
recognized for stock options based on their fair value at the date of grant,
the Company's pro forma net loss for the years ended December 31, 1996, 1997
and 1998 would have been $973,000 ($0.28 per share), $12,586,000 ($2.37 per
share) and $75,660,000 ($1.91 per share), respectively. The pro forma effect
of stock options on the Company's net loss for those years may not be
representative of the pro forma effect for future years due to the impact of
vesting and potential future awards.
Shares Reserved For Issuance
At December 31, 1998, the Company had the following shares reserved for
future issuance:
<TABLE>
<S> <C>
Common Stock:
Class A Common Stock........................................... 11,340,000
Shares of CTI stock which are convertible into common stock.... 17,443,500
Stock option plans............................................. 21,812,676
Warrants....................................................... 1,314,990
----------
51,911,166
==========
</TABLE>
10. Employee Benefit Plans
The Company and its subsidiaries have various defined contribution savings
plans covering substantially all employees. Depending on the plan, employees
may elect to contribute up to 20% of their eligible compensation. Certain of
the plans provide for partial matching of such contributions. The cost to the
Company for these plans amounted to $98,000 and $197,000 for the years ended
December 31, 1997 and 1998, respectively.
CTI has a defined benefit plan which covers all of its employees hired on or
before March 1, 1997. Employees hired after that date are not eligible to
participate in this plan. The net periodic pension cost attributable to this
plan for the four months ended December 31, 1998 was $1,115,000. As of
December 31, 1998, (i) the accumulated benefit obligation under this plan
amounted to $13,635,000 (all of which was vested); (ii) the projected benefit
obligation amounted to $15,298,000; (iii) the fair value of the plan's assets
amounted to $15,848,000; and (iv) the prepaid pension cost attributable to
this plan amounted to $1,704,000.
11. Related Party Transactions
The Company leases office space in a building formerly owned by its Chief
Executive Officer. Lease payments for such office space amounted to $50,000
and $130,000 for the years ended December 31, 1996 and 1997, respectively.
Included in other receivables at December 31, 1997 and 1998 are amounts due
from employees of the Company totaling $499,000 and $368,000, respectively.
12. Commitments and Contingencies
At December 31, 1998, minimum rental commitments under operating leases are
as follows: years ending December 31, 1999--$19,721,000; 2000--$19,456,000;
2001--$19,298,000; 2002--$19,293,000; 2003--$18,996,000; thereafter--
$112,848,000. Rental expense for operating leases was $277,000, $1,712,000 and
$9,620,000 for the years ended December 31, 1996, 1997 and 1998, respectively.
F-26
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company is involved in various claims, lawsuits and proceedings arising
in the ordinary course of business. While there are uncertainties inherent in
the ultimate outcome of such matters and it is impossible to presently
determine the ultimate costs that may be incurred, management believes the
resolution of such uncertainties and the incurrence of such costs should not
have a material adverse effect on the Company's consolidated financial
position or results of operations.
13. Operating Segments and Concentrations of Credit Risk
Operating Segments
The Company's reportable operating segments for 1998 are (i) the domestic
operations of CCI and (ii) the United Kingdom operations of CTI. Financial
results for the Company are reported to management and the Board of Directors
in this manner, and much of the Company's current debt financing is structured
along these geographic lines. In addition, the Company's financial performance
is evaluated by outside securities analysts based on these operating segments.
See Note 1 for a description of the primary revenue sources from these two
segments.
As discussed in Note 2, CTI's results of operations are included in the
Company's consolidated financial statements beginning in 1998. Prior to that
time, the domestic operations of CCI represented the Company's only reportable
segment.
F-27
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The measurement of profit or loss currently used to evaluate the results of
operations for the Company and its operating segments is earnings before
interest, taxes, depreciation and amortization ("EBITDA"). The Company defines
EBITDA as operating income (loss) plus depreciation and amortization and non-
cash compensation charges. EBITDA is not intended as an alternative measure of
operating results or cash flow from operations (as determined in accordance
with generally accepted accounting principles), and the Company's measure of
EBITDA may not be comparable to similarly titled measures of other companies.
There are no significant revenues resulting from transactions between the
Company's operating segments. Total assets for the Company's operating
segments are determined based on the separate consolidated balance sheets for
CCI and CTI. The results of operations and financial position for CTI reflect
appropriate adjustments for their presentation in accordance with generally
accepted accounting principles in the United States. The financial results for
the Company's operating segments are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-------------------------------------------
Corporate
Office Consolidated
CCI CTI and Other Total
-------- -------- --------- ------------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Net revenues:
Site rental and broadcast
transmission................... $ 22,541 $ 52,487 $ -- $ 75,028
Network services and other...... 31,471 5,568 1,011 38,050
-------- -------- -------- ----------
54,012 58,055 1,011 113,078
-------- -------- -------- ----------
Costs of operations (exclusive of
depreciation and amortization)... 23,076 24,372 370 47,818
General and administrative........ 17,929 2,418 3,224 23,571
Corporate development............. -- -- 4,625 4,625
-------- -------- -------- ----------
EBITDA............................ 13,007 31,265 (7,208) 37,064
Non-cash compensation charges..... 132 2,851 9,775 12,758
Depreciation and amortization..... 16,202 20,318 719 37,239
-------- -------- -------- ----------
Operating income (loss)........... (3,327) 8,096 (17,702) (12,933)
Equity in earnings of
unconsolidated affiliate -- -- 2,055 2,055
Interest and other income
(expense)........................ (253) 294 4,179 4,220
Interest expense and amortization
of deferred financing costs...... (4,476) (7,362) (17,251) (29,089)
Provision for income taxes........ (374) -- -- (374)
Minority interests................ -- (1,654) -- (1,654)
-------- -------- -------- ----------
Net loss.......................... $ (8,430) $ (626) $(28,719) $ (37,775)
======== ======== ======== ==========
Capital expenditures.............. $ 84,911 $ 50,224 $ 3,624 $ 138,759
======== ======== ======== ==========
Total assets (at year end)........ $332,555 $887,938 $302,737 $1,523,230
======== ======== ======== ==========
Investments in affiliates (at year
end)............................. $ -- $ -- $ 2,258 $ 2,258
======== ======== ======== ==========
</TABLE>
F-28
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------
1996 1997
------------------------------- ---------------------------------
Corporate Corporate
Office Consolidated Office Consolidated
CCI and Other Total CCI and Other Total
------- --------- ------------ -------- --------- ------------
(In thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Net revenues:
Site rental and
broadcast
transmission......... $ 5,615 $ -- $ 5,615 $ 11,010 $ -- $ 11,010
Network services and
other................ 592 -- 592 20,066 329 20,395
------- ------- ------- -------- -------- --------
6,207 -- 6,207 31,076 329 31,405
------- ------- ------- -------- -------- --------
Costs of operations
(exclusive of
depreciation and
amortization).......... 1,300 -- 1,300 15,350 -- 15,350
General and
administrative......... 1,678 -- 1,678 6,675 149 6,824
Corporate development... 75 1,249 1,324 1,864 3,867 5,731
------- ------- ------- -------- -------- --------
EBITDA.................. 3,154 (1,249) 1,905 7,187 (3,687) 3,500
Depreciation and
amortization 1,242 -- 1,242 6,925 27 6,952
------- ------- ------- -------- -------- --------
Operating income
(loss)................. 1,912 (1,249) 663 262 (3,714) (3,452)
Equity in earnings
(losses) of
unconsolidated
affiliate.............. -- -- -- -- (1,138) (1,138)
Interest and other
income (expense)....... 22 171 193 (77) 2,028 1,951
Interest expense and
amortization of
deferred financing
costs.................. (1,803) -- (1,803) (4,660) (4,594) (9,254)
Credit (provision) for
income taxes........... (59) 49 (10) -- (49) (49)
------- ------- ------- -------- -------- --------
Net income (loss)....... $ 72 $(1,029) $ (957) $ (4,475) $ (7,467) $(11,942)
======= ======= ======= ======== ======== ========
Capital expenditures.... $ 890 $ -- $ 890 $ 17,200 $ 835 $ 18,035
======= ======= ======= ======== ======== ========
Total assets (at year
end)................... $250,911 $120,480 $371,391
======== ======== ========
Investments in
affiliates (at year
end)................... $ -- $ 59,082 $ 59,082
======== ======== ========
</TABLE>
Geographic Information
A summary of net revenues by country, based on the location of the Company's
subsidiary, is as follows:
<TABLE>
<CAPTION>
Years Ended December
31,
-----------------------
1996 1997 1998
------ ------- --------
(In thousands of
dollars)
<S> <C> <C> <C>
United States....................................... $5,050 $29,076 $ 51,807
Puerto Rico......................................... 1,157 2,329 2,470
------ ------- --------
Total domestic operations......................... 6,207 31,405 54,277
------ ------- --------
United Kingdom...................................... -- -- 58,055
Other foreign countries............................. -- -- 746
------ ------- --------
Total for all foreign countries................... -- -- 58,801
------ ------- --------
$6,207 $31,405 $113,078
====== ======= ========
</TABLE>
F-29
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A summary of long-lived assets by country of location is as follows:
<TABLE>
<CAPTION>
December 31,
-------------------
1997 1998
-------- ----------
(In thousands of
dollars)
<S> <C> <C>
United States........................................... $237,125 $ 310,953
Puerto Rico............................................. 10,145 14,473
-------- ----------
Total domestic operations............................. 247,270 325,426
-------- ----------
United Kingdom.......................................... 56,965 855,560
Other foreign countries................................. -- 128
-------- ----------
Total for all foreign countries....................... 56,965 855,688
-------- ----------
$304,235 $1,181,114
======== ==========
</TABLE>
Major Customers
For the years ended December 31, 1996, 1997 and 1998, CCI had revenues from
a single customer amounting to $2,634,000, $5,998,000 and $14,168,000,
respectively. For the year ended December 31, 1998, consolidated net revenues
includes $33,044,000 from a single customer of CTI.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations
of credit risk are primarily cash and cash equivalents and trade receivables.
The Company mitigates its risk with respect to cash and cash equivalents by
maintaining such deposits at high credit quality financial institutions and
monitoring the credit ratings of those institutions.
The Company derives the largest portion of its revenues from customers in
the wireless telecommunications industry. In addition, the Company has
concentrations of operations in certain geographic areas (primarily the United
Kingdom, Pennsylvania, Texas, New Mexico, Arizona and Puerto Rico). The
Company mitigates its concentrations of credit risk with respect to trade
receivables by actively monitoring the creditworthiness of its customers.
Historically, the Company has not incurred any significant credit related
losses.
14. Quarterly Financial Information (Unaudited)
Summary quarterly financial information for the years ended December 31,
1997 and 1998 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
(In thousands of dollars, except per
share amounts)
<S> <C> <C> <C> <C>
1997:
Net revenues................. $ 1,994 $ 4,771 $11,481 $13,159
Operating income (loss)...... (1,293) (921) 61 (1,299)
Net loss..................... (443) (1,706) (4,001) (5,792)
Loss per common share--basic
and diluted................. (0.13) (0.51) (0.62) (0.69)
1998:
Net revenues................. $11,837 $11,530 $28,894 $60,817
Operating income (loss)...... (2,494) (2,197) (12,006) 3,764
Net loss..................... (6,606) (6,426) (17,444) (7,299)
Loss per common share--basic
and diluted................. (0.79) (0.78) (0.33) (0.09)
</TABLE>
F-30
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
15. Subsequent Events (Unaudited)
BellSouth Mobility Inc. and BellSouth Telecommunications Inc. ("BellSouth")
In March 1999, the Company entered into an agreement with BellSouth to
acquire the operating rights for approximately 1,850 of their towers. The
transaction is structured as a lease agreement and will be treated as a sale
of the towers for tax purposes. The Company will pay BellSouth consideration
of $610,000,000, consisting of $430,000,000 in cash and $180,000,000 in shares
of its common stock. The Company will account for this transaction as a
purchase of tower assets. The transaction is expected to close over a period
of up to eight months beginning in the second quarter of 1999. Upon entering
into the agreement, the Company placed $50,000,000 into an escrow account. In
order to fund this escrow deposit, the Company borrowed $45,000,000 under the
Senior Credit Facility.
Powertel, Inc. ("Powertel")
In March 1999, the Company entered into an agreement with Powertel to
purchase approximately 650 of their towers and related assets. The purchase
price for these towers will be $275,000,000 in cash. The Company will account
for this transaction as an acquisition using the purchase method. Upon
entering into the agreement, the Company placed $50,000,000 into an escrow
account. The Company funded this escrow deposit with borrowings under a
$100,000,000 loan agreement provided by a syndicate of investment banks. The
remaining $50,000,000 of borrowings under this loan agreement were used to
repay the amount drawn under the Senior Credit Facility in connection with the
BellSouth escrow deposit.
Proposed Securities Offerings
The Company intends to offer shares of its common stock and debt securities
in concurrent underwritten public offerings. The proceeds from such offerings
would be used to repay amounts drawn under the loan agreement in connection
with the BellSouth and Powertel transactions, and to pay the remaining
purchase price for such transactions. Any securities will only be offered by
means of a prospectus forming a part of a registration statement filed with
the Securities and Exchange Commission. There can be no assurance that such
securities offerings can be successfully completed.
F-31
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Castle Transmission Services (Holdings) Ltd:
We have audited the accompanying balance sheet of the BBC Home Service
Transmission business ("Home Service") at March 31, 1996 and the consolidated
balance sheets of Castle Transmission Services (Holdings) Ltd and its
subsidiaries ("Castle Transmission") at March 31, 1997 and December 31, 1997
and the profit and loss accounts, cash flow statements and reconciliations of
movements in corporate funding for Home Service for the year ended March 31,
1996 and the period from April 1, 1996 to February 27, 1997 and the related
consolidated profit and loss accounts, cash flow statements and
reconciliations of movements in shareholders' funds for Castle Transmission
for the period from February 28, 1997 to March 31, 1997 and the period from
April 1, 1997 to December 31, 1997. These financial statements are the
responsibility of Castle Transmission's and Home Service's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom, which do not differ in any material respect
from generally accepted auditing standards in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Home Service at March 31,
1996 and the consolidated financial position of Castle Transmission at March
31, 1997 and December 31, 1997 and the results of operations and cash flows of
Home Service for the year ended March 31, 1996 and for the period from April
1, 1996 to February 27, 1997 and of Castle Transmission for the period from
February 28, 1997 to March 31, 1997 and for the period from April 1, 1997 to
December 31, 1997 in conformity with generally accepted accounting principles
in the United Kingdom.
Generally accepted accounting principles in the United Kingdom vary in
certain respects from generally accepted accounting principles in the United
States. Application of generally accepted accounting principles in the United
States would have affected results of operations for the year ended March 31,
1996 and the period from April 1, 1996 to February 27, 1997 for Home Service
and the period from February 28, 1997 to March 31, 1997 and from April 1, 1997
to December 31, 1997 for Castle Transmission and shareholders' equity at
March 31, 1996 for Home Service and at March 31, 1997 and December 31, 1997
for Castle Transmission to the extent summarised in Note 27 to these financial
statements.
KPMG
Chartered Accountants
Registered Auditor
London, England
March 31, 1998
F-32
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
<TABLE>
<CAPTION>
Castle Transmission Services
BBC Home Service Transmission (Holdings) Ltd
-------------------------------------- --------------------------------------
Period Period Period
from April 1, Two from from April 1, Eight
1996 Months February 28, 1997 Months
Year Ended to Ended 1997 to Ended
March 31, February 27, February 27, to March 31, December 31, August 31,
Note 1996 1997 1997 1997 1997 1998
------ ----------- ------------- ------------ ------------ ------------- -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Turnover................ 3 70,367 70,614 12,805 6,433 56,752 59,033
Changes in stocks and
work in progress....... (635) (554) (150) 340 747 (1,279)
Own work capitalised.... 4,653 3,249 308 170 1,127 2,440
Raw materials and
consumables............ 14 (1,155) (387) (446) (2,410) (281)
Other external charges.. (34,750) (26,191) (4,130) (1,668) (13,811) (14,900)
Staff costs............. 4 (17,197) (16,131) (3,104) (1,421) (14,345) (16,032)
Depreciation and other
amounts written off
tangible and intangible
assets................. 5 (12,835) (13,038) (2,464) (1,819) (16,854) (15,594)
Other operating
charges................ (1,832) (2,792) (181) (344) (2,430) (2,175)
------- ------- ------- ------ ------- -------
(62,582) (56,612) (10,108) (5,188) (47,976) (47,821)
Operating profit........ 7,785 14,002 2,697 1,245 8,776 11,212
Other interest
receivable and similar
income................. -- -- -- 49 288 440
Interest payable and
similar charges........ 7 -- -- -- (969) (12,419) (9,507)
------- ------- ------- ------ ------- -------
Profit/(loss) on
ordinary activities
before and after
taxation............... 3-6, 8 7,785 14,002 2,697 325 (3,355) 2,145
Additional finance cost
of non-equity shares... -- -- -- (318) (2,862) --
------- ------- ------- ------ ------- -------
Retained profit/(loss)
for the
period................. 7,785 14,002 2,697 7 (6,217) 2,145
======= ======= ======= ====== ======= =======
</TABLE>
Neither BBC Home Service nor Castle Transmission have any recognised gains or
losses other than those reflected in the profit and loss accounts.
The accompanying notes are an integral part of these consolidated financial
statements.
F-33
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
BBC Home Service Castle Transmission Services
Transmission (Holdings) Ltd
---------------- ------------------------------------------
At March 31, At March 31, At December 31, At August 31,
1996 1997 1997 1998
Note ---------------- ------------ --------------- -------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited)
<S> <C> <C> <C> <C> <C>
Fixed assets
Intangible............ 9 -- 46,573 46,056 44,404
Tangible.............. 10 202,592 206,162 206,134 229,124
------- -------- -------- --------
202,592 252,735 252,190 273,528
Current assets
Stocks................ 11 1,750 807 1,340 2,620
Debtors............... 12 4,714 10,344 13,230 11,639
Amounts owed by group
undertakings......... -- -- -- 1,273
Cash at bank and in
hand................. -- 9,688 8,152 9,198
------- -------- -------- --------
6,464 20,839 22,722 24,730
Creditors: amounts fall-
ing due within one
year................... 13 (6,627) (14,820) (29,139) (36,514)
------- -------- -------- --------
Net current
assets/(liabilities)... (163) 6,019 (6,417) (11,784)
------- -------- -------- --------
Total assets less cur-
rent liabilities....... 202,429 258,754 245,773 261,744
Creditors: amounts fall-
ing due after more than
one year............... 14 -- (154,358) (143,748) (149,535)
Provisions for liabili-
ties and charges....... 15 -- (1,723) (2,157) (2,461)
------- -------- -------- --------
Net assets.............. 202,429 102,673 99,868 109,748
======= ======== ======== ========
Capital and reserves
Corporate funding..... 202,429 -- -- --
Called up share capi-
tal.................. 16 -- 102,348 102,898 108,303
Profit and loss ac-
count................ 17 -- 325 (3,030) 1,445
------- -------- -------- --------
202,429 102,673 99,868 109,748
======= -------- -------- --------
Shareholders'
funds/(deficit)
Equity................ 109 (6,107) 109,748
Non-equity............ 102,564 105,975 --
-------- -------- --------
102,673 99,868 109,748
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-34
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
CONSOLIDATED CASH FLOW STATEMENTS
<TABLE>
<CAPTION>
Castle Transmission Services
BBC Home Service Transmission (Holdings) Ltd
---------------------------------------- ----------------------------------------
Period from Period from Eight
Year Period from Two Months February 28, April 1, Months
Ended April 1, 1996 Ended 1997 1997 Ended
March 31, to February 27, February 27, to March 31, to December 31, August 31,
1996 1997 1997 1997 1997 1998
Note ----------- --------------- ------------ ------------ --------------- -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash inflow from
operating activities... 21 24,311 26,427 5,161 5,756 27,983 37,302
Returns on investment
and servicing of
finance................ 22 -- -- -- (885) (2,428) (10,076)
Capital expenditure and
financial investments.. 22 (17,190) (20,092) (711) (748) (14,361) (36,135)
Acquisitions and
disposals.............. 22 -- -- -- (251,141) (307) --
------- ------- ------ -------- -------- --------
Cash inflow/(outflow)... 7,121 6,335 4,450 (247,018) 10,887 (8,909)
Financing............... 22
Net (decrease) in
corporate funding...... (7,121) (6,335) (4,450) -- -- --
Issuance of shares...... -- -- -- 102,348 550 5,405
Increase/(decrease) in
debt................... -- -- -- 154,358 (12,973) 5,000
Capital element of
finance
lease rentals.......... -- -- -- -- -- (450)
------- ------- ------ -------- -------- --------
(7,121) (6,335) (4,450) 256,706 (12,423) 9,955
------- ------- ------ -------- -------- --------
Increase/(decrease) in
cash................... -- -- -- 9,688 (1,536) 1,046
======= ======= ====== ======== ======== ========
Reconciliation of net
cash flow to movement
in net debt............ 23
Increase/(decrease) in
cash in the period..... -- -- -- 9,688 (1,536) 1,046
Cash (inflow)/outflow
from
(increase)/decrease in
debt................... -- -- -- (154,358) 12,973 (4,550)
------- ------- ------ -------- -------- --------
Change in net debt
resulting from cash
flow................... -- -- -- (144,670) 11,437 (3,504)
New finance leases...... -- -- -- -- (711) (797)
Amortisation of bank
loan issue costs....... -- -- -- -- (2,087) (159)
Amortisation of
Guaranteed Bonds....... -- -- -- -- (55) (179)
------- ------- ------ -------- -------- --------
Movement in net debt in
the period............. -- -- -- (144,670) 8,584 (4,639)
Net debt at beginning of
the period............. -- -- -- -- (144,670) (136,086)
------- ------- ------ -------- -------- --------
Net debt at end of the
period................. -- -- -- (144,670) (136,086) (140,725)
======= ======= ====== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-35
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
CONSOLIDATED RECONCILIATION OF MOVEMENTS IN CORPORATE
FUNDING/SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
Castle Transmission Services
BBC Home Service Transmission (Holdings) Ltd
---------------------------------------- ----------------------------------------
Two Period from Eight
Year Period from Months February 28, Period from Months
Ended April 1, 1996 Ended 1997 April 1, 1997 Ended
March 31, to February 27, February 27, to March 31, to December 31, August 31,
1996 1997 1997 1997 1997 1998
----------- --------------- ------------ ------------ --------------- -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Profit/(loss) for the
period................. 7,785 14,002 2,697 325 (3,355) 2,145
Net (decrease) in
corporate funding...... (7,121) (6,335) (4,450) -- -- --
New share capital
subscribed............. -- -- -- 102,348 550 5,405
Charge on share option
arrangements........... -- -- -- -- -- 2,330
------- ------- ------- ------- ------- -------
Net
additions/(deductions)
to corporate
funding/shareholders'
funds.................. 664 7,667 (1,753) 102,673 (2,805) 9,880
Opening corporate
funding/shareholders'
funds.................. 201,765 202,429 211,849 -- 102,673 99,868
------- ------- ------- ------- ------- -------
Closing corporate
funding/shareholders'
funds.................. 202,429 210,096 210,096 102,673 99,868 109,748
======= ======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-36
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Basis of preparation
As used in the financial statements and related notes, the terms "Castle
Transmission" or "the Group" refers to the operations of Castle Transmission
Services (Holdings) Ltd and its subsidiaries, Castle Transmission
International Ltd ("CTI") which is the successor business and Castle
Transmission (Finance) plc ("CTF"). The term "Home Service" refers to the
operations of the Home Service Transmission business of the British
Broadcasting Corporation ("BBC") which was the predecessor business.
These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") applicable in the
United Kingdom (UK) and comply with the financial reporting standards of the
Institute of Chartered Accountants in England and Wales. A summary of the
differences between UK GAAP and United States (US) GAAP as applicable to
Castle Transmission is set out in Note 27.
Castle Transmission Services (Holdings) Ltd (the "Company") was incorporated
on August 27, 1996 and did not trade in the period to February 27, 1997. CTI
was incorporated by the BBC on May 9, 1996 and did not trade in the period to
February 27, 1997. On February 27, 1997, the assets and liabilities of Home
Service were transferred to CTI. On February 28, 1997 CTI was acquired by the
Company. During the period between August 27, 1996 and February 27, 1997
Castle Transmission did not trade and received no income and incurred no
expenditure. Accordingly the first consolidated profit and loss account for
Castle Transmission represents the trading of Castle Transmission for the
period from February 28, 1997 to March 31, 1997. CTF was incorporated
April 9, 1997.
The financial statements for the year ended March 31, 1996 and the period
from April 1, 1996 to February 27, 1997 represent the profit and loss
accounts, balance sheet, cash flow statements and reconciliations of movements
in corporate funding of Home Service. They have been prepared from the
separate financial records and management accounts of Home Service.
Home Service was charged a management fee by the BBC representing an
allocation of certain costs including pension, information technology,
occupancy and other administration costs which were incurred centrally by the
BBC but which were directly attributable to Home Service. Management believes
such allocation is reasonable. Such costs are based on the pension arrangement
and the cost structure of the BBC and are not necessarily representative of
such costs of Castle Transmission under separate ownership.
Home Service did not incur any costs in relation to financing as necessary
funding was provided from the BBC through the corporate funding account. No
interest is charged by the BBC on such funds because there is no debt at BBC
which is attributable to Home Service.
Home Service was not a separate legal entity and therefore was not directly
subject to taxation on its results. The BBC is a not-for-profit organisation
and is not subject to taxation except to the extent of activities undertaken
with the objective of making a profit, including all external activities
(principally site sharing and commercial projects). The tax charge
attributable to Home Service has been calculated as if Home Service were under
separate ownership since April 1, 1994 and as if all of its results of
operations were subject to normal taxation.
Redundancy costs were incurred by the BBC which related to Home Service
staff. The redundancy costs amounted to (Pounds)1.1m in 1996 and (Pounds)0.6m
in the period from April 1, 1996 to February 27, 1997. The redundancy
programmes were controlled by the BBC and the costs were not recharged to Home
Service. No adjustment has been made in the Home Service financial statements
for these costs because any costs incurred would have been reflected in the
cost base of Home Service, and as described in note 25 would have been off-set
by an increase in turnover from the BBC.
The consolidated financial statements for the two months ended February 27,
1997 and as of and for the eight months ended August 31, 1998 are unaudited;
however, in the opinion of all the directors, all adjustments
F-37
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(consisting of normal recurring adjustments) necessary for a fair presentation
have been made. Accounting measurements at interim dates inherently involve
greater reliance on estimates than at year end. Operating results for the
eight month period ended August 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998.
2 Accounting policies
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the financial
statements of Home Service and the consolidated financial statements of Castle
Transmission.
Basis of consolidation
The consolidated financial statements include the financial statements of
the Company and its subsidiaries made up to March 31, 1997 and December 31,
1997 after elimination of all significant inter-company accounts and
transactions. The acquisition method of accounting has been adopted. Under
this method, the results of subsidiaries acquired or disposed of in the period
are included in the consolidated profit and loss account from the date of
acquisition or up to the date of disposal.
Goodwill
Purchased goodwill on acquisitions (representing the excess of the fair
value of the consideration given over the fair value of the separable net
assets acquired) is capitalised and amortised over 20 years, the period over
which the Directors consider that the Group will derive economic benefits.
Tangible fixed assets and depreciation
Depreciation is provided to write off the cost or valuation less the
estimated residual value of tangible fixed assets by equal instalments over
their estimated useful economic lives as follows:
Land and buildings
<TABLE>
<CAPTION>
Home Service Castle Transmission
-------------- -------------------
<S> <C> <C>
Freehold and long leasehold buildings... 50 years 50 years
Freehold and long leasehold improve-
ments.................................. 20 years 20 years
Short leasehold land and buildings...... Unexpired term Unexpired term
No depreciation is provided on freehold
land...................................
</TABLE>
Plant and equipment
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ -------------------
<S> <C> <C>
Transmitters and power plant............... 25 years 20 years
Electric and mechanical infrastructure..... 10-20 years 10-20 years
Other plant and machinery.................. 3-10 years 3-10 years
Computer equipment......................... 5 years 5 years
Motor vehicles............................. -- 3 years
</TABLE>
Strategic spares, which comprise those spares that are vital to the
operation of the transmission system, are included in the capitalised value of
the asset to which they relate and are depreciated over the life of the asset.
Assets under construction are included within fixed assets. The associated
labour costs are capitalised using a predetermined labour rate, and any over
or under recoveries are recognised in the profit and loss account in the
period in which they arise.
F-38
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Foreign currencies
Transactions in foreign currencies are translated at the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities, to the
extent that they are denominated in foreign currency, are retranslated at the
rate of exchange ruling at the balance sheet date and gains or losses are
included in the profit and loss account.
Leases
Where the Company enters into a lease which entails taking substantially all
the risks and rewards of ownership of an asset, the lease is treated as a
"finance lease'. The asset is recorded in the balance sheet as a tangible
fixed asset and is depreciated over its useful life or term of the lease,
whichever is shorter. Future instalments under such leases, net of finance
charges, are included within creditors. Rentals payable are apportioned
between the finance element, which is charged to the profit and loss account,
and the capital element which reduces the outstanding obligation for future
instalments.
Operating lease rentals are charged to the profit and loss account on a
straight line basis over the period of the lease.
Pensions
The pension costs charged in the period include costs incurred, at the
agreed employer's contribution rate. See note 20 for further details.
Stocks
Stocks held are general maintenance spares and manufacturing stocks. Stocks
are stated at the lower of weighted average cost and net realisable value.
Work in progress
For individual projects, the fees on account and project costs are recorded
in work in progress. When a project is complete, the project balances are
transferred to turnover and cost of sales as appropriate, and the net profit
is recognised. Where the payments on account are in excess of project costs,
these are recorded as payments on account.
Provision is made for any losses as soon as they are foreseen.
Taxation
The charge for taxation is based on the result for the period and takes into
account taxation deferred because of timing differences between the treatment
of certain items for taxation and accounting purposes. Provision is made for
deferred tax only to the extent that it is probable that an actual liability
will crystallise.
Turnover
Turnover represents the amounts (excluding value added tax) derived from the
provision of transmission and maintenance contracts, site sharing arrangements
and commercial projects. Revenue is recognised on the basis of contracts or as
services are provided to customers.
Issue costs
Costs incurred in raising funds are deducted from the amount raised and
amortised over the life of the debt facility on a constant yield basis.
F-39
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3 Analysis of turnover
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------------------ ------------------------------
Period from Period from
April 1, Period from April 1,
Year Ended 1996 to February 28, 1997 1997 to
March 31, February 27, to March 31, December 31,
1996 1997 1997 1997
----------- ------------ ----------------- ------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
By activity
BBC..................... 45,704 49,903 3,982 35,640
Other--non BBC.......... 24,663 20,711 2,451 21,112
------ ------ ----- ------
70,367 70,614 6,433 56,752
====== ====== ===== ======
4 Staff numbers and costs
The average number of persons employed by the Group (including directors)
during the period, analysed by category was as follows:
<CAPTION>
Home Service Castle Transmission
------------------------ ------------------------------
Period from Period from
April 1, Period from April 1,
Year Ended 1996 to February 28, 1997 1997 to
March 31, February 27, to March 31, December 31,
1996 1997 1997 1997
----------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
Operational staff....... 381 357 313 289
Project staff........... 154 125 108 97
Management, finance,
personnel and other
support services....... 53 70 69 89
------ ------ ----- ------
588 552 490 475
====== ====== ===== ======
</TABLE>
The aggregate payroll costs of these persons were as follows:
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------------------ ------------------------------
Period from Period from
April 1, Period from April 1,
Year Ended 1996 to February 28, 1997 1997 to
March 31, February 27, to March 31, December 31,
1996 1997 1997 1997
----------- ------------ ----------------- ------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Wages and salaries...... 15,517 14,579 1,189 12,087
Social security costs... 1,159 1,061 76 768
Other pension costs..... 521 491 156 1,490
------ ------ ----- ------
17,197 16,131 1,421 14,345
====== ====== ===== ======
</TABLE>
F-40
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5 Profit/(loss) on ordinary activities before taxation
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------------------- ------------------------------
Period from Period from
April 1, Period from April 1,
Years Ended 1996 to February 28, 1997 1997 to
March 31, February 27, to March 31, December 31,
1996 1997 1997 1997
----------- ------------- ----------------- ------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Profit (loss) on
ordinary activities
before taxation is
stated after charging:
Depreciation and other
amounts written off
tangible fixed assets:
Owned................... 12,835 13,038 1,624 14,953
Leased.................. -- -- -- 147
Goodwill amortisation... -- -- 195 1,754
Hire of plant and ma-
chinery--rentals pay-
able under operating
leases................. 112 53 79
Hire of other assets--
under operating
leases................. 396 36 530
====== ====== ===== ======
</TABLE>
The information in respect of hire of plant and machinery and other assets
under operating leases is not available for the year ended March 31, 1996.
6 Remuneration of directors
There were no directors of Home Service.
The directors of Castle Transmission received no emoluments for the period
February 28, 1997 to March 31, 1997 and (Pounds)277,000 for the period April
1, 1997 to December 31, 1997. The amounts paid to third parties in respect of
directors' services were (Pounds)2,000 for the period from February 28, 1997
to March 31, 1997 and (Pounds)23,000 for the period from April 1, 1997 to
December 31, 1997.
The aggregate emoluments of the highest paid director were (Pounds)170,000.
The highest paid director is not a member of any Group pension scheme.
Pension entitlements
On retirement the directors participating in the Group defined benefit
scheme are entitled to 1/60th of their final pensionable salary for each year
of service.
F-41
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7 Interest payable and similar charges
<TABLE>
<CAPTION>
Home Service Castle Transmission
---------------------------- ------------------------------
Period from
Period from Period from April 1,
Year Ended April 1, 1996 to February 28, 1997 1997 to
March 31, February 27, to March 31, December 31,
1996 1997 1997 1997
----------- ---------------- ----------------- ------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
On bank loans and over-
drafts................. -- -- 934 3,315
On all other loans...... -- -- -- 6,934
Finance charges payable
in respect of finance
leases and hire pur-
chase contracts........ -- -- -- 28
Finance charges
amortised in respect of
bank loans (see note
14).................... -- -- 35 2,087
Finance charges
amortised in respect of
the Bonds.............. -- -- -- 55
--- --- --- ------
-- -- 969 12,419
=== === === ======
</TABLE>
8 Taxation
Home Service
There is no tax charge in respect of the results of Home Service for the
year ended March 31, 1996 or for the period from April 1, 1996 to February 27,
1997. As a separate legal entity subject to normal taxation, Home Service
would have capital allowances available as discussed below which would result
in taxable losses for all periods. Deferred tax assets have not been
recognised on such tax losses as management has concluded that it is not
likely that the deferred tax asset would be realised.
Castle Transmission
There is no tax charge in respect of the period from February 28, 1997 to
March 31, 1997 and April 1, 1997 to December 31, 1997. Based on an agreement
with the Inland Revenue Service, Castle Transmission will have capital
allowances available on capital expenditure incurred by Home Service and the
BBC prior to the acquisition of approximately (Pounds)179 million. The
accelerated tax deductions associated with such capital allowances result in a
taxable loss for both periods. Deferred tax assets have not been recognised on
such tax losses as management has concluded that it is not likely that the
deferred tax asset would be realised based on the limited operating history of
Castle Transmission.
F-42
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9 Intangible assets
Castle Transmission
<TABLE>
<CAPTION>
As at As at
March 31, December 31,
1997 1997
----------- ------------
(Pounds)000 (Pounds)000
<S> <C> <C>
Goodwill
Cost
At beginning of period............................. -- 46,768
Arising on acquisition of Home Service............. 46,768 --
Adjustment to the allocation of fair value arising
on acquisition of Home Service (see notes 18 and
24)............................................... -- 1,237
------ ------
At end of the period............................... 46,768 48,005
====== ======
Amortisation
At beginning of period............................. -- 195
Charged in period.................................. 195 1,754
------ ------
At end of the period............................... 195 1,949
====== ======
Net book value
At end of the period............................... 46,573 46,056
====== ======
</TABLE>
10 Tangible fixed assets
Home Service
<TABLE>
<CAPTION>
Land and Plant and Computer Assets under
buildings machinery equipment construction Total
----------- ----------- ----------- ------------ -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
(i) Year ended March 31,
1996
Cost or valuation
At April 1, 1995........ 26,789 178,205 1,337 22,309 228,640
Additions............... -- 111 40 17,928 18,079
Disposals............... -- -- (1,325) -- (1,325)
Transfers............... 474 13,354 -- (13,828) --
------ ------- ------ ------- -------
At March 31, 1996....... 27,263 191,670 52 26,409 245,394
------ ------- ------ ------- -------
Depreciation
At April 1, 1995........ 7,291 22,671 441 -- 30,403
Charge for period....... 819 12,008 8 -- 12,835
On disposal............. -- -- (436) -- (436)
------ ------- ------ ------- -------
At March 31, 1996....... 8,110 34,679 13 -- 42,802
------ ------- ------ ------- -------
Net book value
At March 31, 1996....... 19,153 156,991 39 26,409 202,592
====== ======= ====== ======= =======
</TABLE>
F-43
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Land and Plant and Computer Assets under
buildings machinery equipment construction Total
----------- ----------- ----------- ------------ -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
(ii) Period ended
February 27, 1997
Cost or valuation
At April 1, 1996........ 27,263 191,670 52 26,409 245,394
Additions............... -- 24 179 14,283 14,486
Disposals............... -- (1,816) -- (1,718) (3,534)
Transfers............... 2,585 23,972 252 (26,809) --
Transfer between
business units......... 10,824 (2,061) (4) 612 9,371
------ ------- --- ------- -------
At February 27, 1997.... 40,672 211,789 479 12,777 265,717
------ ------- --- ------- -------
Depreciation
At April 1, 1996........ 8,110 34,679 13 -- 42,802
Charge for period....... 807 12,158 73 -- 13,038
On disposal............. -- (1,816) -- -- (1,816)
Transfers............... 46 (108) 62 -- --
Transfers between
business units......... 2,185 (137) (1) -- 2,047
------ ------- --- ------- -------
At February 27, 1997.... 11,148 44,776 147 -- 56,071
------ ------- --- ------- -------
Net book value
At February 27, 1997.... 29,524 167,013 332 12,777 209,646
====== ======= === ======= =======
</TABLE>
The transfers between business units reflect transactions made between the
predecessor business and other business units of the BBC, in preparation for
the sale of Home Service. These include the transfer of the head office at
Warwick into the books of Home Service prior to the sale.
Castle Transmission
<TABLE>
<CAPTION>
Land and Plant and Computer Assets under
buildings machinery equipment construction Total
----------- ----------- ----------- ------------ -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
(i) Period ended March
31, 1997
Cost
On acquisition.......... 30,373 163,556 332 12,777 207,038
Additions............... -- 56 -- 692 748
Transfers............... 17 59 -- (76) --
------ ------- --- ------- -------
At March 31, 1997....... 30,390 163,671 332 13,393 207,786
------ ------- --- ------- -------
Depreciation
On acquisition.......... -- -- -- -- --
Charge for period....... 86 1,529 9 -- 1,624
------ ------- --- ------- -------
At March 31, 1997....... 86 1,529 9 -- 1,624
------ ------- --- ------- -------
Net book value
At March 31, 1997....... 30,304 162,142 323 13,393 206,162
====== ======= === ======= =======
(ii) Period ended
December 31, 1997
Cost
At April 1, 1997........ 30,390 163,671 332 13,393 207,786
Addition................ 10 3,602 582 10,878 15,072
Transfers............... 651 12,772 -- (13,423) --
------ ------- --- ------- -------
At December 31, 1997.... 31,051 180,045 914 10,848 222,858
------ ------- --- ------- -------
Depreciation
At April 1, 1997........ 86 1,529 9 -- 1,624
Charge for period....... 847 13,975 278 -- 15,100
------ ------- --- ------- -------
At December 31, 1997.... 933 15,504 287 -- 16,724
------ ------- --- ------- -------
Net book value
At December 31, 1997.... 30,118 164,541 627 10,848 206,134
====== ======= === ======= =======
</TABLE>
F-44
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The net book value of land and buildings comprises:
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ ----------------------------
At March 31, At March 31, At December 31,
1996 1997 1997
------------ ------------ ---------------
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Freehold........................... 16,268 21,558 21,375
Long leasehold..................... 1,540 7,468 7,472
Short leasehold.................... 1,345 1,278 1,271
------ ------ ------
19,153 30,304 30,118
====== ====== ======
</TABLE>
Included within fixed assets are the following assets held under finance
leases:
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ ----------------------------
At March 31, At March 31, At December 31,
1996 1997 1997
------------ ------------ ---------------
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Motor vehicles..................... -- -- 270
Computer equipment................. -- -- 441
--- --- ---
-- -- 711
=== === ===
</TABLE>
11 Stocks
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ ------------------------------------------
At March 31, At March 31, At December 31, At August 31,
1996 1997 1997 1998
------------ ------------ --------------- -------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited)
<S> <C> <C> <C> <C>
Work in progress (see
note 13)............... -- -- 274 1,421
Spares and manufacturing
stocks................. 1,750 807 1,066 1,199
----- --- ----- -----
1,750 807 1,340 2,620
===== === ===== =====
</TABLE>
12 Debtors
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ ----------------------------
At March 31, At March 31, At December 31,
1996 1997 1997
------------ ------------ ---------------
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Trade debtors..................... 3,780 7,503 10,250
Other debtors..................... 212 2,259 2,200
Prepayments and accrued income.... 722 582 780
----- ------ ------
4,714 10,344 13,230
===== ====== ======
</TABLE>
13 Creditors: amounts falling due within one year
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ ----------------------------
At March 31, At March 31, At December 31,
1996 1997 1997
------------ ------------ ---------------
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Payments on account.............. 426 347 --
Obligations under finance leases
and hire purchase contracts..... -- -- 490
Trade creditors.................. 872 4,123 1,916
Other creditors.................. -- 1,519 2,153
Accruals and deferred income..... 5,329 8,831 24,580
----- ------ ------
6,627 14,820 29,139
===== ====== ======
</TABLE>
F-45
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Payments on account (and work in progress) relate to commercial projects and
are shown net in the financial statements. The gross billings amount to
(Pounds)3,222,000 in 1996, (Pounds)3,836,000 in March 1997 and
(Pounds)2,458,000 in December 1997. The related gross costs amounted to
(Pounds)2,796,000 in 1996, (Pounds)3,489,000 in March 1997 and
(Pounds)2,732,000 in December 1997.
14 Creditors: amounts falling due after more than one year
<TABLE>
<CAPTION>
Castle Transmission
------------------------------------------
At March 31, At December 31, At August 31,
1997 1997 1998
------------ --------------- -------------
(Pounds)000 (Pounds)000 (Pounds)000
(Unaudited)
<S> <C> <C> <C>
Guaranteed Bonds................ -- 120,582 120,761
Bank loans and overdrafts....... 154,358 22,945 28,104
Obligations under finance leases
and hire purchase contracts.... -- 221 670
------- ------- -------
154,358 143,748 149,535
======= ======= =======
Debts can be analysed as falling
due:
in one year or less, or on de-
mand........................... -- --
between one and two years....... 7,244 59
between two and five years...... 29,160 162
in five years or more........... 117,954 143,527
------- -------
154,358 143,748
======= =======
</TABLE>
On May 21, 1997, CTF issued and Castle Transmission guaranteed,
(Pounds)125,000,000 9 percent Guaranteed Bonds due 2007 (the "Guaranteed
Bonds"). The Guaranteed Bonds are redeemable at their principal amount, unless
previously redeemed or purchased and cancelled, on March 30, 2007.
The Guaranteed Bonds may be redeemed in whole but not in part, at the option
of CTF, at their principal amount plus accrued interest if, as a result of
certain changes in the laws and regulations of the United Kingdom, CTF or
Castle Transmission becomes obliged to pay additional amounts.
The Guaranteed Bonds may be redeemed in whole or in part, at the option of
CTF, at any time at the higher of their principal amount and such a price as
will provide a gross redemption yield 0.50 percent per annum above the gross
redemption yield on the benchmark gilt plus (in either case) accrued interest.
Bondholders may, in certain circumstances including but not limited to a
change in control of CTF, or the early termination of the agreement between
CTI and the BBC relating to the domestic analogue transmission of radio and
television programmes by CTI, require the Guaranteed Bonds to be redeemed at
101 percent of their principal amount plus accrued interest.
The Guaranteed Bonds were issued at an issue price of 99.161 percent. The
Guaranteed Bonds are shown net of unamortised discount and issue costs.
Interest accrues from the date of issue and is payable in arrears on March 30
each year commencing March 30, 1998.
On February 28, 1997 the Group entered into term and revolving loan
facilities with a syndicate of banks. There are three facilities. Facility A
and Facility B are (Pounds)122,500,000 and (Pounds)35,000,000 term loan
facilities. Facility A is repayable in instalments, the last of which is due
in June 2004, and Facility B is repayable in two instalments in December 2004
and June 2005. These facilities were made available to finance the amount owed
to the BBC on the acquisition of the Home Service transmission business and
were drawn down in full on February 28, 1997.
F-46
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The third facility, Facility C, is a (Pounds)5,000,000 revolving loan
facility maturing in June 2005 under which advances are to be made to the
Group to finance its working capital requirements and for general corporate
purposes. This facility was undrawn at March 31, 1997.
Borrowings under the facilities are secured by fixed and floating charges
over substantially all of the assets and undertakings of the Group and bear
interest at 2.25 percent above LIBOR for Facility B and between 0.875 percent
and 1.75 percent above LIBOR (depending on the annualised debt coverage and
the outstanding percentage of the facilities) for Facilities A and C.
The net proceeds of the Guaranteed Bonds were used to repay substantially
all of the amounts outstanding under Facilities A, B and C. The remaining
balance of Facilities A, B and C was replaced by a (Pounds)64,000,000
revolving loan facility maturing in May 2002 (the "New Facility"), under which
advances will be made to CTI to finance its working capital requirements and
finance capital expenditures in respect of Digital Terrestrial Television.
Borrowings under the New Facility are secured by fixed and floating charges
over substantially all of the assets and undertakings of Castle Transmission
and bear interest at LIBOR plus the applicable margin plus cost rate.
Included within bank loans and overdrafts is an amount of (Pounds)3,142,000
at March 31, 1997 and (Pounds)1,055,000 at December 31, 1997 representing
finance costs deferred to future accounting periods in accordance with FRS4.
As a result of the issuance of the Guaranteed Bonds and the New Facility, the
remaining deferred financing costs of (Pounds)1,930,000, relating to
Facilities A, B and C were charged to the profit and loss account during the
period from April 1, 1997 to December 31, 1997.
15 Provision for liabilities and charges
<TABLE>
<CAPTION>
Castle Transmission
----------------------------
At March 31, At December 31,
1997 1997
------------ ---------------
(Pounds)000 (Pounds)000
<S> <C> <C>
On acquisition/at the start of the period.......... 1,723 1,723
Fair value adjustments (see note 24)............... -- 1,016
Established in the period (see below).............. -- 417
Utilised in the period............................. -- (999)
----- -----
At the end of the period........................... 1,723 2,157
===== =====
</TABLE>
Home Service did not make any provisions for liabilities and charges. On the
acquisition by Castle Transmission, a provision was established for costs
associated with the split of the BBC transmission business between Home
Service and World Service comprising redundancy costs and costs relating to
the relocation and reorganisation of shared sites. No payments or additional
provisions were made in the one month period and the balance on acquisition
and at March 31, 1997 was (Pounds)1,723,000.
As a result of the completion of the fair value exercise this provision was
reduced by (Pounds)234,000 and a further provision was made of
(Pounds)1,250,000 in respect of a contingent liability for wind loading fees
that existed at February 27, 1997. See notes 18 and 24 for further details.
A further provision of (Pounds)417,000, in respect of these wind loading
fees, was charged to the profit and loss account during the period from April
1, 1997 to December 31, 1997.
F-47
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16 Share capital
<TABLE>
<CAPTION>
At March 31, At December 31,
1997 1997 At March 31, At December 31,
Number of Number of 1997 1997
shares shares (Pounds)000 (Pounds)000
-------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Authorised
Equity: Ordinary Shares
of 1 pence each........ 11,477,290 11,477,290 115 115
Non-equity: Redeemable
Preference Shares of 1
pence each............. 11,465,812,710 11,465,812,710 114,658 114,658
-------------- -------------- ------- -------
11,477,290,000 11,477,290,000 114,773 114,773
============== ============== ======= =======
Allotted, called up and
fully paid
Equity: Ordinary Shares
of 1 pence each........ 10,234,790 10,289,790 102 103
Non-equity: Redeemable
Preference Shares of 1
pence each............. 10,224,555,210 10,279,500,210 102,246 102,795
-------------- -------------- ------- -------
10,234,790,000 10,289,790,000 102,348 102,898
============== ============== ======= =======
</TABLE>
On incorporation the Company had an authorised share capital of 100 Ordinary
Shares of (Pounds)1 each of which 1 share was allotted, called up and fully
paid.
On January 23, 1997, the 100 issued and unissued Ordinary Shares of
(Pounds)1 each were subdivided into Ordinary Shares of 1 pence each and the
authorised share capital of the Company was increased to (Pounds)114,772,900
by the creation of 11,467,290 additional Ordinary Shares of 1 pence each and
by the creation of 11,465,812,710 Redeemable Preference Shares of 1 pence
each.
On February 28, 1997 the Company issued for cash 10,234,690 Ordinary Shares
of 1 pence each at par and 10,224,555,210 Redeemable Preference Shares of 1
pence each at par.
On September 19, 1997 a further 55,000 Ordinary Shares of 1 pence each and
54,945,000 Redeemable Preference Shares of 1 pence each were issued at par for
cash. These shares were issued to certain members of the management team.
Management believes that this sale price reflects the fair value of the shares
at that date.
The Redeemable Preference Shares are redeemable on December 31, 2050. The
Company may also redeem any number of Redeemable Preference Shares at any time
by giving at least two business days' notice in writing to the holders. In
addition, the Company shall redeem in full all the Redeemable Preference
Shares on or before the earlier or any listing or sale of 87.5 percent or more
of the issued share capital. No premium is payable on redemption.
The holders of the Redeemable Preference Shares are entitled to receive a
dividend in respect of periods from January 1, 2004 at a rate of 5 percent per
annum. Dividends shall accrue on a daily basis and shall, unless the Company
is prohibited from paying dividends by the Companies Act 1985 or is not
permitted by any financing agreement to which it is a party to pay such
dividend, become a debt due from and payable to the holders of the Redeemable
Preference Shares on January 1 of each year beginning January 1, 2005.
In accordance with FRS4: Capital Instruments, a finance cost has been
calculated to result in a constant rate of return over the period and carrying
amount for these Redeemable Preference Shares and has been included in the
profit and loss account as an appropriation.
F-48
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
On a winding up of the Company, the holders of the Redeemable Preference
Shares would be entitled, in priority to any payment to the holders of the
Ordinary Shares, to receive an amount equal to the nominal amount paid up on
each Redeemable Preference Share together with all arrears and accruals of the
preferential dividend payable thereon, whether or not such dividend has become
due and payable.
The holders of the Redeemable Preference Shares have no right to vote at any
general meeting of the Company.
At December 31, 1997 two of the shareholders held share warrants which
entitled them to a maximum of 772,500 Ordinary Shares and 771,727,500
Redeemable Preference Shares issued at par. These are subject to adjustment in
accordance with the conditions set out in the warrant instrument which relate
to any reorganisation of the Company's share capital. The rights under the
share warrants can be exercised by giving 7 days' notice to the Company. The
rights lapse on the earliest of the following dates: the date of a listing of
any part of the share capital on the Official List of the London Stock
Exchange or any other stock exchange; the date of any sale of 85 percent or
more of the issued share capital of the Company; the date on which the Company
goes into liquidation; and February 28, 2007.
17 Reserves
<TABLE>
<CAPTION>
Castle
Transmission
-----------------------------------
Period from Period from
February 28, 1997 April 1, 1997 to
to March 31, 1997 December 31, 1997
----------------- -----------------
(Pounds)000 (Pounds)000
<S> <C> <C>
Profit and loss account
At the start of the period............. -- 325
Retained profit/(loss) for the period.. 7 (6,217)
Additional finance cost of non-equity
shares................................ 318 2,862
--- ------
At the end of the period............... 325 (3,030)
=== ======
</TABLE>
18 Acquisition
On February 28, 1997 the Company acquired the entire share capital of CTI.
CTI had itself acquired the assets and liabilities of Home Service on February
27, 1997, with the intention of CTI's ensuing disposal to the Company.
As the two transactions were enacted for the purpose of the sale and
purchase of Home Service, a provisional fair value exercise was performed by
CTI on the acquisition of the trade and net assets of Home Service on 27
February 1997, giving rise to acquisition goodwill of (Pounds)39.6 million.
The fair value exercise was only provisional at March 31, 1997 as the
elapsed time had not been sufficient to form a final judgement on the fair
value adjustments. The fair value exercise has now been finalised and as a
result goodwill has been increased by (Pounds)1.2 million. See note 24.
The consideration paid for the acquisition of the shares of CTI by the
Company amounted to (Pounds)45 million plus fees of (Pounds)7.5 million.
(Pounds)7.2 million had been paid or accrued at March 31, 1997, which gave
rise to additional goodwill of (Pounds)7.5 million.
F-49
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In addition, the BBC was paid (Pounds)199 million by CTI as a repayment of
the loan made by the BBC on the transfer of the assets and liabilities of Home
Service. The total consideration paid by the Group amounted to (Pounds)244
million (excluding fees), which resulted in total goodwill in the Consolidated
Financial Statements of (Pounds)48 million. This goodwill has been capitalised
and will be written off over 20 years, the period over which the Directors
consider that the Group will derive economic benefits.
19 Commitments
(a) Capital commitments at the end of the financial period for which no
provision has been made, were as follows:
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ ----------------------------
At March 31, At March 31, At December 31,
1996 1997 1997
------------ ------------ ---------------
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Contracted........................ 4,192 4,785 11,431
Authorised but not contracted..... 7,969 6,490 89,729
===== ===== ======
</TABLE>
(b) Annual commitments under non-cancellable operating leases were as
follows:
<TABLE>
<CAPTION>
Castle
Transmission
-----------------------
At December 31,
1997
-----------------------
Land and
buildings Other
----------- -----------
(Pounds)000 (Pounds)000
<S> <C> <C>
Operating leases which expire:
Within one year...................................... 90 159
In the second to fifth years inclusive............... 343 385
Over five years...................................... 235 --
--- ---
668 544
=== ===
</TABLE>
20 Pension scheme
Home Service
Home Service participated in a multi-employer pension scheme operated by the
BBC. The scheme is a defined benefit scheme whereby retirement benefits are
based on the employees' final remuneration and length of service and is funded
through a separate trustee administered scheme. Contributions to the scheme
are based on pension costs for all members of the scheme across the BBC and
are made in accordance with the recommendations of independent actuaries who
value the scheme at regular intervals, usually triennially. Pension scheme
assets are not apportioned between different parts of the BBC.
The pension rate charged to Home Service was 4.5 percent for the year ended
March 31, 1996 and for the period from April 1, 1996 to February 27, 1997.
This charge took into account the surplus shown by the last actuarial
valuation of the BBC scheme. Amounts charged were as follows: (Pounds)521,000
in 1996 and (Pounds)491,000 in the period from April 1, 1996 to February 27,
1997.
F-50
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Castle Transmission
The pension charge is not comparable between Home Service and Castle
Transmission due to the former having a reduced charge as a result of the
surplus in the BBC Pension scheme.
Under the terms of the sale agreement Castle Transmission was temporarily
participating in the BBC Pension scheme until July 31, 1997. From August 1,
1997 the Group was committed under the sale agreement to establish its own
pension scheme.
In respect of past service benefits, members were able to choose between
transferring past service benefits to the Group scheme or leaving them in the
BBC Pension scheme. To the extent that past service benefits were transferred,
the BBC Pension scheme made a full transfer payment to the Group scheme
calculated in accordance with the actuarial basis as set out in the sale
agreement.
The pension charge for the period from February 28, 1997 to March 31, 1997
included in the accounts represented contributions payable to the BBC Pension
scheme and amounted to (Pounds)156,000. Contributions are calculated at the
employers' contribution rate of 17.7 per cent of pensionable salary. The
contribution rate has been determined by a qualified actuary and is specified
in the sale agreement.
At August 1, 1997 Castle Transmission established its own pension scheme.
This is a defined benefit scheme and assets were transferred from the BBC
Pension scheme to the extent that members chose to transfer past benefits.
From August 1, the Castle Transmission Pension Scheme will be liable in
respect of future pension benefits. The pension charge for the period from
April 1, 1997 to December 31, 1997 was (Pounds)1,490,000.
There were no outstanding or prepaid contributions at either the beginning
or end of the financial periods.
The Group also established a defined contribution scheme which will have a
backdated start date of August 1, 1997. This scheme will be open to employees
joining the Group after March 1, 1997. The defined benefit scheme will not be
open to these employees. The pensionable charge for the period from April 1,
1997 to December 31, 1997 represents contributions under this scheme amounting
to (Pounds)nil.
21 Reconciliation of operating profit to operating cash flows
<TABLE>
<CAPTION>
Home Service Castle Transmission
--------------------------- ---------------------------------
Period from Period from Period from
Year Ended April 1, 1996 February 28, 1997 April 1, 1997
March 31, to February 27, to March 31, to December 31,
1996 1997 1997 1997
----------- --------------- ----------------- ---------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Operating profit........ 7,785 14,002 1,245 8,776
Depreciation and
amortisation charge.... 12,835 13,038 1,819 16,854
(Increase)/Decrease in
stocks................. (678) 294 (2) (746)
Decrease/(Increase) in
debtors................ 2,571 (258) (5,372) (2,937)
Increase/(Decrease) in
creditors.............. 1,798 (649) 8,066 6,036
------ ------ ------ ------
Cash inflow from
operating activities... 24,311 26,427 5,756 27,983
====== ====== ====== ======
</TABLE>
F-51
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
22 Analysis of cash flows for headings noted in the cash flow statement
<TABLE>
<CAPTION>
Home Service Castle Transmission
---------------------------- ---------------------------------
Period from Period from Period from
Year Ended April 1, 1996 to February 28, 1997 April 1, 1997
March 31, February 27, to March 31, to December 31,
1996 1997 1997 1997
----------- ---------------- ----------------- ---------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Returns on investment
and servicing of
finance
Interest received....... -- -- 49 242
Interest paid........... -- -- (934) (2,670)
------- ------- -------- --------
Net cash outflow for
returns on investment
and servicing of
finance................ -- -- (885) (2,428)
======= ======= ======== ========
Capital expenditure and
financial investments
Purchase of tangible
fixed assets........... (18,079) (21,810) (748) (14,361)
Proceeds on disposal of
tangible fixed assets.. 889 1,718 -- --
------- ------- -------- --------
Net cash outflow for
capital expenditure and
financial investments.. (17,190) (20,092) (748) (14,361)
======= ======= ======== ========
Acquisitions and
disposals
Purchase of subsidiary
undertaking (see note
24).................... -- -- (52,141) (307)
Amount paid to BBC on
acquisition............ -- -- (199,000) --
------- ------- -------- --------
Net cash outflow for
acquisition and
disposals.............. -- -- (251,141) (307)
======= ======= ======== ========
Financing
Issue of shares......... -- -- 102,348 550
Increase/(decrease) in
corporate funding...... (7,121) (6,335) -- --
Debt due beyond a year:
Facility A (net of issue
costs)................. -- -- 120,056 --
Facility B (net of issue
costs)................. -- -- 34,302 --
Repayment of Facility A
and B.................. -- -- -- (157,500)
New Facility............ -- -- -- 24,000
Guaranteed Bonds........ -- -- -- 120,527
------- ------- -------- --------
Net cash
inflow/(outflow) from
financing.............. (7,121) (6,335) 256,706 (12,423)
======= ======= ======== ========
</TABLE>
23 Analysis of net debt due after one year
<TABLE>
<CAPTION>
Other
At February 27, non-cash At March 31,
1997 Cashflow changes 1997
--------------- ----------- ----------- ------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Cash at bank and in
hand................... -- 9,688 -- 9,688
Debt due after 1 year... -- (154,358) -- (154,358)
--- -------- --- --------
-- (144,670) -- (144,670)
=== ======== === ========
</TABLE>
<TABLE>
<CAPTION>
Other
At March 31, non-cash At December 31,
1997 Cashflow changes 1997
------------ ----------- ----------- ---------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Cash at bank and in
hand................... 9,688 (1,536) -- 8,152
Finance leases.......... -- -- (711) (711)
Debt due after 1 year... (154,358) 12,973 (2,142) (143,527)
-------- ------ ------ --------
(144,670) 11,437 (2,853) (136,086)
======== ====== ====== ========
</TABLE>
F-52
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
24 Purchase of subsidiary undertaking
<TABLE>
<CAPTION>
At March 31, Fair value At December 31,
1997 adjustments 1997
------------ ----------- ---------------
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Net assets acquired:
Tangible fixed assets........... 207,038 -- 207,038
Stocks.......................... 119 134 253
Debtors......................... 4,972 (97) 4,875
Creditors--trade................ (6,033) 49 (5,984)
--owed to BBC on
acquisition............... (199,000) -- (199,000)
Provisions (see note 15)........ (1,723) (1,016) (2,739)
-------- ------ --------
Adjusted net assets acquired.... 5,373 (930) 4,443
Goodwill........................ 46,768 1,237 48,005
-------- ------ --------
Cost of acquisition including
related fees................... 52,141 307 52,448
======== ====== ========
Satisfied by:
Cash............................ 52,141 307 52,448
======== ====== ========
</TABLE>
The total consideration paid by Castle Transmission included the assumption
and subsequent repayment of (Pounds)199 million paid to the BBC, see note 18.
Fair value adjustments
The fair value adjustments result from the completion of the fair value
exercise performed by CTI on the acquisition of Home Service and the under
accrual of fees by the Company, in relation to the acquisition of CTI, at
March 31, 1997. The (Pounds)1,237,000 increase in goodwill relates
predominantly to the provision of (Pounds)1,250,000 in respect of a dispute
over wind loading fees. This dispute was an existing contingent liability at
the date of acquisition and consequently provision has been made against the
fair value of the assets and liabilities of Home Service at February 27, 1998.
25 Related party disclosures
Home Service
Throughout the year ended March, 31 1996 and the period from April 1, 1996
to February 27, 1997, Home Service entered into a number of transactions with
other parts of the BBC. Substantially all of these transactions are exempt
from the disclosure provisions of FRS 8 "Related Party Disclosures" as they
have been undertaken between different parts of the BBC, and are eliminated in
the consolidated accounts of the BBC. However, brief details of the nature of
these transactions are set out below.
The majority of Home Service's income arises from trading with other parts
of the BBC. Prices are set at BBC group level on the basis of cost budgets
prepared by Home Service. The aggregate value of such sales in each of the
years covered by the combined financial statements is given in Note 3.
Administrative costs include expenses re-charged to Home Service by the BBC.
These re-charges related to costs incurred centrally in respect of pension,
information technology, occupancy and other administration costs. These
charges amounted to (Pounds)5.8 million in 1996 and (Pounds)1.2 million in the
period between April 1, 1996 and February 27, 1997. The reduced charge for the
period to February 27, 1997 is a result of more functions being carried out by
employees of Home Service in preparation for the change to a stand alone
entity.
F-53
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In addition, re-charges were also made for distribution costs relating to
telecommunication links between the BBC and the transmitting stations and
these were then internally re-charged to other parts of the BBC. The charges
amounted to (Pounds)5.6 million in 1996 and (Pounds)6.4 million in the period
between April 1, 1996 and February 27, 1997.
Castle Transmission
The Shareholders of Castle Transmission are:
Crown Castle International Corp. ("CCIC", formerly Castle Tower Holding
Corp.), Candover Investments plc and funds managed by it ("Candover"),
TeleDiffusion de France International S.A ("TdF") and Berkshire Partners LLC
and funds managed by it ("Berkshire"). They are considered to be related
parties as they are the consortium who own 99 percent of the shares of the
Company.
Castle Transmission paid fees to shareholders in respect of expenses
incurred during the acquisition and success fees. Castle Transmission also has
management agreements with CCIC (for commercial and financial advice and
training and consultancy) and TdF (for technical advice and consulting), these
agreements run for five years from February 28, 1997. Fees are payable on the
basis of an annual fee for agreed services provided to Castle Transmission,
together with fees on a commercial arm's length basis for any additional
services provided. In addition Castle Transmission has agreed to reimburse
shareholders' expenses in relation to attendance at board meetings. The
amounts paid and accrued by the Company during the period were as follows:
<TABLE>
<CAPTION>
Total amounts
payable at
Amounts Amounts Amounts March 31,
Related party expensed capitalised paid 1997
------------- ----------- ----------- ----------- -------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
CCIC....................... 20 1,763 1,763 20
Candover................... 1 244 244 1
TdF........................ -- 129 -- 129
Berkshire.................. 1 315 316 --
--- ----- ----- ---
22 2,451 2,323 150
=== ===== ===== ===
</TABLE>
<TABLE>
<CAPTION>
Total amounts Total amounts
payable at payable at
March 31, Amounts Amounts Amounts December 31,
Related party 1997 expensed capitalised paid 1997
------------- ------------- ----------- ----------- ----------- -------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
CCIC.................... 20 253 -- 246 27
Candover................ 1 16 -- 13 4
TdF..................... 129 -- -- 129 --
Berkshire............... -- 55 -- 43 12
--- --- --- --- ---
150 324 -- 431 43
=== === === === ===
</TABLE>
Ongoing BBC relationship
At the time of the acquisition of Home Service, Castle Transmission entered
into a ten year transmission contract with the BBC for the provision of
domestic terrestrial analogue television and radio transmission services
expiring on March 31, 2007. Thereafter, the contract continues until
terminated by twelve months notice by either party on March 31 in any contract
year from and including March 31, 2007. It may also be terminated early if
certain conditions are met.
F-54
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THF BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The contract provides for charges of approximately (Pounds)46 million to be
payable by the BBC to Castle Transmission for the year to March 31, 1998.
Castle Transmission's charges for subsequent years of the contract are largely
determined by a formula which escalates the majority of the charges by a
factor which is 1% below the rate of increase in the Retail Price Index over
the previous calendar year. Those elements of the charges which are subject to
the escalation formula for the contract year commencing April 1, 1998 amount
to approximately (Pounds)46 million.
26 Post balance sheet events
On January 23, 1998, the Board of Directors adopted: (i) the All Employee
Share Option Scheme; (ii) the Management Share Option Scheme; and (iii)
individual share option arrangements for certain directors of the Company.
The All Employee Share Option Scheme provides for an unlimited number of
shares to be granted to all employees of the Company. The Board may select any
number of individuals to apply for the grant of an option. Not later than
thirty days following the date by which an application must be made, the Board
may grant to each applicant the number of options specified in his
application. These options may be exercised at the earliest of the third
anniversary of the date of grant, in the event of a flotation or in the event
of a take-over, reconstruction, liquidation or option exchange as set out in
the Scheme rules. For options granted under this scheme the option price and
the number of shares will not change during the life of the option.
Under the terms of the Management Share Option Scheme and the individual
share option arrangements, share options may be granted to employees or
directors of the Company as determined by the Board of Directors up to a
maximum of 460,000 Ordinary Shares and 459,540,000 Redeemable Preference
Shares. Options will vest over periods of up to four years and have a maximum
term of up to nine years. For options over 223,333 Ordinary Shares and
223,110,000 Redeemable Preference Shares, the option price and the number of
shares will not change during the life of the option. The remaining options
are subject to certain performance criteria.
On January 23, 1998 and January 30, 1998 the Company granted options to
purchase an aggregate of 460,000 Ordinary Shares and 459,540,000 Redeemable
Preference Shares under the terms of the individual share option arrangements
and the Management Share Option Scheme, respectively. The weighted average
price for such options is 1.16 pence for Ordinary Shares and 1.16 pence for
Redeemable Preference Shares. The weighted average vesting period for such
options is 1.13 years. Any accounting charge resulting from a difference
between the fair value of the rights to the shares at the date of grant and
the amount of consideration to be paid for the shares will be charged to the
profit and loss account in the year to December 31, 1998 and subsequent years
according to the vesting provisions of the arrangements. Where the options are
subject to performance criteria, the amount initially recognised will be based
on a reasonable expectation of the extent to which these criteria will be met
and will be subject to subsequent adjustments as necessary to deal with
changes in the probability of performance criteria being met.
Update of post balance sheet events (Unaudited)
On March 23, 1998, the Company granted options to purchase an aggregate of
40,750 Ordinary Shares and 40,709,250 Redeemable Preference Shares under the
terms of the All Employee Share Option Scheme. The price for such options is
1.00 pence for both Ordinary Shares and Redeemable Preference Shares. The
vesting period for such options is three years.
The accounting charge related to all share options included within the
unaudited consolidated financial statements for the eight months ended August
31, 1998 is (Pounds)2,330,000.
F-55
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
On April 23, 1998, the Board of Directors adopted share option arrangements
for certain individuals. On that same date, the Company granted options to
purchase 60,000 Ordinary Shares and 59,940,000 Redeemable Preference Shares
under the terms of such share option arrangements. These options will vest
over a period of four years and have a maximum term of six years. The weighted
average price of such options is 1.75 pence for both Ordinary Shares and
Redeemable Preference Shares. The weighted average vesting period for such
options is two years.
On July 1, 1998 and July 15, 1998, CCIC granted options to purchase 59,932
ordinary shares in CCIC to employees of CTI under terms of individual share
option arrangements. The weighted average price for such options is $37.54.
These options vested on August 18, 1998. The accounting charge related to
these options included in the unaudited consolidated financial statements for
the eight months ended August 31, 1998 is (Pounds)978,000.
On July 15, 1998, the Board of Directors of the Company resolved that the
Management Share Option Scheme would not be subject to any performance
criteria and would vest on a time basis only.
An August 11, 1998, the Company granted options to purchase 15,690 Ordinary
Shares and 15,674,310 Redeemable Preference Shares under the terms of the
Management Share Option Scheme. The weighted average price for such options is
2.5 pence for both Ordinary Shares and Redeemable Preference Shares. The
weighted average vesting period for such options is 2.7 years.
On August 21, 1998, the Company issued 515,000 Ordinary Shares and
514,485,000 Redeemable Preference Shares to CCIC for cash at par under the
terms of the warrant. In addition, CCIC subscribed for 10,210 Ordinary Shares
and 10,199,790 Redeemable Preference Shares for cash at a premium of 1.5 pence
per share.
On August 21, 1998, the Company became an 80% owned subsidiary of CCIC. On
that same date, (i) all issued and unissued Redeemable Preference Shares were
redesignated as Ordinary Shares; and (ii) all existing options to purchase
shares in the Company were converted into options to purchase shares in CCIC
at the rate of 7 shares in CCIC for every 1000 shares in the Company.
27 Summary of differences between United Kingdom and United States generally
accepted accounting principles
These consolidated financial statements have been prepared in accordance
with UK GAAP, which differ in certain respects from US GAAP. The differences
that affect Home Service and Castle Transmission are set out below:
(a) Tangible fixed assets
During 1993 Home Service revalued upwards its investments in certain
identifiable tangible fixed assets. Such upward revaluation is not permissible
under US GAAP. Rather, depreciated historical cost must be used in financial
statements prepared in accordance with US GAAP.
In the period between April 1, 1996 and February 27, 1997 there were a
number of transfers of fixed assets to and from other parts of the BBC as
explained in note 10. For US GAAP purposes these transfers have been accounted
for under the as-if-pooling-of-interests method for transactions between
entities under common control.
F-56
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(b) Deferred taxation
Under UK GAAP, deferred taxes are accounted for to the extent that it is
considered probable that a liability or asset will crystallise in the
foreseeable future. Under US GAAP, deferred taxes are accounted for on all
timing differences and a valuation allowance is established in respect of
those deferred tax assets where it is more likely than not that some portion
will remain unrealised. Deferred tax also arises in relation to the tax effect
of other US GAAP adjustments.
(c) Pensions
The Group accounts for costs of pensions under the rules set out in the UK
accounting standards. US GAAP is more prescriptive in respect of actuarial
assumptions and the allocation of costs to accounting periods.
(d) Capitalised interest
Under US GAAP, interest incurred during the construction periods of tangible
fixed assets is capitalised and depreciated over the life of the assets.
(e) Redeemable preference shares
Under UK GAAP, preference shares with mandatory redemption features or
redeemable at the option of the security holder are classified as a component
of total shareholders' funds. US GAAP requires such redeemable preference
shares to be classified outside of shareholders' funds.
F-57
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THF BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(f) Cash flow statement
Under US GAAP various items would be reclassified within the consolidated
cash flow statement. In particular, interest received, interest paid and
taxation would be part of net cash flows from operating activities, and
dividends paid would be included within net cash flow from financing. In
addition, under US GAAP, acquisitions and disposals would be included as
investing activities.
Movements in those current investments which are included under the heading
of cash under US GAAP form part of the movements entitled "Management of liquid
resources" in the consolidated cash flow statements.
Summary combined statements of cash flows for Castle Transmission prepared in
accordance with US GAAP are set out below:
<TABLE>
<CAPTION>
Home Service Castle Transmission
---------------------------------------- ----------------------------------------
Two Period from Eight
Year Period from Months February 28, Period from Months
Ended April 1, 1996 Ended 1997 April 1, 1997 Ended
March 31, to February 27, February 27, to March 31, to December 31, August 31,
1996 1997 1997 1997 1997 1998
----------- --------------- ------------ ------------ --------------- -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by
operating activities... 24,311 28,146 5,161 4,871 25,555 27,226
Net cash used by
investing activities... (17,190) (21,811) (711) (52,889) (14,668) (36,135)
Net cash (used)/provided
by financing
activities............. (7,121) (6,335) (4,450) 57,706 (12,423) 9,955
------- ------- ------ ------- ------- -------
Net increase/(decrease)
in cash and cash
equivalents............ -- -- -- 9,688 (1,536) 1,046
Cash and cash
equivalents at
beginning of period.... -- -- -- -- 9,688 8,152
------- ------- ------ ------- ------- -------
Cash and cash
equivalents at end of
period................. -- -- -- 9,688 8,152 9,198
======= ======= ====== ======= ======= =======
</TABLE>
The following is a summary of the approximate effect on Home Service's and
Castle Transmission's net profit and corporate funding/shareholders' funds of
the application of US GAAP.
<TABLE>
<CAPTION>
Home Service Castle Transmission
---------------------------------------- ---------------------------------------------
Two Eight
Year Period from Months Period from Period from Months
Ended April 1, 1996 Ended February 28, 1997 April 1, 1997 Ended
March 31, to February 27, February 27, to March 31, to December 31, August 31,
1996 1997 1997 1997 1997 1998
----------- --------------- ------------ ----------------- --------------- -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net profit/(loss) as re-
ported in the profit
and loss accounts...... 7,785 14,002 2,697 325 (3,355) 2,145
US GAAP adjustments:
Depreciation
adjustment on
tangible fixed
assets............... 3,707 3,993 726 -- -- --
Pensions.............. -- -- -- -- 65 108
Capitalised interest.. -- -- -- 78 801 1,385
------ ------ ----- ---- ------ -----
Net income/(loss) under
US GAAP................ 11,492 17,995 3,423 403 (2,489) 3,638
Additional finance cost
of non-equity shares... -- -- -- (318) (2,862) --
------ ------ ----- ---- ------ -----
Net income/(loss)
attributable to
ordinary shareholders
under US GAAP.......... 11,492 17,995 3,423 85 (5,351) 3,638
====== ====== ===== ==== ====== =====
</TABLE>
F-58
<PAGE>
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD AND SUBSIDIARIES AND
THE BBC HOME SERVICE TRANSMISSION BUSINESS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Home Service Castle Transmission
------------ -----------------------------------------
At March 31,
------------------------ At December 31, At August 31,
1996 1997 1997 1998
------------ ----------- --------------- -------------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
(Unaudited)
<S> <C> <C> <C> <C>
Corporate
funding/shareholders'
funds as reported in
the balance sheets..... 202,429 102,673 99,868 109,748
US GAAP adjustments:
Depreciation adjust-
ment on tangible
fixed assets......... (35,945) -- -- --
Pensions.............. -- -- 65 173
Capitalised interest.. -- 78 879 2,264
Redeemable preference
shares (including ad-
ditional finance cost
of non-equity
shares).............. -- (102,564) (105,975) --
------- -------- -------- -------
Corporate
funding/shareholders'
funds/(deficit) under
US GAAP................ 166,484 187 (5,163) 112,185
======= ======== ======== =======
</TABLE>
F-59
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Crown Castle
International Corp.:
We have audited the accompanying statement of net assets of Bell Atlantic
Mobile Tower Operations as of December 31, 1998, and the related statements of
revenues and direct expenses for each of the years in the two-year period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets and the
related statements of revenues and direct expenses are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of net assets and the
related statements of revenues and direct expenses. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the statement of
net assets and the related statements of revenues and direct expenses. We
believe that our audit provides a reasonable basis for our opinion.
The statements of net assets and revenues and direct expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission. As discussed in note 1, such statements do not
reflect certain corporate overhead expenses incurred by Bell Atlantic Mobile,
the contributor of the net assets, on behalf of the tower operations.
In our opinion, the statements referred to above present fairly, in all
material respects, the net assets of Bell Atlantic Mobile Tower Operations as
of December 31, 1998, and the related revenues and direct expenses for each of
the years in the two-year period ended December 31, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
March 4, 1998
F-60
<PAGE>
BELL ATLANTIC MOBILE
TOWER OPERATIONS
STATEMENT OF NET ASSETS
(In thousands of dollars)
December 31, 1998
<TABLE>
<S> <C>
Property and equipment, net............................................ $83,557
-------
Net Assets......................................................... $83,557
=======
</TABLE>
See notes to financial statements.
F-61
<PAGE>
BELL ATLANTIC MOBILE
TOWER OPERATIONS
STATEMENTS OF REVENUES AND DIRECT EXPENSES
(In thousands of dollars)
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------
1997 1998
------------ ------------
<S> <C> <C>
Site rental revenues............................... $ 6,480 $ 11,183
Costs of operations................................ 15,131 14,941
Depreciation and amortization...................... 7,221 6,278
------------ ------------
Loss from Tower Operations....................... $ (15,872) $ (10,036)
============ ============
</TABLE>
See notes to financial statements.
F-62
<PAGE>
BELL ATLANTIC MOBILE TOWER OPERATIONS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
On December 8, 1998 Crown Castle International Corp. ("CCIC") and Bell
Atlantic Mobile and certain entities controlled by Bell Atlantic Mobile
("BAM") entered into a formation agreement in order to create Crown Atlantic
Company LLC ("Crown Atlantic"). Under the terms of the agreement, BAM will
contribute tower structures and certain related assets while CCIC will
contribute cash and shares of its common stock to Crown Atlantic and its
parent company, respectively. The tower structures and related assets consist
of the tower facilities that were previously part of BAM's cellular
operations. Their locations span New York, New England, Philadelphia,
Pittsburgh, Washington-Baltimore and certain areas in the Southeast and
Southwest.
Under the formation agreement, Crown Atlantic will assume all obligations of
BAM as landlord, licensor or tenant relating to the tower space leases with
respect to the period after the closing date. Crown Atlantic will also assume
all obligations of BAM subsequent to the closing date relating to the
operation of the towers and any contracts entered into by BAM during the
ordinary course of business of BAM relating to the towers but only to the
extent that such contracts were chosen to be included in the obligations
assumed by Crown Atlantic. Under the terms of the formation agreement, Crown
Atlantic did not assume certain liabilities as defined in the actual terms of
the formation agreement.
The accompanying statement of net assets reflects the assets to be
contributed by BAM to Crown Atlantic pursuant to the formation agreement. The
statement of net assets reflects BAM's historical carrying values of the
contributed assets, adjusted to exclude certain assets which will not be
contributed as part of the formation agreement.
The accompanying statements of revenue and direct expenses reflect
operations related to the tower assets to be contributed by BAM to Crown
Atlantic per the formation agreement. Certain direct and indirect operating
costs of BAM have been allocated and included in the costs of operations. The
allocated amounts totaled $3,501 and $3,694 for the years ended December 31,
1997 and 1998, respectively. Such allocations are based on determinations that
management believes are reasonable, but may not be necessarily indicative of
such costs incurred by Crown Atlantic in the future. The statements of
revenues and direct expenses do not include allocated costs related to general
corporate overhead, interest expense and income taxes and therefore may not be
indicative of future operations.
The accompanying statement of net assets and the related statements of
revenues and direct expenses were prepared for the purpose of complying with
the requirements of the Securities and Exchange Commission and are not
intended to be a complete presentation of Bell Atlantic Mobile's assets and
liabilities or revenues and expenses.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Site rental revenues are recognized on a monthly basis under lease or
management agreements. Site rental revenues represent charges for tower usage
billed to third party customers under lease arrangements.
F-63
<PAGE>
BELL ATLANTIC MOBILE TOWER OPERATIONS
NOTES TO FINANCIAL STATEMENTS--(Continued)
(In thousands of dollars)
2. Property and Equipment
Property and equipment are stated at historical costs. Depreciation of
property and equipment is provided on the straight-line method over the
estimated useful lives of the assets. Property and equipment at December 31,
1998 consisted of the following:
<TABLE>
<CAPTION>
Estimated
Useful Lives
------------
<S> <C> <C>
Land..................................................... $ 21,798
Telecommunication towers and related equipment........... 12 years 97,035
--------
118,833
Less: accumulated depreciation........................... (35,276)
--------
$ 83,557
========
</TABLE>
3. Commitments
At December 31, 1998, minimum rental commitments under operating leases are
as follows:
<TABLE>
<S> <C>
Years ending December 31,
1999................................................................... 12,235
2000................................................................... 10,200
2001................................................................... 8,118
2002................................................................... 5,512
2003................................................................... 2,762
</TABLE>
4. Site Rental Revenues
At December 31, 1998, minimum amounts receivable under third party lease
agreements are as follows:
<TABLE>
<S> <C>
Years ending December 31,
1999................................................................... 12,214
2000................................................................... 11,948
2001................................................................... 10,952
2002................................................................... 6,997
2003................................................................... 2,207
</TABLE>
F-64
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Crown Castle International Corp.
We have audited the accompanying statement of net assets of Powertel Tower
Operations as of December 31, 1998, and the related statement of revenues and
direct expenses for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets and the
related statement of revenues and direct expenses are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of net assets and the
related statement of revenues and direct expenses. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the statement of
net assets and the related statement of revenues and direct expenses. We
believe that our audits provide a reasonable basis for our opinion.
The statements of net assets and revenues and direct expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission. As discussed in note 1, such statements do not
reflect certain corporate overhead expenses incurred by Powertel, Inc., the
owner of the net assets, on behalf of the tower operations.
In our opinion, the statements referred to above present fairly, in all
material respects, the net assets of Powertel Tower Operations as of December
31, 1998, and the related revenues and direct expenses for the year then ended
in conformity with generally accepted accounting principles.
KPMG LLP
February 5, 1999
F-65
<PAGE>
POWERTEL TOWER OPERATIONS
STATEMENT OF NET ASSETS
(In thousands of dollars)
DECEMBER 31, 1998
<TABLE>
<S> <C>
Prepaid expenses and other current assets............................. $ 2,031
Property and equipment, net........................................... 121,490
--------
Total assets........................................................ 123,521
Deferred revenues..................................................... 309
--------
Net assets.......................................................... $123,212
========
</TABLE>
See notes to financial statements.
F-66
<PAGE>
POWERTEL TOWER OPERATIONS
STATEMENT OF REVENUES AND DIRECT EXPENSES
(In thousands of dollars)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
Site rental revenues................................................. $ 1,865
Cost of operations................................................... 6,167
Depreciation......................................................... 7,534
--------
Loss from tower operations......................................... $(11,836)
========
</TABLE>
See notes to financial statements.
F-67
<PAGE>
POWERTEL TOWER OPERATIONS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
On March 15, 1999, Crown Castle International Corp. ("CCIC") and Powertel,
Inc. ("Powertel") entered into an asset purchase agreement, whereby Powertel
will sell tower structures and certain related assets to CCIC. The tower
structures and related assets consist of the tower facilities that were
previously part of Powertel's PCS and cellular operations. Their locations
span Atlanta, Georgia; Jacksonville, Florida; Memphis, Tennessee; Jackson,
Mississippi; and Birmingham, Alabama and certain areas in Kentucky and
Tennessee.
The accompanying statement of net assets reflects the assets to be sold by
Powertel to CCIC pursuant to the asset purchase agreement. The statement of
net assets reflects Powertel's historical carrying values of the tower assets,
adjusted to exclude certain assets which will not be contributed as part of
the asset purchase agreement.
The accompanying statement of revenues and direct expenses reflects
operations related to the tower assets to be sold by Powertel to CCIC per the
asset purchase agreement. The statement of revenues and direct expenses does
not include allocated costs related to general corporate overhead, interest
expense and income taxes and therefore may not be indicative of future
operations.
The accompanying statement of net assets and the related statement of
revenues and direct expenses were prepared for the purpose of complying with
the requirements of the Securities and Exchange Commission and are not
intended to be a complete presentation of Powertel's assets and liabilities or
revenues and expenses.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Site rental revenues are recognized on a monthly basis under lease
agreements. Site rental revenues represent charges for tower usage billed to
third party customers under lease arrangements. Revenue amounts received in
advance are deferred and recognized over the term of the lease agreement.
F-68
<PAGE>
POWERTEL TOWER OPERATIONS
NOTES TO FINANCIAL STATEMENTS--(Continued)
(In thousands of dollars)
2. Property and Equipment
Property and equipment are stated at historical costs. Depreciation of
property and equipment is provided on the straight-line method over the
estimated useful lives of the assets. Property and equipment at December 31,
1998 consisted of the following:
<TABLE>
<CAPTION>
Estimated
Useful Lives
------------
<S> <C> <C>
Land $ 859
Telecommunication towers and related equipment........... 15 years 134,757
--------
135,616
Less: accumulated depreciation .......................... (14,126)
--------
$121,490
========
</TABLE>
3. Commitments
At December 31, 1998, minimum rental commitments under operating leases are
as follows:
<TABLE>
<S> <C>
Year ending December 31,
1999................................................................... $4,120
2000................................................................... 4,093
2001................................................................... 3,276
2002................................................................... 1,929
2003................................................................... 626
Thereafter............................................................. 185
</TABLE>
4. Site Rental Revenues
At December 31, 1998, minimum amounts receivable under third party lease
agreements are as follows:
<TABLE>
<S> <C>
Year ending December 31,
1999................................................................... $2,690
2000................................................................... 2,677
2001................................................................... 2,610
2002................................................................... 2,131
2003................................................................... 948
Thereafter............................................................. 485
</TABLE>
F-69
<PAGE>
$200,000,000
CROWN CASTLE INTERNATIONAL CORP.
Offer to Exchange all Outstanding 12 3/4% Senior Exchangeable Preferred Stock
due 2010 for
12 3/4% Senior Exchangeable Preferred Stock due 2010, which have been
Registered under the Securities Act of 1933
----------------
Prospectus
, 1999
----------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware ("DGCL")
provides that a corporation has the power to indemnify any director or
officer, or former director or officer, who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) against the expenses
(including attorney's fees), judgments, fines or amounts paid in settlement
actually and reasonably incurred by them in connection with the defense of any
action by reason of being or having been directors or officers, if such person
shall have acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding; provided that such person had no reasonable
cause to believe his conduct was unlawful, except that, if such action shall
be in the right of the corporation, no such indemnification shall be provided
as to any claim, issue or matter as to which such person shall have been
judged to have been liable to the corporation unless and to the extent that
the Court of Chancery of the State of Delaware (the "Court of Chancery"), or
any court in such suit or action was brought, shall determine upon application
that, in view of all of the circumstances of the case, such person is fairly
and reasonably entitled to indemnify for such expenses as such court shall
deem proper.
Accordingly, the Restated Certificate of Incorporation of the Company (filed
herewith as Exhibit 3.1) provide that the Company shall, to the maximum extent
permitted under the DGCL indemnify each person who is or was a director or
officer of the Company. The Company may, by action of the Board of Directors,
indemnify other employees and agents of the Corporation, directors, officers,
employees or agents of a subsidiary, and each person serving as a director,
officer, partner, member, employee or agent or another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, at the request of the Company, with the same scope and effect as
the indemnification of directors and officers of the Company. Notwithstanding
the foregoing, the Company shall be required to indemnify any person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors or is a proceeding to enforce such person's claim to
indemnification pursuant to the rights granted by the Restated Certificate of
Incorporation or otherwise by the Company. The Company may also enter into one
or more agreements with any person which provide for indemnification greater
or different than that provided in the Restated Certificate of Incorporation.
Furthermore, a director of the Company shall not be liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (1) for any breach of the director's duty of
loyalty to the Company or its stockholders, (2) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (3) under Section 174 of the DGCL, or (4) for any transaction from which
the director derived an improper personal benefit.
The Company's By-laws provide that each person who was or is made a party or
is threatened to be made a party to or is involved in any manner in any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative ("Proceeding"), by reason of the
fact that he or she or a person of whom he or she is the legal representative
is or was a director or officer of the Company or, while a director or officer
of the Company, a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall be indemnified and
held harmless by the Company to the fullest extent permitted by the DGCL. Such
indemnification shall continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the Company shall indemnify any such
person seeking indemnification in connection with a Proceeding (or part
thereof) initiated by such person only if such Proceeding (or part thereof)
was authorized by the Board of Directors or is a Proceeding to enforce such
person's claim to indemnification pursuant to the rights granted by the
Company's By-laws. The Company shall pay the expenses incurred by any person
described in the first two sentences of this paragraph in defending any such
Proceeding in advance of its final disposition upon, to the extent such an
II-1
<PAGE>
undertaking is required by applicable law, receipt of an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Company
as authorized in the Company's By-laws or otherwise.
The Company's By-laws further provide that the indemnification and the
advancement of expenses incurred in defending a Proceeding prior to its final
disposition provided by, or granted pursuant to, the Company's By-laws shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Restated Certificate of
Incorporation, other provision of the Company's By-laws or otherwise. The
Company may also maintain insurance, at its expense, to protect itself and any
person who is or was a director, officer, partner, member, employee or agent
of the Company or a subsidiary or of another corporation, partnership, limited
liability company, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under the DGCL.
The Company's By-laws further provide that the Company may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and rights to be paid by the Company the expenses incurred in
defending any Proceeding in advance of its final disposition, to any person
who is or was an employee or agent (other than a director or officer) of the
Company or a subsidiary thereof and to any person who is or was serving at the
request of the Company or a subsidiary thereof as a director, officer,
partner, member, employee or agent of another corporation, partnership,
limited liability company, joint venture, trust or other enterprise, including
service with respect to employee benefit plans maintained or sponsored by the
Company or a subsidiary thereof, to the fullest extent of the provisions of
the Company's By-laws with respect to the indemnification and advancement of
expenses of directors and officers of the Company.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
**2.1 Asset Purchase and Merger Agreement among Crown Network Systems, Inc.,
Crown Mobile Systems, Inc., Robert A. Crown, Barbara Crown and Castle
Acquisition Corp. I, Castle Acquisition Corp. II, Castle Tower Holding
Corp. dated July 11, 1997
**2.2 First Amended and Restated Asset Purchase and Merger Agreement among
Crown Network Systems, Inc., Crown Mobile Systems, Inc., Robert A.
Crown, Barbara Crown and Castle Acquisition Corp. I, Castle
Acquisition Corp. II, Castle Tower Holding Corp. dated July 11, 1997,
as amended and restated on August 14, 1997
**2.3 Stock Purchase Agreement by and between Castle Tower Holding Corp.,
Bruce W. Neurohr, Charles H. Jones, Ronald J. Minnich, Ferdinand G.
Neurohr and Terrel W. Pugh dated May 12, 1997 ("TEA Stock Purchase
Agreement")
***2.4 Share Exchange Agreement among Castle Transmission Services (Holdings)
Ltd., Crown Castle International Corp., T 1 Diffusion de France
International S.A., Digital Future Investments B.V. and certain
shareholders of Castle Transmission Services (Holdings) Ltd. dated as
of April 24, 1998
+3.1 Restated Certificate of Incorporation of Crown Castle International
Corp. dated August 21, 1998
+3.2 Amended and Restated By-laws of Crown Castle International Corp. dated
August 21, 1998
+3.3 Certificate of Designations, Preferences and Relative, Participating,
Optional and other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions thereof of 12 3/4% Senior
Exchangeable Preferred Stock due 2010 and 12 3/4% Series B Senior
Exchangeable Preferred Stock due 2010 of Crown Castle International
Corp.
**4.1 Indenture dated as of November 25, 1997 between Crown Castle
International Corp. and United States Trust Company of New York, as
Trustee (including exhibits).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
-------- ----------------------
<C> <S>
**4.2 Amended and Restated Stockholders Agreement among Castle Tower
Holding Corp., Edward C. Hutcheson, Jr., Ted B. Miller, Jr., Robert
A. Crown and Barbara Crown and the persons listed on Schedule I
thereto dated August 15, 1997
**4.3 Article Fourth of Certificate of Incorporation of Castle Tower
Holding Corp. (included in Exhibits 3.1 and 3.3)
**4.4 Trust Deed related to (Pounds)125,000,000 9 percent. Guaranteed Bonds
due 2007 among Castle Transmission (Finance) PLC, as Issuer, Castle
Transmission International Ltd. and Castle Transmission Services
(Holdings) Ltd., as Guarantors, and The Law Debenture Trust
Corporation p.l.c., as Trustee, dated May 21, 1997
**4.5 First Supplemental Trust Deed related to (Pounds)125,000,000 9
percent Guaranteed Bonds due 2007 among Castle Transmission (Finance)
PLC, as Issuer, Castle Transmission International Ltd. and Castle
Transmission Services (Holdings) Ltd., as Guarantors, and The Law
Debenture Trust Corporation p.l.c., as Trustee, dated October 17,
1997
***4.6 Specimen Certificate of Common Stock
4.7 Indenture dated as of December 21, 1998 between Crown Castle
International Corp. and the United States Trust Company, as Trustee
(including exhibits)
*5 Opinion of Cravath, Swaine & Moore.
**10.1 Registration Rights Agreement by and among Crown Castle International
Corp. and Lehman Brothers Inc. and Credit Suisse First Boston
Corporation dated as of November 25, 1997
***10.2 Amended and Restated Loan Agreement by and among Crown Communication
Inc., Crown Castle International Corp. de Puerto Rico, Key Corporate
Capital Inc. and certain lenders dated July 10, 1998
**10.8 Amended and Restated Limited Holdco Guaranty by Crown Castle
International Corp., in favor of KeyBank National Association, as
Agent, dated November 25, 1997
**10.9 Memorandum of Understanding regarding Management and Governance of
Castle Tower Holding Corp. and Crown Communications, Inc. dated
August 15, 1997
**10.10 Site Commitment Agreement between Nextel Communications, Inc. and
Castle Tower Corporation dated July 11, 1997
**10.11 Independent Contractor Agreement by and between Crown Network
Systems, Inc. and Sprint Spectrum L.P. dated July 8, 1996, including
addendum dated November 12, 1997
**10.12 Independent Contractor Agreement between Crown Network Systems, Inc.
and Powerfone, Inc. d/b/a Nextel Communications dated September 30,
1996
**10.13 Independent Contractor Agreement by and between APT Pittsburgh
Limited Partnership and Crown Network Systems, Inc. dated December 3,
1996
**10.14 Master Lease Agreement between Sprint Spectrum, L.P. and Robert Crown
d/b/a Crown Communications dated June 11, 1996 ("Sprint Master Lease
Agreement")
**10.15 First Amendment to Sprint Master Lease Agreement, dated July 5, 1996
(included in Exhibit 10.14)
**10.16 Second Amendment to Sprint Master Lease Agreement, dated January 27,
1997 (included in Exhibit 10.14)
**10.17 Master Lease Agreement between Powerfone, Inc. d/b/a Nextel
Communications and Robert A. Crown d/b/a Crown Communications dated
October 3, 1996
**10.18 Master Lease Agreement between APT Pittsburgh Limited Partnership and
Robert Crown d/b/a Crown Communications dated December 3, 1996
**10.19 Master Tower Lease Agreement between Cellco Partnership d/b/a Bell
Atlantic NYNEX Mobile, Pittsburgh SMSA, L.P. and Pennsylvania RSN No.
6(II) and Robert A. Crown d/b/a Crown Communications dated December
29, 1995, as amended by a letter agreement dated as of October 28,
1997
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
-------- ----------------------
<C> <S>
**10.20 Master Tower Lease Agreement between Cellco Partnership d/b/a Bell
Atlantic NYNEX Mobile, Pittsburgh SMSA, L.P. and Pennsylvania RSN No.
6(II) and Robert A. Crown d/b/a Crown Communications dated December
29, 1995, as amended by a letter agreement dated as of October 28,
1997
**10.21 Castle Tower Holding Corp. 1995 Stock Option Plan (Third Restatement)
**10.22 Services Agreement between Castle Transmission International Ltd.
(formerly known as Castle Transmission Services Ltd.) and Castle
Tower Holding Corp. dated February 28, 1997
**10.23 Shareholders Agreement among Berkshire Fund IV Investment Corp.,
Berkshire Investors LLC, Berkshire Partners LLC, Candover Investments
PLC, Candover (Trustees) Limited, Candover Partners Limited (as
general partner for four limited partnerships), Castle Tower Holding
Corp., T 1 Diffusion de France International S.A., and Diohold
Limited (now known as Castle Transmission Services (Holdings) Ltd.)
dated January 23, 1997
**10.24 First Amendment to Amended and Restated Stockholders Agreement by and
among Crown Castle International Corp., Edward C. Hutcheson, Jr., Ted
B. Miller, Jr., Robert A. Crown and Barbara Crown and the persons
listed as Investors dated January 28, 1998
**10.25 Third Amendment to Sprint Master Lease Agreement, dated February 12,
1998
10.26 Stockholders Agreement between Crown Castle International Corp. and
certain stockholders listed on Schedule 1 thereto, dated as of August
21, 1998 as amended by Amendment No. 1, dated as of the 12th day of
November, 1998
***10.27 Agreement among Castle Transmission Services (Holdings) Ltd., Digital
Future Investments B.V., Berkshire Partners LLC and certain
shareholders of Castle Transmission Services (Holdings) Ltd. for the
sale and purchase of certain shares of Castle Transmission Services
(Holdings) Ltd., for the amendment of the Shareholders Agreement in
respect of Castle Transmission Services (Holdings) Ltd. and for the
granting of certain options dated April 24, 1998
+10.28 Governance Agreement among Crown Castle International Corp.,
TeleDiffusion de France International S.A. and Digital Future
Investments B.V., dated as of August 21, 1998
10.29 Form of Severance Agreement entered into between Crown Castle
International Corp. and Ted Miller, George Reese, John Gwyn, Charles
Green, Alan Rees, Blake Hawk and David Ivy
10.30 Shareholders Agreement among Crown Castle International Corp., T 1
Diffusion de France International S.A. and Castle Transmission
Services (Holdings) Limited dated August 1998
***10.31 Site Sharing Agreement between National Transcommunications Limited
and The British Broadcasting Corporation dated September 10, 1991
***10.32 Transmission Agreement between The British Broadcasting Corporation
and Castle Transmission Services Limited dated February 27, 1997
***10.33 Digital Terrestrial Television Transmission Agreement between The
British Broadcasting Corporation and Castle Transmission
International Ltd. dated February 10, 1998
***10.34 Agreement for the Provision of Digital Terrestrial Television
Distribution and Transmission Services between British Digital
Broadcasting plc and Castle Transmission International Ltd. dated
December 18, 1997
***10.35 Loan Amendment Agreement among Castle Transmission International,
Castle Transmission Services (Holdings) Ltd. and certain lenders
dated May 21, 1997
***10.36 Crown Castle International Corp. 1995 Stock Option Plan (Fourth
Restatement)
***10.37 Contract between British Telecommunications PLC and Castle
Transmission International Inc. for the Provision of Digital
Terrestrial Television Network Distribution Service dated May 13,
1998
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
----------- ----------------------
<C> <S>
***10.38 Site Marketing Agreement dated June 25, 1998 between BellSouth
Mobility Inc. and Crown Communication Inc.
***10.39 Commitment Agreement between the British Broadcasting Corporation,
Castle Tower Holding Corp., T 1 Diffusion de France International
S.A. and T 1 Diffusion de France S.A.
10.40 Amended and Restated Services Agreement between Castle
Transmission International Limited and T 1 Diffusion de France
S.A. dated August 1998
***10.41 Castle Transmission Services (Holdings) Ltd. All Employee Share
Option Scheme dated as of January 23, 1998
***10.42 Rules of the Castle Transmission Services (Holdings) Ltd. Bonus
Share Plan
10.43 Employee Benefit Trust between Castle Transmission Services
(Holdings) Ltd. and Castle Transmission (Trustees) Limited
***10.44 Castle Transmission Services (Holdings) Ltd. Unapproved Share
Option Scheme dated as of January 23, 1998
***10.45 Amending Agreement between the British Broadcasting Corporation
and Castle Transmission International Limited dated July 16, 1998
+10.46 Rights Agreement dated as of August 21, 1998, between Crown Castle
International Corp. and Chasemellon Shareholder Services, L.L.C.
***10.47 Deed of Grant of Option between Castle Transmission Series
(Holdings) Ltd. and George Reese dated January 23, 1998
***10.48 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and David Ivy dated January 23, 1998
***10.49 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and David Ivy dated April 23, 1998
***10.50 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and Ted B. Miller, Jr., dated April 23, 1998
***10.51 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and Ted B. Miller, Jr., dated January 23, 1998
***10.52 Memorandum Regarding Proposed Initial Public Offering and Certain
Transitional Changes Affecting Management dated July 2, 1998,
between Crown Castle International Corp. and Robert A. and Barbara
A. Crown
***10.53 Services Agreement dated July 2, 1998, by and between Crown Castle
International Corp. and Robert A. and Barbara A. Crown
+10.56 Registration Rights Agreement dated as of December 21, 1998 by and
among Crown Castle International Corp. and Lehman Brothers,
Salomon Smith Barney and Goldman, Sachs & Co.
****10.57 Formation Agreement relating to the formation of Crown Atlantic
Company LLC, Crown Atlantic Holding Sub LLC, and Crown Atlantic
Holding Company LLC dated December 1998 (including exhibits)
*****10.58 Letter of Agreement between Crown Castle International Corp. and
BellSouth Mobility Inc. dated March 5, 1999 (including the Form of
Sublease)
******10.59 Asset Purchase Agreement among Crown Castle International Corp.,
CCP Inc., Powertel Atlanta Towers, LLC, Powertel Birmingham
Towers, LLC, Powertel Jacksonville Towers, LLC, Powertel Kentucky
Towers, LLC, Powertel Memphis Towers, LLC and Powertel, Inc. dated
March 15, 1999
10.60 Framework Agreement between One2One and Castle Transmission
International Ltd. dated March 5, 1999
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
10.61 Indenture between Crown Castle International Corp. and United States
Trust Company of New York dated March 15, 1999
10.62 Registration Rights Agreement among Crown Castle International Corp.
and Goldman Sachs
Credit Partners LP, Salomon Brothers Holding Company Inc. and Credit
Suisse First Boston dated March 15, 1999
10.63 Escrow Agreement among Crown Castle International Corp., Goldman Sachs
Credit Partners LP, Salomon Brothers Holding Company Inc., Credit
Suisse First Boston and United States Trust Company of New York dated
March 15, 1999
10.64 Term Loan Agreement among Crown Castle International Corp. and Goldman
Sachs Credit Partners LP, Salomon Brothers Holding Company Inc. and
Credit Suisse First Boston dated
March 15, 1999
11 Computation of Net Loss per Common Share
12 Computation of Ratio of Earnings to Fixed Charges
21 Subsidiaries of Crown Castle International Corp.
+23.1 Consent of KPMG LLP
*23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 5)
27.1 Financial Data Schedule
</TABLE>
- --------
+ Previously filed.
* To be filed by amendment.
** Incorporated by reference to the exhibits with the corresponding exhibit
numbers in the Registration Statement on Form S-4 previously filed by the
Registrant (Registration No. 333-43873).
*** Incorporated by reference to the exhibits with the corresponding exhibit
numbers in the Registration Statement on Form S-1 previously filed by the
Registrant (Registration No. 333-57283).
**** Incorporated by reference to the exhibit previously filed by the
Registrant on Form 8-K (Registration No. 0-24737) dated December 9, 1998.
***** Incorporated by reference to the exhibit previously filed by the
Registrant on Form 8-K (Registration No. 0-24737) dated March 8, 1999.
****** Incorporated by reference to the exhibit previously filed by the
Registrant on Form 8-K (Registration No. 0-24737) dated March 15, 1999.
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.
Item 22. Undertakings
The undersigned Registrant hereby undertakes that insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions described under Item 20 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim 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 against the Registrant by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-6
<PAGE>
The undersigned Registrant hereby undertakes (i) to respond to requests for
information that are incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This undertaking also includes documents filed
subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the Registration Statement when it became effective.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the undersigned undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
The undersigned Registrant hereby undertakes that every prospectus: (i) that
is filed pursuant to the immediately preceding paragraph or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on this 16th day of March, 1999
Crown Castle International Corp.,
/s/ Charles C. Green, III
by: _________________________________
Name: Charles C. Green, III
Title: Executive Vice President
and Chief Financial Officer
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 16th day of March, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Ted B. Miller, Jr. Chief Executive Officer and Vice Chairman of the
______________________________________ Board (Principal Executive Officer)
Ted B. Miller, Jr.
/s/ David L. Ivy President and Director
______________________________________
David L. Ivy
/s/ Charles C. Green, III Executive Vice President and Chief Financial
______________________________________ Officer (Principal Financial Officer)
Charles C. Green, III
/s/ Wesley D. Cunningham Vice President, Chief Accounting Officer and
______________________________________ Corporate Controller (Principal Accounting
Wesley D. Cunningham Officer)
/s/ Carl Ferenbach Chairman of the Board
______________________________________
Carl Ferenbach
/s/ Michel Azibert Director
______________________________________
Michel Azibert
/s/ Bruno Chetaille Director
______________________________________
Bruno Chetaille
/s/ Robert A. Crown Director
______________________________________
Robert A. Crown
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Bruno Chetaille Director
______________________________________
Bruno Chetaille
/s/ Robert A. Crown Director
______________________________________
Robert A. Crown
/s/ Randall A. Hack Director
______________________________________
Randall A. Hack
/s/ Robert F. McKenzie Director
______________________________________
Robert F. McKenzie
/s/ William A. Murphy Director
______________________________________
William A. Murphy
/s/ Jeffrey H. Schutz Director
______________________________________
Jeffrey H. Schutz
/s/ Charles C. Green, III
______________________________________
Charles C. Green, III
Attorney-in-Fact
</TABLE>
II-9
<PAGE>
CROWN CASTLE INTERNATIONAL CORP.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET (Unconsolidated)
(In thousands of dollars, except share amounts)
<TABLE>
<CAPTION>
December 31,
---------------------
1997 1998
--------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 53,092 $ 37,907
Receivables and other current assets................... 424 957
Advances to subsidiaries, net.......................... 2,611 13,711
--------- ----------
Total current assets................................. 56,127 52,575
Property and equipment, net of accumulated depreciation
of $27 and $875 at December 31, 1997 and 1998,
respectively........................................... 808 4,255
Investment in subsidiaries.............................. 232,229 1,041,788
Investments in affiliates............................... 59,082 2,258
Deferred financing costs and other assets, net of
accumulated amortization of $69 and $814 at December
31, 1997 and 1998, respectively........................ 7,075 7,227
--------- ----------
$ 355,321 $1,108,103
--------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities......... $ 1,187 $ 1,379
--------- ----------
Total current liabilities............................ 1,187 1,379
Long-term debt.......................................... 151,593 168,099
--------- ----------
Total liabilities.................................... 152,780 169,478
--------- ----------
Redeemable preferred stock, $.01 par value; 10,000,000
shares authorized:
12 3/4% Senior Exchangeable Preferred Stock; shares
issued: December 31, 1997--none and December 31,
1998--200,000 (stated at mandatory redemption and
aggregate liquidation value).......................... -- 201,063
Senior Convertible Preferred Stock; shares issued:
December 31, 1997--657,495 and December 31, 1998--none
(stated at redemption value; aggregate liquidation
value of $68,916)..................................... 67,948 --
Series A Convertible Preferred Stock; shares issued:
December 31, 1997--1,383,333 and December 31,
1998--none (stated at redemption and aggregate
liquidation value).................................... 8,300 --
Series B Convertible Preferred Stock; shares issued:
December 31, 1997--864,568 and December 31, 1998--none
(stated at redemption and aggregate liquidation
value)................................................ 10,375 --
Series C Convertible Preferred Stock; shares issued:
December 31, 1997--3,529,832 and December 31, 1998--
none (stated at redemption and aggregate liquidation
value)................................................ 74,126 --
--------- ----------
Total redeemable preferred stock................... 160,749 201,063
--------- ----------
Stockholders' equity:
Common stock, $.01 par value; 690,000,000 shares
authorized:
Class A Common Stock; shares issued: December 31,
1997--1,041,565 and December 31, 1998--none......... 2 --
Class B Common Stock; shares issued: December 31,
1997--9,367,165 and December 31, 1998--none......... 19 --
Common Stock; shares issued: December 31, 1997--none
and December 31, 1998--83,123,873................... -- 831
Class A Common Stock; shares issued: December 31,
1997--none and December 31, 1998--11,340,000........ -- 113
Additional paid-in capital............................. 58,248 795,153
Cumulative foreign currency translation adjustment..... 562 1,690
Accumulated deficit.................................... (17,039) (60,225)
--------- ----------
Total stockholders' equity........................... 41,792 737,562
--------- ----------
$ 355,321 $1,108,103
--------- ----------
</TABLE>
See notes to consolidated financial statements and accompanying notes.
S-1
<PAGE>
CROWN CASTLE INTERNATIONAL CORP.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(Continued)
STATEMENT OF OPERATIONS (Unconsolidated)
(In thousands of dollars)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Other revenues.................................... $ -- $ 329 $ 399
Interest and other income......................... 171 2,028 1,354
General and administrative expenses............... -- (149) (2,975)
Corporate development expenses.................... (1,249) (3,867) (4,404)
Non-cash compensation charges..................... -- -- (9,775)
Depreciation and amortization..................... -- (27) (720)
Interest expense and amortization of deferred
financing costs.................................. -- (4,594) (17,251)
------- -------- --------
Loss before income taxes and equity in earnings
(losses) of subsidiaries and unconsolidated
affiliate........................................ (1,078) (6,280) (33,372)
Credit (provision) for income taxes............... 49 (49) --
Equity in earnings (losses) of subsidiaries....... 72 (4,475) (6,458)
Equity in earnings (losses) of unconsolidated
affiliate........................................ -- (1,138) 2,055
------- -------- --------
Net loss.......................................... (957) (11,942) (37,775)
Dividends on preferred stock...................... -- (2,199) (5,411)
------- -------- --------
Net loss after deduction of dividends on preferred
stock............................................ $ (957) $(14,141) $(43,186)
======= ======== ========
</TABLE>
See notes to consolidated financial statements and accompanying notes.
S-2
<PAGE>
CROWN CASTLE INTERNATIONAL CORP.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(Continued)
STATEMENT OF CASH FLOWS (Unconsolidated)
(In thousands of dollars)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1996 1997 1998
------ -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss......................................... $ (957) $(11,942) $(37,775)
Adjustments to reconcile net loss to net cash
used for operating activities:
Amortization of deferred financing costs and
discount on long-term debt.................... -- 1,652 17,251
Non-cash compensation charges.................. -- -- 9,775
Equity in losses (earnings) of subsidiaries.... (72) 4,475 6,458
Depreciation and amortization.................. -- 27 720
Equity in losses (earnings) of unconsolidated
affiliate..................................... -- 1,138 (2,055)
Increase (decrease) in accounts payable and
other accrued liabilities..................... 130 (103) 1,352
Decrease (increase) in receivables and other
assets........................................ (1,122) 551 (1,413)
------ -------- --------
Net cash used for operating activities....... (2,021) (4,202) (5,687)
------ -------- --------
Cash flows from investing activities:
Investment in subsidiaries....................... -- (89,989) (332,065)
Net advances to subsidiaries..................... (288) (2,223) (11,100)
Capital expenditures............................. -- (835) (3,624)
Investments in affiliates........................ (2,101) (59,487) --
------ -------- --------
Net cash used for investing activities....... (2,389) (152,534) (346,789)
------ -------- --------
Cash flows from financing activities:
Proceeds from issuance of capital stock.......... 10,503 139,867 339,929
Incurrence of financing costs.................... -- (5,908) (1,755)
Purchase of capital stock........................ -- (2,132) (883)
Proceeds from issuance of long-term debt......... -- 150,010 --
Principal payments on long-term debt............. -- (78,102) --
------ -------- --------
Net cash provided by financing activities.... 10,503 203,735 337,291
------ -------- --------
Net increase (decrease) in cash and cash
equivalents....................................... 6,093 46,999 (15,185)
Cash and cash equivalents at beginning of year..... -- 6,093 53,092
------ -------- --------
Cash and cash equivalents at end of year........... $6,093 $ 53,092 $ 37,907
====== ======== ========
Supplementary schedule of noncash investing and
financing activities:
Issuance of long-term debt in connection with
acquisitions.................................... $ -- $ 78,102 $ --
Issuance of common stock in connection with
acquisitions.................................... -- 57,189 420,964
Conversion of subsidiary's Convertible Secured
Subordinated Notes to Series A Convertible
Preferred Stock................................. -- 3,657 --
Supplemental disclosure of cash flow information:
Interest paid.................................... $ -- $ 2,943 $ --
Income taxes paid................................ -- -- --
</TABLE>
See notes to consolidated financial statements and accompanying notes.
S-3
<PAGE>
CROWN CASTLE INTERNATIONAL CORP.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(Continued)
NOTES TO FINANCIAL STATEMENTS (Unconsolidated)
1. Investment in Subsidiaries
The Company's investment in subsidiaries is presented in the accompanying
unconsolidated financial statements using the equity method of accounting.
Under the terms of the Senior Credit Facility, the CTI Credit Facility and the
CTI Bonds, the Company's subsidiaries are limited in the amount of dividends
which can be paid to the Company. For CCI, the amount of such dividends is
limited to (i) $6,000,000 per year until October 31, 2002, and $33,000,000 per
year thereafter, and (ii) an amount to pay income taxes attributable to the
Company's Restricted Subsidiaries. CTI is effectively precluded from paying
dividends. The restricted net assets of the Company's subsidiaries totaled
approximately $826,321,000 at December 31, 1998.
2. Long-term Debt
Long-term debt consists of the Company's 10 5/8% Senior Discount Notes due
2007.
3. Income Taxes
Income taxes reported in the accompanying unconsolidated financial
statements are determined by computing income tax assets and liabilities on a
consolidated basis, for the Company and members of its consolidated federal
income tax return group, and then reducing such consolidated amounts for the
amounts recorded by the Company's subsidiaries on a separate tax return basis.
S-4
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description of Exhibit
-----------------------------
<TABLE>
<C> <S>
**2.1 Asset Purchase and Merger Agreement among Crown Network Systems,
Inc., Crown Mobile Systems, Inc., Robert A. Crown, Barbara Crown and
Castle Acquisition Corp. I, Castle Acquisition Corp. II, Castle Tower
Holding Corp. dated July 11, 1997
**2.2 First Amended and Restated Asset Purchase and Merger Agreement among
Crown Network Systems, Inc., Crown Mobile Systems, Inc., Robert A.
Crown, Barbara Crown and Castle Acquisition Corp. I, Castle
Acquisition Corp. II, Castle Tower Holding Corp. dated July 11, 1997,
as amended and restated on August 14, 1997
**2.3 Stock Purchase Agreement by and between Castle Tower Holding Corp.,
Bruce W. Neurohr, Charles H. Jones, Ronald J. Minnich, Ferdinand G.
Neurohr and Terrel W. Pugh dated May 12, 1997 ("TEA Stock Purchase
Agreement")
***2.4 Share Exchange Agreement among Castle Transmission Services
(Holdings) Ltd., Crown Castle International Corp., T 1 Diffusion de
France International S.A., Digital Future Investments B.V. and
certain shareholders of Castle Transmission Services (Holdings) Ltd.
dated as of April 24, 1998
+3.1 Restated Certificate of Incorporation of Crown Castle International
Corp. dated August 21, 1998
+3.2 Amended and Restated By-laws of Crown Castle International Corp.
dated August 21, 1998
+3.3 Certificate of Designations, Preferences and Relative, Participating,
Optional and other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions thereof of 12 3/4%
Senior Exchangeable Preferred Stock due 2010 and 12 3/4% Series B
Senior Exchangeable Preferred Stock due 2010 of Crown Castle
International Corp.
**4.1 Indenture dated as of November 25, 1997 between Crown Castle
International Corp. and United States Trust Company of New York, as
Trustee (including exhibits).
**4.2 Amended and Restated Stockholders Agreement among Castle Tower
Holding Corp., Edward C. Hutcheson, Jr., Ted B. Miller, Jr., Robert
A. Crown and Barbara Crown and the persons listed on Schedule I
thereto dated August 15, 1997
**4.3 Article Fourth of Certificate of Incorporation of Castle Tower
Holding Corp. (included in Exhibits 3.1 and 3.3)
**4.4 Trust Deed related to (Pounds)125,000,000 9 percent. Guaranteed Bonds
due 2007 among Castle Transmission (Finance) PLC, as Issuer, Castle
Transmission International Ltd. and Castle Transmission Services
(Holdings) Ltd., as Guarantors, and The Law Debenture Trust
Corporation p.l.c., as Trustee, dated May 21, 1997
**4.5 First Supplemental Trust Deed related to (Pounds)125,000,000 9
percent Guaranteed Bonds due 2007 among Castle Transmission (Finance)
PLC, as Issuer, Castle Transmission International Ltd. and Castle
Transmission Services (Holdings) Ltd., as Guarantors, and The Law
Debenture Trust Corporation p.l.c., as Trustee, dated October 17,
1997
***4.6 Specimen Certificate of Common Stock
4.7 Indenture dated as of December 21, 1998 between Crown Castle
International Corp. and the United States Trust Company, as Trustee
(including exhibits)
*5 Opinion of Cravath, Swaine & Moore.
**10.1 Registration Rights Agreement by and among Crown Castle International
Corp. and Lehman Brothers Inc. and Credit Suisse First Boston
Corporation dated as of November 25, 1997
***10.2 Amended and Restated Loan Agreement by and among Crown Communication
Inc., Crown Castle International Corp. de Puerto Rico, Key Corporate
Capital Inc. and certain lenders dated July 10, 1998
</TABLE>
<PAGE>
Exhibit
No. Description of Exhibit
-----------------------------
<TABLE>
<C> <S>
**10.8 Amended and Restated Limited Holdco Guaranty by Crown Castle
International Corp., in favor of KeyBank National Association, as
Agent, dated November 25, 1997
**10.9 Memorandum of Understanding regarding Management and Governance of
Castle Tower Holding Corp. and Crown Communications, Inc. dated August
15, 1997
**10.10 Site Commitment Agreement between Nextel Communications, Inc. and
Castle Tower Corporation dated July 11, 1997
**10.11 Independent Contractor Agreement by and between Crown Network Systems,
Inc. and Sprint Spectrum L.P. dated July 8, 1996, including addendum
dated November 12, 1997
**10.12 Independent Contractor Agreement between Crown Network Systems, Inc.
and Powerfone, Inc. d/b/a Nextel Communications dated September 30,
1996
**10.13 Independent Contractor Agreement by and between APT Pittsburgh Limited
Partnership and Crown Network Systems, Inc. dated December 3, 1996
**10.14 Master Lease Agreement between Sprint Spectrum, L.P. and Robert Crown
d/b/a Crown Communications dated June 11, 1996 ("Sprint Master Lease
Agreement")
**10.15 First Amendment to Sprint Master Lease Agreement, dated July 5, 1996
(included in Exhibit 10.14)
**10.16 Second Amendment to Sprint Master Lease Agreement, dated January 27,
1997 (included in Exhibit 10.14)
**10.17 Master Lease Agreement between Powerfone, Inc. d/b/a Nextel
Communications and Robert A. Crown d/b/a Crown Communications dated
October 3, 1996
**10.18 Master Lease Agreement between APT Pittsburgh Limited Partnership and
Robert Crown d/b/a Crown Communications dated December 3, 1996
**10.19 Master Tower Lease Agreement between Cellco Partnership d/b/a Bell
Atlantic NYNEX Mobile, Pittsburgh SMSA, L.P. and Pennsylvania RSN No.
6(II) and Robert A. Crown d/b/a Crown Communications dated December
29, 1995, as amended by a letter agreement dated as of October 28,
1997
**10.20 Master Tower Lease Agreement between Cellco Partnership d/b/a Bell
Atlantic NYNEX Mobile, Pittsburgh SMSA, L.P. and Pennsylvania RSN No.
6(II) and Robert A. Crown d/b/a Crown Communications dated December
29, 1995, as amended by a letter agreement dated as of October 28,
1997
**10.21 Castle Tower Holding Corp. 1995 Stock Option Plan (Third Restatement)
**10.22 Services Agreement between Castle Transmission International Ltd.
(formerly known as Castle Transmission Services Ltd.) and Castle Tower
Holding Corp. dated February 28, 1997
**10.23 Shareholders Agreement among Berkshire Fund IV Investment Corp.,
Berkshire Investors LLC, Berkshire Partners LLC, Candover Investments
PLC, Candover (Trustees) Limited, Candover Partners Limited (as
general partner for four limited partnerships), Castle Tower Holding
Corp., T 1 Diffusion de France International S.A., and Diohold Limited
(now known as Castle Transmission Services (Holdings) Ltd.) dated
January 23, 1997
**10.24 First Amendment to Amended and Restated Stockholders Agreement by and
among Crown Castle International Corp., Edward C. Hutcheson, Jr., Ted
B. Miller, Jr., Robert A. Crown and Barbara Crown and the persons
listed as Investors dated January 28, 1998
**10.25 Third Amendment to Sprint Master Lease Agreement, dated February 12,
1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
-------- ----------------------
<C> <S>
10.26 Stockholders Agreement between Crown Castle International Corp. and
certain stockholders listed on Schedule 1 thereto, dated as of August
21, 1998 as amended by Amendment No. 1, dated as of the 12th day of
November, 1998
***10.27 Agreement among Castle Transmission Services (Holdings) Ltd., Digital
Future Investments B.V., Berkshire Partners LLC and certain
shareholders of Castle Transmission Services (Holdings) Ltd. for the
sale and purchase of certain shares of Castle Transmission Services
(Holdings) Ltd., for the amendment of the Shareholders Agreement in
respect of Castle Transmission Services (Holdings) Ltd. and for the
granting of certain options dated April 24, 1998
+10.28 Governance Agreement among Crown Castle International Corp.,
TeleDiffusion de France International S.A. and Digital Future
Investments B.V., dated as of August 21, 1998
10.29 Form of Severance Agreement entered into between Crown Castle
International Corp. and Ted Miller, George Reese, John Gwyn, Charles
Green, Alan Rees, Blake Hawk and David Ivy
10.30 Shareholders Agreement among Crown Castle International Corp., T 1
Diffusion de France International S.A. and Castle Transmission
Services (Holdings) Limited dated August 1998
***10.31 Site Sharing Agreement between National Transcommunications Limited
and The British Broadcasting Corporation dated September 10, 1991
***10.32 Transmission Agreement between The British Broadcasting Corporation
and Castle Transmission Services Limited dated February 27, 1997
***10.33 Digital Terrestrial Television Transmission Agreement between The
British Broadcasting Corporation and Castle Transmission
International Ltd. dated February 10, 1998
***10.34 Agreement for the Provision of Digital Terrestrial Television
Distribution and Transmission Services between British Digital
Broadcasting plc and Castle Transmission International Ltd. dated
December 18, 1997
***10.35 Loan Amendment Agreement among Castle Transmission International,
Castle Transmission Services (Holdings) Ltd. and certain lenders
dated May 21, 1997
***10.36 Crown Castle International Corp. 1995 Stock Option Plan (Fourth
Restatement)
***10.37 Contract between British Telecommunications PLC and Castle
Transmission International Inc. for the Provision of Digital
Terrestrial Television Network Distribution Service dated May 13,
1998
***10.38 Site Marketing Agreement dated June 25, 1998 between BellSouth
Mobility Inc. and Crown Communication Inc.
***10.39 Commitment Agreement between the British Broadcasting Corporation,
Castle Tower Holding Corp., T 1 Diffusion de France International
S.A. and T 1 Diffusion de France S.A.
10.40 Amended and Restated Services Agreement between Castle Transmission
International Limited and T 1 Diffusion de France S.A. dated August
1998
***10.41 Castle Transmission Services (Holdings) Ltd. All Employee Share
Option Scheme dated as of January 23, 1998
***10.42 Rules of the Castle Transmission Services (Holdings) Ltd. Bonus Share
Plan
10.43 Employee Benefit Trust between Castle Transmission Services
(Holdings) Ltd. and Castle Transmission (Trustees) Limited
***10.44 Castle Transmission Services (Holdings) Ltd. Unapproved Share Option
Scheme dated as of January 23, 1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
----------- ----------------------
<C> <S>
***10.45 Amending Agreement between the British Broadcasting Corporation
and Castle Transmission International Limited dated July 16, 1998
+10.46 Rights Agreement dated as of August 21, 1998, between Crown Castle
International Corp. and Chasemellon Shareholder Services, L.L.C.
***10.47 Deed of Grant of Option between Castle Transmission Series
(Holdings) Ltd. and George Reese dated January 23, 1998
***10.48 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and David Ivy dated January 23, 1998
***10.49 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and David Ivy dated April 23, 1998
***10.50 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and Ted B. Miller, Jr., dated April 23, 1998
***10.51 Deed of Grant of Option between Castle Transmission Services
(Holdings) Ltd. and Ted B. Miller, Jr., dated January 23, 1998
***10.52 Memorandum Regarding Proposed Initial Public Offering and Certain
Transitional Changes Affecting Management dated July 2, 1998,
between Crown Castle International Corp. and Robert A. and Barbara
A. Crown
***10.53 Services Agreement dated July 2, 1998, by and between Crown Castle
International Corp. and Robert A. and Barbara A. Crown
+10.56 Registration Rights Agreement dated as of December 21, 1998 by and
among Crown Castle International Corp. and Lehman Brothers,
Salomon Smith Barney and Goldman, Sachs & Co.
****10.57 Formation Agreement relating to the formation of Crown Atlantic
Company LLC, Crown Atlantic Holding Sub LLC, and Crown Atlantic
Holding Company LLC dated December 1998 (including exhibits)
*****10.58 Letter of Agreement between Crown Castle International Corp. and
BellSouth Mobility Inc. dated March 5, 1999 (including the Form of
Sublease)
******10.59 Asset Purchase Agreement among Crown Castle International Corp.,
CCP Inc., Powertel Atlanta Towers, LLC, Powertel Birmingham
Towers, LLC, Powertel Jacksonville Towers, LLC, Powertel Kentucky
Towers, LLC, Powertel Memphis Towers, LLC and Powertel, Inc. dated
March 15, 1999
10.60 Framework Agreement between One2One and Castle Transmission
International Ltd. dated March 5, 1999
10.61 Indenture between Crown Castle International Corp. and United
States Trust Company of New York dated March 15, 1999
10.62 Registration Rights Agreement among Crown Castle International
Corp. and Goldman Sachs
Credit Partners LP, Salomon Brothers Holding Company Inc. and
Credit Suisse First Boston dated March 15, 1999
10.63 Escrow Agreement among Crown Castle International Corp., Goldman
Sachs Credit Partners LP, Salomon Brothers Holding Company Inc.,
Credit Suisse First Boston and United States Trust Company of New
York dated March 15, 1999
10.64 Term Loan Agreement among Crown Castle International Corp. and
Goldman Sachs Credit Partners LP, Salomon Brothers Holding Company
Inc. and Credit Suisse First Boston dated
March 15, 1999
</TABLE>
<PAGE>
Exhibit
No. Description of Exhibit
-----------------------------
<TABLE>
<C> <S>
11 Computation of Net Loss per Common Share
12 Computation of Ratio of Earnings to Fixed Charges
21 Subsidiaries of Crown Castle International Corp.
+23.1 Consent of KPMG LLP
*23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 5)
27.1 Financial Data Schedule
</TABLE>
- --------
+ Previously filed.
* To be filed by amendment.
** Incorporated by reference to the exhibits with the corresponding exhibit
numbers in the Registration Statement on Form S-4 previously filed by the
Registrant (Registration No. 333-43873).
*** Incorporated by reference to the exhibits with the corresponding exhibit
numbers in the Registration Statement on Form S-1 previously filed by the
Registrant (Registration No. 333-57283).
**** Incorporated by reference to the exhibit previously filed by the
Registrant on Form 8-K (Registration No. 0-24737) dated December 9, 1998.
***** Incorporated by reference to the exhibit previously filed by the
Registrant on Form 8-K (Registration No. 0-24737) dated March 8, 1999.
****** Incorporated by reference to the exhibit previously filed by the
Registrant on Form 8-K (Registration No. 0-24737) dated March 15, 1999.
<PAGE>
EXHIBIT 4.7
================================================================================
______________________________________________
CROWN CASTLE INTERNATIONAL CORP.
As Issuer
______________________________________________
SERIES A AND SERIES B
12 3/4% SENIOR SUBORDINATED EXCHANGE DEBENTURES DUE 2010
______________________________
EXCHANGE INDENTURE
Dated as of December 21, 1998
______________________________
______________________________
United States Trust Company of Texas, N.A.
As Trustee
______________________________
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)......................................................7.10
(a)(2) .....................................................7.10
(a)(3)......................................................N.A.
(a)(4)......................................................N.A.
(a)(5)......................................................7.10
(b).........................................................7.10
(c).........................................................N.A.
311 (a).........................................................7.11
(b).........................................................7.11
(c).........................................................N.A.
312 (a).........................................................2.05
(b).........................................................11.03
(c).........................................................11.03
313 (a).........................................................7.06
(b)(1)......................................................11.03
(b)(2)......................................................7.07
(c).........................................................7.06; 11.02
(d).........................................................7.06
314 (a).........................................................4.03; 11.02
(b).........................................................11.02
(c)(1)......................................................11.04
(c)(2)......................................................11.04
(c)(3)......................................................N.A.
(d).........................................................N.A.
(e).........................................................11.05
(f).........................................................NA
315 (a).........................................................7.01
(b).........................................................7.05, 11.02
(c).........................................................7.01
(d).........................................................7.01
(e).........................................................6.11
316 (a)(last sentence)..........................................2.09
(a)(1)(A)...................................................6.05
(a)(1)(B)...................................................6.04
(a)(2)......................................................N.A.
(b).........................................................6.07
(c).........................................................2.12
317 (a)(1)......................................................6.08
(a)(2)......................................................6.09
(b).........................................................2.04
318 (a).........................................................11.01
(b).........................................................N.A.
(c).........................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
Section 1.01. Definitions......................................................................................1
Section 1.02. Other Definitions...............................................................................21
Section 1.03. Incorporation by Reference of Trust Indenture Act...............................................22
Section 1.04. Rules of Construction...........................................................................22
Section 1.05. Effectiveness of Indenture......................................................................23
ARTICLE 2. THE DEBENTURES........................................................................................23
Section 2.01. Form and Dating.................................................................................23
Section 2.02. Execution and Authentication....................................................................24
Section 2.03. Registrar and Paying Agent......................................................................25
Section 2.04. Paying Agent to Hold Money in Trust.............................................................25
Section 2.05. Holder Lists....................................................................................25
Section 2.06. Transfer and Exchange...........................................................................26
Section 2.07. Replacement Debentures..........................................................................37
Section 2.08. Outstanding Debentures..........................................................................37
Section 2.09. Treasury Debentures.............................................................................38
Section 2.10. Temporary Debentures............................................................................38
Section 2.11. Cancellation....................................................................................38
Section 2.12. Defaulted Interest..............................................................................39
ARTICLE 3. REDEMPTION AND PREPAYMENT.............................................................................39
Section 3.01. Notices to Trustee..............................................................................39
Section 3.02. Selection of Debentures to Be Redeemed..........................................................39
Section 3.03. Notice of Redemption............................................................................40
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 3.04. Effect of Notice of Redemption..................................................................40
Section 3.05. Deposit of Redemption Price.....................................................................40
Section 3.06. Debentures Redeemed in Part.....................................................................41
Section 3.07. Optional Redemption.............................................................................41
Section 3.08. Mandatory Redemption............................................................................42
Section 3.09. Offer to Purchase by Application of Excess Proceeds.............................................42
ARTICLE 4. COVENANTS.............................................................................................44
Section 4.01. Payment of Debentures...........................................................................44
Section 4.02. Maintenance of Office or Agency.................................................................44
Section 4.03. Reports.........................................................................................44
Section 4.04. Compliance Certificate..........................................................................45
Section 4.05. Taxes...........................................................................................46
Section 4.06. Stay, Extension and Usury Laws..................................................................46
Section 4.07. Restricted Payments.............................................................................46
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries..................................49
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock......................................51
Section 4.10. Asset Sales.....................................................................................53
Section 4.11. Transactions with Affiliates....................................................................55
Section 4.12. [Reserved]......................................................................................56
Section 4.13. Business activities.............................................................................56
Section 4.14. Corporate Existence.............................................................................56
Section 4.15. Offer to Repurchase Upon Change of Control......................................................56
Section 4.16. [Reserved]......................................................................................57
Section 4.17. Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries...................57
Section 4.18. Senior Subordinated Debt........................................................................58
ARTICLE 5. SUCCESSORS............................................................................................58
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 5.01. Merger, Consolidation or Sale of Assets.........................................................58
Section 5.02. Successor Corporation Substituted...............................................................59
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................59
Section 6.01. Events of Default...............................................................................59
Section 6.02. Acceleration....................................................................................60
Section 6.03. Other Remedies..................................................................................61
Section 6.04. Waiver of Past Defaults.........................................................................61
Section 6.05. Control by Majority.............................................................................61
Section 6.06. Limitation on Suits.............................................................................61
Section 6.07. Rights of Holders of Debentures to Receive Payment..............................................62
Section 6.08. Collection Suit by Trustee......................................................................62
Section 6.09. Trustee May File Proofs of Claim................................................................62
Section 6.10. Priorities......................................................................................63
Section 6.11. Undertaking for Costs...........................................................................63
ARTICLE 7. TRUSTEE...............................................................................................63
Section 7.01. Duties of Trustee...............................................................................63
Section 7.02. Rights of Trustee...............................................................................64
Section 7.03. Individual Rights of Trustee....................................................................65
Section 7.04. Trustee's Disclaimer............................................................................65
Section 7.05. Notice of Defaults..............................................................................65
Section 7.06. Reports by Trustee to Holders of the Debentures.................................................65
Section 7.07. Compensation and Indemnity......................................................................66
Section 7.08. Replacement of Trustee..........................................................................67
Section 7.09. Successor Trustee by Merger, etc................................................................67
Section 7.10. Eligibility; Disqualification...................................................................68
Section 7.11. Preferential Collection of Claims Against Company...............................................68
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................68
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........................................68
Section 8.02. Legal Defeasance and Discharge..................................................................68
Section 8.03. Covenant Defeasance.............................................................................69
Section 8.04. Conditions to Legal or Covenant Defeasance......................................................69
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions...70
Section 8.06. Repayment to Company............................................................................71
Section 8.07. Reinstatement...................................................................................71
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER......................................................................71
Section 9.01. Without Consent of Holders of Debentures........................................................71
Section 9.02. With Consent of Holders of Debentures...........................................................72
Section 9.03. Compliance with Trust Indenture Act.............................................................74
Section 9.04. Revocation and Effect of Consents...............................................................74
Section 9.05. Notation on or Exchange of Debentures...........................................................74
Section 9.06. Trustee to Sign Amendments, etc.................................................................74
ARTICLE 10 SUBORDINATION.........................................................................................74
Section 10.01. Agreement to Subordinate.......................................................................74
Section 10.02. Liquidation; Dissolution; Bankruptcy...........................................................75
Section 10.03. Default on Designated Senior Debt..............................................................75
Section 10.04. Acceleration of Debentures.....................................................................76
Section 10.05. When Distribution Must Be Paid Over............................................................76
Section 10.06. Notice by Company..............................................................................77
Section 10.07. Subrogation....................................................................................77
Section 10.08. Relative Rights................................................................................77
Section 10.09. Subordination May Not Be Impaired by Company...................................................77
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Section 10.10. Distribution or Notice to Representative.......................................................77
Section 10.11. Rights of Trustee and Paying Agent.............................................................78
Section 10.12. Authorization to Effect Subordination..........................................................78
Section 10.13. Amendments.....................................................................................78
ARTICLE 11. MISCELLANEOUS........................................................................................78
Section 11.01. Trust Indenture Act Controls...................................................................78
Section 11.02. Notices........................................................................................78
Section 11.03. Communication by Holders of Debentures with Other Holders of Debentures........................80
Section 11.04. Certificate and Opinion as to Conditions Precedent.............................................80
Section 11.05. Statements Required in Certificate or Opinion..................................................80
Section 11.06. Rules by Trustee and Agents....................................................................80
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders.......................81
Section 11.08. Governing Law..................................................................................81
Section 11.09. No Adverse Interpretation of Other Agreements..................................................81
Section 11.10. Successors.....................................................................................81
Section 11.11. Severability...................................................................................81
Section 11.12. Counterpart Originals..........................................................................81
Section 11.13. Table of Contents, Headings, etc...............................................................81
</TABLE>
EXHIBITS
Exhibit A1 FORM OF DEBENTURE
Exhibit A2 FORM OF REGULATION S GLOBAL DEBENTURE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
v
<PAGE>
INDENTURE dated as of December 21, 1998 between Crown Castle International
Corp., a Delaware corporation (the "Company"), and United States Trust Company,
as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the 12 3/4% Series A
Senior Subordinated Exchange Debentures due 2010 (the "Series A Debentures") and
the 12 3/4% Series B Senior Subordinated Exchange Debentures due 2010 (the
"Series B Debentures" and, together with the Series A Debentures, the "Senior
Subordinated Exchange Debentures"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"144A Global Debenture" means a global debenture substantially in the form
---------------------
of Exhibit A1 hereto bearing the Global Debenture Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the name
of, the Depositary or its nominee that will be issued in a denomination equal to
the outstanding principal amount of the Debentures sold in reliance on Rule
144A.
"Acquired Debt" means, with respect to any specified Person:
-------------
(1) Indebtedness or Disqualified Stock of any other Person existing at
the time such other Person is merged with or into or became a Subsidiary of
such specified Person, including, without limitation, Indebtedness incurred
in connection with, or in contemplation of, such other Person merging with
or into or becoming a Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Adjusted Consolidated Cash Flow" has the meaning given to such term in the
-------------------------------
definition of "Debt to Adjusted Consolidated Cash Flow Ratio".
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
-----
"Applicable Procedures" means, with respect to any transfer or exchange of
---------------------
or for beneficial interests in any Global Certificate, the rules and procedures
of the Depositary that apply to such transfer or exchange.
"Asset Sale" means:
----------
1
<PAGE>
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback),
provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken
as a whole shall be governed by Section 8.1 and/or Section 9.4 hereof and
not by Section 8.2 hereof; and
(2) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Subsidiaries
(other than directors' qualifying shares or shares required by applicable
law to be held by a Person other than the Company or a Restricted
Subsidiary), in the case of either clause (1) or (2), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets by the Company to a Restricted Subsidiary or
by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary;
(2) an issuance of Equity Interests by a Subsidiary to the Company or
to another Restricted Subsidiary;
(3) a Restricted Payment that is permitted by Section 9.1 hereof;
(4) grants of leases or licenses in the ordinary course of business;
and
(5) disposals of Cash Equivalents.
"BAM" means Cellco Partnership, a Delaware general partnership doing
---
business as Bell Atlantic Mobile.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
--------------
law for the relief of debtors.
"Berkshire Group" means Berkshire Fund III, A Limited Partnership,
---------------
Berkshire Fund IV, Limited Partnership, Berkshire Investors LLC and Berkshire
Partners LLC.
"Board of Directors" means the Board of Directors of the Company, or any
------------------
authorized committee of the Board of Directors.
"Broker-Dealer" means any broker or dealer registered under the Exchange
-------------
Act.
"Business Day" means any day other than a Legal Holiday.
------------
"Capital Lease Obligation" means, at the time any determination thereof is
------------------------
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
-------------
2
<PAGE>
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
----------------
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than six months from the
date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Senior Credit Facility
or with any domestic commercial bank having capital and surplus in excess
of $500.0 million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group and in each case
maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1)-(5) of this
definition.
"CCAIC" means CCA Investment Corp., which is an indirect wholly owned
-----
Subsidiary of the Company and was formed to hold the Company's Equity Interests
in Crown Atlantic Holding Company LLC.
"Cedel" means Cedel Bank, S.A.
-----
"Centennial Group" means Centennial Fund IV, L.P., Centennial Fund V, L.P.
----------------
and Centennial Entrepreneurs Fund V, L.P.
"Certificate of Designations" means the Certificate of Designations,
---------------------------
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and
3
<PAGE>
Restrictions Thereof with respect to the Senior Exchangeable Preferred Stock, as
the same may be amended from time to time.
"Change of Control" means the occurrence of any of the following:
-----------------
(1) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Restricted Subsidiaries, taken as a whole, to any "person" (as such
term is used in Section 13(d)(3) of the Exchange Act) other than a
Principal or a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution
of the Company;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person
has the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly
or indirectly, of more than 50% of the Voting Stock of the Company
(measured by voting power rather than number of shares); provided that
transfers of Equity Interests in the Company between or among the
beneficial owners of the Company's Equity Interests and/or Equity Interests
in CTSH, in each case as of November 20, 1997, shall not be deemed to cause
a Change of Control under this clause (3) so long as no single Person
together with its Affiliates acquires a beneficial interest in more of the
Voting Stock of the Company than is at the time collectively beneficially
owned by the Principals and their Related Parties;
(4) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; or
(5) the Company consolidates with, or merges with or into, any Person,
or any Person consolidates with, or merges with or into, the Company, in
any such event pursuant to a transaction in which any of the outstanding
Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where (x) the
Voting Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving
or transferee Person (immediately after giving effect to such issuance) or
(y) the Principals and their Related Parties own a majority of such
outstanding shares after such transaction.
"Company" means Crown Castle International Corp. and any and all successors
-------
thereto.
"Consolidated Cash Flow" means, with respect to any Person for any period,
----------------------
the Consolidated Net Income of such Person for such period plus:
(1) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net Income,
plus
4
<PAGE>
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus
(3) depreciation, amortization (including amortization of goodwill and
other intangibles and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income, minus
(4) non-cash items increasing such Consolidated Net Income for such
period (excluding any items that were accrued in the ordinary course of
business), in each case on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of any
-------------------------
date of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries, plus
(2) the total amount of Indebtedness of any other Person, to the
extent that such Indebtedness has been Guaranteed by the referent Person or
one or more of its Restricted Subsidiaries, plus
(3) the aggregate liquidation value of all Disqualified Stock of such
Person and all preferred stock of Restricted Subsidiaries of such Person,
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
-----------------------
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP,
provided that:
(1) the Net Income (but not loss) of any Person other than the Company
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person or a
Restricted Subsidiary thereof;
(2) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(3) the cumulative effect of a change in accounting principles shall
be excluded; and
5
<PAGE>
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall
be excluded whether or not distributed to the Company or one of its
Restricted Subsidiaries.
"Consolidated Tangible Assets" means, with respect to the Company, the
----------------------------
total consolidated assets of the Company and its Restricted Subsidiaries, less
the total intangible assets of the Company and its Restricted Subsidiaries, as
shown on the most recent internal consolidated balance sheet of the Company and
such Restricted Subsidiaries calculated on a consolidated basis in accordance
with GAAP.
"Continuing Directors" means, as of any date of determination, any member
--------------------
of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue Date;
(2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election; or
(3) is a designee of a Principal or was nominated by a Principal.
"Corporate Trust Office of the Trustee" shall be at the address of the
-------------------------------------
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means one or more debt facilities (including, without
-----------------
limitation, the Senior Credit Facility) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, term
loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Crown Transition Agreements" means collectively (i) the Crown Memorandum
---------------------------
of Understanding among the Company, Robert A. Crown and Barbara A. Crown, dated
as of July 2, 1998, (ii) the Crown Services Agreement between the Company and
Robert A. Crown, dated as of July 2, 1998 and (iii) the Registration Rights
Crown Side Letter Agreement, among the Company, Robert A. Crown and Barbara A.
Crown, dated as of August 18, 1998.
"CTI" means Castle Transmission International Limited.
---
"CTI Operating Agreement" means the memorandum of understanding among the
-----------------------
Company, CTSH, CTI and TdF, dated as of August 21, 1998, relating to the
development of certain business opportunities outside of the United States and
the provision of certain business support and technical services in connection
therewith.
"CTI Services Agreement" means the amended and restated services agreement
----------------------
between CTI and TdF, dated as of August 21, 1998, relating to the provisions of
certain services to CTI.
"CTSH" means Castle Transmission Services (Holdings) Ltd and its
----
successors.
6
<PAGE>
"CTSH Shareholders' Agreement" means the agreement entered into by the
----------------------------
Company, CTSH and TdF, dated as of August 21, 1998, to govern the relationship
between the Company and TdF as shareholders of CTSH.
"Custodian" means the Trustee, as custodian with respect to the Debentures
---------
in global form, or any successor entity thereto.
"Debentures" means (i) the 12 3/4% Senior Subordinated Exchange Debentures
----------
due 2010 of the Company issued on the Exchange Date, (ii) any and all additional
12 3/4% Senior Subordinated Exchange Debentures due 2010 of the Company issued
after the Exchange Date as payment of interest in accordance with the provisions
of this Indenture and (iii) any and all New Exchange Debentures.
"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date of
---------------------------------------------
determination, the ratio of:
(1) the Consolidated Indebtedness of the Company as of such date to
(2) the sum of (a) the Consolidated Cash Flow of the Company for the
four most recent full fiscal quarters ending immediately prior to such date
for which internal financial statements are available, less the Company's
Tower Cash Flow for such four-quarter period, plus (b) the product of four
times the Company's Tower Cash Flow for the most recent quarterly period
(such sum being referred to as "Adjusted Consolidated Cash Flow"),
-------------------------------
in each case determined on a pro forma basis after giving effect to all
acquisitions or dispositions of assets made by the Company and its Subsidiaries
from the beginning of such four-quarter period through and including such date
of determination (including any related financing transactions) as if such
acquisitions and dispositions had occurred at the beginning of such four-quarter
period. For purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the reference period or subsequent to
such reference period and on or prior to the Calculation Date shall be deemed to
have occurred on the first day of the reference period and Consolidated Cash
Flow for such reference period shall be calculated without giving effect to
clause (ii) of the proviso set forth in definition of Consolidated Net Income,
and (ii) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to Calculation Date, shall be excluded.
"Default" means any event that is, or with the passage of time or the
-------
giving of notice or both would be, an Event of Default.
"Definitive Debenture" means a certificated Debenture registered in the
--------------------
name of the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A1 hereto except that such Debenture shall
not bear the Global Debenture Legend and shall not have the "Schedule of
Exchanges of Interests in the Global Debenture" attached thereto.
"Depositary" means, with respect to the Debentures issuable or issued in
----------
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Debentures, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
7
<PAGE>
"Designated Senior Debt" with respect to the Debentures means:
----------------------
(1) any Indebtedness under or in respect of the Senior Credit
Facility;
(2) any Indebtedness outstanding under the Senior Discount Notes
Indenture; and
(3) any other Senior Debt permitted under this Indenture the principal
amount of which is $25.0 million or more and that has been designated by
the Company in the instrument or agreement relating to the same as
"Designated Senior Debt".
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
------------------
terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Senior Exchangeable Preferred Stock or Debentures mature;
provided, however, that any Capital Stock that would constitute Disqualified
Stock solely because the holders thereof have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a Change of Control or
an Asset Sale shall not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with Section 9.1 hereof.
"Eligible Indebtedness" means any Indebtedness other than (i) Indebtedness
---------------------
in the form of, or represented by, bonds or other securities or any guarantee
thereof and (ii) Indebtedness that is, or may be, quoted, listed or purchased
and sold on any stock exchange, automated trading system or over-the-counter or
other securities market (including, without prejudice to the generality of the
foregoing, the market for securities eligible for resale pursuant to Rule 144A
under the Securities Act).
"Eligible Receivables" means the accounts receivable (net of any reserves
--------------------
and allowances for doubtful accounts in accordance with GAAP) of the Company and
its Restricted Subsidiaries that are not more than 60 days past their due date
and that were entered into in the ordinary course of business on normal payment
terms as shown on the most recent internal consolidated balance sheet of the
Company and such Restricted Subsidiaries, all calculated on a consolidated basis
in accordance with GAAP.
"Equity Interests" means Capital Stock and all warrants, options or other
----------------
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
---------
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Date" means the date on which the Company exchanges all but not
-------------
less than all of the Senior Exchangeable Preferred Stock for Debentures.
"Exchange Offer" means exchange and issuance by the Company of New
--------------
Preferred Stock or New Exchange Debentures, as the case may be, which shall be
registered pursuant to a Registration
8
<PAGE>
Statement, in an amount equal to (i) the aggregate Liquidation Preference of all
shares of Senior Exchangeable Preferred Stock that are tendered by the Holders
thereof or (ii) the aggregate principal amount of all Debentures that are
tendered by the Holders thereof, as the case may be, in connection with such
exchange and issuance.
"Exchange Offer Registration Statement" means the Registration Statement
-------------------------------------
relating to the Exchange Offer, including the related Prospectus.
"Existing Indebtedness" means Indebtedness of the Company and its
---------------------
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the Issue Date, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Global Debentures" means, individually and collectively, each of the
-----------------
Restricted Global Debentures and the Unrestricted Global Debentures,
substantially in the form of Exhibit A1 or A2 hereto issued in accordance with
Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"Global Debenture Legend" means the legend set forth in Section
-----------------------
2.06(g)(ii), which is required to be placed on all Global Debentures issued
under this Indenture.
"Governance Agreement" means the agreement among the Company, TdF and its
--------------------
affiliates, dated as of August 21, 1998, to provide for certain rights and
obligations of the Company, TdF and its affiliates with respect to the
management of the Company.
"Government Securities" means direct obligations of, or obligations
---------------------
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of negotiable
---------
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
-------------------
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency exchange rates.
"Holder" means a Person in whose name a Debenture is registered.
------
9
<PAGE>
"Indebtedness" means, with respect to any Person, any indebtedness of such
------------
Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property; or
(6) representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person whether or not such
Indebtedness is assumed by such Person (the amount of such Indebtedness as of
any date being deemed to be the lesser of the value of such property or assets
as of such date or the principal amount of such Indebtedness of such other
Person so secured) and, to the extent not otherwise included, the Guarantee by
such Person of any Indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
---------
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
--------------------
Global Debenture through a Participant.
"Investments" means, with respect to any Person, all investments by such
-----------
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company or a Restricted Subsidiary of the Company issues any of its Equity
Interests such that, in each case, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of Section 9.1 hereof.
10
<PAGE>
"Issue Date" means the closing date for the sale and original issuance of
----------
the Senior Exchangeable Preferred Stock.
"Joint Venture Operating Agreement" means the Crown Atlantic Holding
---------------------------------
Company LLC Operating Agreement to be entered into by the Company and BAM,
substantially in the form of Exhibit 3.5 to the Formation Agreement, dated as of
December 8, 1998, by and among BAM, the Transferring Partnerships (as defined
therein), the Company and CCA Investment Corp.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
---------------------
the Company and sent to all Holders of the Debentures for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
------------------
Section 5 of the Registration Rights Agreement.
"Nassau Group" means Nassau Capital Partners II, L.P. and NAS Partners I,
------------
L.L.C.
"Net Income" means, with respect to any Person, the net income (loss) of
----------
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or
any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
------------
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of:
11
<PAGE>
(1) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof;
(2) taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements);
(3) amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under a Credit Facility) secured by a Lien on the
asset or assets that were the subject of such Asset Sale;
(4) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such
Asset Sale;
(5) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale; and
(6) without duplication, any reserves that the Company's Board of
Directors determines in good faith should be made in respect of the sale
price of such asset or assets for post closing adjustments; provided that
in the case of any reversal of any reserve referred to in clause (5) or (6)
above, the amount so reserved shall be deemed to be Net Proceeds from an
Asset Sale as of the date of such reversal.
"New Exchange Debentures" means the Company's 12 3/4% Senior Subordinated
-----------------------
Exchange Debentures due 2010 issued pursuant to this Indenture (i) in the
Exchange Offer or (ii) in connection with a resale of Debentures in reliance on
a Shelf Registration Statement.
"New Preferred Stock" means the Company's 12 3/4% Senior Exchangeable
-------------------
Preferred Stock due 2010 issued pursuant to this Certificate of Designations (i)
in the Exchange Offer or (ii) in connection with a resale of Senior Exchangeable
Preferred Stock in reliance on a Shelf Registration Statement.
"Non-Recourse Debt" means Indebtedness:
-----------------
(1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable (as a guarantor or otherwise) or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of the Company or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment
thereof to be accellerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries (except that
12
<PAGE>
this clause (3) shall not apply to any Indebtedness incurred by CTSH and
its Subsidiaries prior to August 21, 1998).
"Non-U.S. Person" means a Person who is not a U.S. Person.
---------------
"Obligations" means any principal, interest, penalties, fees,
-----------
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board, the
-------
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
---------------------
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 11.05
hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
------------------
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Pari Passu Indebtedness" means, with respect to any Asset Sale Offer, all
-----------------------
other senior subordinated Indebtedness of the Company containing provisions
similar to those set forth in this Indenture.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
-----------
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to The Depository Trust Company, shall include Euroclear and
Cedel).
"Participating Broker-Dealer" means a Broker-Dealer that participates in
---------------------------
the Exchange Offer in accordance with Section 3(c) of the Registration Rights
Agreement.
"Permitted Business" means any business conducted by the Company, its
------------------
Restricted Subsidiaries or CTSH and its Subsidiaries on the Issue Date and any
other business related, ancillary or complementary to any such business.
"Permitted Investments" means:
---------------------
(1) Liens securing Senior Debt;
(2) any Investment in the Company or in a Restricted Subsidiary of the
Company;
(3) any Investment in Cash Equivalents;
(4) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or
13
<PAGE>
conveys substantially all of its assets to, or is liquidated into, the
Company or a Restricted Subsidiary of the Company;
(5) any Restricted Investment made as a result of the receipt of non-
cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 8.2 hereof;
(6) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;
(7) receivables created in the ordinary course of business;
(8) loans or advances to employees made in the ordinary course of
business not to exceed $1.0 million at any one time outstanding;
(9) securities and other assets received in settlement of trade debts
or other claims arising in the ordinary course of business;
(10) purchases of additional Equity Interests in CTSH for cash
pursuant to the Governance Agreement as the same is in effect on the Issue
Date for aggregate cash consideration not to exceed $20.0 million since the
Issue Date;
(11) the Investment of up to an aggregate of $100.0 million of the net
proceeds from the sale of the Senior Exchangeable Preferred Stock (i) to be
used to consummate the formation of the Crown Atlantic Holding Company LLC
joint venture with BAM or (ii) if the Company does not consummate the
formation of the Crown Atlantic Holding Company LLC joint venture with BAM,
in one or more other Subsidiaries of the Company (which may be Unrestricted
Subsidiaries of the Company), each of which derives or expects to derive a
majority of its revenues from one or more Permitted Businesses (each such
Investment being measured as of the date made and without giving effect to
subsequent changes in value);
(12) Additional Investments with the net proceeds from the sale of the
Senior Exchangeable Preferred Stock in an aggregate amount equal to (x) the
gross proceeds from the sale of the Senior Exchangeable Preferred Stock,
minus (y) the aggregate amount of Investments made or permitted to be made
pursuant to clause (11) of this paragraph, minus (z) the aggregate amount
of Indebtedness incurred and/or Disqualified Stock issued pursuant to
clause (11) of the second paragraph of Section 9.2 hereof (each such
Investment being measured as of the date made and without giving effect to
subsequent changes in value); and
(13) other Investments in Permitted Businesses not to exceed an amount
equal to $10.0 million plus 10% of the Company's Consolidated Tangible
Assets at any one time outstanding (each such Investment being measured as
of the date made and without giving effect to subsequent changes in value).
"Permitted Junior Securities" means Equity Interests in the Company or debt
---------------------------
securities that are subordinated to all Senior Debt (and any debt securities
issued in exchange for Senior Debt) to substantially the same extent as, or to a
greater extent than, the Debentures are subordinated to Senior Debt pursuant to
this Indenture.
14
<PAGE>
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
----------------------------------
or any of its Restricted Subsidiaries or Disqualified Stock of the Company
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund other Indebtedness of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness) or
Disqualified Stock of the Company; provided that:
(1) the principal amount, initial accreted value or liquidation
preference, as applicable, of such Permitted Refinancing Indebtedness does
not exceed the principal amount, accreted value or liquidation preference,
as applicable, of, plus accrued interest or accumulated dividends on, the
Indebtedness or Disqualified Stock so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of expenses and prepayment
premiums incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Debentures,
such Permitted Refinancing Indebtedness is subordinated in right of payment
to, the Debentures on terms at least as favorable to the Holders of
Debentures as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded or such
Disqualified Stock is issued by the Company.
"Person" means any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principals" means Berkshire Group, Centennial Group, Nassau Group, TdF and
----------
any Related Party of the foregoing.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
------------------------
to be placed on all Debentures issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Prospectus" means the prospectus included in a Registration Statement at
----------
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
"Public Equity Offering" means an underwritten primary public offering of
----------------------
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
15
<PAGE>
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
---
"Registration Rights Agreement" means the registration rights agreement to
-----------------------------
be entered into by the Company on or before the Issue relating to the
registration of the Senior Exchangeable Preferred Stock and the Debentures with
the Commission.
"Registration Statement" means any registration statement of the Company
----------------------
relating to an offering of New Preferred Stock or New Exchange Debentures, as
the case may be, that is filed pursuant to the provisions of the Registration
Rights Agreement, and includes the Prospectus included therein, all amendments
and supplements thereto (including post-effective amendments) and all exhibits
and material incorporated by reference therein.
"Regulation S" means Regulation S promulgated under the Securities Act.
------------
"Regulation S Global Debenture" means a Regulation S Temporary Global
-----------------------------
Debenture or Regulation S Permanent Global Debenture, as appropriate.
"Regulation S Permanent Global Debenture" means a permanent global
---------------------------------------
Debenture substantially in the form of Exhibit A1 hereto bearing the Global
Debenture Legend and the Private Placement Legend and deposited with or on
behalf of and registered in the name of the Depositary or its nominee, issued in
a denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Debenture upon expiration of the Restricted Period.
"Regulation S Temporary Global Debenture" means a temporary global
---------------------------------------
Debenture substantially in the form of Exhibit A2 hereto bearing the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Debentures initially sold in reliance on
Rule 903 of Regulation S.
"Related Party" with respect to any Principal means:
-------------
(1) any controlling stockholder, 80% (or more) owned Subsidiary of such
Principal; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, members, partners, owners or Persons beneficially holding an 80%
or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (1).
"Representative" means the indenture trustee or other trustee, agent or
--------------
representative for any Senior Debt.
"Responsible Officer", when used with respect to the Trustee, means any
-------------------
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Debenture" means a definitive certificate evidencing
-------------------------------
Debentures, registered in the name of the holder thereof, in the form of Exhibit
A1 or A2 hereto and bearing the Private Placement Legend.
16
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"Restricted Global Debenture" means a 144A Global Debenture or a Regulation
---------------------------
S Global Debenture, as appropriate.
"Restricted Investment" means an Investment other than a Permitted
---------------------
Investment.
"Restricted Period" means the 40-day restricted period as defined in
-----------------
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
---------------------
Person that is not an Unrestricted Subsidiary.
"Rights Agreement" means the agreement between the Company and ChaseMellon
----------------
Shareholders Services, L.L.C., as rights agent, dated as of August 21, 1998,
relating to the dividend declared by the Company consisting of the right to
purchase 1/1000th of a share of the Company's Series A Participating Cumulative
Preferred Stock, par value $.01 per share.
"Rule 144" means Rule 144 promulgated under the Securities Act.
--------
"Rule 144A" means Rule 144A promulgated under the Securities Act.
---------
"Rule 903" means Rule 903 promulgated under the Securities Act.
--------
"Rule 904" means Rule 904 promulgated the Securities Act.
--------
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Senior Credit Facility" means that certain Amended and Restated Loan
----------------------
Agreement, dated as of July 10, 1998, by and among Key Corporate Capital Inc.
and PNC Bank, National Association, as arrangers and agents for the financial
institutions listed therein, and Crown Communication Inc. and Crown Castle
International Corp. de Puerto Rico, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time.
"Senior Debt" means:
-----------
(1) all Indebtedness outstanding under the Senior Credit Facility and
all Hedging Obligations (including guarantees thereof) with respect thereto
of the Company, whether outstanding on the Issue Date or thereafter
incurred;
(2) all Indebtedness outstanding under the Senior Discount Notes or
any Guarantees thereof, as the case may be;
(3) any other Indebtedness permitted to be incurred by the Company or
any of its Restricted Subsidiaries under the terms of this Certificate of
Designations unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Debentures; and
17
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(4) all Obligations with respect to the preceding clauses (1), (2) and
(3) (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable
law).
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include:
(1) any liability for federal, state, local or other taxes owed or
owing by the Company or the Restricted Subsidiaries;
(2) any Indebtedness of the Company or any Restricted Subsidiary to
any of its Subsidiaries;
(3) any trade payables;
(4) any Indebtedness that is incurred in violation of this Certificate
of Designations (but only to the extent so incurred); or
(5) any Capitalized Lease Obligations.
"Senior Discount Notes Indenture" means that certain Indenture, dated as of
-------------------------------
November 20, 1997, governing the Company's 10 5/8% Senior Discount Notes due
2007.
"Senior Exchangeable Preferred Stock" means (i) the 12 3/4% Senior
-----------------------------------
Exchangeable Preferred Stock due 2010 of the Company issued on the Issue Date,
(ii) any and all additional fully-paid and non-assessable shares of 12 3/4%
Senior Exchangeable Preferred Stock due 2010 of the Company issued after the
Issue Date as payment of dividends in accordance with the provisions of Section
3 hereof and (iii) any and all shares of New Preferred Stock.
"Shelf Registration Statement" means the Shelf Registration Statement as
----------------------------
defined in the Registration Rights Agreement.
"Significant Subsidiary" means, with respect to any Person, any Restricted
----------------------
Subsidiary of such Person that would be a "significant subsidiary" of such
Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof, except that all references to "10 percent" in Rule 1-02(w)(1), (2) and
(3) shall mean "5 percent" and that all Unrestricted Subsidiaries of the Company
shall be excluded from all calculations under Rule 1-02(w).
"Stated Maturity" means, with respect to any installment of interest or
---------------
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders' Agreement" means the agreement among the Company and certain
-----------------------
stockholders of the Company, dated as of August 21, 1998, to provide for certain
rights and obligations of the
18
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Company and such stockholders with respect to the governance of the Company and
such stockholders' shares of Common Stock and/or Class A Common Stock of the
Company.
"Strategic Equity Investment" means a cash contribution to the common
---------------------------
equity capital of the Company or a purchase from the Company of common Equity
Interests (other than Disqualified Stock), in either case by or from a Strategic
Equity Investor and for aggregate cash consideration of at least $50.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted Business
-------------------------
whose Total Equity Market Capitalization exceeds $1.0 billion.
"Subsidiary" means, with respect to any Person:
----------
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TdF" means TeleDiffusion de France International S.A.
---
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
---
as in effect on the date on which this Indenture is qualified under the TIA.
"Total Equity Market Capitalization" of any Person means, as of any day of
----------------------------------
determination, the sum of:
(1) the product of (A) the aggregate number of outstanding primary
shares of common stock of such Person on such day (which shall not include
any options or warrants on, or securities convertible or exchangeable into,
shares of common stock of such person) multiplied by (B) the average
closing price of such common stock listed on a national securities exchange
or the Nasdaq National Market System over the 20 consecutive business days
immediately preceding such day; plus
(2) the liquidation value of any outstanding shares of preferred stock
of such Person on such day.
"Tower Asset Exchange" means any transaction in which the Company or one of
--------------------
its Restricted Subsidiaries exchanges assets for Tower Assets and/or cash or
Cash Equivalents where the fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the Tower Assets and cash or Cash Equivalents received by the
Company and its Restricted Subsidiaries in such exchange is at least equal to
the fair market value of the assets disposed of in such exchange.
19
<PAGE>
"Tower Assets" means wireless transmission towers and related assets that
------------
are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of the
---------------
Company and its Restricted Subsidiaries for such period that is directly
attributable to site rental revenue or license fees paid to lease or sublease
space on communication sites owned or leased by the Company, all determined on a
consolidated basis and in accordance with GAAP. Tower Cash Flow shall not
include revenue or expenses attributable to non-site rental services provided by
the Company or any of its Restricted Subsidiaries to lessees of communication
sites or revenues derived from the sale of assets.
"Trustee" means the trustee under the indenture governing the Debentures.
-------
"Unrestricted Definitive Certificate" means a definitive certificate
-----------------------------------
evidencing Senior Exchangeable Preferred Stock, registered in the name of the
holder thereof, substantially in the form of Exhibit A1 hereto, representing a
series of Senior Exchangeable Preferred Stock that do not bear the Private
Placement Legend.
"Unrestricted Global Certificate" means a permanent global certificate
-------------------------------
substantially in the form of Exhibit A1 attached hereto that bears the Global
Certificate Legend and that has the "Schedule of Exchanges of Interests in the
Global Debenture" attached thereto, and that is deposited with or on behalf of
and registered in the name of the Depositary, representing a series of Senior
Exchangeable Preferred Stock that do not bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that is
-----------------------
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the Company;
(3) is a Person with respect to which neither the Company nor any of
its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of the Company or any of its Restricted Subsidiaries.
20
<PAGE>
Any such designation by the Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
9.1 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Certificate of Designations
and this Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 9.2
hereof, the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 9.2 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period, and (ii) no
Default would occur or be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
-----------
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of such
------------
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
---------------------------------
or series or class of preferred stock at any date, the number of years obtained
by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal or liquidation preference, including payment
at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment, by
(2) the then outstanding principal amount of such Indebtedness or the
aggregate liquidation preference of the then outstanding preferred stock,
as the case may be.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
----------------------------------
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
Section 1.02. Other Definitions.
Defined in
Term Section
"Affiliate Transaction"...........................4.11
"Asset Sale Offer"................................3.09
"Authentication Order"............................2.02
"Change of Control Offer".........................4.15
21
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"Change of Control Payment".......................4.15
"Change of Control Payment Date"..................4.15
"Covenant Defeasance".............................8.03
"Event of Default"................................6.01
"Excess Proceeds".................................4.10
"incur"...........................................4.09
"Legal Defeasance"................................8.02
"Offer Amount"....................................3.09
"Offer Period"....................................3.09
"Paying Agent"....................................2.03
"Payment Blockage Notice..........................10.03
"Payment Default".................................6.01
"Permitted Debt"..................................4.09
"Purchase Date"...................................3.09
"Registrar".......................................2.03
"Remaining Excess Proceeds........................4.10
"Restricted Payments".............................4.07
"Senior Asset Sale Offer".........................4.10
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Debentures;
"indenture security Holder" means a Holder of a Debenture;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Debentures means the Company and any successor obligor
upon the Debentures.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
22
<PAGE>
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
Section 1.05. Effectiveness of Indenture.
The provisions of this Indenture as set forth in Article 4, Article 5 and
Article 6 shall not be effective unless and until the Company issues any
Debentures hereunder.
ARTICLE 2.
THE DEBENTURES
Section 2.01. Form and Dating.
(a) General.
The Debentures and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A1 or A2 hereto. The Debentures may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Debenture shall be dated the date of its authentication. The
Debentures shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Debentures shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Debenture conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Debentures.
Debentures issued in global form shall be substantially in the form of
Exhibit A1 or A2 attached hereto (including the Global Debenture Legend thereon
and the "Schedule of Exchanges of Interests in the Global Debenture" attached
thereto). Debentures issued in definitive form shall be substantially in the
form of Exhibit A1 attached hereto (but without the Global Debenture Legend
thereon and without the "Schedule of Exchanges of Interests in the Global
Debenture" attached thereto). Each Global Debenture shall represent such of the
outstanding Debentures as shall be specified therein and each shall provide that
it shall represent the aggregate principal amount of outstanding Debentures from
time to time endorsed thereon and that the aggregate principal amount of
outstanding Debentures represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Debenture to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Debentures represented
thereby shall be made by the Trustee or the Debenture Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
23
<PAGE>
(c) Temporary Global Debentures.
Debentures offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Debenture, which
shall be deposited on behalf of the purchasers of the Debentures represented
thereby with the Trustee, at its New York office or at such other office of the
Trustee as the Trustee may designate, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Debenture (except to the
extent of any beneficial owners thereof who acquired an interest therein during
the Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Debenture bearing a Private Placement Legend, all as contemplated
by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the
Company. Following the termination of the Restricted Period, beneficial
interests in the Regulation S Temporary Global Debenture shall be exchanged for
beneficial interests in Regulation S Permanent Global Debentures pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Debentures, the Trustee shall cancel the Regulation S Temporary
Global Debenture. The aggregate principal amount of the Regulation S Temporary
Global Debenture and the Regulation S Permanent Global Debentures may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Debenture and the Regulation S Permanent Global Debentures that are held
by Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Debentures for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Debentures
and may be in facsimile form.
If an Officer whose signature is on a Debenture no longer holds that office
at the time a Debenture is authenticated, the Debenture shall nevertheless be
valid.
A Debenture shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Debenture
has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Debentures for original issue
--------------------
up to the aggregate principal amount stated in paragraph 4 of the Debentures.
The aggregate principal amount of Debentures outstanding at any time may not
exceed such amount except as provided in Section 2.07 hereof.
24
<PAGE>
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Debentures. An authenticating agent may authenticate Debentures
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Debentures may be
presented for registration of transfer or for exchange ("Registrar") and an
---------
office or agency where Debentures may be presented for payment ("Paying Agent").
------------
The Registrar shall keep a register of the Debentures and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
---
as Depositary with respect to the Global Debentures.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Debenture Custodian with respect to the Global
Debentures.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Debentures, and will
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company, the Trustee
shall serve as Paying Agent for the Debentures.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Debentures and the Company shall otherwise comply with TIA (S) 312(a).
25
<PAGE>
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Debentures.
A Global Debenture may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
All Global Debentures will be exchanged by the Company for Definitive Debentures
if (i) the Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Debentures (in whole but not in part)
should be exchanged for Definitive Debentures and delivers a written notice to
such effect to the Trustee; provided that in no event shall the Regulation S
Temporary Global Debenture be exchanged by the Company for Definitive Debentures
prior to (x) the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under
the Securities Act. Upon the occurrence of either of the preceding events in
(i) or (ii) above, Definitive Debentures shall be issued in such names as the
Depositary shall instruct the Trustee. Global Debentures also may be exchanged
or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Debenture authenticated and delivered in exchange for, or in lieu of, a
Global Debenture or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Debenture. A Global Debenture may not be exchanged
for another Debenture other than as provided in this Section 2.06(a), however,
beneficial interests in a Global Debenture may be transferred and exchanged as
provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Debentures. The transfer and exchange of beneficial interests in the Global
Debentures shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Debentures shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Debentures also shall
require compliance with either subparagraph (i) or (ii) below, as applicable, as
well as one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Debenture.
Beneficial interests in any Restricted Global Debenture may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in the
same Restricted Global Debenture in accordance with the transfer restrictions
set forth in the Private Placement Legend; provided, however, that prior to
the expiration of the Restricted Period, transfers of beneficial interests in
the Temporary Regulation S Global Debenture may not be made to a U.S. Person
or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Debenture may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Debenture. No written orders or
instructions shall be required to be delivered to the Registrar to effect the
transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Debentures. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial
26
<PAGE>
interest in another Global Debenture in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information regarding the
Participant account to be credited with such increase or (B) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause to
be issued a Definitive Debenture in an amount equal to the beneficial interest
to be transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing information regarding the Person in whose name such
Definitive Debenture shall be registered to effect the transfer or exchange
referred to in (1) above; provided that in no event shall Definitive
Debentures be issued upon the transfer or exchange of beneficial interests in
the Regulation S Temporary Global Debenture prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act. Upon consummation of
an Exchange Offer by the Company in accordance with Section 2.06(f) hereof,
the requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial interests in
the Restricted Global Debentures. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Debentures
contained in this Indenture and the Debentures or otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Debenture(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Debenture. A beneficial interest in any Restricted Global Debenture may be
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in another Restricted Global Debenture if the transfer complies with
the requirements of Section 2.06(b)(ii) above and the Registrar receives the
following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Debenture, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
in item (1) thereof;
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Temporary Global Debenture or the Regulation
S Global Debenture, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (2)
thereof; and
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
Debenture for Beneficial Interests in the Unrestricted Global Debenture. A
beneficial interest in any Restricted Global Debenture may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Debenture
or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Debenture if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of the beneficial interest to be transferred, in the case of an exchange,
or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Debentures or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
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(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Debenture proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Debenture, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Debenture proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Debenture, a certificate from such holder in
the form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Debenture has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Debentures in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Debenture cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Debenture.
(c) Transfer or Exchange of Beneficial Interests for Definitive Debentures.
(i) Beneficial Interests in Restricted Global Debentures to Restricted
Definitive Debentures. If any holder of a beneficial interest in a Restricted
Global Debenture proposes to exchange such beneficial interest for a
Restricted Definitive Debenture or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Debenture, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global
Debenture proposes to exchange such beneficial interest for a Restricted
Definitive Debenture, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (2)(a) thereof;
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(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Debenture to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Definitive
Debenture in the appropriate principal amount. Any Definitive Debenture
issued in exchange for a beneficial interest in a Restricted Global
Debenture pursuant to this Section 2.06(c) shall be registered in such name
or names and in such authorized denomination or denominations as the holder
of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Debentures to the
Persons in whose names such Debentures are so registered. Any Definitive
Debenture issued in exchange for a beneficial interest in a Restricted
Global Debenture pursuant to this Section 2.06(c)(i) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Debenture may not be exchanged
for a Definitive Debenture or transferred to a Person who takes delivery
thereof in the form of a Definitive Debenture prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in
the case of a transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Debentures to Unrestricted
Definitive Debentures. A holder of a beneficial interest in a Restricted
Global Debenture may exchange such beneficial interest for an Unrestricted
Definitive Debenture or may transfer such beneficial interest to a Person who
takes delivery thereof in the form of an Unrestricted Definitive Debenture
only if:
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(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Debentures or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Debenture proposes to exchange such beneficial interest for a
Definitive Debenture that does not bear the Private Placement Legend,
a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Debenture proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a Definitive Debenture
that does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Debentures to Unrestricted
Definitive Debentures. If any holder of a beneficial interest in an
Unrestricted Global Debenture proposes to exchange such beneficial interest
for a Definitive Debenture or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Debenture, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Debenture to be reduced accordingly pursuant to Section 2.06(h) hereof, and
the Company shall execute and the Trustee shall authenticate and deliver to
the Person designated in the instructions a Definitive Debenture in the
appropriate principal amount. Any Definitive Debenture issued in exchange for
a beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Debentures to
the Persons in whose names such Debentures are so registered. Any Definitive
Debenture issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall not bear the Private Placement Legend.
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(d) Transfer and Exchange of Definitive Debentures for Beneficial
Interests.
(i) Restricted Definitive Debentures to Beneficial Interests in Restricted
Global Debentures. If any Holder of a Restricted Definitive Debenture
proposes to exchange such Debenture for a beneficial interest in a Restricted
Global Debenture or to transfer such Restricted Definitive Debentures to a
Person who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Debenture, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Debenture proposes to
exchange such Debenture for a beneficial interest in a Restricted Global
Debenture, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Debenture is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such Restricted Definitive Debenture is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Debenture is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Debenture is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(F) if such Restricted Definitive Debenture is being transferred
pursuant to an effective registration statement under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Debenture, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Debenture, in the case
of clause (B) above, the 144A Global Debenture, in the case of clause (C)
above, the Regulation S Global Debenture, and in all other cases, the 144A
Global Debenture.
(ii) Restricted Definitive Debentures to Beneficial Interests in
Unrestricted Global Debentures. A Holder of a Restricted Definitive Debenture
may exchange such Debenture for a beneficial interest in an Unrestricted
Global Debenture or transfer such Restricted Definitive Debenture to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Debenture only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of
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Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Debentures or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Debentures proposes to exchange
such Debentures for a beneficial interest in the Unrestricted Global
Debenture, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Debentures proposes to transfer
such Debentures to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Debenture, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Debentures and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Debenture.
(iii) Unrestricted Definitive Debentures to Beneficial Interests in
Unrestricted Global Debentures. A Holder of an Unrestricted Definitive
Debenture may exchange such Debenture for a beneficial interest in an
Unrestricted Global Debenture or transfer such Definitive Debentures to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Debenture at any time. Upon receipt of a request for such
an exchange or transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Debenture and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Debentures.
If any such exchange or transfer from a Definitive Debenture to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Debenture has not yet been
issued, the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Debentures in an aggregate principal amount equal to the
principal amount of Definitive Debentures so transferred.
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(e) Transfer and Exchange of Definitive Debentures for Definitive
Debentures. Upon request by a Holder of Definitive Debentures and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Debentures. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Debentures duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e).
(i) Restricted Definitive Debentures to Restricted Definitive Debentures.
Any Restricted Definitive Debenture may be transferred to and registered in
the name of Persons who take delivery thereof in the form of a Restricted
Definitive Debenture if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from
the registration requirements of the Securities Act, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Debentures to Unrestricted Definitive
Debentures. Any Restricted Definitive Debenture may be exchanged by the
Holder thereof for an Unrestricted Definitive Debenture or transferred to a
Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Debenture if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Debentures or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Restricted Definitive Debentures proposes
to exchange such Debentures for an Unrestricted Definitive Debenture,
a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Debentures proposes
to transfer such Debentures to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Debenture, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Debentures to Unrestricted Definitive
Debentures. A Holder of Unrestricted Definitive Debentures may transfer such
Debentures to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Debenture. Upon receipt of a request to register such
a transfer, the Registrar shall register the Unrestricted Definitive
Debentures pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Debentures in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Debentures tendered for acceptance by Persons
that certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Debentures and (z) they are not affiliates (as defined in Rule 144) of the
Company, and accepted for exchange in the Exchange Offer and (ii) Definitive
Debentures in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Debentures accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Debentures, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Debentures to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Debentures so accepted Definitive Debentures in the appropriate principal
amount.
(g) Legends. The following legends shall appear on the face of all Global
Debentures and Definitive Debentures issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Debenture and each Definitive Debenture (and all Debentures issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form.
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
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OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT
TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE CERTIFICATE OF
DESIGNATIONS PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF CROWN
CASTLE INTERNATIONAL CORP. THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
THE COMPANY SO REQUESTS), (2) TO CROWN CASTLE INTERNATIONAL CORP. OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Debenture or Definitive
Debenture issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all
Debentures issued in exchange therefor or substitution thereof) shall not
bear the Private Placement Legend.
(ii) Global Debenture Legend. Each Global Debenture shall bear a legend in
substantially the following form:
"THIS GLOBAL DEBENTURE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS DEBENTURE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE
INDENTURE, (II) THIS GLOBAL DEBENTURE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
DEBENTURE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE
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AND (IV) THIS GLOBAL DEBENTURE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Debenture Legend. The Regulation S
Temporary Global Debenture shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL DEBENTURE,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
DEBENTURES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL
DEBENTURE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. HEDGING
TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT."
(h) Cancellation and/or Adjustment of Global Debentures.
At such time as all beneficial interests in a particular Global Debenture
have been exchanged for Definitive Debentures or a particular Global Debenture
has been redeemed, repurchased or canceled in whole and not in part, each such
Global Debenture shall be returned to or retained and canceled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Debenture is exchanged for or transferred to
a Person who will take delivery thereof in the form of a beneficial interest in
another Global Debenture or for Definitive Debentures, the principal amount of
Debentures represented by such Global Debenture shall be reduced accordingly and
an endorsement shall be made on such Global Debenture by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Debenture, such other Global Debenture shall be increased accordingly and an
endorsement shall be made on such Global Debenture by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Debentures and Definitive
Debentures upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Debenture or to a Holder of a Definitive Debenture for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Debenture selected for redemption in whole or in part, except the
unredeemed portion of any Debenture being redeemed in part.
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(iv) All Global Debentures and Definitive Debentures issued upon any
registration of transfer or exchange of Global Debentures or Definitive
Debentures shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Global
Debentures or Definitive Debentures surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Debentures during a period beginning at the
opening of business 15 days before the day of any selection of Debentures for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Debenture so selected for redemption in whole or in part, except the
unredeemed portion of any Debenture being redeemed in part or (c) to register
the transfer of or to exchange a Debenture between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Debenture, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Debenture is registered as the absolute owner of such
Debenture for the purpose of receiving payment of principal of and interest on
such Debentures and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Debentures and Definitive
Debentures in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
Section 2.07. Replacement Debentures
If any mutilated Debenture is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Debenture, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Debenture if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Company to protect the Company, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a
Debenture is replaced. The Company may charge for its expenses in replacing a
Debenture.
Every replacement Debenture is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Debentures duly issued hereunder.
Section 2.08. Outstanding Debentures.
The Debentures outstanding at any time are all the Debentures authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Debenture effected by
the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof, a
Debenture does not cease
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to be outstanding because the Company or an Affiliate of the Company holds the
Debenture; however, Debentures held by the Company or a Subsidiary of the
Company shall not be deemed to be outstanding for purposes of Section 3.07(b)
hereof.
If a Debenture is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Debenture is held by a bona fide purchaser.
If the principal amount of any Debenture is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Debentures payable on that date, then on and after that date such
Debentures shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Debentures.
In determining whether the Holders of the required principal amount of
Debentures have concurred in any direction, waiver or consent, Debentures owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Debentures that the Trustee knows are so
owned shall be so disregarded.
Section 2.10. Temporary Debentures
Until certificates representing Debentures are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Debentures. Temporary Debentures shall be
substantially in the form of certificated Debentures but may have variations
that the Company considers appropriate for temporary Debentures and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Debentures in
exchange for temporary Debentures.
Holders of temporary Debentures shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Debentures to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Debentures surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Debentures surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Debentures (subject to the record retention requirement
of the Exchange Act). Certification of the destruction of all canceled
Debentures shall be delivered to the Company. The Company may not issue new
Debentures to replace Debentures that it has paid or that have been delivered to
the Trustee for cancellation.
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Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Debentures, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Debentures and in Section 4.01 hereof. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Debenture and the date of the proposed payment. The Company shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Debentures pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Debentures to be redeemed and (iv) the redemption price (expressed as
a percentage of principal amount).
Section 3.02. Selection of Debentures to Be Redeemed
If less than all of the Debentures are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Debentures to be
redeemed or purchased among the Holders of the Debentures in compliance with the
requirements of the principal national securities exchange, if any, on which the
Debentures are listed or, if the Debentures are not so listed, on a pro rata
basis, by lot or in accordance with any other method the Trustee shall deem fair
and appropriate; provided that no Debentures of $1,000 or less shall be redeemed
in part. In the event of partial redemption by lot, the particular Debentures
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Debentures not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Debentures
selected for redemption and, in the case of any Debenture selected for partial
redemption, the principal amount thereof to be redeemed. Debentures and
portions of Debentures selected shall be in amounts of $1,000 or whole multiples
of $1,000; except that if all of the Debentures of a Holder are to be redeemed,
the entire outstanding amount of Debentures held by such Holder, even if not a
multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Debentures called for
redemption also apply to portions of Debentures called for redemption.
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Section 3.03. Notice of Redemption
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Debentures are to be redeemed at its registered address.
The notice shall identify the Debentures to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Debenture is being redeemed in part, the portion of the
principal amount of such Debenture to be redeemed and that, after the redemption
date upon surrender of such Debenture, a new Debenture or Debentures in
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Debenture;
(d) the name and address of the Paying Agent;
(e) that Debentures called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Debentures called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Debentures and/or Section of this Indenture
pursuant to which the Debentures called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Debentures.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Debentures called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Debentures to be redeemed on that date.
The Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
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amounts necessary to pay the redemption price of, and accrued interest on, all
Debentures to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Debentures
or the portions of Debentures called for redemption. If a Debenture is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Debenture was registered at the close of business on such
record date. If any Debenture called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Debentures and in Section 4.01 hereof.
Section 3.06. Debentures Redeemed in Part.
Upon surrender of a Debenture that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Debenture equal in principal
amount to the unredeemed portion of the Debenture surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Debentures pursuant to this
Section 3.07 prior to December 15, 2003. Thereafter, the Company shall have the
option to redeem the Debentures, in whole or in part, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on
December 15 of the years indicated below:
Year Percentage
---- ----------
2003......................................106.375%
2004......................................104.781%
2005......................................103.188%
2006......................................101.594%
2007 and thereafter.......................100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
during the first 36 months after the Issue Date, the Company may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Debentures
originally issued at a redemption price equal to 112.750% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the redemption date, with the net cash proceeds of one or more Public
Equity Offerings and/or Strategic Equity Investments; provided that at least
$130.0 million aggregate principal amount of Debentures remains outstanding
immediately after the occurrence of such redemption (excluding Debentures held
by the Company or any of its Subsidiaries);and provided, further, that such
redemption shall occur within 60 days of the date of the closing of such Public
Equity Offering and/or Strategic Equity Investment.
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(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption or sinking
fund payments with respect to the Debentures.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to holders of Debentures and Pari Passu
Indebtedness (an "Asset Sale Offer") to purchase the maximum principal amount
----------------
(or accreted value, as applicable, of Debentures and Pari Passu Indebtedness
that may be purchased out of Excess Proceeds), of Debentures and Pari Passu
Indebtedness it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
------------
Business Days after the termination of the Offer Period (the "Purchase Date"),
-------------
the Company shall purchase the principal amount (or accreted value, as
applicable) of Debentures and Pari Passu Indebtedness required to be purchased
pursuant to Section 4.10 hereof (on a pro rata basis if Debentures and Pari
Passu Indebtedness tendered are in excess of the Excess Proceeds) (which maximum
principal amount of Debentures shall be the "Offer Amount") or, if less than the
------------
Offer Amount has been tendered, all Debentures and Pari Passu Indebtedness
tendered in response to the Asset Sale Offer. Payment for any Debentures so
purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Debenture is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Debentures pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Debentures pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Debenture not tendered or accepted for payment shall
continue to accrue interest;
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(d) that, unless the Company defaults in making such payment, any
Debenture accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(e) that Holders electing to have a Debenture purchased pursuant to an
Asset Sale Offer may only elect to have all of such Debenture purchased and may
not elect to have only a portion of such Debenture purchased;
(f) that Holders electing to have a Debenture purchased pursuant to
any Asset Sale Offer shall be required to surrender the Debenture, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Debenture
completed, or transfer by book-entry transfer, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Debenture the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Debenture purchased;
(h) that, if the aggregate principal amount (or accreted value, as
applicable) of Debentures and Pari Passu Indebtedness tendered by Holders
exceeds the Offer Amount, the Company shall select the Debentures to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Debentures in denominations of $1,000,
or integral multiples thereof, shall be purchased and Pari Passu Indebtedness);
and
(i) that Holders whose Debentures were purchased only in part shall be
issued new Debentures equal in principal amount to the unpurchased portion of
the Debentures surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Debentures or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Debentures, Pari
Passu Indebtedness or portions thereof tendered, and shall deliver to the
Trustee an Officers' Certificate stating that such Debentures, and Pari Passu
Indebtedness or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Debentures tendered by such Holder
and accepted by the Company for purchase, and the Company shall promptly issue a
new Debenture, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Debenture to such Holder, in a
principal amount equal to any unpurchased portion of the Debenture surrendered.
Any Debenture not so accepted shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the results
of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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ARTICLE 4.
COVENANTS
Section 4.01. Payment of Debentures.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest and Liquidated Damages, if any, on the Debentures on the dates
and in the manner provided in the Debentures. Principal, premium, if any,
interest and Liquidated Damages, if any, shall be considered paid on the date
due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, interest and Liquidated Damages, if any, then
due. The Company shall pay all Liquidated Damages, if any, in the same manner
on the dates and in the amounts set forth in the Registration Rights Agreement.
On or prior to December 15, 2003, the Company may, at its option, pay
interest (1) in cash or (2) in additional Debentures having an aggregate
principal amount equal to the amount of such interest. After December 15, 2003,
the Company shall pay interest in cash only.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Debentures to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Debentures may be surrendered
for registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Debentures and this Indenture may be served.
The Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Debentures may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Debentures are outstanding, the Company shall furnish to the Holders
of Debentures:
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(i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of the
Company and its consolidated Subsidiaries (showing in reasonable detail, in
the footnotes to the financial statements and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" (in each
case to the extent not prohibited by the SEC's rules and regulations), (A)
the financial condition and results of operations of the Company and its
Restricted Subsidiaries separate from the financial condition and results
of operations of the Unrestricted Subsidiaries of the Company and (B) the
Tower Cash Flow for the most recently completed fiscal quarter and the
Adjusted Consolidated Cash Flow for the most recently completed four-
quarter period) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants; and
(ii) all current reports that would be required to be filed with the
SEC on Form 8-K if the Company were required to file such reports, in each
case within the time periods specified in the SEC's rules and regulations.
In addition, following consummation of the exchange offer contemplated by
the Registration Rights Agreement, whether or not required by the rules and
regulations of the SEC, the Company shall file a copy of all such information
and reports with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. The Company shall at times comply with TIA
(S) 314(a).
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Debentures
is prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
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understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Debentures are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Debentures.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment
in connection with any merger or consolidation involving the Company or any
of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company
or a Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests of the Company or
any direct or indirect parent of the Company (other than any such Equity
Interests owned by the Company or any Restricted Subsidiary of the Company
and other than the Senior Exchangeable Preferred Stock);
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Debentures, except a payment of interest or the payment
of principal at Stated Maturity; or
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(4) make any Restricted Investment, (all such payments and other
actions set forth in clauses (1) through (4) above being collectively
referred to as "Restricted Payments"),
-------------------
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default shall have occurred and be continuing or would occur as
a consequence thereof; and
(2) the Company would have been permitted to incur at least $1.00 of
additional indebtedness pursuant to the Debt to Adjusted Consolidated Cash
Flow Ratio test set forth in the first paragraph of Section 4.09 hereof;
provided that the Company and its Restricted Subsidiaries shall not be
required to comply with this clause (2) in order to make any Restricted
Investment; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (2), (3) and (4) of the next succeeding paragraph), is less than
the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the Issue Date to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit); plus
(b) 100% of the aggregate net cash proceeds received by the
Company since the Issue Date as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock and except to the extent such net cash
proceeds are used to incur new Indebtedness outstanding pursuant to
clause (10) of the second paragraph of Section 4.09 hereof) or from
the issue or sale of Disqualified Stock or debt securities of the
Company that have been converted into such Equity Interests (other
than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock); plus
(c) to the extent that any Restricted Investment that was made
after the Issue Date is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted Investment; plus
(d) to the extent that any Unrestricted Subsidiary of the Company
and all of its Subsidiaries are designated as Restricted Subsidiaries
after the Issue Date, the lesser of (A) the fair market value of the
Company's Investments in such Subsidiaries as of the date of such
designation, or (B) the sum of (x) the fair market value of the
Company's Investments in such Subsidiaries as of the date on which
such Subsidiaries were originally designated as Unrestricted
Subsidiaries and (y) the amount of any Investments
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<PAGE>
made in such Subsidiaries subsequent to such designation (and treated
as Restricted Payments) by the Company or any Restricted Subsidiary;
provided that:
(i) in the event the Unrestricted Subsidiaries designated as
Restricted Subsidiaries are CTSH and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair
market value of the Company's Investments in such Subsidiaries
shall mean the amount by which the fair market value of all such
Investments exceeds 34.3% of the fair market value of CTSH and
its Subsidiaries as a whole; and
(ii) in the event the Unrestricted Subsidiaries designated
as Restricted Subsidiaries are CCAIC and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair
market value of the Company's Investments in such Subsidiaries
shall mean the amount by which the fair market value of all such
Investments exceeds $250.0 million; plus
(e) 50% of any dividends received by the Company or a Restricted
Subsidiary after the Issue Date from an Unrestricted Subsidiary of the
Company, to the extent that such dividends were not otherwise included
in Consolidated Net Income of the Company for such period.
The foregoing provisions shall not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(2) the making of any Investment or the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated
Indebtedness or Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the sale after the Issue Date (other than to a
Subsidiary of the Company) of, any Equity Interests of the Company (other
than any Disqualified Stock); provided that such net cash proceeds are not
used to incur new Indebtedness pursuant to clause (10) of the second
paragraph of Section 4.09 hereof); and provided further that, in each such
case, the amount of any such net cash proceeds that are so utilized shall
be excluded from clause (3) (b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its common Equity Interests on a pro rata basis;
or
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary
of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of the Issue
Date; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or
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retired Equity Interests shall not exceed (a) $500,000 in any twelve-month
period and (b) $5.0 million in the aggregate.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; provided
that in no event shall the businesses operated by the Company's Restricted
Subsidiaries as of November 20, 1997 be transferred to or held by an
Unrestricted Subsidiary. For purposes of making such determination, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid in cash) in the Subsidiary so designated shall be deemed to
be Restricted Payments at the time of such designation and shall reduce the
amount available for Restricted Payments under the first paragraph of this
Section 4.07. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation shall only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary if such designation would not cause a Default.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or the applicable Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any property, assets or Investments required by this Section
4.07 to be determined shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to
(1) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries on its Capital Stock or with respect to
any other interest or participation in, or measured by, its profits;
(2) pay any indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(3) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(4) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries.
However, the foregoing restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness or Indebtedness under the Senior Credit
Facility, in each case as in effect on the Issue Date, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive, taken as a whole,
with respect to such
49
<PAGE>
dividend and other payment restrictions than those contained in the
applicable series of Existing Indebtedness or in the Senior Credit
Facility, in each case as in effect on the Issue Date;
(2) encumbrances and restrictions applicable to any Unrestricted
Subsidiary, as the same are in effect as of the date on which such
Subsidiary becomes a Restricted Subsidiary, and as the same may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced; provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings
are no more restrictive, taken as a whole, with respect to such dividend
and other payment restrictions than those contained in the applicable
series of Indebtedness of such Subsidiary as in effect on the date on which
such Subsidiary becomes a Restricted Subsidiary;
(3) any Indebtedness (incurred in compliance with Section 4.09 hereof)
or any agreement pursuant to which such Indebtedness is issued if the
encumbrance or restriction applies only in the event of a payment default
or default with respect to a financial covenant contained in such
Indebtedness or agreement and such encumbrance or restriction is not
materially more disadvantageous to the holders of the Debentures than is
customary in comparable financings (as determined by the Company) and the
Company determines that any such encumbrance or restriction will not
materially affect the Company's ability to pay interest on or the principal
of the Debentures;
(4) this Indenture and the Debentures;
(5) applicable law;
(6) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this
Indenture to be incurred;
(7) by reason of customary non-assignment provisions in leases or
licenses entered into in the ordinary course of business;
(8) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (4) in the prior paragraph on the property so acquired;
(9) the provisions of agreements governing Indebtedness incurred
pursuant to clause (4) of the second paragraph of Section 4.09 hereof;
(10) any agreement for the sale of a Restricted Subsidiary that
restricts that Restricted Subsidiary pending its sale;
(11) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive,
50
<PAGE>
taken as a whole, than those contained in the agreements governing the
Indebtedness being refinanced;
(12) Liens that limit the right of the debtor to transfer the assets
subject to such Liens;
(13) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar
agreements; and
(14) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively "incur") any Indebtedness (including Acquired
-----
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock and the Company's Restricted
Subsidiaries may incur Indebtedness if, in each case, the Company's Debt to
Adjusted Consolidated Cash Flow Ratio at the time of incurrence of such
Indebtedness or the issuance of such Disqualified Stock, after giving pro forma
effect to such incurrence or issuance as of such date and to the use of proceeds
therefrom as if the same had occurred at the beginning of the most recently
ended four full fiscal quarter period of the Company for which internal
financial statements are available, would have been no greater than 7.5 to 1.
The provisions of the first paragraph of this Section 4.09 shall not apply
to the incurrence of any of the following items of Indebtedness or to the
issuance of any of the following items of Disqualified Stock or preferred stock
(collectively, "Permitted Debt"):
--------------
(1) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness (including Indebtedness under Credit
Facilities) in an aggregate principal amount (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Company and its Restricted Subsidiaries thereunder) at any one time
outstanding not to exceed the greater of (x) $200.0 million less the
aggregate amount of all Net Proceeds of Asset Sales applied after the Issue
Date to repay Indebtedness under a Credit Facility pursuant to Section 4.10
hereof and (y) 70% of the Eligible Receivables that are outstanding as of
such date of incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(3) the incurrence by the Company of Indebtedness represented by the
Debentures;
(4) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business
51
<PAGE>
of the Company or such Restricted Subsidiary, in an aggregate principal
amount, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (4), not to exceed $10.0 million at any one time outstanding;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace,
defease or refund Indebtedness of the Company or any of its Restricted
Subsidiaries or Disqualified Stock of the Company (other than intercompany
Indebtedness) that was permitted by this Indenture to be incurred under the
first paragraph hereof or clauses (2) or (3) or this clause (5) of this
paragraph;
(6) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, that (i) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Debentures and (ii)(A) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary and (B) any sale
or other transfer of any such Indebtedness to a Person that is not either
the Company or a Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(7) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding or currency exchange risk;
(8) the guarantee by the Company or any of its Restricted Subsidiaries
of Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted to be incurred by another provision of this Indenture;
(9) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt in connection with the acquisition of assets
or a new Subsidiary and the incurrence by the Company's Restricted
Subsidiaries of Indebtedness as a result of the designation of an
Unrestricted Subsidiary as a Restricted Subsidiary; provided that, in the
case of any such incurrence of Acquired Debt, such Acquired Debt was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Restricted
Subsidiaries and was not incurred in connection with, or in contemplation
of, such acquisition by the Company or one of its Restricted Subsidiaries;
and provided further that, in the case of any incurrence pursuant to this
clause (9), as a result of such acquisition by the Company or one of its
Restricted Subsidiaries, the Company's Debt to Adjusted Consolidated Cash
Flow Ratio at the time of incurrence of such Acquired Debt, after giving
pro forma effect to such incurrence as if the same had occurred at the
beginning of the most recently ended four full fiscal quarter period of the
Company for which internal financial statements are available, would have
been less than the Company's Debt to Adjusted Consolidated Cash Flow Ratio
for the same period without giving pro forma effect to such incurrence;
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<PAGE>
(10) the incurrence by the Company of Indebtedness not to exceed, at
any one time outstanding, the sum of (i) 2.0 times the aggregate net cash
proceeds plus (ii) 1.0 times the fair market value of non-cash proceeds
(evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee), in each case, from the
issuance and sale, other than to a Subsidiary, of Equity Interests (other
than Disqualified Stock) of the Company since the Issue Date (less the
amount of such proceeds used to make Restricted Payments as provided in
clause (3)(b) of the first paragraph or clause (2) of the second paragraph
of Section 4.07 hereof); provided that such Indebtedness does not mature
prior to the Stated Maturity of the Debentures and the Weighted Average
Life to Maturity of such Indebtedness is longer than that of the
Debentures; and
(11) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness and/or the issuance by the Company
of Disqualified Stock in an aggregate principal amount, accreted value or
liquidation preference, as applicable, at any time outstanding, not to
exceed an amount equal to $100.0 million less the aggregate amount of all
Investments made pursuant to clause (12) of the definition of Permitted
Investments; provided that, notwithstanding the foregoing, the aggregate
principal amount, accreted value or liquidation preference, as applicable,
permitted to be incurred or issued pursuant to this clause (11) shall not
be reduced to less than $25.0 million.
For purposes of determining compliance with this Section 4.09, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (11) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify (or later reclassify in
whole or in part) such item of Indebtedness in any manner that complies with
this Section 4.09. Any Indebtedness incurred pursuant to clause (1) of the
second paragraph of Section 9.2 of the Certificate of Designations shall be
deemed to have been incurred under clause (1) above on the Exchange Date.
Accrual of interest, accretion or amortization of original issue discount and
the payment of interest in the form of additional Indebtedness shall not be
deemed to be an incurrence of Indebtedness for purposes of this Section 4.09.
Section 4.10. Asset Sales
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of the assets
or Equity Interests issued or sold or otherwise disposed of; and
(2) except in the case of a Tower Asset Exchange, at least 75% of the
consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to be
cash:
(1) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent
53
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liabilities and liabilities that are by their terms subordinated to the
Debentures or any guarantee thereof) that are assumed by the transferee of
any such assets pursuant to a customary novation agreement that releases
the Company or such Restricted Subsidiary from further liability; and
(2) any securities, notes or other obligations received by the Company
or any such Restricted Subsidiary from such transferee that are converted
by the Company or such Restricted Subsidiary into cash within 20 days of
the applicable Asset Sale (to the extent of the cash received).
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Restricted Subsidiary may apply such Net Proceeds
to:
(1) reduce any Indebtedness of the Company that constitutes Senior
Debt;
(2) reduce any Indebtedness of any of the Company's Restricted
Subsidiaries;
(3) the acquisition of all or substantially all the assets of a
Permitted Business;
(4) the acquisition of Voting Stock of a Permitted Business from a
Person that is not a Subsidiary of the Company; provided, that, after
giving effect thereto, the Company or its Restricted Subsidiary owns a
majority of such Voting Stock and designates such Permitted Business as a
Restricted Subsidiary; or
(5) the making of a capital expenditure or the acquisition of other
long-term assets that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph shall be deemed to constitute
"Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0
- ----------------
million, the Company shall be required to make an offer to all holders of Senior
Discount Notes and may be required to make such offer to holders of other Senior
Debt of the Company then outstanding (a "Senior Asset Sale Offer") to purchase
-----------------------
the maximum principal amount of the Senior Discount Notes and such other Senior
Debt, if applicable, that may be purchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount or
accreted value thereof, as the case may be, plus accrued and unpaid interest to
the date of purchase, in accordance with the procedures set forth in the Senior
Discount Notes Indenture and in the instruments governing such other Senior
Debt. To the extent that the aggregate amount of Senior Discount Notes and such
other Senior Debt tendered pursuant to a Senior Asset Sale Offer is less than
the remaining Excess Proceeds ("Remaining Excess Proceeds") and the sum of (A)
-------------------------
such amount of Remaining Excess Proceeds and (B) the Remaining Excess Proceeds
from any subsequent Senior Asset Sale Offers exceeds $3.0 million, the Company
shall be required to make an offer to all Holders of Debentures and all holders
of other senior subordinated Indebtedness of the Company containing provisions
similar to those set forth in this Indenture with respect to offers to purchase
with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the
----------------
maximum principal amount of Debentures and such other senior subordinated
Indebtedness of the Company that may be purchased out of the Remaining Excess
54
<PAGE>
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest and Liquidated Damages, if any, due
on the relevant interest payment date), in accordance with the procedures set
forth in this Indenture and such other senior subordinated Indebtedness of the
Company. To the extent that any Remaining Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Debentures and such other senior subordinated Indebtedness
of the Company tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Remaining Excess Proceeds, the Trustee shall
select the Debentures and such other senior subordinated Indebtedness to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
The Asset Sale provisions described above shall be applicable whether or
not any other provisions of this Indenture are applicable. The Company shall
comply, to the extent applicable, with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations applicable to any
Asset Sale Offer. To the extent that the provisions of any such securities laws
or securities regulations conflict with the provisions of this Section 4.10, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.10 by
virtue thereof.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
---------------------
(1) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board of Directors set
forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested
members of the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $10.0 million, an opinion as to the fairness to the Holders
of such Affiliate Transaction from a financial point of view issued by
an accounting, appraisal or investment banking firm of national
standing.
The following items shall not be deemed to be Affiliate Transactions and
therefore shall not be subject to the provisions of the prior paragraph:
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(1) any employment arrangements with any executive officer of the
Company or a Restricted Subsidiary that is entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business and
consistent with compensation arrangements of similarly situated executive
officers at comparable companies engaged in Permitted Businesses;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of directors fees in an aggregate annual amount not to
exceed $25,000 per Person;
(4) Restricted Payments that are permitted by Section 4.07 hereof;
(5) the issuance or sale of Equity Interests (other than Disqualified
Stock) of the Company; and
(6) transactions pursuant to the provisions of the Governance
Agreement, the Rights Agreement, the Stockholders' Agreement, the CTSH
Shareholders' Agreement, the CTI Services Agreement, the CTI Operating
Agreement and the Crown Transition Agreements, as the same are in effect on
the Issue Date.
Section 4.12. [Reserved]
Section 4.13. Business activities.
The Company shall not, and shall not permit any Subsidiary to, engage in
any business other than Permitted Businesses, except to such extent as would not
be material to the Company and its Subsidiaries taken as a whole.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Significant Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Significant Subsidiary and (ii) the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Significant Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Significant Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the
Debentures.
Section 4.15. Offer to Repurchase Upon Change of Control.
If a Change of Control occurs, each Holder of Debentures shall have the
right to require the Company to repurchase all or any part (but not any
fractional shares) of such Holder's Debentures pursuant to the offer described
below (the "Change of Control Offer"). In the Change of Control Offer, the
-----------------------
Company shall offer a payment in cash equal to 101% of the aggregate principal
amount of Senior Exchangeable Preferred Stock repurchased plus accrued and
unpaid interest and Liquidated Damages
56
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thereon, if any (subject to the right of Holders of record on the relevant
record date to receive dividends and Liquidated Damages, if any, due on the
relevant dividend payment date), to the date of purchase (the "Change of Control
-----------------
Payment"). Within 30 days following any Change of Control, the Company shall
- -------
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Debentures on the
date specified in such notice, which date shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed (the "Change of
---------
Control Payment Date"), pursuant to the procedures required by this Indenture
- --------------------
and described in such notice.
On the Change of Control Payment Date, the Company shall, to the extent
lawful:
(1) accept for payment all Debentures or portions thereof properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Debentures or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the Trustee the Debentures so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Debentures or portions thereof being purchased by the
Company.
The Company shall promptly mail to each Holder of Debentures so tendered
the Change of Control Payment for such Debentures, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new certificate representing the Debentures equal in principal
amount to any unpurchased portion of the Debentures surrendered, if any.
The Change of Control provisions described above shall be applicable
whether or not any other provisions of this Indenture are applicable. The
Company shall comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer. To the extent that the provisions of
any such securities laws or securities regulations conflict with the provisions
of this Section 4.15, the Company shall comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
under this Section 4.15 by virtue thereof.
The Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by the Company
and purchases all Debentures validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.16. [Reserved].
Section 4.17. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.
The Company:
(1) shall not, and shall not permit any Restricted Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Restricted
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Subsidiary of the Company to any Person (other than the Company or a Wholly
Owned Restricted Subsidiary of the Company); and
(2) shall not permit any Restricted Subsidiary of the Company to issue
any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly Owned Restricted Subsidiary of the
Company,
unless, in each such case: (a) as a result of such transfer, conveyance, sale,
lease or other disposition or issuance such Restricted Subsidiary no longer
constitutes a Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition or issuance are applied in
accordance with Section 4.10.
Section 4.18. Senior Subordinated Debt.
So long as any Debentures are outstanding, the Company shall not incur any
Indebtedness that is expressly made subordinated in right of payment to any
Senior Debt unless such Indebtedness, by its terms and by the terms of any
agreement or instrument pursuant to which such Indebtedness is outstanding, is
expressly made pari passu with, or subordinate in right of payment to, the
Debentures pursuant to provisions substantially similar to those contained in
this Indenture; provided that the foregoing limitations shall not apply to
distinctions between categories of Senior Debt that exist by reason of any Liens
or Guarantees arising or created in respect of some but not all Senior Debt.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless:
(1) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under the
Debentures and this Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default exists; and
(4) except in the case of a merger of the Company with or into a
Wholly Owned Restricted Subsidiary of the Company and except in the case of
a merger entered into solely for
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the purpose of reincorporating the Company in another jurisdiction, the
Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made will, at the time of such transaction after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Adjusted Consolidated Cash
Flow Ratio test set forth in the first paragraph of Section 4.09 hereof.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, provided, however, that
and the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Debentures except in the case of a sale of all
of the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Debentures;
(2) default in payment when due of the principal of or premium, if
any, on the Debentures;
(3) failure by the Company or any of its Subsidiaries for 30 days
after notice to comply with the provisions of Article 5 hereof or failure
by the Company to consummate a Change of Control Offer or Asset Sale Offer
in accordance with the provisions of this Indenture applicable thereto;
(4) failure by the Company or any of its Subsidiaries for 60 days
after notice to comply with any of its other agreements in this Indenture
or the Debentures;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Significant Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the Issue Date, which default (a) is caused by
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period
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provided in such Indebtedness on the date of such default (a "Payment
-------
Default") or (b) results in the acceleration of such Indebtedness prior to
-------
its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accellerated, aggregates $20.0 million or more;
(6) failure by the Company or any of its Significant Subsidiaries to
pay final judgments aggregating in excess of $20.0 million, which judgments
are not paid, discharged or stayed for a period of 60 consecutive days; or
(7) the Company or any of its Significant Subsidiaries pursuant to or
within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of the property of the
Company or any Significant Subsidiary; or
(iii) orders the liquidation of the Company or any Significant
Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in clause
(g) or (h) of Section 6.01 hereof with respect to the Company, any Significant
Subsidiary or any group of Significant Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Debentures may declare all the Debentures to be due and payable immediately.
Upon any such declaration, the principal of, and accrued and unpaid interest and
Liquidated Damages, if any, on such Debentures shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause
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(g) or (h) of Section 6.01 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, shall be due and payable immediately
without further action or notice. The Holders of a majority in aggregate
principal amount of the then outstanding Debentures by written notice to the
Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, interest
and Liquidated Damages, if any, on the Debentures or to enforce the performance
of any provision of the Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Debentures or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Debenture in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Debentures by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Debentures (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Debentures may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Debentures may direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Debentures or that may
involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Debenture may pursue a remedy with respect to this Indenture
or the Debentures only if:
(a) the Holder of a Debenture gives to the Trustee written notice of a
continuing Event of Default;
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(b) the Holders of at least 25% in principal amount of the then outstanding
Debentures make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Debenture or Holders of Debentures offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Debentures do not give the Trustee a direction
inconsistent with the request.
A Holder of a Debenture may not use this Indenture to prejudice the rights
of another Holder of a Debenture or to obtain a preference or priority over
another Holder of a Debenture.
Section 6.07. Rights of Holders of Debentures to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Debenture to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Debenture, on or after the respective due
dates expressed in the Debenture (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Debentures and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Debentures allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Debentures), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all
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distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Debentures or the rights of any Holder,
or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Debentures for amounts due and unpaid on the
Debentures for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Debentures for principal, premium and Liquidated Damages,
if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Debentures pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Debenture pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in principal
amount of the then outstanding Debentures.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
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(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Debentures and may otherwise deal with the Company or any Affiliate
of the Company with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Debentures, it shall not be
accountable for the Company's use of the proceeds from the Debentures or any
money paid to the Company or upon the Company's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the
Debentures or any other document in connection with the sale of the Debentures
or pursuant to this Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Debentures a notice
of the Default or Event of Default within 90 days after it occurs. Except in
the case of a Default or Event of Default in payment of principal of, premium,
if any, or interest on any Debenture, the Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Debentures.
Section 7.06. Reports by Trustee to Holders of the Debentures.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Debentures remain outstanding, the
Trustee shall mail to the Holders of the Debentures a brief report dated as of
such reporting date that complies with TIA (S) 313(a) (but if no event described
in TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report
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need be transmitted). The Trustee also shall comply with TIA (S) 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Debentures shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Debentures are listed in accordance with TIA (S) 313(d).
The Company shall promptly notify the Trustee when the Debentures are listed on
any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Debentures on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Debentures. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
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Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Debentures of
a majority in principal amount of the then outstanding Debentures may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Debentures may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Debentures of at least 10% in principal amount of the then
outstanding Debentures may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Debenture who has
been a Holder of a Debenture for at least six months, fails to comply with
Section 7.10, such Holder of a Debenture may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Debentures. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
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Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
When (i) the Company delivers to the Trustee all outstanding Debentures
(other than Debentures replaced pursuant to Section 2.07) for cancellation or
(ii) all outstanding Debentures have become due and payable, whether at maturity
or as a result of the mailing of a notice of redemption pursuant to Article 3
hereof and the Company irrevocably deposits with the Trustee funds sufficient to
pay at maturity or upon redemption all outstanding Debentures, including
interest thereon to maturity or such redemption date (other than Debentures
replaced pursuant to Section 2.07), and if in either case the Company pays all
other sums payable hereunder by the Company, then this Indenture shall, subject
to the proviso set forth in Section 8.02, cease to be of further effect. The
Company may, at the option of its Board of Directors evidenced by a resolution
set forth in an Officers' Certificate, at any time, elect to have either Section
8.02 or 8.03 hereof applied to all outstanding Debentures upon compliance with
the conditions set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Debentures on
the date the conditions set forth below are satisfied (hereinafter, "Legal
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Defeasance"). For this purpose, Legal Defeasance means that the Company shall
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be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Debentures, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Debentures and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same); provided that the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Debentures to receive solely from the trust fund
described in Section 8.04 hereof, and as more fully set forth in such
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Section, payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages on such Debentures when such payments are due, (b) the
Company's obligations with respect to such Debentures under Article 2 and
Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Company's obligations in connection therewith and
(d) this Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.13, 4.15, 4.17 and 4.18 hereof with respect to the outstanding
Debentures on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Debentures shall
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thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Debentures shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding
Debentures, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such
Debentures shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01 hereof of the option applicable to this Section 8.03
hereof, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of
Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Debentures:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
and Liquidated Damages on the outstanding Debentures on the stated maturity
or on the applicable redemption date, as the case may be, and the Company
must specify whether the Debentures are being defeased to maturity or to a
particular redemption date;
(2) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the Issue Date, there has been a change in
the applicable federal income tax law, in either case to the effect that,
and based thereon such Opinion of Counsel shall confirm that, the Holders
of the outstanding Debentures will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal
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Defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(3) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Debentures will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Debentures pursuant to
this Article 8 concurrently with such incurrence) or insofar as Sections
6.01(g) or 6.01(h) hereof with respect to the Company are concerned, at any
time in the period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or
any of its Restricted Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that
on the 91st day following the deposit, the trust funds will not be subject
to the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(7) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding
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Debentures shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Debentures and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Debentures of all
sums due and to become due thereon in respect of principal, premium, if any,
interest and Liquidated Damages, if any, but such money need not be segregated
from other funds except to the extent required by law.
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The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Debentures.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Debenture and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Debenture shall thereafter,
as a secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Debentures shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 8.02 or
8.03 hereof, as the case may be; provided, however, that, if the Company makes
any payment of principal of, premium, if any, or interest on any Debenture
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Debentures to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Debentures.
Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee
may amend or supplement this Indenture or the Debentures without the consent of
any Holder of a Debenture:
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(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(3) to provide for the assumption of the Company's obligations to the
Holders of the Debentures by a successor to the Company pursuant to Article 5
hereof;
(4) to make any change that would provide any additional rights or
benefits to the Holders of the Debentures or that does not adversely affect the
legal rights hereunder of any such Holder; or
(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Debentures.
Except as provided below in this Section 9.02, this Indenture (including
Section 3.09, 4.10 and 4.15 hereto) and the Debentures may be amended or
supplemented with the consent of the Holders of a majority of the aggregate
principal amount of the Debentures then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Debentures) or, if no
Debentures are outstanding, the holders of a majority in Liquidation Preference
of the Senior Exchangeable Preferred Stock then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Senior Exchangeable Preferred Stock), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Debentures, except a payment default resulting from
an acceleration that has been rescinded) or compliance with any provision of
this Indenture or the Debentures may be waived with the consent of the Holders
of a majority of the aggregate principal amount of the then outstanding
Debentures voting as a single class (including consents obtained in connection
with a tender offer or exchange offer for, or purchase of, the Debentures) or,
if no Debentures are outstanding, the holders of a majority in Liquidation
Preference of the Senior Exchangeable Preferred Stock then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Senior Exchangeable Preferred Stock).
Section 2.08 hereof shall determine which Debentures are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Debentures as aforesaid,
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and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Debentures
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Debentures affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Debentures then outstanding voting
as a single class may waive compliance in a particular instance by the Company
with any provision of this Indenture or the Debentures. However, without the
consent of each Holder affected, an amendment or waiver under this Section 9.02
may not (with respect to any Debentures held by a non-consenting Holder):
(1) reduce the principal amount of Debentures whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any
Debenture or alter or waive any of the provisions with respect to the redemption
(but not any required repurchase in connection with an Asset Sale Offer or
Change of Control Offer) of the Debentures;
(3) reduce the rate of or change the time for payment of interest,
including default interest, on any Debenture;
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Debentures (except a rescission of
acceleration of the Debentures by the Holders of at least a majority in
aggregate principal amount of the then outstanding Debentures and a waiver of
the payment default that resulted from such acceleration);
(5) make any Debenture payable in money other than that stated in the
Debentures;
(6) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Debentures to receive
payments of principal of, premium, if any, or interest on the Debentures;
(7) waive a redemption payment (but not any payment upon a required
repurchase in connection with an Asset Sale Offer or Change of Control Offer)
with respect to any Debenture; or
(8) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
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Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Debentures shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Debenture is a continuing consent by the Holder of a Debenture
and every subsequent Holder of a Debenture or portion of a Debenture that
evidences the same debt as the consenting Holder's Debenture, even if notation
of the consent is not made on any Debenture. However, any such Holder of a
Debenture or subsequent Holder of a Debenture may revoke the consent as to its
Debenture if the Trustee receives written notice of revocation before the date
the waiver, supplement or amendment becomes effective. An amendment, supplement
or waiver becomes effective in accordance with its terms and thereafter binds
every Holder.
Section 9.05. Notation on or Exchange of Debentures.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Debenture thereafter authenticated. The Company in
exchange for all Debentures may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Debentures that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Debenture shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall
be fully protected in relying upon, in addition to the documents required by
Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Debenture agrees, that
the Indebtedness evidenced by the Debentures is subordinated in right of
payment, to the extent and in the manner provided in this Article 10, to the
prior payment in full in cash or Cash Equivalents (other than Cash Equivalents
of the type referred to in clauses (3) and (4) of the definition thereof) of all
Senior Debt of the Company (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
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Section 10.02. Liquidation; Dissolution; Bankruptcy.
For purposes of this Article 10, a "distribution" may consist of cash,
securities or other property, by set-off or otherwise.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment in
full in cash or Cash Equivalents (other than Cash Equivalents of the type
referred to in clauses (3) and (4) of the definition thereof) of all
Obligations due in respect of such Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the
applicable Senior Debt) before Holders of the Debentures shall be entitled
to receive any payment or distribution of any kind or character with
respect to the Debentures (except that Holders of Debentures may receive
(A) Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof);
and
(ii) until all Obligations with respect to Senior Debt (as provided in
clause (i) above) are paid in full, any distribution to which Holders would
be entitled but for this Article 10 shall be made to holders of Senior Debt
(except that Holders of Debentures may receive (A) Permitted Junior
Securities and (B) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof), as their
interests may appear.
Section 10.03. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution in respect of
Obligations with respect to the Debentures and may not acquire any Debentures
for cash or property (other than (A) Permitted Junior Securities and (B)
payments and other distributions made from any defeasance trust created pursuant
to Section 8.01 hereof) until all principal and other Obligations with respect
to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Debt occurs and is continuing beyond any
applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior
Debt occurs and is continuing that then permits holders of the Designated
Senior Debt to accelerate its maturity immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from a Person who may
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give it pursuant to Section 10.11 hereof. If the Trustee receives any such
Payment Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section unless and until at least 360 days
shall have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Payment
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Blockage Notice unless such default shall have been cured or waived for a
period of not less than 90 consecutive days.
(b) The Company may and shall resume payments on and distributions in
respect of the Debentures and may acquire them upon:
(i) in the case of a payment default referred to in clause (i) of
Section 10.03(a), the date upon which the default is cured or waived, or
(ii) in the case of a nonpayment default referred to in clause (ii) of
Section 10.03(a) hereof, upon the earliest of (x) the date upon which all
non-payment defaults are cured or waived, (y) 179 days after the applicable
Payment Blockage Notice is received or (z) the date on which the Trustee
receives notice from the holders of such Designated Senior Debt or their
Representative rescinding the Payment Blockage Notice, unless the maturity
of any Designated Senior Debt has been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.04. Acceleration of Debentures.
If payment of the Debentures is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Debentures at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.03 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued as their respective interests
may appear, for application to the payment of all Obligations with respect to
Senior Debt remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
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Section 10.06. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Debentures to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Debentures to the Senior Debt
as provided in this Article 10.
Section 10.07. Subrogation.
After all Senior Debt is paid in full and until the Debentures are paid in
full, Holders of Debentures shall be subrogated (equally and ratably with all
other Indebtedness and pari passu with the Debentures) to the rights of holders
of Senior Debt to receive distributions applicable to Senior Debt to the extent
that distributions otherwise payable to the Holders of Debentures have been
applied to the payment of Senior Debt. A distribution made under this Article
10 to holders of Senior Debt that otherwise would have been made to Holders of
Debentures is not, as between the Company and Holders, a payment by the Company
on the Debentures.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Debentures and
holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Debentures, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Debentures in accordance with their terms;
(ii) affect the relative rights of Holders of Debentures and creditors
of the Company other than their rights in relation to holders of Senior
Debt; or
(iii) prevent the Trustee or any Holder of Debentures from exercising
its available remedies upon a Default, subject to the rights of holders and
owners of Senior Debt to receive distributions and payments otherwise
payable to Holders of Debentures.
If the Company fails because of this Article 10 to pay principal of or
interest on a Debenture on the due date, the failure is still a Default.
Section 10.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Debentures shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
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Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Debentures shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Debentures for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Debt and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Debentures, unless the Trustee shall have received at its Corporate Trust
Office at least five Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Debentures to violate this Article 10. Only the Company or a Representative
may give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
Section 10.12. Authorization to Effect Subordination.
Each Holder of Debentures, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Debentures.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
ARTICLE 11.
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt
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requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address
If to the Company:
Crown Castle International Corp.
150 Bering Drive, Suite 500
Houston, TX 77057
Telecopier No.: 713-570-3150
Attention: Chief Financial Officer
With a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopier No.: 212-474-3700
Attention: Stephen L. Burns
If to the Trustee:
United States Trust Company of Texas, N.A.
114 West 47th Street, 25th Floor
New York, NY 10036
Telecopier No.: 212-528-1626
Attention: Gerard F. Ganey
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
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If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Debentures with Other Holders of
Debentures.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Debentures. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S)
314(e) and shall include:
(a) a statement that the Persons making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he, she has or they
have made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such Persons, such
condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Debentures, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Debenture waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the
Debentures.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE DEBENTURES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Company in this Indenture and the Debentures shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Debentures shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of December 21, 1998
CROWN CASTLE INTERNATIONAL CORP.
By: /s/ Kathy Broussard
-------------------------------
Name: Kathy Broussard
Title: Vice President
Attest:
/s/ Cynthia Naylor
- -------------------------------
Name: Cynthia Naylor
Title: Administrative Assistant
United States Trust Company of TEXAS, N.A.
By: /s/ Gerard Ganey
----------------------------
Authorized Signatory
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EXHIBIT A1
(Face of Debenture)
================================================================================
CUSIP/CINS ____________
12 3/4% Senior Subordinated Exchange Debentures due 2010
No. ______ Principal Amount $_____________
CROWN CASTLE INTERNATIONAL CORP.
promises to pay to _________________________________, or registered assigns, the
principal sum of _____________________________________________ Dollars on
December 15, 2010.
Interest Payment Dates: June 15 and December 15, commencing the first such date
following original issuance of the Debentures.
Record Dates: June 1 and December 1
Dated: ________________, _____
Crown Castle International Corp.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
(SEAL)
This is one of the [Global]
Debentures referred to in the
within-mentioned Indenture:
United States Trust Company of TEXAS, N.A.,
as Trustee
By:
------------------------------
================================================================================
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<PAGE>
(Back of Debenture)
12 3/4% Senior Subordinated Exchange Debentures due 2010
[Insert Global Debenture Legend, if applicable pursuant to the provisions
of the Indenture.]
[Insert Private Placement Legend, if applicable pursuant to the provisions
of the Indenture.]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Crown Castle International Corp., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this
-------
Debenture at 12 3/4% per annum from the date of original issuance of this
Debenture (or, if this Debenture is issued in a transfer of or exchange for
another Debenture, from the date on which interest was payable with respect to
such other Debenture) until maturity and shall pay the Liquidated Damages, if
any, payable pursuant to Section 5 of the Registration Rights Agreement referred
to below. The Company will pay interest and Liquidated Damages, if any, semi-
annually on June 15 and December 15 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
----------------
Date"); provided that the first such interest payment date shall be the first
- ----
such date to occur following original issuance of this Debenture. On or prior
to December 15, 2003, the Company may, at its option, pay interest in cash or in
additional Debentures having an aggregate principal amount equal to the amount
of such interest. After December 15, 2003, the Company shall pay interest in
cash only. Interest on the Debentures will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance of Debentures. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on this Debenture
(except defaulted interest) and Liquidated Damages to the Persons who are the
registered Holders of this Debenture at the close of business on the June 1 or
December 1 next preceding the Interest Payment Date, even if it is canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
This Debenture will be payable as to principal, premium and Liquidated Damages,
if any, and interest (in the case of the payment of interest in cash) at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of and interest (in the case of the payment of interest in cash),
premium and Liquidated Damages on, all Global Debentures and all other
Debentures the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided that Liquidated Damages
may be paid through the issuance of additional Debentures having a principal
amount at the time of issuance equal to the amount of Liquidated Damages so
paid. In the case of payment of interest in additional Debentures having an
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aggregate principal amount equal to the amount of such interest, such additional
Debentures shall be issued and registered in the name of the registered Holder
of the Debenture with respect to which such interest is being paid in the manner
set forth in the first sentence of this paragraph.
3. Paying Agent and Registrar. Initially, United States Trust Company of
Texas, N.A., the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Debentures under an Indenture dated
as of December 21, 1998 ("Indenture") between the Company and the Trustee. The
---------
terms of the Debentures include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Debentures are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Debenture
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Debentures are obligations of
the Company limited to $400.0 million in aggregate principal amount, plus
amounts, if any, issued to pay Liquidated Damages on outstanding Debentures as
set forth in Paragraph 2 hereof.
5. Optional Redemption.
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
COMPANY SHALL NOT HAVE THE OPTION TO REDEEM THE DEBENTURES PURSUANT TO THIS
SECTION 3.07 PRIOR TO DECEMBER 15, 2003. THEREAFTER, THE COMPANY SHALL HAVE THE
OPTION TO REDEEM THE DEBENTURES, IN WHOLE OR IN PART, AT THE REDEMPTION PRICES
(EXPRESSED AS PERCENTAGES OF PRINCIPAL AMOUNT) SET FORTH BELOW PLUS ACCRUED AND
UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE APPLICABLE
REDEMPTION DATE (SUBJECT TO THE RIGHT OF HOLDERS OF RECORD ON THE RELEVANT
RECORD DATE TO RECEIVE INTEREST AND LIQUIDATED DAMAGES DUE ON THE RELEVANT
INTEREST PAYMENT DATE), IF REDEEMED DURING THE TWELVE-MONTH PERIOD BEGINNING ON
DECEMBER 15 OF THE YEARS INDICATED BELOW:
Year Percentage
---- ----------
2003......................................106.375%
2004......................................104.781%
2005......................................103.188%
2006......................................101.594%
2007 and thereafter.......................100.000%
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, DURING THE FIRST 36 MONTHS AFTER THE DATE OF ORIGINAL ISSUANCE OF
THE DEBENTURES, THE COMPANY MAY ON ANY ONE OR MORE OCCASIONS REDEEM UP TO 35% OF
THE AGGREGATE PRINCIPAL AMOUNT OF DEBENTURES THEN OUTSTANDING AT A REDEMPTION
PRICE EQUAL TO 112.750% OF THE PRINCIPAL AMOUNT THEREOF ON THE REDEMPTION DATE,
PLUS ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE
REDEMPTION DATE, WITH THE NET CASH PROCEEDS OF ONE OR MORE PUBLIC EQUITY
OFFERINGS AND/OR
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STRATEGIC EQUITY INVESTMENTS; PROVIDED THAT AT LEAST $130.0 MILLION AGGREGATE
PRINCIPAL AMOUNT OF DEBENTURES REMAINS OUTSTANDING IMMEDIATELY AFTER THE
OCCURRENCE OF SUCH REDEMPTION (EXCLUDING DEBENTURES HELD BY THE COMPANY OR ANY
OF ITS SUBSIDIARIES); AND PROVIDED, FURTHER, THAT SUCH REDEMPTION SHALL OCCUR
WITHIN 60 DAYS OF THE DATE OF THE CLOSING OF SUCH PUBLIC EQUITY OFFERING AND/OR
STRATEGIC EQUITY INVESTMENT.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Debentures.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder of Debentures
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Debentures pursuant
to the offer described below (the "Change of Control Offer") at an offer price
-----------------------
in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any (subject to the right of
Holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, due on the relevant interest payment date), to the date of
purchase (the "Change of Control Payment"). Within 30 days following any Change
-------------------------
of Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall commence an offer to all holders of Senior Discount Notes and may
be required to make such offer to holders of other Senior Debt of the Company
then outstanding (a "Senior Asset Sale Offer") to purchase the maximum principal
-----------------------
amount of the Senior Discount Notes and such other Senior Debt, if applicable,
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount or accreted value thereof, as
the case may be, plus accrued and unpaid interest to the date of purchase, in
accordance with the procedures set forth in the Senior Discount Notes Indenture
and in the instruments governing such other Senior Debt. To the extent that the
aggregate amount of Senior Discount Notes and such other Senior Debt tendered
pursuant to a Senior Asset Sale Offer is less than the remaining Excess Proceeds
("Remaining Excess Proceeds") and the sum of (A) such amount of Remaining Excess
-------------------------
Proceeds and (B) the Remaining Excess Proceeds from any subsequent Senior Asset
Sale Offers exceeds $3.0 million, the Company shall commence an offer to all
Holders of Debentures and all holders of other senior subordinated Indebtedness
of the Company containing provisions similar to those set forth in the Indenture
with respect to offers to purchase with the proceeds of sales of assets (an
"Asset Sale Offer") to purchase the maximum principal amount of Debentures and
- -----------------
such other senior subordinated Indebtedness of the Company that may be purchased
out of the Remaining Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest and
Liquidated Damages, if any, due on the relevant interest payment date), in
accordance with the procedures set forth in the Indenture and such other senior
subordinated Indebtedness of the Company. To the extent that any Remaining
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Debentures and such other
senior subordinated Indebtedness of the
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Company tendered into such Asset Sale Offer surrendered by Holders thereof
exceeds the amount of Remaining Excess Proceeds, the Trustee shall select the
Debentures and such other senior subordinated Indebtedness to be purchased on a
pro rata basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero. Holders of Debentures that are the subject of
an offer to purchase will receive an Asset Sale Offer from the Company prior to
any related purchase date and may elect to have such Debentures purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Debentures.
The Change of Control and Asset Sale provisions described above shall be
applicable whether or not any other provisions of the Indenture are applicable.
The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer or Asset Sale Offer. To the extent
that the provisions of any such securities laws or securities regulations
conflict with the provisions of Section 4.10 or 4.15 of the Indenture, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under Section 4.10 or 4.15
by virtue thereof.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Debentures are to be redeemed at its registered address. Debentures in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Debentures held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on
Debentures or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Debentures are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Debentures may be registered and Debentures may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Debenture or portion of a Debenture
selected for redemption, except for the unredeemed portion of any Debenture
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Debentures for a period of 15 days before a selection of
Debentures to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Debenture may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Debentures may be amended or supplemented with the consent of
the Holders of a majority of the aggregate principal amount of the Debentures
then outstanding voting as a single class (including, without limitation,
consents obtained in connection with a purchase of or tender offer or exchange
offer for, Debentures) or, if no Debentures are outstanding, the holders of a
majority in Liquidation Preference of the Senior Exchangeable Preferred Stock
then outstanding (including, without limitation, consents obtained in connection
with a purchase of or tender offer or exchange offer for, Senior Exchangeable
Preferred Stock), and any existing default or compliance with any provision of
the Indenture or the Debentures may be waived with the consent of the Holders of
a majority of the aggregate principal amount of the then outstanding Debentures
voting as a single class (including, without limitation, consents obtained in
connection with a purchase of or tender offer or exchange offer for, Debentures)
or,
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<PAGE>
if no Debentures are outstanding, the holders of a majority in Liquidation
Preference of the Senior Exchangeable Preferred Stock then outstanding
(including, without limitation, consents obtained in connection with a purchase
of or tender offer or exchange offer for, Senior Exchangeable Preferred Stock).
Without the consent of any Holder of a Debenture, the Indenture or the
Debentures may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Debentures in addition to or in
place of certificated Debentures, to provide for the assumption of the Company's
obligations to Holders of the Debentures in case of a merger or consolidation,
to make any change that would provide any additional rights or benefits to the
Holders of the Debentures or that does not adversely affect the legal rights
under the Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Debentures; (ii) default in payment when due of principal of or premium,
if any, on the Debentures, (iii) failure by the Company or any of its
Subsidiaries for 30 days after notice to comply with Section 4.10 or 4.15 or
Article 5 of the Indenture; (iv) failure by the Company or any of its
Subsidiaries for 60 days after notice to comply with its other agreements in the
Indenture or the Debentures; (v) default under certain other agreements relating
to Indebtedness of the Company which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default or (b) results in the acceleration of such Indebtedness prior to its
express maturity, in either case the principal amount of such Indebtedness
together with the principal amount of any other such Indebtedness under which
there has been a payment default or the maturity of which has been accelerated,
aggregates $20.0 million or more; (vi) certain final judgments for the payment
of money aggregating in excess of $20.0 million that remain undischarged for a
period of 60 consecutive days; and (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Debentures may declare
all the Debentures to be due and payable. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Debentures will become due and payable without
further action or notice. Holders may not enforce the Indenture or the
Debentures except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Debentures may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Debentures notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the
Debentures then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Debentures. The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
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14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Debentures or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
15. Authentication. This Debenture shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Debentures and
Restricted Definitive Debentures. In addition to the rights provided to Holders
of Debentures under the Indenture, Holders of Restricted Global Debentures and
Restricted Definitive Debentures shall have all the rights set forth in the A/B
Exchange Registration Rights Agreement dated as of December 21, 1998, between
the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
- ------------------------------
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Debentures and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Debentures
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
Attention: Chief Financial Officer
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Assignment Form
To assign this Debenture, fill in the form below: (I) or (we) assign and
transfer this Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Debenture on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
---------------
Your Signature:
---------------------
(Sign exactly as your name appears on the
face of this Debenture)
Signature Guarantee.
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Option of Holder to Elect Purchase
If you want to elect to have this Debenture purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ]Section 4.10 [ ]Section 4.15
If you want to elect to have only part of the Debenture purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: Your Signature:
--------- ---------------------------------
(Sign exactly as your name
appears on the Debenture)
Tax Identification No:
--------------------------
Signature Guarantee.
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL DEBENTURE
The following exchanges of a part of this Global Debenture for an interest
in another Global Debenture or for a Definitive Debenture, or exchanges of a
part of another Global Debenture or Definitive Debenture for an interest in this
Global Debenture, have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global authorized
in in Principal Debenture officer of
Principal Amount Amount of following such Trustee or
of this Global this Global decrease (or Debenture
Date of Exchange Debenture Debenture increase) Custodian
- ---------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A1-10
<PAGE>
EXHIBIT A2
(Face of Regulation S Temporary Global Debenture)
================================================================================
CUSIP/CINS ____________
12 3/4% Senior Subordinated Exchange Debentures due 2010
No. ____ Principal Amount $_____________
CROWN CASTLE INTERNATIONAL CORP.
promises to pay to Cede & Co., or registered assigns, the principal sum of
________________________ Dollars on December 15, 2010.
Interest Payment Dates: June 15 and December 15, commencing the first such date
to occur following original issuance of the Debentures.
Record Dates: June 1 and December 1
Dated:
----------------, ----
CROWN CASTLE INTERNATIONAL CORP.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
[(SEAL)]
This is one of the Global
Debentures referred to in the
within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF TEXAS, N.A.,
as Trustee
By:
-------------------------------
================================================================================
A2-1
<PAGE>
(Back of Debenture)
12 3/4% Senior Subordinated Exchange Debentures due 2010
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL DEBENTURE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
DEBENTURES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE
HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL DEBENTURE
SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
THIS GLOBAL DEBENTURE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS DEBENTURE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
DEBENTURE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
OF THE INDENTURE, (III) THIS GLOBAL DEBENTURE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
DEBENTURE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF
ANY, REQUIRED UNDER THE CERTIFICATE OF DESIGNATIONS PURSUANT TO WHICH THIS
SECURITY IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A OR REGULATION S THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES
ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
CROWN CASTLE INTERNATIONAL CORP. THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO CROWN
CASTLE INTERNATIONAL CORP. OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL AND
A2-2
<PAGE>
EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Crown Castle International Corp., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this
-------
Debenture at 12 3/4% per annum from the date of original issuance of this
Debenture (or, if this Debenture is issued in a transfer of or exchange for
another Debenture, from the date on which interest was payable with respect to
such other Debenture) until maturity and shall pay the Liquidated Damages, if
any, payable pursuant to Section 5 of the Registration Rights Agreement referred
to below. The Company will pay interest and Liquidated Damages, if any, semi-
annually on June 15 and December 15 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
----------------
Date"); provided that the first such interest payment date shall be the first
- ----
such date to occur following original issuance of this Debenture. On or prior
to December 15, 2003, the Company may, at its option, pay interest in cash or in
additional Debentures having an aggregate principal amount equal to the amount
of such interest. After December 15, 2003, the Company shall pay interest in
cash only. Interest on the Debentures will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance of Debentures. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
Until this Regulation S Temporary Global Debenture is exchanged for one or
more Regulation S Permanent Global Debentures, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Debenture shall in all other respects be
entitled to the same benefits as other Debentures under the Indenture.
2. Method of Payment. The Company will pay interest on this Debenture
(except defaulted interest) and Liquidated Damages to the Persons who are the
registered Holders of this Debenture at the close of business on the June 1 or
December 1 next preceding the Interest Payment Date, even if it is canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
This Debenture will be payable as to principal, premium and Liquidated Damages,
if any, and interest (in the case of the payment of interest in cash) at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of and interest (in the case of the payment of interest in cash),
premium and Liquidated Damages on, all Global Debentures and all other
Debentures the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided that Liquidated Damages
may be paid through the issuance of additional Debentures having a principal
amount at the time of issuance equal to the amount
A2-3
<PAGE>
of Liquidated Damages so paid. In the case of payment of interest in additional
Debentures having an aggregate principal amount equal to the amount of such
interest, such additional Debentures shall be issued and registered in the name
of the registered Holder of the Debenture with respect to which such interest is
being paid in the manner set forth in the first sentence of this paragraph.
3. Paying Agent and Registrar. Initially, United States Trust Company of
Texas, N.A., the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Debentures under an Indenture dated
as of December 21, 1998 ("Indenture") between the Company and the Trustee. The
---------
terms of the Debentures include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Debentures are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Debenture
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Debentures are obligations of
the Company limited to $400.0 million in aggregate principal amount, plus
amounts, if any, issued to pay Liquidated Damages on outstanding Debentures as
set forth in Paragraph 2 hereof.
5. Optional Redemption.
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
COMPANY SHALL NOT HAVE THE OPTION TO REDEEM THE DEBENTURES PURSUANT TO THIS
SECTION 3.07 PRIOR TO DECEMBER 15, 2003. THEREAFTER, THE COMPANY SHALL HAVE THE
OPTION TO REDEEM THE DEBENTURES, IN WHOLE OR IN PART, AT THE REDEMPTION PRICES
(EXPRESSED AS PERCENTAGES OF PRINCIPAL AMOUNT) SET FORTH BELOW PLUS ACCRUED AND
UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE APPLICABLE
REDEMPTION DATE (SUBJECT TO THE RIGHT OF HOLDERS OF RECORD ON THE RELEVANT
RECORD DATE TO RECEIVE INTEREST AND LIQUIDATED DAMAGES DUE ON THE RELEVANT
INTEREST PAYMENT DATE), IF REDEEMED DURING THE TWELVE-MONTH PERIOD BEGINNING ON
DECEMBER 15 OF THE YEARS INDICATED BELOW:
Year Percentage
---- ----------
2003......................................106.375%
2004......................................104.781%
2005......................................103.188%
2006......................................101.594%
2007 and thereafter.......................100.000%
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, DURING THE FIRST 36 MONTHS AFTER THE DATE OF ORIGINAL ISSUANCE OF
THE DEBENTURES, THE COMPANY MAY ON ANY ONE OR MORE OCCASIONS REDEEM UP TO 35% OF
THE AGGREGATE PRINCIPAL AMOUNT OF DEBENTURES THEN OUTSTANDING AT A REDEMPTION
PRICE EQUAL TO 112.750% OF THE PRINCIPAL AMOUNT THEREOF ON THE REDEMPTION DATE,
PLUS ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF ANY, TO THE
REDEMPTION DATE,
A2-4
<PAGE>
WITH THE NET CASH PROCEEDS OF ONE OR MORE PUBLIC EQUITY OFFERINGS AND/OR
STRATEGIC EQUITY INVESTMENTS; PROVIDED THAT AT LEAST $130.0 MILLION AGGREGATE
PRINCIPAL AMOUNT OF DEBENTURES REMAINS OUTSTANDING IMMEDIATELY AFTER THE
OCCURRENCE OF SUCH REDEMPTION (EXCLUDING DEBENTURES HELD BY THE COMPANY OR ANY
OF ITS SUBSIDIARIES); AND PROVIDED, FURTHER, THAT SUCH REDEMPTION SHALL OCCUR
WITHIN 60 DAYS OF THE DATE OF THE CLOSING OF SUCH PUBLIC EQUITY OFFERING AND/OR
STRATEGIC EQUITY INVESTMENT.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Debentures.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder of Debentures
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Debentures pursuant
to the offer described below (the "Change of Control Offer") at an offer price
-----------------------
in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any (subject to the right of
Holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, due on the relevant interest payment date), to the date of
purchase (the "Change of Control Payment"). Within 30 days following any Change
-------------------------
of Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall commence an offer to all holders of Senior Discount Notes and may
be required to make such offer to holders of other Senior Debt of the Company
then outstanding (a "Senior Asset Sale Offer") to purchase the maximum principal
-----------------------
amount of the Senior Discount Notes and such other Senior Debt, if applicable,
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount or accreted value thereof, as
the case may be, plus accrued and unpaid interest to the date of purchase, in
accordance with the procedures set forth in the Senior Discount Notes Indenture
and in the instruments governing such other Senior Debt. To the extent that the
aggregate amount of Senior Discount Notes and such other Senior Debt tendered
pursuant to a Senior Asset Sale Offer is less than the remaining Excess Proceeds
("Remaining Excess Proceeds") and the sum of (A) such amount of Remaining Excess
-------------------------
Proceeds and (B) the Remaining Excess Proceeds from any subsequent Senior Asset
Sale Offers exceeds $3.0 million, the Company shall commence an offer to all
Holders of Debentures and all holders of other senior subordinated Indebtedness
of the Company containing provisions similar to those set forth in the Indenture
with respect to offers to purchase with the proceeds of sales of assets (an
"Asset Sale Offer") to purchase the maximum principal amount of Debentures and
- -----------------
such other senior subordinated Indebtedness of the Company that may be purchased
out of the Remaining Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest and
Liquidated Damages, if any, due on the relevant interest payment date), in
accordance with the procedures set forth in the Indenture and such other senior
subordinated Indebtedness of the Company. To the extent that any Remaining
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture.
A2-5
<PAGE>
If the aggregate principal amount of Debentures and such other senior
subordinated Indebtedness of the Company tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Remaining Excess Proceeds,
the Trustee shall select the Debentures and such other senior subordinated
Indebtedness to be purchased on a pro rata basis. Upon completion of such offer
to purchase, the amount of Excess Proceeds shall be reset at zero. Holders of
Debentures that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Company prior to any related purchase date and may elect to
have such Debentures purchased by completing the form entitled "Option of Holder
to Elect Purchase" on the reverse of the Debentures.
The Change of Control and Asset Sale provisions described above shall be
applicable whether or not any other provisions of the Indenture are applicable.
The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer or Asset Sale Offer. To the extent
that the provisions of any such securities laws or securities regulations
conflict with the provisions of Section 4.10 or 4.15 of the Indenture, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under Section 4.10 or 4.15
by virtue thereof.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Debentures are to be redeemed at its registered address. Debentures in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Debentures held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on
Debentures or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Debentures are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Debentures may be registered and Debentures may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Debenture or portion of a Debenture
selected for redemption, except for the unredeemed portion of any Debenture
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Debentures for a period of 15 days before a selection of
Debentures to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
This Regulation S Temporary Global Debenture is exchangeable in whole or in
part for one or more Global Debentures only (i) on or after the termination of
the 40-day restricted period (as defined in Regulation S) and (ii) upon
presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article 2 of the Indenture. Upon exchange of this
Regulation S Temporary Global Debenture for one or more Global Debentures, the
Trustee shall cancel this Regulation S Temporary Global Debenture.
10. Persons Deemed Owners. The registered Holder of a Debenture may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Debentures may be amended or supplemented with the consent of
the Holders of a majority of the aggregate principal amount of the Debentures
then outstanding voting as a single class (including,
A2-6
<PAGE>
without limitation, consents obtained in connection with a purchase of or tender
offer or exchange offer for, Debentures) or, if no Debentures are outstanding,
the holders of a majority in Liquidation Preference of the Senior Exchangeable
Preferred Stock then outstanding (including, without limitation, consents
obtained in connection with a purchase of or tender offer or exchange offer for,
Senior Exchangeable Preferred Stock), and any existing default or compliance
with any provision of the Indenture or the Debentures may be waived with the
consent of the Holders of a majority of the aggregate principal amount of the
then outstanding Debentures voting as a single class (including, without
limitation, consents obtained in connection with a purchase of or tender offer
or exchange offer for, Debentures) or, if no Debentures are outstanding, the
holders of a majority in Liquidation Preference of the Senior Exchangeable
Preferred Stock then outstanding (including, without limitation, consents
obtained in connection with a purchase of or tender offer or exchange offer for,
Senior Exchangeable Preferred Stock). Without the consent of any Holder of a
Debenture, the Indenture or the Debentures may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated
Debentures in addition to or in place of certificated Debentures, to provide for
the assumption of the Company's obligations to Holders of the Debentures in case
of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Debentures or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Debentures; (ii) default in payment when due of principal of or premium,
if any, on the Debentures, (iii) failure by the Company or any of its
Subsidiaries for 30 days after notice to comply with Section 4.10 or 4.15 or
Article 5 of the Indenture; (iv) failure by the Company or any of its
Subsidiaries for 60 days after notice to comply with its other agreements in the
Indenture or the Debentures; (v) default under certain other agreements relating
to Indebtedness of the Company which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default or (b) results in the acceleration of such Indebtedness prior to its
express maturity, in either case the principal amount of such Indebtedness
together with the principal amount of any other such Indebtedness under which
there has been a payment default or the maturity of which has been accelerated,
aggregates $20.0 million or more; (vi) certain final judgments for the payment
of money aggregating in excess of $20.0 million that remain undischarged for a
period of 60 consecutive days; and (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Debentures may declare
all the Debentures to be due and payable. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Debentures will become due and payable without
further action or notice. Holders may not enforce the Indenture or the
Debentures except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Debentures may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Debentures notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the
Debentures then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Debentures. The
Company is required to deliver to the Trustee annually a statement regarding
A2-7
<PAGE>
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Debentures or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
15. Authentication. This Debenture shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Debentures and
Restricted Definitive Debentures. In addition to the rights provided to Holders
of Debentures under the Indenture, Holders of Restricted Global Debentures and
Restricted Definitive Debentures shall have all the rights set forth in the A/B
Exchange Registration Rights Agreement dated as of December 21, 1998, between
the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
- ------------------------------
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Debentures and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Debentures
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
Attention: Chief Financial Officer
A2-8
<PAGE>
Assignment Form
To assign this Debenture, fill in the form below: (I) or (we) assign and
transfer this Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Debenture on the books of the Company. The agent June
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
----------------
Your Signature:
-----------------------
(Sign exactly as your name appears on the face of this Debenture)
Signature Guarantee.
A2-9
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Debenture purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[ ]Section 4.10 [ ]Section 4.15
If you want to elect to have only part of the Debenture purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:
------------ ----------------------
(Sign exactly as your name appears on the Debenture)
Tax Identification No.:
--------------
Signature Guarantee.
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL DEBENTURE
The following exchanges of a part of this Regulation S Temporary Global
Debenture for an interest in another Global Debenture, or of other Restricted
Global Debentures for an interest in this Regulation S Temporary Global
Debenture, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of of this
decrease in Amount of increase Global Debenture Signature of
Principal Amount in Principal Amount following such authorized officer
of this Global of this Global decrease (or of Trustee or
Date of Exchange Debenture Debenture increase) Debenture Custodian
---------------- --------- --------- --------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
United States Trust Company of Texas, N.A.
114 West 47th Street, 25th Floor
New York, NY 10036
Re: 12 3/4% Senior Subordinated Exchange Debentures due 2010
--------------------------------------------------------
Reference is hereby made to the Indenture, dated as of December 21, 1998
(the "Indenture"), between Crown Castle International Corp., as issuer (the
---------
"Company"), and United States Trust Company of Texas, N.A., as trustee.
- --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
----------
Debenture[s] or interest in such Debenture[s] specified in Annex A hereto, in
the principal amount of $___________ in such Debenture[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
- --------- ----------
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
144A Global Debenture or a Definitive Debenture Pursuant to Rule 144A. The
- ---------------------------------------------------------------------
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
---------- ---
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Debenture is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Debenture for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Debenture will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the 144A
Global Debenture and/or the Definitive Debenture and in the Indenture and the
Securities Act.
2. [ ] Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
Temporary Regulation S Global Debenture, the Regulation S Global Debenture or a
- -------------------------------------------------------------------------------
Definitive Debenture pursuant to Regulation S. The Transfer is being effected
- ---------------------------------------------
pursuant to and in accordance with Rule 903
B-1
<PAGE>
or Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive
Debenture will be subject to the restrictions on Transfer enumerated in the
Private Placement Legend printed on the Regulation S Global Debenture, the
Temporary Regulation S Global Debenture and/or the Definitive Debenture and in
the Indenture and the Securities Act.
3. [ ] Check and complete if Transferee will take delivery of a beneficial
-------------------------------------------------------------------
interest in a 144A Global Debenture or a Definitive Debenture pursuant to any
- -----------------------------------------------------------------------------
provision of the Securities Act other than Rule 144A or Regulation S. The
- --------------------------------------------------------------------
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Debentures and
Restricted Definitive Debentures and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act.
4. [ ] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Debenture or of an Unrestricted Definitive Debenture.
(a) [ ] Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or
B-2
<PAGE>
Definitive Debenture will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Debentures, on Restricted Definitive Debentures and in the Indenture.
(b) [ ] Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Debenture will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Debentures, on Restricted Definitive Debentures and in the Indenture.
(c) [ ] Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Debenture will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Debentures or Restricted Definitive Debentures and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-------------------------------------------------
[Insert Name of Transferor]
By:
----------------------------------------------
Name:
Title:
Dated: ,
----------- -----------
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Debenture (CUSIP _________), or
(ii) [ ] Regulation S Global Debenture (CUSIP _________), or
(b) [ ] a Restricted Definitive Debenture.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Debenture (CUSIP ________), or
(ii) [ ] Regulation S Global Debenture (CUSIP ________), or
(iii) [ ] Unrestricted Global Debenture (CUSIP ________); or
(b) [ ] a Restricted Definitive Debenture; or
(c) [ ] an Unrestricted Definitive Debenture,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
United States Trust Company of Texas, N.A.
114 West 47th Street, 25th Floor
New York, NY 10036
Re: 12 3/4% Senior Subordinated Exchange Debentures due 2010
-------------------------------------------------------------
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of December 21, 1998
(the "Indenture"), between Crown Castle International Corp., as issuer (the
---------
"Company"), and United States Trust Company of Texas, N.A., as trustee.
- --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Debenture[s]
-----
or interest in such Debenture[s] specified herein, in the principal amount of
$____________ in such Debenture[s] or interests (the "Exchange"). In connection
--------
with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Debentures or Beneficial Interests in a
Restricted Global Debenture for Unrestricted Definitive Debentures or Beneficial
Interests in an Unrestricted Global Debenture
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Debenture to beneficial interest in an Unrestricted Global Debenture. In
- ---------------------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Debenture for a beneficial interest in an Unrestricted Global Debenture
in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Debentures and pursuant to and in accordance with the
United States Securities Act of 1933, as amended (the "Securities Act"), (iii)
--------------
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest in an Unrestricted Global
Debenture is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(b) [ ] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Debenture to Unrestricted Definitive Debenture. In connection with the
- -----------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Debenture for
an Unrestricted Definitive Debenture, the Owner hereby certifies (i) the
Definitive Debenture is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to
C-1
<PAGE>
the Restricted Global Debentures and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Debenture is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) [ ] Check if Exchange is from Restricted Definitive Debenture to
------------------------------------------------------------
beneficial interest in an Unrestricted Global Debenture. In connection with the
- -------------------------------------------------------
Owner's Exchange of a Restricted Definitive Debenture for a beneficial interest
in an Unrestricted Global Debenture, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Debentures and pursuant to and
in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.
(d) [ ] Check if Exchange is from Restricted Definitive Debenture to
----------------------------------------------------------------
Unrestricted Definitive Debenture. In connection with the Owner's Exchange of a
- ---------------------------------
Restricted Definitive Debenture for an Unrestricted Definitive Debenture, the
Owner hereby certifies (i) the Unrestricted Definitive Debenture is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Debentures and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive
Debenture is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
2. Exchange of Restricted Definitive Debentures or Beneficial Interests in
Restricted Global Debentures for Restricted Definitive Debentures or Beneficial
Interests in Restricted Global Debentures
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Debenture to Restricted Definitive Debenture. In connection with the
- ---------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Debenture for
a Restricted Definitive Debenture with an equal principal amount, the Owner
hereby certifies that the Restricted Definitive Debenture is being acquired for
the Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Debenture issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Debenture and in the Indenture and the Securities Act.
(b) [ ] Check if Exchange is from Restricted Definitive Debenture to
------------------------------------------------------------
beneficial interest in a Restricted Global Debenture. In connection with the
- ----------------------------------------------------
Exchange of the Owner's Restricted Definitive Debenture for a beneficial
interest in the [CHECK ONE] 144A Global Debenture, Regulation S Global
Debenture, with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Debentures and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the
C-2
<PAGE>
proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the relevant Restricted Global Debenture
and in the Indenture and the Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
-----------------------------------------------
[Insert Name of Owner]
By:
--------------------------------------------
Name:
Title:
Dated: ,
---------------- ----
C-4
<PAGE>
EXECUTION COPY
Exhibit 10.26
STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of the
---------
21st day of August, 1998, among CROWN CASTLE INTERNATIONAL CORP.
(formerly named Castle Tower Holding Corp.), a Delaware
corporation (the "Company"), and each of the STOCKHOLDERS of the
-------
Company listed in Schedule I hereto (collectively, the
"Stockholders" and each individually, a "Stockholder"), as
------------- -----------
amended by Amendment No. 1, dated as of the 12th day of November,
1998.
W I T N E S S E T H :
WHEREAS the Company, Castle Transmission Services (Holdings) Ltd.
("CTSH"), TeleDiffusion de France International S.A., a company incorporated in
- ------
France ("TDF"), Digital Future Investments B.V. ("DFI (BV)") and certain
---
shareholders of CTSH are parties to a Share Exchange Agreement (the "Exchange
--------
Agreement") pursuant to which DFI (BV) and such shareholders of CTSH have
- ---------
agreed, subject to the terms and conditions of the Exchange Agreement, to
exchange (the "Exchange") their shares of capital stock of CTSH for Shares (as
--------
defined) of the Company; and
WHEREAS, as an inducement to TDF, DFI (BV) and such shareholders of
CTSH to enter into the Exchange Agreement, the Company and each of the
Stockholders desire to enter into this Agreement, upon and subject to the
Closing of the Exchange, to provide for certain rights and obligations of the
Company and the Stockholders with respect to the governance of the Company and
the Stockholders' shares of Common Stock or, in the case of DFI (BV), DFI (BV)'s
shares of Class A Stock, following the consummation of the Exchange.
NOW THEREFORE, the Company and each of the Stockholders, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, agree as follows:
<PAGE>
2
ARTICLE I
Definitions
-----------
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
----------------------
capitalized terms shall have the meanings assigned to such terms as set forth
below:
"Affiliate" and "Associate", when used with reference to any person,
--------- ---------
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
Exchange Act, as in effect on the date of this Agreement. In addition, (i) each
of the Centennial Parties shall be deemed an Affiliate of the other, (ii) each
of Nassau Parties shall be deemed an Affiliate of the other, (iii) each of the
Berkshire Parties and shall be deemed an Affiliate of the other, and (iv) each
of the Candover Parties shall be deemed an Affiliate of the other.
"Amended and Restated Stockholders Agreement" shall mean the Amended
-------------------------------------------
and Restated Stockholders Agreement, dated August 15, 1997, as amended, among
the Company, certain stockholders of the Company and certain investors.
"Applicable Law" shall have the meaning given to such term in the
--------------
Exchange Agreement.
"BBC" shall mean The British Broadcasting Corporation.
---
"BBC Contracts" shall mean the BBC Analogue Transmission Contract
-------------
among the BBC and Castle Transmission International Ltd. ("CTI"), dated as of
---
February 28, 1997, and the BBC Digital Transmission Contract among the BBC and
CTI, dated as of February 10, 1998.
A person shall be deemed the "beneficial owner" of, and shall be
----------------
deemed to "beneficially own", and shall be deemed to have "beneficial ownership"
---------------- --------------------
of:
(i) any securities that such person or any of such person's Affiliates
or Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 under the Exchange Act, as in effect on the date of this Agreement;
and
(ii) any securities (the "underlying securities") that such person or
---------------------
any of such person's Affiliates or Associates has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or
<PAGE>
3
understanding (written or oral), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise (it being
understood that such person shall also be deemed to be the beneficial owner
of the securities convertible into or exchangeable for the underlying
securities).
"Berkshire Group" shall mean the Berkshire Parties, their Affiliates
---------------
and their respective partners and members, collectively.
"Berkshire Parties" shall mean Berkshire Fund III, A Limited
-----------------
Partnership, Berkshire Investors LLC and Berkshire Fund IV, Limited Partnership.
"Board" shall mean the Board of Directors of the Company.
-----
"Business Combination" shall have the meaning given to it in the
--------------------
Governance Agreement.
"Business Day" shall mean any day that is not a Saturday, a Sunday, a
------------
bank holiday or any other day on which commercial banking institutions in New
York, New York, Paris, France or London, England are not generally open for
business.
"By-laws" shall mean the By-laws of the Company to be adopted with
-------
immediate effect upon the Closing, as amended from time to time in accordance
with the terms of the Governance Agreement and applicable law.
"Candover Group" shall mean the Candover Parties, their Affiliates and
--------------
the limited partners of the Candover Parties, collectively.
"Candover Group Interest" shall mean the percentage of Voting Power
-----------------------
that is controlled, directly or indirectly, by the Candover Group.
"Candover Parties" shall mean Candover Investments plc, Candover
----------------
(Trustees) Limited, Candover Partners Limited (a company incorporated in England
and Wales as general partner of the Candover 1994 UK Limited Partnership),
Candover Partners Limited (a company incorporated in England and Wales as
general partner of the Candover 1994 UK No. 2 Limited Partnership), Candover
Partners Limited (a company incorporated in England and Wales as general partner
of the Candover 1994 US No. 1 Limited Partnership) and Candover Partners Limited
(a company incorporated in England and
<PAGE>
4
Wales as general partner of the Candover 1994 US No. 2 Limited Partnership).
"Centennial Group" shall mean the Centennial Parties, their Affiliates
----------------
and their respective partners, collectively.
"Centennial Parties" shall mean Centennial Fund IV, L.P., Centennial
------------------
Fund V, L.P. and Centennial Entrepreneurs Fund V, L.P.
"Charter" shall mean the certificate of incorporation of the Company
-------
to be adopted with immediate effect upon the Closing, as amended from time to
time in accordance with the terms of the Governance Agreement and applicable
law.
"Class A Stock" shall mean the Company's Class A Common Stock, $.01
-------------
par value per share, as designated in the Charter.
"Closing" shall have the meaning given to such term in the Exchange
-------
Agreement.
"Commission" shall mean the Securities and Exchange Commission, or any
----------
other Federal agency at the time administering the Securities Act and the
Exchange Act.
"Common Stock" shall mean the shares of the Company's common stock,
------------
par value $.01 per share, as designated in the Charter.
"Company Call Right" shall have the meaning set forth in Section 6.02
------------------
of the Governance Agreement.
"Crown Group" shall mean the Crown Parties and their permitted
-----------
transferees.
"Crown Parties" shall mean Robert A. Crown, Barbara Crown, the Grantor
-------------
Retained Annuity Trust on behalf of Mr. Crown and the Grantor Retained Annuity
Trust on behalf of Ms. Crown.
"CTSH Option" shall have the meaning set forth in the Governance
-----------
Agreement.
"CTSH Ordinary Shares" shall mean the ordinary shares of 1p each of
--------------------
CTSH.
"CTSH Preference Shares" shall mean the redeemable preference shares
----------------------
of 1p each of CTSH.
<PAGE>
5
"CTSH Warrants" shall mean the warrants dated February 28, 1997,
-------------
entitling TDF to subscribe for 257,000 CTSH Ordinary Shares and 257,242,500 CTSH
Preference Shares and the Company to subscribe for 515,000 CTSH Ordinary Shares
and 514,485,000 CTSH Preference Shares.
"Director" shall mean a Director of the Company.
--------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any similar Federal securities statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"Exchange Agreement" shall mean the Share Exchange Agreement dated as
------------------
of April 24, 1998, among the Company, CTSH, DFI (BV), TDF and certain
shareholders of CTSH.
"Governance Agreement" shall mean the Governance Agreement, dated as
--------------------
of August 21, 1998, between TDF, DFI (BV) and the Company.
"group" shall have the meaning given to such term in Section 13(d)(3)
-----
of the Exchange Act.
"Group" or "Groups" shall mean any and all of the TDF Group, the
----- ------
Candover Group, the Crown Group, the Initial Stockholder Group, the Centennial
Group, the Berkshire Group, the Nassau Group and the Management Group.
"Independent Director" shall mean a Director who is none of (i) an
--------------------
officer, employee, Affiliate or Associate of the Company or an officer, employee
or Director of any Affiliate or Associate of the Company or (ii) an officer,
employee, Director, Affiliate or Associate of any Stockholder.
"Initial Stockholder" shall mean Ted B. Miller, Jr.
-------------------
"Initial Stockholder Group" shall mean the Initial Stockholder and its
-------------------------
permitted transferees, collectively.
"IPO" shall have the meaning given to such term in the Exchange
---
Agreement.
"Nassau Group" shall mean the Nassau Parties, their Affiliates and
------------
their respective partners, collectively.
"Nassau Parties" shall mean Nassau Capital Partners II, L.P. and NAS
--------------
Partners I, L.L.C.
<PAGE>
6
"Newco" shall mean any person which becomes a holding company of the
-----
Company all the shares in which (other than shares not exceeding the Relevant
Percentage (as defined in the Governance Agreement)) are held by the same
persons as were stockholders in the Company prior to such person becoming a
holding company of the Company.
"Original Stockholders Agreement" shall mean the Amended and Restated
-------------------------------
Stockholders Agreement, dated as of August 15, 1997, as amended, by and among
the Company and certain Stockholders.
"Ownership Interest" shall mean, with respect to any person, the
------------------
percentage of Total Voting Power determined on the basis of the number of shares
of Voting Securities actually outstanding that is controlled, directly or
indirectly, by such person.
"permitted transferee" of any person shall mean (a) if the transferor
--------------------
is a natural person, (i) in the case of the death of such person, such person's
executors, administrators, testamentary trustees, heirs, devisees and legatees,
(ii) such person's current or future spouse, parents, siblings or descendants or
such parents', siblings' or descendants' spouses (each a "Family Member"), (iii)
any trust for the benefit of any Family Member and (iv) any charitable
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended (the "Code") and any charitable income or lead trust for which,
under the Code and regulations thereunder and Internal Revenue Service
interpretations thereof, an income, gift or estate tax charitable deduction is
available to the grantor of the trust, (b) whether or not the transferor is a
natural person, a corporation or corporations and a partnership or partnerships
(or other entity for collective investment, such as a fund or a limited
liability company) which at the date of transfer are directly or indirectly
controlled by, controlling or under common control with such person and the
officers, employees, general partners and limited partners of such person, and
(c) if the transferor, whether or not a natural person, itself received the
transferred interest as a permitted transferee as to the original transferor, a
permitted transferee of such person is any person, whether or not a natural
person, who would be a permitted transferee under subparagraph (a) or (b) above,
as to the original transferor; provided that any such transferee shall agree in
-------- ----
writing with the Company and the other parties to this Agreement to be bound by
all of the provisions of this Agreement to the same extent as if such transferee
were the individual.
<PAGE>
7
"person" shall mean an individual, corporation, limited liability
------
company, partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof and shall include any
"group" (which shall have the meaning given to such term in Section 13(d)(3) of
the Exchange Act).
"Qualified" shall have the meaning given to such term in the
---------
Governance Agreement.
"Restricted Shares" shall mean the shares of Common Stock and Class A
-----------------
Stock of the Company which are (i) issued or issuable to any of the Stockholders
of the Company and (ii) "restricted securities" as defined in Rule 144(a)(3)
under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar Federal securities statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Shares" shall mean all shares of Common Stock (and Class A Stock, in
------
the case of TDF and DFI (BV)).
"Subsidiary" or "Subsidiaries" when used with respect to any person
---------- ------------
shall mean (i) any other person, whether incorporated or unincorporated, which
is either required to be consolidated with such person under U.S. generally
accepted accounting principles or (ii) is an affiliate controlled by such
person, directly or indirectly through one or more intermediaries within the
meaning of Rule 1.02(x) of Regulation S-X under the Exchange Act.
"TDF CCIC Warrants" shall mean the warrants issued to TDF upon the
-----------------
exercise of the TDF Put Right in exchange for, and on substantially the same
terms as, the TDF CTSH Warrants.
"TDF Change of Control" shall have the meaning given to such term in
---------------------
the Governance Agreement.
"TDF Consolidated Group Interest" shall mean the percentage of Voting
--------------------------------
Power that is controlled directly or indirectly by the TDF Group or would be
controlled directly or indirectly by the TDF Group on the exercise of the TDF
Put Right (assuming the exercise of the TDF CTSH Warrants).
"TDF CTSH Warrants" shall mean the CTSH Warrants beneficially owned by
-----------------
the TDF Group.
<PAGE>
8
"TDF Group" shall mean TDF and its Affiliates (other than the Company
---------
and its Subsidiaries).
"TDF Group Interest" shall mean the percentage of Voting Power that is
------------------
controlled, directly or indirectly, by the TDF Group or would be controlled,
directly or indirectly, by the TDF Group (assuming the exercise of the TDF CCIC
Warrants).
"TDF Put Right" shall have the meaning set forth in Section 6.01(a) of
-------------
the Governance Agreement.
"TDF Rollup" shall have the meaning set forth in the Governance
----------
Agreement.
"Total Voting Power" means the aggregate number of votes entitled to
------------------
be voted in an election of Directors by all the outstanding Voting Securities.
"Transaction Documents" shall have the meaning set forth in the
---------------------
Exchange Agreement.
"Voting Power", when used with reference to any class or series of
------------
securities of the Company, or any classes or series of securities of the Company
entitled to vote together as a single class or series, shall mean the power of
such class or series (or such classes or series) to vote for the election of
directors. For purposes of determining the percentage of Voting Power of any
class or series (or classes or series) beneficially owned by any person, any
securities not outstanding which are subject to conversion rights, exchange
rights, rights, warrants, options or similar securities held by such person
shall be deemed to be outstanding for the purpose of computing the percentage of
outstanding securities of the class or series (or classes or series)
beneficially owned by such person, but shall not be deemed to be outstanding for
the purpose of computing the percentage of the class or series (or classes or
series) beneficially owned by any other person.
"Voting Securities", when used with reference to any person, shall
-----------------
mean any securities of such person having Voting Power or any securities
convertible into or exchangeable for any securities having Voting Power.
SECTION 1.02. Securities Outstanding. In determining the number or
-----------------------
other amount outstanding of any securities of the Company or the percentage of
Voting Power of any class or series beneficially owned by such person,
securities owned by the Company or any of its Subsidiaries shall be deemed to be
not outstanding.
<PAGE>
9
ARTICLE II
Securities Act; Legends
-----------------------
SECTION 2.01. General Restriction. Any of the Stockholders may sell
--------------------
or otherwise transfer any Shares or any interest therein; provided, that such
--------
sale or other transfer is in compliance with this Agreement, the other
Transaction Documents and the Securities Act.
SECTION 2.02. Legends on Certificates. (a) Each Stockholder shall
------------------------
hold in certificate form all Shares owned by such Stockholder. Each certificate
evidencing Shares issued to or beneficially owned by a person that is subject to
the provisions of this Agreement shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS AGREEMENT, DATED AS
OF AUGUST 21, 1998, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF
THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED
WITH. IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF
THE ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT."
(b) In the event that a Stockholder requests that the legend in
Section 2.02(a) be removed, the Company shall, upon the written request of the
holder thereof, issue to such holder a new certificate evidencing such Shares
without the legend required by Section 2.02(a) endorsed thereon; provided;
--------
however, that such holder shall furnish the Company or its transfer agent such
- -------
certificates, legal opinions or other information as the Company or its transfer
agent may reasonably require to confirm that the legend is not required on such
certificate.
(c) In the event that any Shares shall cease to be subject to the
restrictions on transfer set forth in this Agreement, the Company shall, upon
the written request of the holder thereof, issue to such holder a new
certificate
<PAGE>
10
evidencing such Shares without the legend required by Section 2.02(a).
SECTION 2.03. Notice of Proposed Transfer. Prior to any proposed
----------------------------
transfer of any Shares (other than under the circumstances described in Sections
4.01, 4.02 or 4.03), the holder thereof shall give written notice to the Company
of its intention to effect such transfer. Each such notice shall describe the
manner of the proposed transfer and, if requested by the Company, shall be
accompanied by an opinion of counsel satisfactory to the Company to the effect
that the proposed transfer may be effected without registration under the
Securities Act and any applicable state securities laws, whereupon the holder of
such stock shall be entitled to transfer such stock in accordance with the terms
of its notice; provided, however, that no such opinion of counsel shall be
-------- -------
required for a transfer, without receipt of consideration, to an Affiliate.
Each certificate for Shares transferred as above provided shall bear the legend
set forth in Section 2.02, except that such certificate shall not bear such
legend if (a) such transfer is in accordance with the provisions of Rule 144 (or
any other rule permitting public sale without registration under the Securities
Act) or (b) the opinion of counsel referred to above is to the further effect
that the transferee and any subsequent transferee (other than an Affiliate of
the Company) would be entitled to transfer such securities in a public sale
without registration under the Securities Act. The restrictions provided for in
this Section 2.03 shall not apply to securities which are not required to bear
the legend prescribed by Section 2.02 in accordance with the provisions of that
Section.
SECTION 2.04. Stop Transfer. (a) The Company shall not register the
--------------
sale or other transfer of any Shares, unless the transferee and the transferor
of such shares have furnished such certificates, legal opinions or other
information as the Company or its transfer agent may reasonably require to
confirm that such proposed sale or transfer is permitted by Section 2.01.
(b) The Company and each Stockholder hereby agree that any purported
sale or transfer of Shares not permitted by Section 2.01 shall be deemed null
and void and shall not be given effect or recognition by the Company.
SECTION 2.05. Certain Transferees to Execute Agreement. Each
-----------------------------------------
Stockholder agrees that it will not, directly or indirectly, sell or otherwise
transfer any Shares held by such Stockholder to any of its Affiliates or
permitted transferees, unless, prior to the consummation of
<PAGE>
11
any such sale or transfer, the Affiliate or permitted transferee to whom such
sale or transfer is proposed to be made (a "Prospective Transferee") (i)
----------------------
executes and delivers to the Company and each other party to this Agreement a
counterpart hereof and (ii) represents and warrants in writing to the Company
that such counterpart has been duly authorized, executed and delivered by such
Prospective Transferee and is a legal, valid and binding obligation of such
Prospective Transferee enforceable against it in accordance with its terms,
subject to insolvency, bankruptcy and other laws affecting creditors generally.
Upon the execution and delivery by such Prospective Transferee of the documents
referred to in the preceding sentence, such Prospective Transferee shall be
deemed a "Stockholder" for the purposes of this Agreement, and shall have the
rights and be subject to the obligations of a Stockholder hereunder with respect
to the Shares held by such Prospective Transferee. Notwithstanding the foregoing
or any other provision of this Agreement, from and after the time immediately
prior to any transfer of Shares by any Candover Party to any of its limited
partners, no member of the Candover Group shall have any rights or obligations
under Article III or V hereof with respect to any Shares.
SECTION 2.06. Sale to a Third Party. If a sale or transfer of Shares
----------------------
is made by a Stockholder to a third party (except for transfers within the TDF
Group, the Berkshire Group, the Centennial Group, the Candover Group, the Nassau
Group or otherwise to an Affiliate or to any permitted transferee)(a "Third
-----
Party Transferee"), such Shares shall immediately cease to be subject to this
- ----------------
Agreement and such Third Party Transferee will not become a Stockholder for
purposes of this Agreement. If a sale or transfer of Shares results in the
selling Stockholder or a permitted transferee ceasing to own any Shares, such
selling Stockholder shall cease to be a Stockholder for purposes of this
Agreement.
ARTICLE III
Governance
----------
SECTION 3.01. Board of Directors. The Board shall consist of 12
-------------------
members.
SECTION 3.02. Board Representation. (a) At all times from and after
---------------------
the date hereof, the Directors shall be nominated as follows (it being
understood that such nomination shall include any nomination of any incumbent
Director for reelection to the Board):
<PAGE>
12
(i) so long as TDF is Qualified, TDF shall have the right to appoint
two Directors pursuant to the terms of the Class A Stock set forth in the
Charter (the "TDF Designees") and the initial TDF Designees shall be Michel
-------------
Azibert and Bruno Chetaille; provided, however, that if TDF is not
-------- -------
Qualified, such members of the TDF Group shall, so long as the Ownership
Interest of the TDF Group is at least 5.0%, have the right to appoint a
Director pursuant to the terms of such Class A Stock (the "TDF Designee");
------------
(ii) so long as the Crown Group has beneficial ownership of at least
555,555 shares of Common Stock (as adjusted from time to time to take into
account any stock split, stock dividend, recapitalization or other similar
transaction) the members of the Crown Group holding in the aggregate a
majority of the aggregate number of Shares held of record by the Crown
Group shall have the right to designate one nominee for election as a
Director (the "Crown Designee");
--------------
(iii) so long as the Initial Stockholder Group maintains an Ownership
Interest, the members of the Initial Stockholder Group holding in the
aggregate a majority of the aggregate number of Shares held of record by
the Initial Stockholder Group shall have the right to designate one nominee
for election as a Director (the "Initial Stockholder Designee"), it being
----------------------------
understood that the Initial Stockholder may be such nominee;
(iv) the Chief Executive Officer of the Company shall have the right
to designate one nominee for election as a Director (the "CEO Designee");
------------
(v) so long as the Ownership Interest of the Centennial Group is at
least 5.0%, the members of the Centennial Group holding in the aggregate a
majority of the aggregate number of Shares held of record by the Centennial
Group shall have the right to designate one nominee for election as a
Director (the "Centennial Designee");
-------------------
(vi) so long as the Ownership Interest of the Berkshire Group is at
least 5.0%, the members of the Berkshire Group holding in the aggregate a
majority of the aggregate number of Shares held of record by the Berkshire
Group shall have the right to designate one nominee for election as a
Director (the "Berkshire Designee");
------------------
<PAGE>
13
(vii) so long as the Ownership Interest of the Nassau Group is not
less than the Ownership Interest of the Nassau Group immediately following
the closing of the IPO, the members of the Nassau Group holding in the
aggregate a majority of the aggregate number of Shares held of record by
the Nassau Group shall have the right to designate one nominee for election
as a Director (the "Nassau Designee"); and
---------------
(viii) all Directors other than the Designees ("General Directors")
-----------------
shall be nominated in accordance with the Charter and By-laws; provided,
--------
however, that immediately upon the effectiveness of this Agreement, the
-------
Company, through the Board, shall cause to be duly appointed to the Board
at least four Independent Directors (including for the avoidance of doubt,
the Independent Director designated for nomination by TDF as set forth
below); provided, however, that TDF shall have a one-time right,
-------- -------
exercisable upon the Closing, to designate one such Independent Director
for nomination as a Director, which designee shall be Mr. William A.
Murphy. For purposes of this Section 3.02(a)(viii), Mr. Robert F.
McKenzie, Mr. J. Landis Martin and Mr. Edward C. Hutcheson, Jr. shall be
deemed to be Independent Directors.
(b) Without limiting the generality of Section 3.02(a), in the event
that at any time after the date hereof the number of Directors designated by a
Group pursuant to Section 3.02(a) differs from the number that such Group has
the right (and desire) to designate, (i) if the number of such Directors exceeds
such number, such Group shall promptly take all appropriate action to cause to
resign that number of Directors designated by such Group as is required to make
the remaining number of such Directors conform to the provisions of this
Agreement or (ii) if the number of such Directors otherwise is less than such
number, the Board shall take all necessary action to create sufficient vacancies
on the Board to permit such Group to designate the full number of Directors
which it is entitled (and desires) to designate pursuant to the provisions of
this Agreement (such action may include but need not be limited to seeking the
resignation or removal of Directors or, at the request of such Group and/or
calling a special meeting of the stockholders of the Company for the purpose of
removing Directors to create such vacancies to the extent permitted by
applicable law). Upon the creation of any vacancy pursuant to the preceding
sentence, such Group shall designate a nominee to fill any such vacancy in
accordance with the provisions of this Agreement and the Board shall elect each
nominee so designated.
<PAGE>
14
(c) Subject to TDF's right pursuant to Section 3.02(a)(viii), no
Group shall be entitled to designate any nominee for election as a Director
under more than one paragraph of this Section 3.02.
SECTION 3.03. Removal of Directors. (a) At the request of a Group
---------------------
with respect to a Director designated by such Group pursuant to Section 3.02(a),
each other Stockholder hereby agrees to vote or act by written consent with
respect to (or cause to be voted or acted upon written consent) all Shares held
of record or beneficially owned by such Stockholder at the time of such vote or
action by written consent or as to which such Stockholder has voting control at
the time of such vote or action by written consent to remove or cause the
removal from office of such Director at any meeting or action by written consent
of the holders of Shares called or taken for the purpose of determining whether
or not such Director shall be removed from office (and otherwise shall not vote
or act by written consent to remove or cause the removal of any Director without
cause).
(b) If any Group entitled to designate any person for election as a
Director pursuant to Section 3.02(a) shall cease to have at least the requisite
Ownership Interest to entitle such Group to designate any person for election as
a Director pursuant to Section 3.02(a), such Group's right to designate a
nominee or nominees for election as a Director shall be lost for all time and
such Group shall cause each Designee designated by such Group and elected as a
Director to resign from the Board; provided that such Designee shall continue to
-------- ----
serve on the Board until a successor shall be duly elected and shall qualify in
accordance with the Charter and By-laws.
SECTION 3.04. Filling of Vacancies. (a) Except as provided in
---------------------
subparagraph (b) below, each Group shall have the right to designate a
replacement for any Designee designated by such Group and elected as a Director
upon the death, resignation, retirement, disqualification or removal from office
for other cause of such Designee, and those members of the Board who are
designated by the parties to this Agreement shall duly appoint as a Director
each person so designated.
(b) Any vacancies on the Board (i) resulting from the death,
resignation, retirement, disqualification or removal from office for other cause
of a General Director and (ii) created by a resignation pursuant to Section
3.03(b) shall be filled with a Director or Directors that are nominated by the
Nominating Committee; provided,
--------
<PAGE>
15
however, that if the Nominating Committee shall be unable to unanimously agree
- -------
on the approval of a designee to be nominated to fill any vacancy on the Board
for a period of six months, the Nominating Committee shall submit a slate of
candidates to the Independent Directors of the Board, who shall by a majority
approve a designee from such slate to be nominated to fill such vacancy;
provided, further, that if the Independent Directors shall also be unable to
- -------- -------
agree on the approval of such a designee by a majority for a period of two
months, then the Board shall approve a designee from such slate or upon its own
selection to fill such vacancy by a Special Majority Vote.
SECTION 3.05. Solicitation and Voting of Shares. (a) With respect to
----------------------------------
each meeting of stockholders of the Company at which Directors are to be
elected, the Company shall use its best efforts to solicit from the stockholders
of the Company eligible to vote in the election of Directors proxies in favor of
the nominees selected in accordance with Section 3.02(a) or 3.04(b) (including
without limitation the inclusion of each Director nominee in management's slate
of nominees and in the proxy statement prepared by management of the Company in
respect of each annual meeting, vote or action by written consent).
(b) Each Stockholder hereby agrees to vote or act by written consent
with respect to (or cause to be voted or acted upon by written consent) (i) all
Shares held of record or beneficially owned by such Stockholder at the time of
such vote or action by written consent and (ii) all Shares as to which such
Stockholder at the time of such vote or action by written consent has voting
control, in each case (A) in favor of the election of the persons nominated
pursuant to Section 3.02(a) to serve on the Board as Directors and (B) against
the election of any other person nominated to be a Director.
(c) Each Stockholder agrees that it will, and will use its best
efforts to cause its Affiliates (other than the Company and its Subsidiaries)
to, take all action as a stockholder of the Company or as is otherwise
reasonably within its control, as necessary to effect the provisions of this
Agreement.
(d) In the event that any Stockholder shall fail at any time to vote
or act by written consent with respect to any of such Stockholder's Shares as
agreed by such Stockholder in this Agreement, such Stockholder hereby
irrevocably grants to and appoints each other Stockholder (and any officer of
such Stockholder or each of them individually), such Stockholder's proxy and
attorney-in-fact
<PAGE>
16
(with full power of substitution), for and in the name, place and stead of such
Stockholder, to vote, act by written consent or grant a consent, proxy or
approval in respect of such Shares with respect to such vote or action by
written consent exclusively as agreed by such Stockholder in this Agreement.
Each Stockholder hereby affirms that any such irrevocable proxy set forth in
this Section 3.05(d) is given in connection with the Closing of the Exchange
pursuant to the Exchange Agreement and that such irrevocable proxy is given to
secure the performance of the obligations of such Stockholder under this
Agreement. Each such Stockholder hereby further affirms that any such proxy
hereby granted shall be irrevocable and shall be deemed coupled with an
interest, in accordance with Section 212(e) of the Delaware General Corporation
Law.
SECTION 3.06. Committees of the Board. Subject to the general
------------------------
oversight and authority of the full Board, the Board shall establish, empower,
maintain and elect the members of the following committees of the Board at all
times while this Agreement is in effect:
(a) an Audit Committee, comprised solely of Independent Directors;
(b) a Nominating Committee, which shall, subject to Section 3.02, be
responsible for recommending the nomination of Directors and which shall
initially consist of four Directors; provided, however, that the Nominating
-------- -------
Committee shall include the Chief Executive Officer of the Company, unless
he is unwilling or unable to serve pursuant to the terms and conditions of
this Agreement, and, so long as TDF is Qualified, at least one TDF
Designee;
(c) an Executive Committee, which shall initially consist of five
Directors and which, so long as TDF is Qualified, shall include at least
one TDF Designee who is elected to the Board;
(d) a Compensation Committee; and
(e) such other committees as the Board deems necessary or desirable to
establish, empower and maintain as required by applicable law or any
regulatory authority; provided that such committees are established in
--------
compliance with the terms of this Agreement.
SECTION 3.07. Certain Board Procedures. The Board shall follow the
-------------------------
following procedures:
<PAGE>
17
(a) Meetings. The Board shall hold at least six regularly scheduled
---------
meetings per year at such times as may from time to time be fixed by resolution
of the Board, and no notice (other than the resolution) need be given as to a
regularly scheduled meeting. Special meetings of the Board may be held at any
time upon the call of the Chairman of the Board or at least one-third of the
entire Board, by oral, telephonic, telegraphic or facsimile notice duly given or
sent at least three days, or by written notice sent by express mail at least
three days, before the meeting to each Director, provided that all such notices
to Directors located outside the United States shall be given or sent orally or
by telephone, telegraph or facsimile transmission. Reasonable efforts shall be
made to ensure that each Director actually receives timely notice of any such
special meeting. An annual meeting of the Board shall be held without notice
immediately following the annual meeting of stockholders of the Company.
(b) Agenda. A reasonably detailed agenda shall be supplied to each
-------
Director reasonably in advance of each meeting of the Board, together with other
appropriate documentation with respect to agenda items calling for Board action,
to inform adequately Directors regarding matters to come before the Board. Any
Director wishing to place a matter on the agenda for any meeting of the Board
may do so by communicating with the Chairman of the Board sufficiently in
advance of the meeting of the Board so as to permit timely dissemination to all
Directors of information with respect to the agenda items.
(c) Powers of the Board. The Board shall reserve to itself the power
--------------------
to approve transactions that are of a type customarily subject to Board approval
as a matter of good corporate practice for public companies in the United
States, and shall not delegate to any committee of the Board or to any officers
of the Company the authority to conduct business in any manner that would
circumvent, or deprive any Stockholder of the protection of this Agreement or
TDF of the protection of the Governance Agreement. All committees of the Board
will report to and be accountable to the Board. The Board shall establish, in
cooperation with the Chief Executive Officer of the Company, a schedule for
Board review or action, as appropriate, with respect to matters which shall
typically come before the Board, including, but not limited to:
(i) annual business plans (including capital expenditures and
operating budgets); and
(ii) appointments of officers.
<PAGE>
18
SECTION 3.08. Charter and By-laws. The Company and each Stockholder
--------------------
shall take or cause to be taken all lawful action necessary to ensure at all
times that the Charter and By-laws are not at any time inconsistent with the
provisions of this Agreement, it being understood that in the event of any
conflict between this Agreement and the Charter or By-laws, the Charter or By-
laws, as applicable, shall control.
SECTION 3.09. Negative Covenants. Notwith standing any other
-------------------
provision of the Transaction Documents, neither the Company nor any Stockholder
shall take or approve any action which would result in the BBC having the right
to terminate a BBC Contract in accordance with the terms of such BBC Contract.
SECTION 3.10. Company Name. So long as the Ownership Interest of the
-------------
Crown Group is at least 1% or they otherwise consent in writing, the Company
covenants and agrees (subject to the limitations below) to use its best efforts
to (i) retain a name beginning with "Crown Castle", (ii) retain or cause the
name of its principal Affiliate owning communication towers in the United States
to be "Crown Communication Inc." ("CCI"), (iii) upon a merger, consolidation,
---
amalgamation, roll-up or any other transaction with a similar effect involving
the Company (including, without limitation, a merger or roll-up involving Castle
Transmission Services (Holdings) Ltd. or any of its Affiliates), cause the
successor or surviving entity to retain or have a name beginning with "Crown
Castle", (iv) cause all of the Company's operations in the United States to be
conducted by CCI, and cause any subsidiaries or affiliates of the Company or CCI
conducting such operations to include the name "Crown" first in their corporate
name or to otherwise be conducted under the name "Crown" consistent with the
provisions of the Memorandum of Understanding Regarding Management and
Governance of Castle Tower Holding Corp. and Crown Communications, Inc., dated
as of August 15, 1997 relating to CCI, and (v) cause CCI and all of its United
States Subsidiaries (as defined under clause (i) only of the definition of
Subsidiary set forth in Article I hereof) to retain the current "Crown" logo.
Notwithstanding the above, the above covenants and agreement shall not (a)
require the Company (including any successor entity), any stockholder of the
Company or member of the Board to incur any costs, expenses or losses of any
nature or amount including, without limitation, losses relating to potential
corporate opportunity or foregone stockholder value (price, content or any other
item), (b) prevent or delay the Company (including any successor entity) from
consummating or negotiating any proposed transaction or
<PAGE>
19
(c) require any member of the Board to breach any duty and obligation to the
Company or its stockholders. Consent of the Crown Group shall be deemed given if
written consent is obtained from members of the Crown Group holding more than
50% of the Common Stock held by such persons at the time of the determination.
ARTICLE IV
Registration Rights
-------------------
SECTION 4.01. "Piggy-Back" Registration. If the Company at any time
--------------------------
proposes to register any of its securities under the Securities Act for sale to
the public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Forms S-4, S-
8 or another form not available for registering the Restricted Shares for sale
to the public), each such time it will give written notice to all holders of
outstanding Restricted Shares of its intention so to do. Upon the written
request of any such holder, received by the Company within 20 days after the
giving of any such notice by the Company, to register any of its Restricted
Shares, the Company will, subject as provided below, cause the Restricted Shares
as to which registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent requisite to permit the sale or other disposition
by the holder of such Restricted Shares so registered. In the event that any
registration pursuant to this Section 4.01 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of Restricted Shares to
be included in such an underwriting may be reduced (pro rata among the
requesting holders based upon the number of Restricted Shares owned by such
holders) if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein; provided, however, that such
-------- -------
number of Restricted Shares shall not be reduced if any shares are to be
included in such underwriting for the account of any person other than the
Company or requesting holders of Restricted Shares. Notwithstanding the
foregoing provisions, the Company may withdraw any registration statement
referred to in this Section 4.01 without thereby incurring any liability to the
holders of Restricted Shares. There shall be no limit to the number of
registrations of Restricted Shares which may be effected under this Section
4.01.
<PAGE>
20
SECTION 4.02. Demand Registration. (a) At any time after the
--------------------
expiration of six months after the IPO, TDF may request the Company to register
under the Securities Act all or a portion of the shares of Restricted Shares
held by it for sale in the manner specified in such notice; provided, that (i)
--------
the reasonably anticipated aggregate net proceeds to the sellers from such
public offering would exceed $30,000,000, (ii) such request covers at least 5%
of the Voting Securities then outstanding and (iii) no such request may be made
by TDF more than once every nine months. Notwithstanding anything to the
contrary contained herein, no request may be made under this Section 4.02 within
90 days after the effective date of a registration statement filed by the
Company covering a firm commitment underwritten public offering in which the
holders of Restricted Shares shall have been entitled to join pursuant to
Sections 4.01 or 4.03 and in which there shall have been effectively registered
all shares of Restricted Shares as to which registration shall have been
requested.
(b) At any time after the expiration of six months after the IPO, any
Stockholder or group of Stockholders may request the Company to register under
the Securities Act all or a portion of the shares of Restricted Shares held by
such Stockholder or group of Stockholders for sale in the manner specified in
such notice; provided, that (i) the reasonably anticipated aggregate net
--------
proceeds to the sellers from such public offering would exceed $30,000,000, (ii)
such request covers at least 5% of the Voting Securities then outstanding and
(iii) no such request may be made by such Stockholders or group of Stockholders
more than once every nine months. Notwithstanding anything to the contrary
contained herein, no request may be made under this Section 4.02 within 90 days
after the effective date of a registration statement filed by the Company
covering a firm commitment underwritten public offering in which the holders of
Restricted Shares shall have been entitled to join pursuant to Sections 4.01 or
4.03 and in which there shall have been effectively registered all shares of
Restricted Shares as to which registration shall have been requested.
(c) Following receipt of any notice under this Section 4.02, the
Company shall immediately notify all holders of Restricted Shares from whom
notice has not been received and shall use its best efforts to register under
the Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders, the number of shares of
Restricted Shares specified in such notice (and in all notices received by the
Company from other holders within 20 days after the giving of such notice by the
Company). If such method of
<PAGE>
21
disposition shall be an underwritten public offering, the holders of a majority
of the shares of Restricted Shares to be sold in such offering may designate the
managing underwriter of such offering, subject to the approval of the Company,
which approval shall not be unreasonably withheld or delayed. The Company shall
be obligated to register Restricted Shares pursuant to Section 4.02(a) on three
occasions only and pursuant to Section 4.02(b) on three occasions only,
provided, however, that such obligations shall be deemed satisfied only when a
- -------- -------
registration statement covering all shares of Restricted Shares specified in
notices received as aforesaid, for sale in accordance with the method of
disposition specified by the requesting holders, shall have become effective
and, if such method of disposition is a firm commitment underwritten public
offering, all such shares shall have been sold pursuant thereto unless (i) any
such registration statement does not become effective due to the withdrawal
thereof by or on the request of the holders of 66 2/3% of the shares of
Restricted Shares to be registered or (ii) the reason all shares of Restricted
Shares specified in notices pursuant to this Section 4.02 are not registered is
due to a limitation on the registration of shares by the managing underwriter
(which limitation shall be applied pro rata) and no more than 50% of the
Restricted Shares so specified are not registered as a result of the limitation
imposed by such managing underwriter or the voluntary withdrawal of any such
shares from registration by the holder thereof.
(d) The Company shall be entitled to include in any registration
statement referred to in this Section 4.02, for sale in accordance with the
method of disposition specified by the requesting holders, shares of Common
Stock to be sold by the Company for its own account, except as and to the extent
that, in the opinion of the managing underwriter (if such method of disposition
shall be an underwritten public offering), such inclusion would adversely affect
the marketing of the Restricted Shares to be sold. Except for registration
statements on Forms S-4, S-8 or any successor thereto, the Company will not file
with the Commission any other registration statement with respect to its Common
Stock, whether for its own account or that of other stockholders, from the date
of receipt of a notice from requesting holders pursuant to this Section 4.02 90
days after the commencement of the public offering of the Restricted Shares
covered by the registration statement requested pursuant to this Section 4.02.
SECTION 4.03. Registration on Form S-3. If at any time (a) a holder
-------------------------
or holders of 5% of the Voting Securities request that the Company file a
registration
<PAGE>
22
statement on Form S-3 or any successor thereto for a public offering of all or
any portion of the Restricted Shares held by such requesting holder or holders,
the reasonably anticipated aggregate price to the public of which would exceed
$30,000,000, and (b) the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Restricted Shares specified in such
notice. Whenever the Company is required by this Section 4.03 to use its best
efforts to effect the registration of Restricted Shares, each of the procedures
and requirements of Section 4.02 and 4.04 (including but not limited to the
requirement that the Company notify all holders of Restricted Shares from whom
notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration, provided,
--------
however, the Company shall not be required to effect more than seven
- -------
registrations on Form S-3 which may be requested and obtained under this Section
4.03.
SECTION 4.04. Registration Procedures. If and whenever the Company
------------------------
is required by the provisions of Sections 4.01, 4.02 or 4.03 to use its best
efforts to effect the registration of any Restricted Shares under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (i) below and
comply with the provisions of the Securities Act with respect to the
disposition of all Restricted Shares covered by such registration statement
in accordance with the sellers' intended method of disposition set forth in
such registration statement for such period;
(c) furnish to each seller of Restricted Shares and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate
<PAGE>
23
the public sale or other disposition of the Restricted Shares covered by
such registration statement;
(d) use its best efforts to register or qualify the Restricted Shares
covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as the sellers of Restricted Shares or, in the
case of an underwritten public offering, the managing underwriter
reasonably shall request; provided, however, that the Company shall not for
-------- -------
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(e) use its best efforts to list the Restricted Shares covered by such
registration statement with any securities exchange or market on which the
Common Stock of the Company, if applicable, is then listed or quoted;
(f) immediately notify each seller of Restricted Shares and each
underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;
(g) at the request of any seller of Restricted Shares, use its best
efforts to furnish on the date that Restricted Shares are delivered to the
underwriters for sale pursuant to such registration: (i) an opinion dated
such date of counsel representing the Company for the purposes of such
registration, addressed to the underwriters and to such seller, stating
that such registration statement has become effective under the Securities
Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under the
Securities Act, (B) the registration statement, the related prospectus and
each amendment or supplement thereof comply as to form in all material
respects with the requirements of the Securities Act (except that
<PAGE>
24
such counsel need not express any opinion as to financial statements
contained therein) and (C) to such other effects as reasonably may be
requested by counsel for the underwriters or by such seller or its counsel
and (ii) a letter dated such date from the independent public accountants
retained by the Company, addressed to the underwriters and to such seller,
stating that they are independent public accountants within the meaning of
the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration statement
or the prospectus, or any amendment or supplement thereof, comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act, and such letter shall additionally cover such other
financial matters (including information as to the period ending no more
than five business days prior to the date of such letter) with respect to
such registration as such underwriters reasonably may request;
(h) (i) make available for inspection by each seller of Restricted
Shares, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, (ii) cause the
Company's officers, Directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant
or agent in connection with such registration statement and (iii) provide
each seller and its counsel with the opportunity to participate in the
preparation of such registration statement;
(i) with respect to any registration statement pursuant to which
Restricted Shares are to be sold pursuant to Sections 4.01, 4.02 or 4.03,
the Company shall use its best efforts to cause such registration statement
to become and remain effective for 180 days; and
(j) enter into such agreements and take such other actions as the
sellers of Restricted Shares and the underwriters reasonably request in
order to expedite or facilitate the disposition of such Restricted Shares
including, without limitation, preparing for and participating in, such
number of "road shows" and all such other customary selling efforts as the
<PAGE>
25
underwriters reasonably request in order to expedite or facilitate such
disposition.
In connection with each registration hereunder, the sellers of
Restricted Shares will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as shall be
reasonably necessary in order to assure compliance with Federal and applicable
state securities laws.
In connection with each registration pursuant to Sections 4.01, 4.02
or 4.03 covering an underwritten public offering, the Company and each seller
agree to enter into a written agreement with the managing underwriter selected
in the manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature (it being
understood that the Company will not require a selling stockholder to make any
representation, warranty or agreement in such agreement other than with respect
to such stockholder, the ownership of such stockholder's securities being
registered and such stockholder's intended method of disposition). The
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of the underwriters in such written agreement
with the underwriters shall also be made to and for the benefit of the selling
stockholders. In the event that any condition to the obligations under any such
written agreement with the underwriters are not met or waived, and such failure
to be met or waived is not attributable to the fault of the selling stockholders
requesting a demand registration pursuant to Sections 4.02 and 4.03, such
request for registration shall not be deemed exercised for purposes of
determining whether such registration has been effected for purposes of Section
4.02 or 4.03.
SECTION 4.05. Expenses. Notwithstanding Section 10.10 of the
---------
Exchange Agreement, all expenses incurred by the Company in complying with
Sections 4.01, 4.02 or 4.03, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs of insurance and
fees and disbursements of one counsel for the sellers of Restricted Shares, but
excluding any Selling Expenses, are called "Registration Expenses". All
---------------------
underwriting discounts and
<PAGE>
26
selling commissions applicable to the sale of Restricted Shares are called
"Selling Expenses".
----------------
The Company will pay all Registration Expenses in connection with each
registration statement under Sections 4.01, 4.02 or 4.03. All Selling Expenses
in connection with each registration statement under Sections 4.01, 4.02 or 4.03
shall be borne by the participating sellers in proportion to the number of
shares sold by each, or by such participating sellers other than the Company
(except to the extent the Company shall be a seller) as they may agree.
SECTION 4.06. Indemnification and Contribution. (a) In the event of
---------------------------------
a registration of any of the Restricted Shares under the Securities Act pursuant
to Sections 4.01, 4.02 or 4.03, the Company will indemnify and hold harmless
each seller of such Restricted Shares thereunder, each underwriter of such
Restricted Shares thereunder and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Shares were registered under the Securities Act
pursuant to Sections 4.01, 4.02 or 4.03, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such seller, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished in writing by such seller, such
underwriter or such controlling person specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any of the Restricted Shares
under the Securities Act pursuant to
<PAGE>
27
Sections 4.01, 4.02 or 4.03, each seller of such Restricted Shares thereunder,
severally and not jointly, will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
Director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, Director, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Restricted Shares were registered
under the Securities Act pursuant to Sections 4.01, 4.02, or 4.03, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, Director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that such seller will be liable hereunder in any such case if
- ------- -------
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact made in
reliance upon and in conformity with information pertaining to such seller, as
such, furnished in writing to the Company by such seller specifically for use in
such registration statement or prospectus; and provided further, however, that
---------------- -------
the liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the proceeds received
by such seller from the sale of Restricted Shares covered by such registration
statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the
<PAGE>
28
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Section 4.06 and shall only relieve it from any liability which it may have to
such indemnified party under this Section 4.06 if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 4.06 for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; provided, however, that, if the defendants in any such action
-------- -------
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any
indemnified party exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 4.06 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 4.06
provides for indemnification in such case, (ii) contribution under the
Securities Act may be required on the part of any such selling holder or any
such controlling person in circumstances for which indemnification is provided
under this Section 4.06, or (iii) the indemnification provided for by this
Section 4.06 is insufficient to hold harmless an
<PAGE>
29
indemnified party, other than by reason of the exceptions provided therein;
then, and in each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) (x) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other or (y) if the allocation provided by clause (x)
above is not permitted by Applicable Law, or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative fault referred to in clause (x)
above but also the relative benefits received by the indemnifying party and the
indemnified party from the offering of the securities (taking into account the
portion of the proceeds of the offering received by each such party) as well as
the statements or omissions which resulted in such losses, claims, damages or
liabilities and any other relevant equitable considerations. No person will be
required to contribute any amount in excess of the proceeds received by such
person in respect of all such Restricted Shares offered and sold by it pursuant
to such registration statement and no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
SECTION 4.07. Changes in Common Stock; Successors. (a) If, and as
------------------------------------
often as, there is any change in the Common Stock or Class A Stock by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or Class A Stock as so changed.
(b) If the Company consolidates or merges into or with, another person
or sells, assigns, conveys, transfers, leases or otherwise disposes of all or a
majority of its assets to any person or group, or any person or group
consolidates with, or merges into or with, the Company, each Stockholder shall,
as a condition to the relevant transaction involving such person, group or
successor in business, be granted by such person, group or successor in business
(each a "Successor"), equivalent rights to the rights granted in this Agreement;
---------
provided, that in the case of a Successor which becomes a Successor in a
- --------------
transaction which constitutes a Business Combination (as such term is
<PAGE>
30
defined in the Governance Agreement), such rights shall not include those
granted under Article III of this Agreement.
SECTION 4.08. Rule 144 Reporting. With a view to making available
-------------------
the benefits of certain rules and regulations of the Commission which may at any
time permit the sale of Restricted Shares to the public without registration, at
all times 90 days after any registration statement covering a public offering of
securities of the Company under the Securities Act shall have become effective,
the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Shares forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents so filed by the Company as such holder
may reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Restricted Shares without
registration.
SECTION 4.09. Suspension of Registration Obligations.
---------------------------------------
Notwithstanding the provisions of Section 4.04(a), (i) the Company's obligation
to file a registration statement, or cause such registration statement to become
and remain effective (a) may be suspended on one occasion for a period not to
exceed 180 days if there exists at the time material nonpublic information
relating to the Company which, in the reasonable opinion of the Company, should
not be disclosed and (b) shall not apply for the period which begins seven days
prior to and ends 90 days after the commencement of a public offering of the
Common Stock, so long as the Company has fulfilled its notice obligations under
Sections 4.01, 4.02 or 4.03 with respect to such offering and (ii) if a public
offering of the Common Stock has been previously commenced, neither the Company
nor any controlling person of the Company shall commence another public offering
of the Common Stock until 90 days after the commencement of such prior offering.
<PAGE>
31
SECTION 4.10. Transferability of Registration Rights; Termination.
----------------------------------------------------
(a) Registration rights conferred herein on the holders of Restricted Shares
shall only inure to the benefit of a Prospective Transferee who becomes a party
to this Agreement pursuant to Section 2.05.
(b) The obligations of the Company to register shares of Restricted
Shares under Sections 4.01, 4.02 or 4.03 shall terminate as to each Stockholder,
on the later of (i) the sixth anniversary of the date of this Agreement and (ii)
such Stockholder's percentage (together with the percentage of Voting Securities
held by any member(s) of such Stockholder's Group) of Voting Securities falling
below 5%.
SECTION 4.11. Other Registration Rights. The Company has not granted
--------------------------
and shall not grant to any third party any registration rights more favorable
than or inconsistent with any of those contained herein, so long as any of the
registration rights under this Agreement remains in effect.
SECTION 4.12. Successors to the Company. The Company shall procure
--------------------------
that each of the Stockholders shall be granted by any Newco equivalent rights to
the rights contained in this Agreement as a condition to any transaction
involving the creation of such a Newco.
ARTICLE V
Tag-Along Rights
----------------
SECTION 5.01. General Restriction. Except as set forth in the
--------------------
Governance Agreement in the case of the TDF Group and except for transfers
within the TDF Group, the Candover Group, the Crown Group, the Berkshire Group,
the Centennial Group and the Nassau Group, no Stockholder shall transfer any
Shares without complying with the terms and conditions set forth in Section
5.02.
SECTION 5.02. Tag-Along. (a) Except in the case of the IPO, any
----------
registered sale of securities under the Securities Act or any other sales of
securities on the market, if at any time Stockholders holding at least 2% of the
Voting Securities of the Company (the "Initiating Stockholder(s)") shall
-------------------------
determine to sell or transfer (in a business combination or otherwise) 2% or
more of the Voting Securities then issuable or outstanding in one or a series of
bona fide arm's-length transactions to a third party who
<PAGE>
32
is not an Affiliate of any of the Initiating Stockholders, the Initiating
Stockholders shall give not less than 30 days' prior written notice of such
intended transfer to each of the other Stockholders (individually, a
"Participating Offeree" and collectively, the "Participating Offerees") and to
--------------------- ----------------------
the Company. Such notice (the "Participation Notice") shall set forth the terms
--------------------
and conditions of such proposed transfer, including the name of the prospective
transferee, the number of Shares proposed to be transferred (the "Participation
-------------
Securities") by the Initiating Stockholders, the purchase price per Share
- ----------
proposed to be paid therefor, and the payment terms and type of transfer to be
effectuated. Within 20 days following the delivery of the Participation Notice
by the Initiating Stockholders to each Participating Offeree and to the Company,
each Participating Offeree may, by notice in writing to the Initiating
Stockholders and to the Company, have the opportunity and the right to sell to
the purchasers in such proposed transfer (upon the same terms and conditions as
the Initiating Stockholders) up to that number of Shares owned by such
Participating Offeree as shall equal the product of (i) a fraction, the
numerator of which is the number of Shares owned by such Participating Offeree
as of the date of such proposed transfer and the denominator of which is the
aggregate number of Shares owned as of the date of such Participation Notice by
the Initiating Stockholders and by all Participating Offerees, multiplied by
(ii) the number of Participation Securities. The amount of Participation
Securities to be sold by the Initiating Stockholders shall be reduced to the
extent necessary to provide for such sales of Shares by Participating Offerees.
(b) At the closing of any proposed transfer in respect of which a
Participation Notice has been delivered, the Initiating Stockholders, together
with all Participating Offerees electing to sell Shares, shall deliver to the
proposed transferee certificates evidencing the Shares to be sold thereto duly
endorsed with stock powers and shall receive in exchange therefor the
consideration to be paid or delivered by the proposed transferee in respect of
such Shares as described in the Participation Notice.
(c) (i) the provisions of this Section 5.02 shall not apply to sales
pursuant to Sections 4.01, 4.02 and 4.03 of this Agreement and (ii) the
provisions of this Article V shall not apply to any transfer by a Stockholder to
(x) an Affiliate or limited partner of such Stockholder or (y) the Company.
<PAGE>
33
ARTICLE VI
Miscellaneous
-------------
SECTION 6.01. Survival of Warranties. The covenants, agreements,
-----------------------
representations and warranties of the parties contained herein or in any
certificate or other document delivered pursuant hereto or in connection
herewith shall survive the Closing and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any party hereto.
SECTION 6.02. Reasonable Efforts; Further Actions. The parties
------------------------------------
hereto each will use all reasonable efforts to take or cause to be taken all
action and to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
SECTION 6.03. Consents. The parties hereto will cooperate, with each
---------
other in filing any necessary applications, reports or other documents with,
giving any notices to, and seeking any consents from, all regulatory bodies and
all governmental agencies and authorities and all third parties as may be
required in connection with the consummation of the transactions contemplated by
this Agreement.
SECTION 6.04. Amendment and Waiver. This Agreement may not be
---------------------
amended, supplemented or discharged, and no provision hereof may be modified or
waived, except by the mutual agreement of the parties hereto. No waiver of any
provision hereof by any party shall constitute a waiver thereof by any other
party nor shall any such waiver constitute a continuing waiver of any matter by
such party.
SECTION 6.05. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, each of which shall be deemed an original but which together
shall constitute but one instrument. It shall not be necessary for each party
to sign each counterpart so long as every party has signed at least one
counterpart.
SECTION 6.06. Notices. All notices, requests, demands, waivers and
--------
other communications required or permitted to be given under this Agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its
<PAGE>
34
address or facsimile number given below (or at such other address or facsimile
number for such party as shall be specified by notice given hereunder):
If to the Company: Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
Fax: (713) 570-3150
Attn: President
with a copy to: Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Fax: (212) 474-3700
Attn: Stephen L. Burns, Esq.
If to the Crowns: Robert A. Crown
Barbara A. Crown
c/o Crown Communication Inc.
375 Southpointe Blvd.
Canonsburg, PA 15317
Fax: (724) 416-2200
with a copy to: Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Fax: (412) 355-6501
Attn: Charles J. Queenan, Jr.,Esq.
If to the Initial
Stockholder: Ted B. Miller, Jr.
510 Bering, Suite 500
Houston, TX 77056
Fax: (713) 570-3150
If to any
Stockholder: At the address of such Stockholder
listed on Schedule I
with a copy (in the case of any Berkshire Party, any Centennial Party, any
Nassau Party, PNC Venture Corp.,
<PAGE>
35
Fay, Richwhite Communications Limited, New York Life Insurance Company,
American Home Assurance Company or The Northwestern Mutual Life Insurance
Company)
to:
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
Fax: (617) 951-1295
Attn: Harry A. Hanson III, Esq.
If to TDF: TeleDiffusion de France
International S.A.
10 Rue d'Oradour-sur-Glane
75732 Paris 15
France
Fax: 155 95 2066
Attn: Michel Azibert
with a copy to: Allen & Overy
One New Change
London EC4M 9QQ
Fax: 44 171 330 9999
Attn: Michael P. Scargill, Esq.
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed to be received or the validity of such facsimile notice.
SECTION 6.07. Binding Effect; Assignment. This Agreement and all of
---------------------------
the provisions hereof shall be binding upon and shall inure to the benefit of
the parties and their respective successors and permitted assigns. Except as
otherwise specifically provided for in this Agreement, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned,
directly or indirectly, including, without limitation, by operation of law, by
any party hereto without the prior written consent of the other parties hereto
(it being understood that TDF
<PAGE>
36
may not transfer to any person (other than to any of its Affiliates which
becomes a party to the Agreement and to whom there is transferred any Voting
Securities of the Company), by operation of law or otherwise, any right of TDF
hereunder which arises as a result of TDF being Qualified without the prior
written consent of the Company); provided, that TDF shall be entitled to
transfer any of its rights under this Agreement to any of its Affiliates subject
to any condition or obligation in connection with such right provided hereunder,
so long as such Affiliate agrees to become a party to this Agreement and such
Affiliate is a holder of the whole or any part of the TDF Group Interest or the
TDF Consolidated Group Interest, as applicable.
SECTION 6.08. Entire Agreement. This Agreement, the other
-----------------
Transaction Documents and the schedules, exhibits and other documents and
agreements referred to herein and therein or delivered pursuant hereto or
thereto which form a part hereof or thereof constitute the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all other prior agreements and understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
This Agreement supersedes, replaces and renders null and void the Amended and
Restated Stockholders Agreement in its entirety.
SECTION 6.09. No Third Party Beneficiaries. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits, claims, liabilities, causes of action or remedies of any
nature whatsoever under or by reason of this Agreement.
SECTION 6.10. Expenses. Except as otherwise provided for in Section
---------
4.05, each of the parties hereto shall pay its own costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby,
including the fees and expenses of counsel, irrespective of when incurred.
SECTION 6.11. Applicable Law and Jurisdiction; Service of Process.
----------------------------------------------------
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York; provided, however, that the terms and conditions of
-------- -------
this Agreement relating to the internal affairs of the Company shall be
construed in accordance with and governed by the law of the State of Delaware.
<PAGE>
37
(b) Each of the parties to this Agreement hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(c) Each of the parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each of the parties to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 6.06. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 6.12. Waiver of Jury Trial. Each party hereto hereby waives,
---------------------
to the fullest extent permitted by Applicable Law, any right it may have to a
trial by jury in any legal proceeding directly or indirectly arising out of or
relating to this Agreement or the transactions contemplated hereby or thereby
(whether based on contract, tort or any other theory). Each party hereto (a)
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this
agreement by, among other things, the mutual waivers and certifications in this
Section.
<PAGE>
38
SECTION 6.13. Article and Section Headings. The article, section and
-----------------------------
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 6.14. Termination. This Agreement may be terminated by the
------------
mutual consent of the parties hereto.
SECTION 6.15. Specific Enforcement. The parties hereto acknowledge
---------------------
and agree that irreparable damage would occur in the event any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached for which money damages would not be an adequate remedy.
It is accordingly agreed that, so long as permitted by Applicable Law, the
parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof without the necessity of proving the inadequacy of money
damages as a remedy.
Section 6.16. Severability. Should any provision of this Agreement
-------------
for any reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of this
Agreement, which remaining provisions shall remain in full force and effect and
the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law.
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Agreement as
of the day and year first above written.
CROWN CASTLE
INTERNATIONAL CORP.
By: /s/ Kathy Broussard
--------------------------------
Name: Kathy Broussard
Title: Vice President
<PAGE>
STOCKHOLDERS:
TELEDIFFUSION DE FRANCE
INTERNATIONAL S.A.,
by /s/ Michel Azibert
-------------------------------
Name: Michel AZIBERT
Title: Chairman
DIGITAL FUTURE INVESTMENTS B.V.,
by /s/ Michel Azibert
-------------------------------
Name: Michel AZIBERT
Title: As Chairman of
TELEDIFFUSION DE FRANCE
INTERNATIONALE S.A.
Managing Director of
[ILLEGIBLE] B.V.
<PAGE>
CANDOVER INVESTMENTS, PLC
by /s/ G.D. Fairservice
-------------------------------
Name: G.D. Fairservice
Title: Deputy Chief Executive
CANDOVER (TRUSTEES) LIMITED
by /s/ G.D. Fairservice
-------------------------------
Name: G.D. Fairservice
Title: Deputy Chief Executive
CANDOVER PARTNERS LIMITED
(as general partner of the
Candover 1994 UK Limited
Partnership)
by /s/ G.D. Fairservice
-------------------------------
Name: G.D. Fairservice
Title: Deputy Chief Executive
CANDOVER PARTNERS LIMITED
(as general partner of the
Candover 1994 UK No. 2 Limited
Partnership)
by /s/ G.D. Fairservice
-------------------------------
Name: G.D. Fairservice
Title: Deputy Chief Executive
CANDOVER PARTNERS LIMITED
(as general partner of the
Candover 1994 US No. 1 Limited
Partnership)
by /s/ G.D. Fairservice
-------------------------------
Name: G.D. Fairservice
Title: Deputy Chief Executive
<PAGE>
CANDOVER PARTNERS LIMITED
(as general partner of the
Candover 1994 US No. 2 Limited
Partnership)
by /s/ G.D. Fairservice
-------------------------------
Name: G.D. Fairservice
Title: Deputy Chief Executive
<PAGE>
TED B. MILLER, JR.
by /s/ Ted B. Miller, Jr.
-------------------------------
Ted B. Miller, Jr.
<PAGE>
ROBERT A. CROWN
by /s/ Robert A. Crown
-------------------------------
Robert A. Crown
BARBARA A. CROWN
by /s/ Barbara A. Crown
-------------------------------
Barbara A. Crown
ROBERT A. CROWN AND PNC BANK,
DELAWARE, TRUSTEES OF THE
ROBERT A. CROWN GRANTOR
RETAINED ANNUITY TRUST
by /s/ Robert A. Crown
-------------------------------
Name: Robert A. Crown
Title: Trustee
BARBARA A. CROWN AND PNC BANK,
DELAWARE, TRUSTEES OF THE
BARBARA A. CROWN GRANTOR
RETAINED ANNUITY TRUST
by /s/ Barbara A. Crown
-------------------------------
Name: Barbara A. Crown
Title: Trustee
<PAGE>
BERKSHIRE FUND III, A
LIMITED PARTNERSHIP
by /s/ [ILLEGIBLE]
-------------------------------
a Managing Member
BERKSHIRE FUND IV,
LIMITED PARTNERSHIP
by /s/ [ILLEGIBLE]
-------------------------------
a Managing Member
BERKSHIRE INVESTORS LLC
by /s/ [ILLEGIBLE]
-------------------------------
a Managing Member
<PAGE>
CENTENNIAL FUND IV, L.P.
by Centennial Holdings V, L.P.,
its General Partner
by /s/ Jeffrey H. Schutz
-------------------------------
Name: Jeffrey H. Schutz
Title: General Partner
by
-------------------------------
Name:
Title:
CENTENNIAL FUND V, L.P.
by Centennial Holdings V, L.P.,
its General Partner
by /s/ Jeffrey H. Schutz
-------------------------------
Name: Jeffrey H. Schutz
Title: General Partner
CENTENNIAL ENTREPRENEURS FUND V,
L.P.
by /s/ Jeffrey H. Schutz
-------------------------------
Name: Jeffrey H. Schutz
Title: General Partner
<PAGE>
NASSAU CAPITAL PARTNERS II, L.P.
by Nassau Capital L.L.C., its
General Partner
by /s/ Randall A. Hack
-------------------------------
Name: Randall A. Hack
Title: Senior Managing Director
<PAGE>
NAS PARTNERS I, L.L.C.
by /s/ Randall A. Hack
--------------------------
Name: Randall A. Hack
Title: Senior Managing Director
<PAGE>
FAY, RICHWHITE COMMUNICATIONS
LIMITED
by /s/ Illegible
-------------------------
Name:
Title:
<PAGE>
PNC VENTURE CORP.
by /s/ David McL. Holeman
-------------------------
Name: David McL. Holeman
Title: Exec. V.P.
<PAGE>
AMERICAN HOME ASSURANCE COMPANY
by /s/ David Pinkerton
-----------------------------
Name: David Pinkerton
Title: Vice President
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
by /s/ Steven M. Benevento
----------------------------
Name: Steven M. Benevento 12/21/98
Title: Director
<PAGE>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
by /s/ A. Kipp Koester
-------------------------
Name: A. Kipp Koester
Title: its authorized representative
<PAGE>
HARVARD PRIVATE CAPITAL
HOLDINGS, INC.
by /s/ Tim R. Palmer
------------------------
Name: Tim R. Palmer
Title: Authorized Signatory
<PAGE>
PRIME VIII, L.P
by /s/ Danny Fennewald
--------------------------
Name: Danny Fennewald
Title: Treasurer
<PAGE>
Exhibit 10.29
FORM OF SEVERANCE AGREEMENT, dated August 21, 1998 by and
between Crown Castle International Corporation (the "Company")
and __________ (the "Executive").
This Agreement sets forth the terms and conditions of contingent
severance arrangements between Crown Castle International Corporation and the
Executive and cancels and supersedes all other severance-related agreements
between the parties. This Agreement shall be effective on, and not effective
until, an initial public offering of the stock of the Company.
I. DEFINITIONS
For all purposes hereof, the following defined terms have the meanings
set forth below:
1.1 "Accrued Obligations" means all (i) accrued but unpaid Base Salary to
-------------------
the Executive's Date of Termination, (ii) any earned but unpaid bonus, and (iii)
any benefits for which the Executive is eligible under the terms of any benefit
plan or arrangement of the Company or its subsidiaries.
1.2 "Annual Bonus" means the highest annual bonus payable to the Executive
------------
for service during the Term, excluding any special or one-time bonus payments.
1.3 "Base Salary" means the greater of (i) the Executive's annual base
-----------
salary as of the date of his Qualifying Termination (without taking into account
any reductions that constitute Good Reason) or (ii) if applicable, the
Executive's annual base salary in effect on the date of a Change in Control.
1.4 "Cause" means (i) the Executive's conviction of, or plea of guilty or
-----
nolo contendere to, any criminal violation involving dishonesty, fraud or breach
- ---- ----------
of trust, or any felony which materially adversely affects the Company or (ii)
willful engagement by the Executive in gross misconduct in the performance of
duties owed the Company that materially adversely affects the Company.
1.5 "Change in Control" has the meaning set forth on Schedule 1 hereto.
-----------------
1.6 "Change in Control Period" means the period beginning on the date of a
------------------------
Change in Control and ending on the second anniversary of that Change in
Control.
<PAGE>
2
1.7 "Company" means Crown Castle International Corporation and any
-------
successors thereto.
1.8 "Date of Termination" means the effective date of the termination
--------------------
of the Executive's employment with the Company and its subsidiaries as set forth
in the Notice of Termination.
1.9 "Disability" means the Executive's inability to perform the primary
----------
duties of his position for at least 180 consecutive days due to a physical or
mental impairment.
1.10 "Good Reason" means (i) the assignment to the Executive of any duties
-----------
materially inconsistent with the Executive's position, authority, duties or
responsibilities as of the date hereof or as of the date immediately preceding a
Change in Control, if applicable, or any other action by the Company that
results in a material diminution in such position, authority, duties or
responsibilities; (ii) a decrease in the Executive's Base Salary or annual or
long term bonus opportunity; (iii) a material reduction in any material benefits
or other compensation provided to the Executive; or (iv) the Company's requiring
the Executive to be based at any office or location outside the Houston
metropolitan area; (iv) the Company's material failure to comply with its
obligations under this Agreement; or (v) the Company giving Notice (as defined
in Section 2.1(i)). For purposes of any determination regarding the existence
of Good Reason during the Change in Control Period, any good faith determination
by the Executive that Good Reason exists shall be presumed to be correct unless
the Company establishes by clear and convincing evidence that Good Reason does
not exist.
1.11 "Non-Qualifying Termination" means any termination of the Executive's
--------------------------
employment with the Company and its subsidiaries other than a Qualifying
Termination.
1.12 "Notice of Termination" means a written notice of the termination of
---------------------
the Executive's employment that (i) indicates the specific termination provision
in this Agreement relied upon, (ii) sets forth in reasonable detail, if
applicable, the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) if the Date of Termination is other than the date of receipt of such
notice, specifies the termination date. The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance that contributes to
a showing of Good Reason shall not waive any right of the Executive hereunder
<PAGE>
3
or preclude the Executive from asserting such fact or circumstance in enforcing
the Executive's rights hereunder.
1.13 "Qualifying Termination" means (i) the Company's termination of the
----------------------
Executive's employment with the Company for any reason other than for Cause or
Disability or (ii) the Executive's termination of employment with the Company
within 60 days of the occurrence of an event that constitutes Good Reason. A
transfer of the Executive to any subsidiary of the Company or the Executive's
death shall not be considered a termination of employment hereunder.
II. TERM AND POSITION
2.1 Term. This Agreement is effective as of August __, 1998 ("Commencement
----
Date") and terminates on the fifth anniversary of the Commencement Date (the
"Term"); provided that, (i) beginning on the fifth anniversary of the
-------- ----
Commencement Date and each anniversary thereafter (each, an "Anniversary Date")
the term shall be extended by twelve months unless either party provides notice
(the "Notice") at least 60 days before any such Anniversary Date of their intent
to terminate this Agreement as of such Anniversary Date, (ii) except as provided
in (iii), below, the Term will automatically expire on the Executive's 65th
birthday without the necessity of any notice from the Executive or the Company
and (iii) notwithstanding (ii), above, if a Change in Control occurs during the
Term, this Agreement shall not expire until the later of (a) the expiration of
the Term or (b) the end of the Change in Control Period.
2.2 Position. During the Term, the Executive shall serve as the Executive
--------
Vice President and Chief Financial Officer of the Company.
III. TERMINATION OF EMPLOYMENT
3.1 Termination by the Executive.
----------------------------
(a) Termination for Good Reason. The Executive may terminate his
---------------------------
employment during the Term for Good Reason by delivering a Notice of Termination
to the Company in accordance with Section 5.6 within 60 days of the occurrence
of the event purported to constitute "Good Reason" hereunder. With respect to
any termination for Good Reason during the Change in Control Period, any good
faith determination of "Good Reason" made by the Executive shall be conclusive.
<PAGE>
4
(b) Termination Without Good Reason. The Executive may terminate his
-------------------------------
employment during the Term without Good Reason by delivering a Notice of
Termination to the Company in accordance with Section 5.6 at least 15 days prior
to the effective date of such termination.
3.2 Termination by the Company.
--------------------------
(a) Termination for Cause. The Company may terminate the Executive's
---------------------
employment during the Term for Cause by delivering to the Executive in
accordance with Section 5.6 a Notice of Termination and a copy of a resolution,
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board of Directors of the Company (the "Board"), including at
least 66 2/3% of those members of the Board who are not employees of the Company
at a meeting of the Board called and held for the purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct specified in the definition of "Cause".
(b) Termination Without Cause. The Company may terminate the
-------------------------
Executive's employment during the Term without Cause by delivering a Notice of
Termination to the Executive in accordance with Section 5.5.
3.3 Death or Disability. The Executive's employment shall terminate
-------------------
automatically upon the Executive's death during the Term. If the Company
determines in good faith that the Disability of the Executive has occurred
during the Terms, it may give to the Executive a Notice of Termination in
accordance with Section 5.5 of this Agreement. In such event, the Executive's
employment shall terminate effective on the 30th day after receipt of such
notice, provided that within the 30 days after such receipt, the Executive shall
-------- ----
not have returned to full-time performance of the Executive's duties.
IV. BENEFITS UPON TERMINATION
4.1 Qualifying Termination Not Within the Change in Control Period. If,
--------------------------------------------------------------
during the Term, the Executive's employment with the Company and its
subsidiaries is terminated in a Qualifying Termination and such termination does
not occur during a Change in Control Period:
<PAGE>
5
(a) the Company shall pay to the Executive in a cash lump sum within
30 days after the Date of Termination, the sum of (i) all Accrued Obligations
and (ii) the product of two and the sum of the Executive's Base Salary and
Annual Bonus;
(b) for two years following the Date of Termination, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue medical, dental, vision, and death benefits to the Executive and/or the
Executive's family at a level at least equal to those that would have been
provided if the Executive's employment had not been terminated under the plans,
practices, programs or policies of the Company applicable to the Executive as of
his Date of Termination; and
(c) all options to acquire stock of the Company and all restricted
stock awards held by the Executive shall become immediately vested and such
options shall become immediately exercisable and shall remain exercisable until
the earlier of (i) the date specified in the applicable option agreement between
the Executive and the Company or (ii) the normal expiration date of any such
option.
4.2 Qualifying Termination During the Change in Control Period. If, during
----------------------------------------------------------
the Term, the Executive's employment with the Company and its subsidiaries is
terminated in a Qualifying Termination and such termination occurs during a
Change in Control Period:
(a) the Company shall pay to the Executive in a cash lump sum within
30 days after the Date of Termination, the sum of (i) all Accrued Obligations
and (ii) the product of three and the sum of the Executive's Base Salary and
Annual Bonus;
(b) for three years following the Date of Termination, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue medical, dental, vision, and death benefits to the Executive and/or the
Executive's family at a level at least equal to those that would have been
provided if the Executive's employment had not been terminated under the plans,
practices, programs or policies of the Company applicable to the Executive as of
his Date of Termination; and
(c) all options to acquire stock of the Company and all restricted
stock awards held by the Executive shall become immediately vested and such
options shall become immediately exercisable and shall remain exercisable until
<PAGE>
6
the earlier of (i) the date specified in the applicable option agreement between
the Executive and the Company or (ii) the normal expiration date of any such
option.
Any provision in this Agreement to the contrary notwithstanding, if a
Change in Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change in Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (x)
was at the request of a third party who had taken steps reasonably calculated to
effect the Change in Control or (y) otherwise arose in connection with or
anticipation of the Change in Control, then for all purposes of this Agreement
the termination of the Executive's employment shall be deemed to have occurred
during a Change in Control Period.
4.3 Non-Qualifying Termination. If the Executive's employment with
--------------------------
the Company and its subsidiaries is terminated in a Non-Qualifying Termination,
this Agreement shall terminate without further obligations to the Executive
other than the Accrued Obligations.
4.4 Excise Tax Payments.
-------------------
(a) Notwithstanding anything in the Agreement to the contrary, in the
event of the determination (as hereinafter provided) that any required payment
by the Company to or for benefit of the Executive (whether paid or payable
pursuant to the terms of the Agreement or otherwise (individually and
collectively, "Payment")) would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") or any
successor provision thereto (the "Excise Tax"), the Executive shall be entitled
to receive an additional payment or payments (individually or collectively, "Tax
Assistance Payment"), which shall include an amount such that, after the
Executive pays (1) all taxes (including any interest or penalties imposed with
respect to such taxes) and (2) any Excise Tax (including interest and penalties
with respect thereto) imposed upon the Tax Assistance Payment, the Executive
retains so much of the Tax Assistance Payment as is equal to the Excise Tax
(including interest and penalties with respect thereto) imposed on the Payment.
(b) Subject to the provisions hereinafter concerning the provision of
notice of a claim by the Internal Revenue Service, all determinations required
to be made under these provisions, including whether an Excise Tax is payable by
the Executive, the amount of such Excise Tax
<PAGE>
7
and whether the Company is required to pay the Executive a Tax Assistance
Payment and the amount of such Tax Assistance Payment, if any, shall be made by
the Company's independent accountants or such other nationally recognized
accounting firm retained by the Company and reasonably acceptable to the
Executive ("Accounting Firm"). The Company shall direct the Accounting Firm to
submit its determination and detailed supporting calculations to both the
Executive and the Company within thirty (30) days after the payment or provision
of any benefit that could give rise to an Excise Tax and any such other time or
times as the Executive or the Company may request. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company shall
pay the required Tax Assistance Payment to the Executive within ten (10)
business days after the Company receives such determination and calculations
with respect to any Payment to the Executive.
(c) Any federal tax returns the Executive files shall be prepared and
filed on a basis consistent with the determination of the Accounting Firm with
respect to the Excise Tax payable by the Executive. If the Accounting Firm
determines that the Executive is required to pay no Excise Tax, it shall (at the
same time it makes such determination) furnish the Executive and the Company an
opinion that the Executive has substantial authority not to report any Excise
Tax on the Executive's federal income tax return. However, in view of the
uncertainty concerning application of Section 4999 of the Code (or any successor
provision thereto) at the time of any determination made hereunder by the
Accounting Firm, it is possible that a Tax Assistance Payment that should have
been made by the Company will not have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event the Company
exhausts or fails to pursue its remedies pursuant to the provisions concerning
notice of a claim by the Internal Revenue Service, and the Executive thereafter
is required to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment and to submit its
determination and detailed supporting calculations as promptly as possible both
to the Executive and to the Company, which shall pay the amount of such
Underpayment to the Executive or for the Executive's benefit within ten (10)
business days following the Company's receipt of such determination and
calculations.
(d) Each of the Executive and the Company shall provide the Accounting
Firm access to and copies of any books, records and documents in the Executive's
or its possession, as the case may be, reasonably requested by the
<PAGE>
8
Accounting Firm, and shall otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination and
calculations required or contemplated hereunder.
(e) The Company shall bear the fees and expenses of the Accounting
Firm for services hereunder. If, for any reason, the Executive initially pays
such fees and expenses, the Company shall reimburse the Executive the full
amount of the same within ten (10) business days following receipt from the
Executive of a statement and reasonable evidence of the Executive's payment
thereof.
(f) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the Company to
pay a Tax Assistance Payment. The Executive shall give such notification as
promptly as practicable, but in no event later than the tenth (10th) business
day next following the Executive's receipt of such claim, and the Executive
further shall apprise the Company of the nature of such claim and the date on
which it is required to be paid (in each case, to the extent known to the
Executive). The Executive shall not pay or otherwise satisfy such claim prior
to the earlier of (a) the expiration of the thirty (30)-calendar-day period next
following the date on which the Executive gives notice to the Company or (b) the
date any payment of the amount with respect to such claim is due. If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) provide the Company any written records or documents in the
Executive's possession relating to such claim and reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company reasonably shall request in writing from time to time, including
without limitation accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and reasonably selected
by the Company;
(iii) cooperate with the Company in good faith in order effectively
to contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim, provided, however, that the Company directly shall bear and pay
all costs and expenses (including without limitation, interest and
<PAGE>
9
penalties) incurred in connection with such contest and shall indemnify the
Executive and hold the Executive harmless, on an after-tax basis, from and
against any and all Excise Tax or income tax (including without limitation,
interest and penalties with respect thereto), imposed as a result of such claim
and payment of costs and expenses. Without limiting the foregoing, the Company
shall control all proceedings taken in connection with the contest of any claim
contemplated by these provisions and, at its sole option, may pursue or forego
any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim (provided, however, that the
Executive may participate therein at the Executive's own cost and expense) and
may, at its option, either direct the Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay the tax claimed and to sue for a refund, the
Company shall advance the amount of such payment to the Executive, and pay on a
current basis all costs of litigation, including without limitation attorneys'
fees, on an interest-free basis and shall agree to and shall indemnify the
Executive and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including without limitation, interest and penalties
with respect thereto, imposed with respect to such advance; and provided
further, however, that any extension of the statute of limitations relating to
payment of taxes for the Executive's taxable year with respect to which the
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Tax Assistance Payment would be
payable hereunder, and the Executive shall be entitled to settle or to contest,
as the case may be, any other issue(s) raised by the Internal Revenue Service or
any other taxing authority.
(g) If, after the Executive receives an amount advanced by the Company
pursuant to provisions of the last full paragraph, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with any applicable provisions of the same paragraph) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the Executive
receives such an amount advanced by the Company, a determination is made that
the Executive shall not be
<PAGE>
10
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to expiration of thirty (30) calendar days after such determination, then
such advance shall be forgiven and shall not be required to be repaid, and the
amount of such advance shall offset, to the extent thereof, the amount of the
Tax Assistance Payment the Company is required to pay the Executive hereunder.
V. MISCELLANEOUS PROVISIONS
5.1 Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
-------------------------
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any other agreements with the Company or any of its
affiliated companies; provided that, by executing this Agreement, the Executive
-------- ----
acknowledges his ineligibility for, and waives any other right he may have to
receive, any other severance or termination benefits provided by the Company or
its subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of the
Company or any of its affiliated companies (other than any severance plan or
program) at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program except as explicitly
modified by this Agreement.
5.2 Other. The Company's obligation to make the payments provided for in
-----
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The Company agrees to pay, from time
to time promptly upon invoice, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of any
contest or controversy (regardless of the outcome thereof and whether or not
litigation is involved) by the Company, the Executive or others of the validity
or enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof.
<PAGE>
11
5.3 Confidential Information.
------------------------
(a) During the Term and thereafter, the Executive shall not, without the
written consent of the Chief Executive Officer of the Company, disclose to any
person, other than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company, any material
confidential information obtained by him while in the employ of the Company or
its subsidiaries with respect to any of the products, improvements, formulas,
designs or styles, processes, customers, methods of distribution or methods of
manufacture of the Company or its subsidiaries, the disclosure of which he knows
will be materially damaging to the Company; provided, however, that confidential
-------- -------
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive) or any
information of a type not otherwise considered confidential by persons engaged
in the same business or a business similar to that conducted by the Company.
(b) Any and all inventions made, developed or created by the Executive
(whether at the request or suggestion of the Company or otherwise, whether alone
or in conjunction with others, and whether during regular hours of work or
otherwise) during the period of his employment by the Company or its
subsidiaries, which may be directly or indirectly useful in, or relate to, the
business of or tests being carried out by the Company or any of its subsidiaries
or affiliates, will be promptly and fully disclosed by the Executive to an
appropriate executive officer of the Company and shall be the Company's
exclusive property as against the Executive, and the Executive will promptly
deliver to an appropriate executive officer of the Company all papers, drawings,
models, data and other material relating to any invention made, developed or
created by him as aforesaid.
(c) The Executive will, upon the Company's request and without any payment
therefor, execute any documents necessary or advisable in the opinion of the
Company's counsel to direct issuance of patents to the Company with respect to
such inventions as are to be the Company's exclusive property as against the
Executive under Section 5.3 (b) above or to vest in the Company title to such
inventions as against the Executive; provided, however, that the expense of
-------- -------
securing any such patent will be borne by the Company.
<PAGE>
12
(d) The foregoing provisions of this Section 5.3 shall be binding upon the
Executive's heirs, successors and legal representatives.
(e) In no event shall an asserted violation of the provisions of this
Section 5.3 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
5.4 Successors.
----------
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
5.5 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
-------------------
Home address as currently shown
on Human Resources Department records
of Executive's business unit.
With a copy to:
Robert J. Stucker, Esq.
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Suite 2600
Chicago, IL 60601
<PAGE>
13
If to the Company:
-----------------
Crown Castle International Corporation
510 Bering Drive, Suite 500
Houston, TX 77057
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
5.6 The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
5.7 The Company may withhold from any amount payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
5.8 The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
5.9 This Agreement contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof.
5.10 The Executive and the Company acknowledge that the employment of the
Executive by the Company is "at will".
5.11 Choice of Law. This Agreement shall be governed by the law of Texas,
-------------
without regard to its choice of law provisions.
<PAGE>
14
IN WITNESS WHEREOF, the Executive and the Company have entered into this
Agreement as of the date first written above.
CROWN CASTLE INTERNATIONAL CORP.
By
----------------------------
----------------------------
<PAGE>
SCHEDULE 1
----------
"Change in Control" shall mean:
(a) the acquisition by any individual, entity or group (within the
meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
- -------- -------
of Control: (i) any acquisition by the Company if no Person (excluding those
Persons described in this proviso) owns more than 40% or more of the outstanding
Company Common Stock or Company Stock Voting Securities after such acquisition,
(ii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, or
(iii) any acquisition by a corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (i), (ii) and (iii) of subsection (c), below,
are satisfied or (iv) any acquisition by any Person who beneficially owns (as
defined in Rule 13d-3 of the Exchange Act) 15% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities as of the date
hereof to the extent such Person (after such acquisition) beneficially owns less
than 50% of the Oustandng Company Common Stock and Outstanding Company Voting
Securities;
(b) individuals who constitute the Board as of the date immediately
after an initial public offering of the Company's stock (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board; provided,
--------
however, that any individual becoming a director subsequent to the date hereof
- -------
whose election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the
<PAGE>
2
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or
(c) the occurrence of a reorganization, merger, or consolidation,
unless, following such reorganization, merger or consolidation, (i) more than
50% of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 40% or more of
the Outstanding Company Common Stock or Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 40% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) the occurrence of: (i) a complete liquidation or dissolution of
the Company, (ii) the sale or other disposition of all or substantially all of
the assets of the Company, or (iii) a similar transaction or series of
transactions, other than to a corporation, with respect to which following such
sale or other disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such
<PAGE>
3
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding the Company and
any employee benefit plan (or related trust) of the Company or such corporation
and any Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 40% or more of the Outstanding Company
Common Stock or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 40% or more of, respectively, the
then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Company.
<PAGE>
EXHIBIT 10.30
DATED August, 1998
CROWN CASTLE INTERNATIONAL CORP. (1)
TELEDIFFUSION DE FRANCE INTERNATIONAL S.A. (2)
CASTLE TRANSMISSION SERVICES (HOLDINGS) LIMITED (3)
____________________________________________
SHAREHOLDERS' AGREEMENT
____________________________________________
ALLEN & OVERY
London
C2:205860.9
<PAGE>
CONTENTS
Clause Page
1. Interpretation.....................................................1
2. Completion.........................................................7
3. The Company's Objectives, Business, Structure and Governance.......9
4. Governance of Subsidiaries........................................13
5. Accounts, Audit and Reporting.....................................13
6. Matters Requiring Agreement.......................................14
7. Guarantees to Third Parties.......................................19
8. Annual Budget.....................................................19
9. Transfers.........................................................20
10. Services Agreement with Tdf; Warrants; Operating Agreement........28
11. Specific Performance..............................................29
12. Term..............................................................29
13. Warranties........................................................30
14. Confidentiality...................................................30
15. Public Announcements..............................................31
16. Further Assurances................................................31
17. Other Agreements Among Shareholders...............................31
18. Subsidiaries to Acknowledge Agreement.............................32
19. Compliance by the Company and Subsidiaries........................32
20. Modification......................................................33
21. Effect of Waiver..................................................33
22. Partial Invalidity................................................33
23. Implied Relationships.............................................33
24. Costs.............................................................33
25. Agreement to take Priority........................................34
26. Entire Agreement..................................................34
27. Governing Law and Jurisdiction....................................34
28. Notices...........................................................35
29. Restrictions in the Agreement.....................................36
30. Counterparts......................................................36
Schedules
1. Deed of Adherence.................................................37
2. Conditions Precedent to Put and Call Rights.......................38
Signatories............................................................39
<PAGE>
Agreed form documents
Current Business Plan
TDF Service Agreement
Special Resolutions
Articles of Association
Operating Agreement
<PAGE>
THIS SHAREHOLDERS' AGREEMENT is dated August, 1998 and is made AMONG:
(1) CROWN CASTLE INTERNATIONAL CORP. ("CCIC"), a Delaware corporation;
(2) TELEDIFFUSION DE FRANCE INTERNATIONAL S.A. ("TdF"), a company incorporated
in France; and
(3) CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD. (the "Company"), a company
incorporated in England and Wales.
WHEREAS
(A) The Company is a private company limited by shares incorporated in England
and Wales with No. 3242381 under the Companies Act 1985 on 27th August,
1996.
(B) At the date hereof the Company has an authorised share capital of
(Pounds)117,800,000 divided into 11,780,000 ordinary shares of lp each and
11,768,220,000 redeemable preference shares of lp each.
(C) On 24th April, 1998 CCIC and, inter alia, the Company, Digital Future
Investments B.V. ("TdF sub"), the Berkshire parties (as defined below) and
the Candover parties (as defined below) entered into a Share Exchange
Agreement (the "Share Exchange Agreement") pursuant to which TdF sub, the
Berkshire parties and the Candover parties agreed, subject to the terms and
conditions of such Share Exchange Agreement, to exchange (the "Exchange")
shares in the Company for shares of common stock (or, in the case of TdF
sub, shares of Class A Stock) of CCIC.
(D) CCIC, TdF and the Company have agreed to enter into this Agreement for the
purposes of regulating the operation and management of the Company and the
relationship between CCIC and TdF as shareholders of the Company with
effect on and from the Exchange.
THE PARTIES AGREE as follows:
1. INTERPRETATION
1.1 Definitions:
In this Agreement unless the context otherwise requires:
"Acquisition Agreement" means the agreement dated 23rd January, 1997
between The British Broadcasting Corporation and the Company relating to
the sale and purchase of the whole of the issued share capital of CTI;
"Affiliate" means, in relation to any Shareholder, any other member of that
Shareholder's Group;
"Agreement" means this agreement as amended from time to time;
"Analogue Transmission Contract" means the analogue transmission agreement
between the BBC and CTI dated 28th February, 1997;
<PAGE>
"BBC" means The British Broadcasting Corporation;
"BBC Contracts" means the Analogue Transmission Contract and the Digital
Transmission Contract;
"Berkshire parties" means Berkshire Fund IV, LP, Berkshire Investors LLC
and Berkshire Partners LLC;
"Business Combination" has the meaning given to it in the Governance
Agreement;
"Business Plan" means the Current Business Plan of the Company and its
Subsidiaries as amended from time to time in accordance with clause 6.1;
"Business Day" means a day (excluding Saturdays) on which banks generally
are open in London for the transaction of normal banking business;
"Candover-Berkshire Agreement" means the Candover-Berkshire Agreement dated
24th April, 1998 between TdF sub, the Company, CCIC, TdF, the Berkshire
Parties and the Candover Parties;
"Candover parties" means Candover Investments plc, Candover (Trustees)
Limited, Candover Partners Limited (as general partner of the Candover 1994
UK Limited Partnership), Candover Partners Limited (as general partner of
the Candover 1994 UK No. 2 Limited Partnership), Candover Partners Limited
(as general partner of Candover 1994 US No. 1 Limited Partnership) and
Candover Partners Limited (as general partner of the Candover 1994 US No. 2
Limited Partnership);
"CCIC Group" means CCIC and its ultimate holding company, its subsidiaries
and subsidiaries of any such holding company other than the CTSH Group;
"CCIC Services Agreement" means the services agreement dated 28th February,
1997 between CCIC and the Company;
"Change of Control" means the occurrence or subsistence of any event or
circumstance described in clause 13.5.1 of the Analogue Transmission
Contract (other than a breach by TdF of the Commitment Agreement) or clause
12.7.1 of the Digital Transmission Contract in relation to any holding
company (as defined in section 736 of UK Companies Act 1985) of the Company
or a Business Combination;
"Class A Stock" shall have the meaning given to it in the Governance
Agreement;
"Commitment Agreement" means the Commitment Agreement dated 28th February,
1997 between The British Broadcasting Corporation, CCIC, TdF and
Telediffusion de France, S.A.;
"Common Stock" means shares of CCIC's common stock, par value $.01 per
share;
"Company's Business" has the meaning set out in clause 3.2;
<PAGE>
"Company Call Right" shall have the meaning given to it in the Governance
Agreement;
"Company's Constitution" means the memorandum and articles of association
of the Company, as amended from time to time;
"Company's Directors" means the directors of the Company from time to time;
"Company Shares" means the Ordinary Shares and the Preference Shares or,
following the conversion of Preference Shares into Ordinary Shares (as
contemplated by clause 2.2(a)), the Ordinary Shares;
"Controlling Shareholder" means any Shareholder who holds more than 50 per
cent. of the Shares;
"CTI" means Castle Transmission International Limited, a private company
limited by shares incorporated in England and Wales with registered number
3196207;
"CTSH Group" means CTSH and its subsidiaries;
"CTSH Option" has the meaning given to it in Section 5.01(a) of the
Governance Agreement;
"Current Business Plan" means the business plan of the Company and its
Subsidiaries for the current Financial Year in the agreed form;
"Digital Transmission Contract" means the digital transmission contract
between the BBC and CTI dated 10th February, 1998;
"dispose" means, in relation to a Share, to transfer, sell, assign,
mortgage, pledge or otherwise encumber that Share or allow any right to
arise under which any person other than the holder thereof may require a
transfer, sale, assignment, mortgage, pledge or other encumbrance of that
Share and "disposal" shall be construed accordingly;
"Fair Market Value" means, as to any property, the cash price at which a
willing seller would sell and a willing buyer would buy such property in an
arms' length negotiated transaction without time constraints;
"Finance Documents" means all of the documents referred to in the
definition of "Financing Documents" in the Loan Agreement dated 28th
February, 1997 between CTI (1) the Company (2), the lenders listed therein
(3) Credit Suisse First Boston (4) and J.P. Morgan Securities Limited (5)
(as amended on 21st May, 1997) and the Guaranteed Bonds and any document
which replaces the same;
"Financial Year" means a financial year for the purposes of the Companies
Act 1985;
"Governance Agreement" means the Governance Agreement of even date between
CCIC and TdF;
"Group" means, in relation to a Shareholder, it, its ultimate holding
company, its subsidiaries and subsidiaries of any such holding company.
<PAGE>
"Guaranteed Bonds" means (Pounds)125,000,000 9 per cent. Guaranteed Bonds
due 2007 issued by Castle Transmission (Finance) PLC and jointly and
severally guaranteed by CTSH and CTI;
"holding company" shall have the meaning ascribed to it by section 736
Companies Act 1985;
"interest" means, in relation to a Share, any legal or beneficial interest
in that Share or any right or power (whether conditional or unconditional
and whether legally enforceable or otherwise) to exercise control (directly
or indirectly) over the disposal of that Share or over the manner in which
any right to vote in a general meeting attached to that Share is exercised
and "interested" shall be construed accordingly;
"Liens" shall mean all liens, security interests, claims, charges and
encumbrances of any kind;
"London Stock Exchange" means London Stock Exchange Limited;
"Operating Agreement" means the operating agreement in the agreed form
between CCIC, the Company, CTI and TdF;
["Option Agreement" means the Option Agreement dated 24th April, 1998
between TdF, TdF sub and CCIC;]
"Option Exercise Date" means the date upon which TdF gives written notice
to CCIC in accordance with clause 28 of the exercise of its option under
clause 9.6(a)(i);
"Ordinary Shares" means ordinary shares of lp each in the capital of the
Company;
"Original Shareholders' Agreement" means the Shareholders' Agreement dated
23rd January, 1997 in respect of the Company (as amended by a Deed of
Adherence dated 2nd May, 1997, the Share Sale Agreement dated 24th April,
1998 and a Deed of Adherence dated 24th April, 1998) between, inter alia,
the Company, CCIC, TdF, the Berkshire Parties and the Candover Parties;
"Permitted Business" means the provision of wireless communication
infrastructure services and analogue or digital television and radio
transmission services;
"Permitted Transferees" means a person to whom Company Shares have been
transferred pursuant to clause 9.2;
"Persons Acting in Concert" means persons who, pursuant to an agreement or
understanding (whether formal or informal), actively co-operate, through
the acquisition by any of them of shares in a party, to obtain a
Controlling Interest in relation to that party, or agree so to co-operate;
"Preference Shares" means redeemable preference shares of lp each in the
capital of the Company;
<PAGE>
"Qualified" means, in relation to CCIC, for so long as it (when taken
together with its Affiliates and Permitted Transferees) holds 10 per cent.
or more of the equity share capital of the Company from time to time (and
CCIC shall be treated as being Qualified for the purposes of this Agreement
for so long as CCIC shall satisfy such criteria) and, in relation to TdF,
Qualified means:
(a) at any time prior to TdF (or any of its Affiliates or Permitted
Transferees) having exchanged its Shares in the company for Class A
Stock of CCIC pursuant to the terms of this Agreement or the
Governance Agreement, that it (when taken together with its Affiliates
and permitted Transferees) holds 10 per cent. or more of the equity
share capital of the Company from time to time (and TdF shall be
treated as being Qualified for the purposes of this Agreement for so
long as TdF shall satisfy such criteria); and
(b) if the TDF Rollup shall have occurred pursuant to the Governance
Agreement, that the TDF Group Interest (as defined in the Governance
Agreement) shall not have fallen below 5 per cent; provided that, for
the purposes of clauses 6.1(p) and 6.2(o) only, Qualified means that
the TDF Group Interest shall have fallen below 10.5 per cent;
"TDF Put Right" shall have the meaning given to it in the Governance
Agreement;
"TdF Services Agreement" means the services agreement (as amended and
restated) in the agreed form to be entered into between TdF and CTI;
"Shareholders" means CCIC and TdF and such other holders of Company Shares
who become parties to this Agreement from time to time;
"Shares" means any shares in the share capital of the Company;
"Share Sale Agreement" means the share sale agreement dated 24th April,
1998, inter alia, for the sale and purchase of certain shares of the
Company entered into by the Berkshire parties, the Candover parties, TdF,
TdF sub, CCIC and the Company;
"Special Majority Vote of the Board" shall have the meaning given to it in
the Governance Agreement;
"Subsidiary" or "Subsidiaries" means CTI and any subsidiary of the Company
from time to time;
"subsidiary" shall have the meaning ascribed to it by section 736 Companies
Act;
"TdF Rollup" shall have the meaning given to it in the Governance
Agreement;
"TdF Change of Control" shall have the meaning given to it in the
Governance Agreement as if references to "the Company" therein were
references to CCIC;
"Warrants" means the warrants to subscribe for Shares in accordance with
the Warrant Documentation;
<PAGE>
"Warrant Documentation" means (a) the instrument dated 28th February, 1997
constituting warrants entitling (i) CCIC to subscribe for 515,000 Ordinary
Shares and 514,485,000 Preference Shares and (ii) TdF to subscribe for
257,500 Ordinary Shares and 257,242,500 Preference Shares and (b) the
certificates dated 28th February, 1997 in respect thereof.
1.2 Headings
Section, clause and other headings are for ease of reference only and shall
not be deemed to form any part of the context or to affect the
interpretation of this Agreement.
1.3 Parties
References to parties are references to parties to this Agreement.
1.4 Persons
References to persons shall be deemed to include references to individuals,
companies, corporations, firms, partnerships, joint ventures, associations,
organisations, trusts, states or agencies of state, government departments
and local and municipal authorities in each case whether or not having
separate legal personality.
1.5 Defined Expressions
Expressions defined in this Agreement bear the defined meaning in the whole
of this Agreement including the recitals.
1.6 Sections, Clauses, Schedules and Annexures
References to sections, clauses, schedules annexures are references to
sections and clauses of, and schedules and annexures to this Agreement.
1.7 Plural and Singular
Words importing the singular number shall include the plural and vice
versa.
1.8 Negative Obligations
Any obligation not to do anything shall be deemed to include an obligation
not knowingly to cause that thing to be done.
1.9 Gender
Words importing one gender shall include the other gender.
1.10 Statutes and Regulations
References to a statute include references to regulations, orders or
notices made under or pursuant to such statute or regulations made under
the statute and references to a statute or regulation include references to
all amendments to that statute or regulation whether by subsequent statute
or otherwise and a statute or regulation passed in substitution for the
statute or regulation referred to as incorporating any of the provisions.
<PAGE>
1.11 Currency
References to any monetary amount are, unless expressly stated otherwise,
references to an amount in pounds sterling.
1.12 Unlawful Provisions
Neither the Company nor any Subsidiary shall be bound by any provision of
this Agreement to the extent that it would constitute an unlawful fetter on
any statutory power of the Company and/or any Subsidiary (as the case may
be), but that provision shall remain valid and binding as regards all other
parties to which it is expressed to apply and such provision shall take
effect so as to include an obligation on the part of the Shareholders to
exercise all their respective powers and rights so as to procure, so far as
they are able, that the Company and/or any Subsidiary (as the case may be)
complies with such provision notwithstanding that it is not bound by it.
1.13 References to any documents being "in the agreed form" mean in a form
agreed, and for the purposes of identification signed, by or on behalf of
the Shareholders and the Company.
2. COMPLETION
2.1 Completion shall take place immediately following the execution of this
Agreement (or at such other date and time as the Shareholders may agree in
writing).
2.2 At Completion:
(a) the Shareholders shall procure that special resolutions of the Company
in the agreed form are passed to convert each existing Preference
Share in issue into one Ordinary Share and to adopt the Articles in
the agreed form;
(b) CCIC and TdF shall procure that a meeting of the Board is held at
which it is resolved that:
(i) each of the share transfers referred to in the Share Exchange
Agreement shall be approved for registration and (subject only
to the transfer being duly stamped, if required) CCIC shall be
registered as the holder of the Shares in the register of
members;
(ii) Charles Green III be appointed as an additional Director by
CCIC;
(iii) Michel Combes be appointed as an additional Director by TdF;
(iv) Ted B. Miller, Jr. be appointed the chairman of the board of
Directors;
(v) the Company approve the TDF Services Agreement (as amended and
restated) and the Operating Agreement; and
(vi) the Company approve the Termination Agreement (referred to in
paragraph (h) below) and the termination of the agreements to
which CCIC is a party pursuant to the terms of the Termination
Agreement; and
<PAGE>
(vii) the Company approve the allotment and issue of shares envisaged
by clause 2.2(g) and (h);
(c) CCIC and TdF shall procure the resignation of Carl Ferenbach and
Douglas Fairservice as Directors of the Company and its Subsidiaries
(if relevant), to take effect at or immediately after Completion;
(d) the Company and TdF shall enter into the TDF Services Agreement (as
amended and restated);
(e) the Company, CCIC and TdF shall, and the Company shall procure that
CTI shall, enter into the Operating Agreement;
(f) CCIC shall subscribe at 2.5 times par value for such number of
Ordinary Shares of 1p each of CTSH (or the corresponding amount of
Ordinary and Preference Shares in the ratio of 1 Ordinary Shares to
999 Preference shares if the resolution referred to in clause 2.2(a)
has not been passed) as would result in CCIC holding 80 per cent. in
number of the Ordinary Shares (or, as the case may be, the Ordinary
Shares and the Preference Shares) and the Company shall allot and
issue such shares;
(g) CCIC shall exercise each of its Warrants; and
(h) the Company, CCIC and TdF and others shall enter into a termination
agreement (the "Termination Agreement") in respect of, inter alia, the
Original Shareholders' Agreement as amended by the Candover-Berkshire
Agreement, the options contained in clause 6 and Schedules 3 and 5 of
the Candover-Berkshire Agreement, the Option Agreement and the CCIC
Services Agreement with effect at or immediately after Completion.
2.3 No party shall be obliged to complete any of the transactions or do any of
the things referred to in this clause 2 unless all other transactions and
things are completed in accordance with this clause.
3. THE COMPANY'S OBJECTIVES, BUSINESS, STRUCTURE AND GOVERNANCE
3.1 The Company's Primary Objects
The primary objects of the Company under the Original Shareholders'
Agreement were sub-clauses 3.1(a) to 3.1(f) and are under this Agreement
sub-clauses 3.1(c) to 3.1(g):
(a) Purchase CTI: enter into and discharge its obligations under the
Acquisition Agreement;
(b) Funding Purchase: enter into arrangements in respect of the funding of
the acquisition of CTI;
(c) Financing CTI: enter into and continue the arrangements contemplated
by the Finance Documents regarding the capitalisation of CTI;
<PAGE>
(d) Hold Shares in CTI: hold all the issued shares of CTI subject to the
terms of this Agreement;
(e) Management: undertake generally such actions and matters as are
necessary to manage the Company's shareholding in CTI; and
(f) Incidental: undertake such other actions, matters or things as may be
necessary to achieve or are incidental to any of the above objects;
and
(g) Guarantor: act as guarantor of the Guaranteed Bonds.
3.2 The Company's Business
The Company's Business shall consist of implementing the objects set forth
in clause 3.1. The Company shall carry on no business other than the
Company's Business, except as authorised pursuant to clause 6. l(e).
3.3 The Company's Structure
Except to the extent already the case, the Shareholders agree to proceed
with all due expedition to structure or restructure the Company in
accordance with the following provisions:
(a) Memorandum and Articles: the Company shall have a memorandum of
association and articles of association in the agreed form;
(b) Number of the Company's Directors: the number of Directors of the
Company shall be 6;
(c) Shareholders' Entitlement to Nominate Directors of the Company: the
Shareholders shall exercise their voting entitlements in the Company
to procure that at any time:
(i) CCIC, for so-long as it (when taken together with its Affiliates
and Permitted Transferees) is Qualified, shall have the right to
appoint (and remove) two Directors;
(ii) TdF, for so long as it (when taken together with its Affiliates
and Permitted Transferees) is Qualified, shall have the right to
appoint (and remove) two Directors.
Directors of the Company appointed pursuant to 3.3(c) shall be
nominated by written notice to each Shareholder. Each Director of the
Company so appointed may be removed and replaced at any time by the
Shareholder entitled to nominate that Director; each Shareholder with
a right to nominate a Director of the Company may assign or waive that
right in whole but not in part in connection with a transfer of the
whole but not some only of the Shareholder's Company Shares pursuant
to clause 9 (provided that no Shareholder (when taken together with
its Affiliates and Permitted Transferees) shall be entitled to appoint
more than two Directors and provided that any transferee shall only be
entitled to appoint a Director if such transferee (when
<PAGE>
taken together with its Affiliates and its Permitted Transferees) is
Qualified and each assignor of that right shall give notice to the
Directors of the Company of any such assignment immediately. If a
Shareholder removes from office a Director of the Company nominated by
that Shareholder, that Shareholder shall indemnify the Company against
any loss, liability or cost that the Company may suffer or incur as a
result of any claim by such Director arising out of such removal. The
first Directors nominated pursuant to this clause 3.3(c) shall be as
follows:
----------------------------------------------------------------------
Name of Shareholder Nominee
----------------------------------------------------------------------
CCIC Ted Miller
----------------------------------------------------------------------
CCIC Charles Green III
----------------------------------------------------------------------
TdF Michel Azibert
----------------------------------------------------------------------
TdF Michel Combes
----------------------------------------------------------------------
(d) Additional Directors of the Company: any additional Directors of the
Company shall be nominated and elected, and may be removed and
replaced at any time, by a written notice signed by or on behalf of
every Shareholder who (when taken together with its Affiliates and
Permitted Transferees) is Qualified.
(e) Observers: each of the Shareholders shall be entitled to nominate one
observer who shall be entitled to attend and speak at meetings of the
Directors of the Company. Such observers shall not be Directors and
shall neither be entitled to vote at meetings of the Directors of the
Company nor have any authority to bind the Company.
(f) Majority Rule: except as provided in this Agreement, resolutions of
the Directors of the Company shall be deemed to be passed if approved
by a majority of the Directors of the Company which includes a
Director nominated by CCIC and a Director nominated by TdF voting
thereon at a meeting of Directors of the Company at which a Director
nominated by CCIC and a Director nominated by TdF is present, provided
the meeting is duly convened and held after notice provided in
accordance with clause 3.3(i) (which meeting may be a telephone
meeting conducted as provided in the Articles of Association), or
approved in writing signed by all the Directors of the Company in
accordance with the Company's Constitution; provided that, at any time
after the TdF Rollup shall have occurred pursuant to the Governance
Agreement and TDF shall have ceased to be Qualified, for the purposes
of any resolution of the board of the Directors of the Company
approving any of the matters referred to in clauses 6.1(p) or 6.2(o),
the majority of the Directors of the Company does not require a
Director nominated by TdF.
(g) Committees of the Directors of the Company: There shall be established
two committees of the Directors of the Company, pursuant to the
Company's Constitution, as follows:
(i) an Audit Committee consisting of any number of non-executive
Directors of the Company (including the Directors appointed from
time to time under and in accordance with clause 3.3(c)) selected
by the Directors of the Company as a board and having the
functions customary to an Audit Committee; and
<PAGE>
(ii) a Remuneration Committee consisting of any number of non-
executive Directors of the Company (including the Directors
appointed from time to time under and in accordance with clause
3.3(c)) selected by the Directors of the Company as a board and
having only advisory powers unless other powers are specifically
delegated by the Directors of the Company as a board.
Such committees shall have the powers delegated by resolution of the
Directors of the Company.
(h) No Action Until Designee Replaced: If a Director of the Company
nominated by a Shareholder resigns, is removed or for any other reason
ceases to serve as a Director of the Company and/or as a member of any
committee of the Directors of the Company on which such person had the
right to serve, such Shareholder shall have the right to nominate the
successor of such person, and provided such Shareholder nominates a
successor within five business days after the predecessor ceased to
serve as a Director of the Company or as a member of such committee,
neither the Directors of the Company nor such committee shall take any
action, whether at a meeting of the Directors of the Company (or a
committee thereof) or otherwise, until such successor has been elected
as a Director of the Company or a member of such committee, as the
case may be; provided that in no event may any Shareholder cause a
single delay of more than 10 days by the failure of such Shareholder
to exercise its rights under this clause 3.3(h).
(i) Notice of Meetings: No meeting of the Directors of the Company or of
a committee of the Directors of the Company shall normally be convened
on less than 14 days' notice, but such a meeting may be convened by
giving not less than two days' notice if the interests of the Company
would be likely to be adversely affected to a material extent if the
business to be transacted at such meeting was not dealt with as a
matter of urgency or if all the Directors agree. An agenda of the
business to be transacted at such meeting shall be sent with any such
notice and any documents relating to issues to be considered at any
such meeting shall be distributed in advance to all the Directors (or,
in the case of a committee, to the members of that committee) and
their alternates so as to ensure that they are received at least seven
days (or, if less than seven days' notice of such meeting is given, as
soon as practicable) prior to the date fixed for such meeting.
3.4 Governance of the Company
(a) General Provisions: The Company shall be operated in accordance with the
Company's Constitution and the terms of this Agreement and any agreement
entered into pursuant to this Agreement and, while effective, pursuant to
the Finance Documents. Each of the Shareholders agrees to perform and
observe all terms and conditions to be observed by them and performed under
any contract or arrangement from time to time subsisting between them and
the Company or any of the Subsidiaries, and the Shareholders (in their
capacity as Shareholders) agree to procure (insofar as they are able by the
exercise of such rights and powers) that the Company and the Subsidiaries
perform and observe this Agreement and all such agreements.
<PAGE>
(b) Directors' Meetings of the Company: Meetings of the Directors of the
Company shall be held at regular intervals as shall be determined by the
Directors of the Company. Such meetings may be carried on in any manner
permitted by the Company's Constitution but the parties shall each use all
reasonable endeavours to ensure that actual meetings at which Directors of
the Company are personally present in one room (barring unscheduled
unavailability) occur not less frequently than at quarterly intervals at
such place or places within the United Kingdom as the Directors of the
Company may from time to time determine. The Company shall meet the
reasonable travel and accommodation expenses of Directors of the Company
attending meetings of Directors of the Company. Any Director of the Company
who is unable to attend a meeting in person shall have the right to attend
the meeting by means of conference telephone.
(c) Chairman of the Company: The chairman of the board of Directors shall be
Ted B. Miller, Jr. or such other person as the Directors of the Company
nominated by CCIC shall determine and any such other person shall be such
person as shall have been approved by a Special Majority Vote of the Board
of CCIC. Such other person appointed pursuant to this clause 3.4(c) shall
be nominated by written notice to each Shareholder together with a
certified copy of the Special Majority Vote of the Board of CCIC. The
chairman of the board of Directors of the Company shall not have a second
or casting vote.
(d) Responsibility of the Directors: The Directors of the Company shall be
responsible for the overall guidance and direction of the Company.
(e) Chief Executive, Chief Operative Officer, Chief Financial Officer: The
chief executive officer, the chief operating officer and the chief
financial officer of the Company shall be nominated by CCIC and shall be
such persons as shall have been approved by a Special Majority Vote of the
Board of CCIC. Such an officer of the Company appointed pursuant to this
clause 3.4(e) shall be nominated by written notice to each Shareholder
together with a certified copy of the Special Majority Vote of the Board of
CCIC.
(f) Allocation of Management Resources: Without limiting the foregoing, the
allocation of management's time and other resources to the business of the
CCIC Group and the terms on which such time and resources are provided to
the CCIC Group from time to time shall be subject to prior review and
approval by the Directors of the Company.
(g) Indemnification of Directors: The Company shall indemnify the Directors of
the Company to the greatest extent permitted by applicable law with respect
to any liability, claim or expense incurred arising out of or related to
their service as Directors of the Company and shall obtain Directors and
Officers liability insurance coverage to the extent available on reasonable
terms, as determined by resolution of the Directors of the Company.
4. GOVERNANCE OF SUBSIDIARIES
4.1 Each Director of the Company from time to time shall be appointed as a
director of each Subsidiary of the Company.
4.2 The provisions of clauses 3.3(e), (f), (g), (h), (i) and 3.4(a), (b), (c),
(d), (e) and (f) shall apply, mutatis mutandis, in relation to each
Subsidiary in the same way as they apply in the Company and its
Subsidiaries.
<PAGE>
5. ACCOUNTS, AUDIT AND REPORTING
5.1 Financial Year
Each Financial Year of the Company and each Subsidiary shall end on the
date determined by resolution of the Directors of the Company nominated by
CCIC.
5.2 Auditors
The Directors of the Company nominated by CCIC shall have the right to
appoint the auditors to the Company and its Subsidiaries.
5.3 Reports etc.
The Company and each Subsidiary (where applicable) shall:
(a) Adopt Policies: adopt such accounting, administrative, insurance and
other policies and systems consistent with US and UK generally
accepted accounting principles from time to time as the Directors of
the Company nominated by CCIC may from time to time determine;
(b) Books, Records etc.: maintain accurate and complete books, records,
accounts, statements and documents of its respective operations,
businesses and financial affairs, all of which shall be available to
each of the Shareholders, their respective nominated Directors and
their authorised representatives for the purpose of inspection and
making copies thereof and taking extracts therefrom;
(c) Furnish Reports: prepare and furnish to each of the Shareholders
within 30 days after the end of each month during the term of this
Agreement such financial statements and business reports as may be
available (including, without limitation, copies of any financial
statements and business reports furnished pursuant to the Finance
Documents);
(d) Financial Statements: prepare and deliver to each of the Shareholders
(i) consolidated financial statements in respect of the Company and
its Subsidiaries consisting of a balance sheet, statement of revenue
and expenses and statement of changes in financial position; (ii)
copies of any financial statements and business reports furnished
pursuant to the Finance Documents; and (iii) such other statements as
the Directors of the Company may from time to time consider advisable,
in each case prepared in accordance with the generally accepted
accounting principles approved by resolution of the Directors of the
Company nominated by CCIC, as follows:
(i) Quarterly Statements: unaudited quarterly consolidated financial
statements shall be prepared and delivered to each of the
Shareholders promptly after they are available and in any event
within 45 days after the end of each quarter; and
(ii) Annual Statements: audited annual consolidated financial
statements, accompanied by the report of the Company's auditors
thereon, shall be prepared and delivered to each of the
Shareholders promptly when available
<PAGE>
and in any event within 90 days after the end of each financial
year of the Company,
provided that all or any of the requirements of this clause 5.2(d)
may, to the extent permitted by applicable law, be waived by unanimous
resolution of those Directors of the Company nominated by the
Shareholders; and
(e) Keep Informed: keep the Shareholders informed on a timely basis of all
material developments (as determined by the Directors of the Company)
affecting the conduct of their respective businesses.
6. MATTERS REQUIRING AGREEMENT
6.1 Matters Requiring Agreement of Shareholders - the Company
The Shareholders shall exercise all voting and other powers of control
available to them directly or indirectly in relation to the Company so as
to procure (insofar as they are able by the exercise of such rights and
powers in accordance with clause 17.4 of this Agreement) that the Company
shall not without the prior agreement in writing of each Shareholder (such
consent to be given or refused within 14 days of a written request for such
approval) which is Qualified:
(a) Acquisition and Dispositions: acquire or establish any Subsidiary
other than CTI or make any acquisition or disposal which would
constitute a super class 1 transaction or a class 2 transaction if the
share capital of the Company were listed on the London Stock Exchange;
(b) Share Issues: issue or offer to any person any share or loan capital,
or other securities convertible or exchangeable into share or loan
capital, or allow to arise or subsist any interest in any share or
loan capital, in the Company or any Subsidiary or purchase or redeem
or reorganise any share or loan capital in the Company or any
Subsidiary except Company Shares to be issued pursuant to the terms of
the Warrant Documentation;
(c) Subsidiaries' Shares: transfer (other than as required by the Finance
Documents) or otherwise dispose of the Shares it holds in each of the
Subsidiaries;
(d) Transactions with Shareholders: enter into a transaction with (other
than with respect to the provision of services or know-how by or to
CTI in accordance with the terms of the TdF Services Agreement and/or
the Operating Agreement) a Shareholder or any Affiliate of a
Shareholder, except as expressly contemplated by this Agreement or
make any variation or amendment (other than of a formal, minor or
technical nature) to any arrangements (whether or not contemplated by
this Agreement) between the Company and any Shareholder or any
Affiliate of any Shareholder;
(e) Other Business: carry on any business other than the Company's
Business;
<PAGE>
(f) Capital Expenditure: incur capital expenditure in any financial year
in excess of that which is included in the Company's budget for that
year as approved in writing by all the Shareholders;
(g) Banking and Other Financing Facilities: enter into any banking or
other financing facility (other than pursuant to the Finance
Documents) or vary the terms of any banking or other financing
facility;
(h) Guarantees and Indemnities: give any guarantee or indemnity in respect
of the obligations of any other person (other than a wholly-owned
Subsidiary provided that such guarantee or indemnity is expressly
contemplated by the Business Plan, the Finance Documents or the
Acquisition Agreement);
(i) Creation of Security: create any mortgage, charge, lien (other than a
lien arising in the ordinary course of trading) or encumbrance on any
assets (other than pursuant to the Finance Documents);
(j) Lending of Money: lend any money to any other person (other than to a
wholly-owned Subsidiary provided that such loan is expressly
contemplated in the Business Plan or made to finance the payment of
the consideration under the Acquisition Agreement);
(k) Joint Venture Arrangements: enter into any arrangements which
constitute a partnership or joint venture with any other person or
persons;
(l) Litigation: commence or settle any litigation involving a claim
exceeding (Pounds)500,000;
(m) The Company's Constitution: make any alteration to its Constitution;
(n) Winding Up: pass any resolution for winding up;
(o) Receiver or Administrator: apply for the appointment of a receiver or
an administrator;
(p) Dividends: declare, make or pay any dividend (interim or final) save
in respect of (i) dividends payable in respect of the Preference
Shares in accordance with the Company's Constitution (but subject
always to the terms of the Financing Documents), and (ii) dividends of
amounts which would not (if paid) unreasonably deplete the financial
resources of the Company having regard to the actual and prospective
obligations, commitments and planned or budgeted expenditure of the
CTSH Group; provided always that the payment of such dividends is
permitted by the terms of the Finance Documents (it being agreed that
the Shareholders will use their best endeavours to ensure that the
Company will make any such dividends in a tax efficient manner for
each Shareholder);
(q) Incentive Schemes: establish, approve or make any amendment or
variation to any cash incentive or cash bonus scheme in relation to
any employee of the Company or any subsidiary provided that (I)
neither CCIC nor TdF shall unreasonably withhold their consent to the
establishment or implementation of cash incentive or cash bonus
schemes of a type which are currently or have in the past been
operated by members
<PAGE>
of the CTSH Group in accordance with reasonable business principles
for the benefit of employees of the Company or its Subsidiaries and
(ii) it is acknowledged and agreed that the remuneration of employees
of the Company or its Subsidiaries may continue to be determined and
increased in a manner consistent with past practices of the Company
and its Subsidiaries in accordance with reasonable business
principles;
(r) Public Offerings: take any step to obtain a listing or quotation for
any Shares or any shares of a Subsidiary on any stock exchange, over-
the-counter market or other trading association with a view to
offering any Shares for sale to the public or offer any Shares or any
shares of a Subsidiary for sale to the public; and
(s) Operating Agreement: make any amendment to the Operating Agreement,
other than an amendment of a formal, minor or technical nature.
6.2 Matters Requiring Agreement of Shareholders - Subsidiaries
The Shareholders shall exercise all voting and other powers of control
available to them directly or indirectly in relation to the Company, and
the Company shall exercise all voting and other powers of control available
to it so as to procure (insofar as they are able by the exercise of such
rights and powers in accordance with clause 17.4 of this Agreement) that
each Subsidiary shall not without the prior agreement in writing (such
consent to given or refused within 14 days of a written request for such
approval) of each Shareholder which is Qualified:
(a) Acquisitions and Disposals: make any acquisition or disposal which
would constitute a super class 1 transaction or a class 2 transaction
if the share capital of that Subsidiary were listed on the London
Stock Exchange;
(b) Share Issues: issue or offer to any person any shares or loan capital,
or other securities convertible or exchangeable into shares or loan
capital, or allow to arise or subsist any interest in any share or
loan capital, of such Subsidiary or the Company or purchase or redeem
or reorganise any share or loan capital of such Subsidiary or the
Company except for any shares issued or offered to the Company;
(c) Transactions with Shareholders: enter into a transaction (other than
with respect to the provision of services or know-how by or to CTI in
accordance with the terms of the TdF Services Agreement and/or the
Operating Agreement ) with a Shareholder or any Affiliate of a
Shareholder, except as expressly contemplated by this Agreement or
make any variation or amendment (other than of a formal, minor or
technical nature) to any arrangements (whether or not contemplated by
this Agreement) between a Subsidiary and any Shareholder or any
Affiliate of any Shareholder;
(d) Other Business: (in the case of CTI) carry on any category of business
other than Permitted Business or one which is carried on at the date
of this Agreement;
(e) Capital Expenditure: incur capital expenditure in any financial year
in excess of that which is included in such Subsidiary's budget for
that year as approved in writing by all of the Shareholders;
<PAGE>
(f) Banking and other Financing Facilities: enter into any banking or
other financing facility (other than pursuant to the Finance
Documents) or vary the terms of any banking or other financing
facility;
(g) Guarantees and Indemnities: give any guarantee or indemnity in respect
of the obligations of any other person (other than a wholly-owned
Subsidiary provided that such guarantee or indemnity is expressly
contemplated by the Business Plan or the Finance Documents);
(h) Creation of Security: create any mortgage, charge, lien (other than a
lien arising in the ordinary course of trading) or encumbrance on any
assets (other than pursuant to the Finance Documents);
(i) Lending of Money: lend any money to any other person (other than to
the Company);
(j) Joint Venture Arrangements: enter into any arrangements which
constitute a partnership or joint venture with any other person or
persons;
(k) Litigation: commence or settle any litigation involving a claim
exceeding (Pounds)500,000;
(l) Subsidiary's Constitution: make any alteration to any Subsidiary's
memorandum or articles of association.
(m) Winding Up: pass any resolution for winding up;
(n) Receiver or Administrator: apply for the appointment of a receiver or
an administrator;
(o) Dividends: declare, make or pay any dividend (interim or final) save
to the extent needed to fund the payment of dividends on Preference
Shares (but subject always to the terms of the Finance Documents), and
save also in respect of dividends of amounts which would not (if paid)
unreasonably deplete the financial resources of the relevant
Subsidiary having regard to the actual and prospective obligations,
commitments and planned or budgeted expenditure of the CTSH Group
provided always that the payment of such dividends is permitted by the
terms of the Finance Documents (it being agreed that the Shareholders
will use their best endeavours to ensure that the Company will make
any such dividends in a tax efficient manner for each Shareholder);
(p) Business Plan: reorganise or change the nature or scope of its
business from that as set out in the Business Plan (as amended from
time to time in accordance with clause 8.1);
(q) Incentive Schemes: establish, approve or make any amendment or
variation to any cash incentive or cash bonus scheme in relation to
any employee of the Company or any Subsidiary provided that (i)
neither CCIC nor TdF shall unreasonably withhold their consent to the
establishment or implementation of cash incentive or cash bonus
schemes of a type which are currently or have in the past been
operated by members of the CTSH Group in accordance with reasonable
business principles for the benefit
<PAGE>
of employees of the Company or its Subsidiaries and (ii) it is
acknowledged and agreed that the remuneration of employees of the
Company or its Subsidiaries may continue to be determined and
increased in a manner consistent with past practices of the Company
and its Subsidiaries in accordance with reasonable business
principles;
(r) Public Offerings: take any step to obtain a listing or quotation for
any Shares or any shares of a Subsidiary on any stock exchange, over-
the-counter market or other trading association with a view to
offering any Shares or any shares of a Subsidiary for sale to the
public; and
(s) Operating Agreement: make any amendment to the Operating Agreement ,
other than an amendment of a formal, minor or technical nature.
6.3 Matters Requiring Consent of Particular Shareholder
The Shareholders shall exercise all voting and other powers of control
available to them (directly or indirectly) in relation to the Company so as
to procure (insofar as they are able by the exercise of such rights and
powers) that neither the Company nor any Subsidiary shall do or permit or
suffer to be done any act or thing which will cause the rights of any
Shareholder (in that Shareholder's capacity as a holder of the Company
Shares) to be adversely affected in a manner not applicable to all
Shareholders, without such Shareholder's written consent.
6.4 Each Shareholder agrees that it will procure that entities comprised within
it, its Affiliates and Permitted Transferees shall together ensure that one
entity shall at all times be authorised to exercise the rights of that
Shareholder under this Agreement. The identity of such entity for the time
being shall be notified to all other Shareholders.
6.5 Notwithstanding any other provisions of this Agreement neither the Company
nor any Subsidiary shall issue any share capital or other securities
convertible or exchangeable into share capital if the consequence of such
issue would be that (i) the BBC would thereby become entitled to terminate
the Analogue Transmission Contract pursuant to 13.5 thereof or the Digital
Transmission Contract pursuant to clause 12.7 thereof (unless the BBC shall
have first confirmed in writing that it will not exercise its right of
termination in consequence of such issue), (ii) any licence held by the
Company or any Subsidiary under the Telecommunications Act 1984 or the
Wireless Telegraphy Act 1949 would thereby become capable of being
terminated or revoked in accordance with its terms unless the relevant
regulator shall have first confirmed in writing that the relevant licence
will not be terminated in consequence of the proposed issue (iii) either
CCIC or TdF would thereby be in breach of the Commitment Agreement (unless
the BBC shall have first consented to the transfer in accordance with the
terms of the Commitment Agreement) or (iv) CCIC and TdF would cease to hold
the same percentage of Company Shares as they did immediately prior to such
issue at the date of this Agreement being 80 and 20 per cent. respectively.
6.6 If either of the Shareholders shall refuse to give its agreement in respect
of any matter for which its consent is required under clause 6.1 or 6.2 or
if that Shareholder's nominated Directors shall vote against, or abstain in
respect of, a resolution put to the Board of Directors of the Company or
any of its Subsidiaries, then the other Shareholder (notwithstanding the
terms of the Operating Agreement) shall be entitled to pursue the
transaction to which that matter or resolution relates in its own right and
for its own account
<PAGE>
free from any duty or obligation to any company in the CTSH Group or any of
their respective shareholders.
6.7 The rights of the Directors of the Company nominated by CCIC referred to in
clauses 3.4(c) and (e), and 5.3(a) and (d) cease to be rights of such
Directors and shall become rights of all of the Directors of the Company,
upon CCIC ceasing to be the Controlling Shareholder.
7. GUARANTEES TO THIRD PARTIES
No Shareholder shall be under any obligation to give any guarantee or
indemnity or the like on behalf of the Company or any Subsidiary.
8. ANNUAL BUDGET
The Shareholders shall exercise all voting and other powers of control
available to them directly or indirectly in relation to the Company so as
to procure (insofar as they are able by the exercise of such rights and
powers) that, not less than 90 days before the beginning of each Financial
Year, the Company shall draw up an annual budget for the Financial Year
next following in such format as the Shareholders shall prescribe from time
to time (but to include a capital expenditure forecast and a cashflow
forecast) and shall submit each such annual budget and any proposed
amendments to the Business Plan for review and approval to each Shareholder
which is Qualified. Each such annual budget and proposed amendments to the
Business Plan shall be subject to the approval of each Shareholder which is
Qualified. Each such Shareholder undertakes to the other Shareholders to
act in good faith when reviewing each such annual budget and proposed
amendments to the Business Plan and subject always to its rights under
clauses 6.1(b) and 6.2(d) undertakes not unreasonably to withhold its
approval of such document.
9. TRANSFERS
9.1 No Transfers
Unless prior consent in writing is obtained from each Shareholder which is
Qualified or except as provided in clauses 9.2 or 9.4 to 9.9 or as
contemplated by the Governance Agreement (but in any case subject to
clauses 9.3 and 9.12) no Shareholder may sell, transfer, mortgage, charge
or otherwise dispose of all or any of its Company Shares or any legal or
beneficial interest therein or any rights to subscribe therefor.
9.2 Permitted Transfers
Notwithstanding the provisions in clauses 9.1 but subject to clauses 9.3
and 9.12, any Shareholder may transfer its holding of, or beneficial
interest in, Company Shares to a person who is an Affiliate of the
transferor at the date hereof, provided that (a) as a condition of each of
the permitted transfers, the transferee shall be required to comply with
clause 9.12, (b) where Company Shares have been transferred from a
Shareholder to an Affiliate and subsequently the transferee ceases to be an
Affiliate of that Shareholder, then the Shareholder concerned shall procure
that such Affiliate shall forthwith transfer such Company Shares back to
the original Shareholder and (c) each Shareholder agrees not to effect
transfers or changes in such Shareholder's Group in such a manner as to
frustrate the intent of this clause 9.2, which is to permit transfers only
to and holdings by related persons and entities. For the purposes of
clauses 9.4 to 9.9 reference to TdF shall be deemed to include TdF and its
<PAGE>
Affiliates and Permitted Transferees and to CCIC shall be deemed to include
CCIC and its Affiliates and Permitted Transferees.
9.3 Change of Control and Stapling
Notwithstanding any other provisions of this Agreement:
(a) no Shareholder shall be entitled to transfer or otherwise dispose of
an interest in any Company Shares if the consequence of such transfer
or disposal would be that (i) the BBC would thereby become entitled to
terminate the Analogue Transmission Contract pursuant to clause 13.5
thereof or the Digital Transmission Contract pursuant to clause 12.7
thereof (unless the BBC shall have first confirmed in writing that it
will not exercise its right of termination in consequence of such
transfer or disposal), (ii) any licence held by the Company or any
Subsidiary under the Telecommunications Act 1984 or the Wireless
Telegraphy Act 1949 would thereby become capable of being terminated
or revoked in accordance with its terms unless the relevant regulator
shall have confirmed in writing that the relevant licence will not be
terminated in consequence of the proposed transfer or disposal or
(iii) either CCIC or TdF would thereby be in breach of the Commitment
Agreement (unless the BBC shall have first consented to the transfer
in accordance with the terms and conditions of the Commitment
Agreement); and
(b) at any time prior to the conversion of Preference Shares into Ordinary
Shares (as contemplated by clause 2.2(a), Company Shares may only be
transferred or otherwise disposed of in tranches of 1,000 Company
Shares, comprising 1 Ordinary Share and 999 Preference Shares (or,
following the redemption of any Preference Shares, in such proportion
as the aggregate number of Ordinary Shares then in issue bears to the
aggregate number of Preference Shares then in issue).
9.4 Pre-emption Rights
(a) A Shareholder may transfer its Shares and Warrants at any time after
whichever is the later of (i) the second anniversary of this Agreement or
(ii) the expiry of the period for the completion of the TDF Put Right or,
as the case may be, the Company Call Right, in accordance with the
provisions of this clause 9.4. Subject to clauses 9.2, 9.3, 9.5 and 9.12,
if a Shareholder (for the purposes of this clause 9.4, the "Selling
Shareholder") wishes to transfer all (but not part of) its Shares and
Warrants in the Company (collectively the "Vendor Interest") it shall give
to the other Shareholder notice in writing of such desire (for the purposes
of this clause 9.4 a "Transfer Notice"). A Selling Shareholder may only
serve a Transfer Notice if it has first agreed (on a subject to contract
basis) the material terms relating to that transfer (including a cash
price) for the Vendor Interest with a bona fide third party purchaser. A
Transfer Notice shall specify the name of the person (the "Proposed
Purchaser") to whom the Selling Shareholder proposes to transfer the Vendor
Interest (any shares comprised in the Vendor Interest being for the
purposes of this clause 9.4 referred to as the "Sale Shares" and, as
applicable, any Warrants referred to as "Sale Warrants") and the cash price
per Sale Share and, as applicable, the cash price per Sale Warrant at which
the Selling Shareholder proposes to so transfer (the "Sale Price").
(b) If the other Shareholder shall give notice to the Selling Shareholder that
it wishes to purchase the Sale Shares and, as applicable, the Sale Warrants
at the Sale Price on or before the date
<PAGE>
which falls 30 days after such notice (the date on which the other
Shareholder gives such notice being referred to as the "Acceptance Date")
of the date of receipt of the Transfer Notice by the other Shareholder, the
Selling Shareholder shall be bound upon receipt of the Sale Price to
transfer the Sale Shares and, as applicable, Sale Warrants to the other
Shareholder and the other Shareholder shall be bound to purchase the Sale
Warrants at the Sale Price.
(c) If the other Shareholder shall notify the Selling Shareholder that it is
not willing to purchase all of the Sale Shares and, as applicable, the Sale
Warrants at the Sale Price pursuant to the foregoing provisions of this
clause 9.4 or the other Shareholder fails to give notice to the Selling
Shareholder in accordance with clause 9.4(b), then in the event that the
Selling Shareholder wishes to transfer the Sale Shares and, as applicable,
the Sale Warrants the Selling Shareholder shall not be obliged to sell any
of the Sales Shares or, as applicable, the Sale Warrants to the other
Shareholder and shall, subject to clause 9.5, be at liberty at any time
within 6 months after the Acceptance Date to sell and transfer all (but not
part of) the Sale Shares and, as applicable, the Sale Warrants to the
person whose name was specified in the Transfer Notice at a cash price not
being less than the Sale Price.
(d) Subject to clause 9.4(e), he closing of any sale of Sale Shares and, as
applicable, Sale Warrants pursuant to this clause 9.4 shall, subject to the
satisfaction of the conditions precedent set out in Schedule 2, take place
on any Business Day within 6 months after the Acceptance Date as nominated
by the Selling Shareholder (or, if later, such date which is the second
Business Day after the date on which such conditions shall have been
satisfied) at a time and place specified by the Selling Shareholder by not
less than 14 days' notice in writing. On the closing date, the Selling
Shareholder shall deliver (i) duly executed transfers in respect of such
Sale Shares and, as applicable, Sale Warrants and the share and, as
applicable, warrant certificate(s) in respect thereof (which Sale Shares
and Sale Warrants shall be sold free and clear of any Liens) and (ii) such
other documents, including evidence of ownership and authority, as the
other Shareholder may reasonably request, against which the other
Shareholder shall pay the Sale Price. In connection with such closing, the
Selling Shareholder and the other Shareholder shall also provide such other
customary closing certificate and opinions as the other Shareholder or, as
the case may be, the Selling Shareholder may reasonably request.
The sale of any shares under the above provisions of this clause shall
comprise the entire legal and beneficial ownership of the Sale Shares and,
as applicable, Sale Warrants in question with a full title guarantee
covenant.
(e) Notwithstanding clause 9.4(d), if CCIC is not the Selling Shareholder, CCIC
shall, at its option, be entitled to discharge the Sale Price by issuing to
the Selling Shareholder (instead of cash) such number of shares of Common
Stock (the "TdF Pre-emption Shares") as have an aggregate price equal to
the Sale Price divided by the weighted average price per share of Common
Stock over the five trading days on the principal stock exchange on which
such Common Stock was traded immediately preceding the closing of the sale
of the Sale Shares and the Sale Warrants (discounted by 15 per cent.). If
CCIC so elects, CCIC shall deliver to TdF at the closing of the sale of the
Sale Shares and the Sale Warrants the TdF Pre-emption Shares (and
certificates in respect thereof) registered in the name of TdF (or, as it
may require, its nominees or Affiliates). The provisions of clause 9.7(e)
and (d) shall apply, mutatis mutandis, in respect of the TdF Pre-emption
Shares.
<PAGE>
9.5 Take along rights
(a) Subject to clauses 9.2 and 9.3, no sale or transfer (whether by one or by a
series of transactions) to a person or its Affiliates or anyone acting in
concert with that person of any Shares and, as applicable, Warrants (the
"Specified Shares") in the Company held by a Selling Shareholder (as
defined in clause 9.4) (other than a sale or transfer to a Shareholder)
shall be made or registered without the prior consent of the other
Shareholder unless, before such sale or transfer is made, the proposed
transferee has irrevocably and unconditionally offered to purchase all of
the Shares and, as applicable, Warrants in the Company held by the other
Shareholder for the time being at the Specified Price and otherwise on the
same terms (including as to the time of completion and the manner of
payment) as the proposed transferee has offered to purchase the Specified
Shares.
(b) In this clause 9.5, the expression the "Specified Price" shall mean a
consideration for each of the Shares and Warrants at least equal to the
aggregate of that offered or paid or payable by the proposed transferee for
each of the Specified Shares. For the purposes of this clause, the
consideration payable for such of the Specified Shares shall include any
amount received or receivable by the holder of the Specified Shares which,
having regard to the substance of the transaction as a whole, can
reasonably be regarded as an addition to the price paid or payable for each
of the Specified Shares and, in the event of any disagreement about the
calculation of the Specified Price, its calculation shall be referred to
the auditors of the Company within seven days of the dispute arising
(acting as experts and not as arbitrators) whose decision with respect to
the Specified Price shall be final and binding on the parties. The parties
shall give all reasonable assistance to the auditors of the Company in
verifying the Specified Price, including, without limitation, the
disclosure of all relevant documentation containing the terms of the
transaction relating to the proposed sale of the Specified Shares.
(c) The sale of any Shares and Warrants under the above provisions of this
clause shall comprise the entire legal and beneficial ownership of the
Shares and Warrants in question, with a full title guarantee covenant.
9.6 TdF's Rights on Change of Control
(a) Change of Control
(i) CCIC agrees that if the TDF Rollup shall not have been consummated on or
prior to the second anniversary of the date of this Agreement or, if
earlier, if TdF shall cease to be Qualified (as determined in accordance
with the Governance Agreement) TdF shall have the option to require CCIC to
acquire all, but not less than all, of the Shares and the Warrants legally
or beneficially owned or held by TdF (the "TdF Interest") for cash in an
amount equal to the Fair Market Value (as determined in accordance with the
procedures set forth in clause 9.6(b)) of the TdF Interest at any time in
the event of a Change of Control (the "Change in Control Option").
(ii) The Change of Control Option may be exercised by TdF serving written notice
(a "Change of Control Notice") within 45 days of TdF becoming aware on
reasonable grounds of a Change of Control in accordance with clause 28.
(b) The valuation procedures referred to in clause 9.6(a) shall be as follows.
Each of CCIC and TdF shall negotiate in good faith to determine the Fair
Market Value per share and per
<PAGE>
warrant of the TdF Shares Interest (the "CTSH Per Share/Warrant Value")
within 30 days following the delivery by TdF to CCIC of the Change of
Control Notice. If CCIC and TdF do not agree on a CTSH Per Share/Warrant
Value within such 30 day period, they shall, within three days, appoint an
independent investment banker of international stature with its principal
office in New York City (the "Appraiser") and shall provide such Appraiser
with their respective written determinations of the CTSH Per Share/Warrant
Value. Such Appraiser shall then choose (taking into account all relevant
factors but no discount shall be applied as a result of the termination or
potential termination of the BBC Contracts), as between the written
determinations of the CTSH Per Share/Warrant Value provided by CCIC and TdF
to the Appraiser, the CTSH Per Share/Warrant Value which most closely
approximates, in the expert opinion of the Appraiser, the Fair Market Value
per Share and per Warrant of the TdF Interest as of the Option Exercise
Date. If the parties are unable to agree on the selection of such Appraiser
within such three-day period, they shall on such third day so notify the
Chairman of the New York Stock Exchange, Inc., who shall, within five days
of such notification, appoint an investment banker meeting the
qualifications set forth above to serve as the Appraiser. In any case, the
Appraiser shall make its decision with respect to the CTSH Per
Share/Warrant Value within ten days of the date of its engagement and must
choose (taking into account all relevant factors but no discount shall be
applied as a result of the termination or potential termination of the BBC
Contracts) a CTSH Per Share/Warrant Value presented by either of CCIC or
TdF pursuant to their respective written determinations (i.e. such
Appraiser may not select a different value). The fees and expenses of the
Appraiser shall be paid by CCIC.
9.7 TdF Exit Right
(a) CCIC agrees that at any time after the earlier to occur of (i) the second
anniversary of the date of this Agreement or (ii) TdF ceasing to be
Qualified for the purposes of the Governance Agreement, TdF shall have the
right at any time in its sole discretion, so long as the CTSH Option shall
not have been consummated, (the "TdF Exit Right"), upon not less than six
months' notice (the "TdF Exit Notice") by TdF to CCIC, to require CCIC to
purchase all, but not less than all, of the Shares and Warrants legally or
beneficially owned or held by TdF ("the TdF Interest") in exchange for, in
CCIC's sole discretion, (i) that number of shares of Common Stock (the "TdF
Exit Shares") as have an aggregate price equal to the Fair Market Value (as
determined in accordance with the procedures set forth in clause 9.7(e)) of
the TdF Interest divided by the weighted average price per share of Common
Stock over the five trading days on the principal stock exchange on which
such Common Stock was traded immediately preceding the closing of the TdF
Exit Right pursuant to clause 9.7(e) (discounted by 15 per cent.), or (ii)
cash in an amount equal to such Fair Market Value (determined as aforesaid)
of the TdF Interest.
(b) The closing of the TdF Exit Right shall, subject to the satisfaction of the
conditions precedent set forth in Schedule 2, take place on any Business
Day within 6 months after the date on which CCIC shall have received the
TdF Exit Notice (or, if later, such date which is the second Business Day
after the date on which such conditions shall have been satisfied), at a
date, time and place specified by CCIC or such other date, time and place
as may be agreed to by TdF and CCIC. On the closing date of the TdF Exit
Right, CCIC shall deliver or, as the case may be, pay to TdF, against
delivery of (i) duly executed transfers in respect of the Shares and
Warrants legally or beneficially owned or held by TdF and the share or
warrant certificate(s) in respect thereof (which Shares and Warrants TdF
undertakes to sell free and
<PAGE>
clear of all Liens) and (ii) such other documents, including evidence of
ownership and authority, as CCIC may reasonably request, the TdF Exit
Shares (and certificates in respect thereof) registered in the name of TdF
(or, as it may require, its nominees or Affiliates) or, as the case may be,
an amount in cash equal to the Fair Market Value of the TdF Interest (by
unconditional and irrevocable credit to such bank account as TdF may
specify for such purpose). In connection with such closing, CCIC and TdF
shall also provide such other customary closing certificates and opinions
as TdF or CCIC, as appropriate, may reasonably request.
(c) All TdF Exit Shares to be issued pursuant to any exercise of the TdF Exit
Right shall be issued as fully paid and free from all Liens and shall carry
all rights, benefits and advantages attached to the Common Stock except any
right with a record date prior to the date of issue of the TdF Exit Shares
including, without limitation, the right to any dividend declared but not
paid.
(d) If TdF shall receive Common Stock pursuant to clause 9.7(b)(i) in respect
of its exercise of the TdF Exit Right, the Company shall grant TdF demand
registration rights (the "Demand Rights") comparable to those set forth in
Section 4.02 of the Stockholders Agreement with respect to such Common
Stock and "tag along" rights comparable to those set out in section 5.02 in
the Stockholders' Agreement with respect to such Common Stock. TdF shall
on a disposal of such Common Stock pursuant to the aforementioned Demand
Rights appoint an underwriter reasonably satisfactory to CCIC.
(e) The valuation procedures referred to in clause 9.7(b) shall be as follows.
Each of CCIC and TdF shall negotiate in good faith to determine the Fair
Market Value per share and per warrant of the TdF Interest (the "CTSH Per
Share/Warrant Value") within 30 days following the delivery by TdF to CCIC
of the TdF Exit Notice. If CCIC and TdF do not agree on a CTSH Per
Share/Warrant Value within such 30 day period, they shall, within three
days, appoint an independent investment banker of international stature
with its principal office in New York City (the "Appraiser") and shall
provide such Appraiser with their respective written determinations of the
CTSH Per Share/Warrant Value. Such Appraiser shall then choose (taking
into account all relevant factors), as between the written determinations
of the CTSH Per Share/Warrant Value provided by CCIC and TdF to the
Appraiser, the CTSH Per Share/Warrant Value which most closely
approximates, in the expert opinion of the Appraiser, the Fair Market Value
per Share and per Warrant of the TdF Interest as of the closing of the TdF
Exit Right. If the parties are unable to agree on the selection of such
Appraiser within such three-day period, they shall on such third day so
notify the Chairman of the New York Stock Exchange, Inc., who shall, within
five days of such notification, appoint an investment banker meeting the
qualifications set forth above to serve as the Appraiser. In any case, the
Appraiser shall make its decision with respect to the CTSH Per
Share/Warrant Value within ten days of the date of its engagement and must
choose (taking into account all relevant factors) a CTSH Per Share/Warrant
Value presented by either of CCIC or TdF pursuant to their respective
written determinations (i.e. such Appraiser may not select a different
value). The fees and expenses of the Appraiser shall be paid by CCIC.
(f) The sale of any Shares and Warrants under the above provisions of this
clause shall comprise the entire legal and beneficial interest of the
Shares and the Warrants in question, with a full title guarantee covenant.
<PAGE>
9.8 CCIC Deadlock Right
(a) Subject to clause 9.3 and provided that the TdF Rollup shall not have been
consummated, TdF agrees that CCIC shall have the right (the "CCIC Deadlock
Right") to require TdF to sell all, but not less than all, of the TdF
Interest in exchange for cash in an amount equal to the Fair Market Value
of the TdF Interest determined in accordance with the procedures set out in
clause 9.7(e). The CCIC Deadlock Right may be exercised on one occasion
only but shall not be exercisable unless the following conditions shall
have been satisfied:
(i) a period of three years shall have elapsed from the date of this
Agreement; and
(ii) in any consecutive period of six months following the third
anniversary of this Agreement, TdF shall on three separate occasions
have refused to give its agreement in respect of a matter or matters
relating to Permitted Business or permitted by the Operating
Agreement of the type described in clause 6.1(a), (f), (g), (h),
(i), (j) or (k) or clause 6.2(a), (f), (g), (h), (i), (j) or (p) in
each case relating to any matter or thing relating to Permitted
Business and/or as permitted by the Operating Agreement in
circumstances in which CCIC has given its agreement and in which the
matters in question have been proposed in good faith; and
(iii) TdF has not elected to withdraw the latest veto giving rise to the
Deadlock Right within 14 Business Days after receipt of the CCIC
Deadlock Right Notice (and during which period TdF and CCIC agree to
negotiate in good faith with respect to the matter concerned with a
view to reaching agreement or a mutually acceptable compromise with
respect to such matter).
The CCIC Deadlock Right shall only be exercisable by CCIC serving on TdF a
written notice (the "CCIC Deadlock Right Notice") stating its intention to
exercise such right unless TdF withdraws the latest veto giving rise to the
Deadlock Right within 14 Business Days after receipt of such notice, and
only so long as such notice is served on TdF within 14 Business Days after
condition (ii) above has been satisfied.
(b) The closing of the CCIC Deadlock Right shall, subject to satisfaction of
the conditions precedent set out in Schedule 2, take place on the tenth
Business Day after the date on which TdF gives notice to CCIC of its
election not to withdraw the latest veto or if no such notice is given the
latest day on which TdF has the right to withdraw such veto under clause
(a) above (or, if later, such date which is the second Business Day after
the date on which each of such conditions shall have been satisfied), at a
time and place specified by CCIC as such notice or such other date, time
and place as may be agreed by CCIC and TdF. On the closing date of the
CCIC Deadlock Right, CCIC shall pay to TdF, against delivery of (i) duly
executed transfers in respect of the Shares and Warrants legally or
beneficially held by TdF and the share and warrant certificate(s) in
respect thereof (which Shares and Warrants TdF undertakes to sell free and
clear of all Liens) and (ii) such other documents, including evidence of
ownership and authority, as CCIC may reasonably request, an amount in cash
equal to the Fair Market Value of the TdF Interest (by unconditional and
irrevocable credit to such bank account as TdF may specify for such
purpose). In connection with such closing, CCIC and TdF shall also provide
such other customary closing certificates and opinions as TdF or, as the
case may be, CCIC may reasonably request.
<PAGE>
(c) The sale of any Shares and Warrants under the above provisions of this
clause shall comprise the entire legal and beneficial interest of the
Shares and the Warrants in question, with a full title guarantee covenant.
9.9 CCIC Shotgun Right
(a) Provided that the TdF Rollup shall not have been consummated, CCIC may (i)
by not more than 90 and not less than 60 days' notice in writing, expiring
on the fifth anniversary of the date of this Agreement or (ii) at any time
within 45 days of CCIC becoming aware on reasonable grounds of a TdF
Change of Control (in each case, the "Shotgun Notice") offer to TdF to
acquire the TdF Interest, in the case of (a)(i), on the fifth anniversary
of the date of this Agreement (or, if such day is not a Business Day, the
first Business Day thereafter) or, in the case of (a)(ii), on the forty-
fifth day after the date of the Shotgun Notice. Such Shotgun Notice shall
specify the cash price per Share and per Warrant at which the offer is made
and shall request TdF to notify CCIC in writing within 30 days from the
date of the Shotgun Notice:
(i) whether or not TdF is willing to sell the TdF Interest; and
(ii) (if TdF is not so willing) that TdF (by itself or together with any
other person or persons) is willing to acquire from CCIC all the
Shares and Warrants for the time being held by CCIC at the same price
per Share and per Warrant as is specified in the Shotgun Notice.
(b) If, after the expiry of the 30 day period referred to in clause 9.9(a), TdF
shall not have given any notice in writing to CCIC in the form required by
clause 9.9(a), TdF shall be deemed to have accepted the offer made by CCIC
and shall be bound to sell the TdF Interest at the price specified in the
Shotgun Notice on the date for completion specified in clause 9.9(a).
(c) If TdF gives notice to CCIC of its willingness to sell the TdF Interest (as
contemplated by clause 9.9(a)(i)), TdF shall be bound to sell the TdF
Interest at the price specified in the Shotgun Notice given by CCIC on the
date for completion specified in clause 9.9(a).
(d) If TdF gives notice (the "TdF Notice") to CCIC of its willingness to
purchase all the Shares and Warrants then held by CCIC (as contemplated by
clause 9.9(a)(ii)), CCIC shall be bound to sell such Shares and Warrants at
the price specified in the Shotgun Notice on the date for completion
specified in clause 9.9(a).
(e) The closing of any sale of Shares and Warrants pursuant to this clause 9.9
shall, subject to the satisfaction of the conditions precedent set out in
Schedule 2 to this Agreement, take place at a time and place specified by
CCIC, if CCIC is the purchaser, or by TdF, if TdF is the purchaser, by not
less than 15 days' notice in writing. On the closing date, the Shareholder
which is obliged to sell its Shares and Warrants shall deliver (i) duly
executed transfers in respect of such Shares and Warrants and the share and
warrant certificate(s) in respect thereof (which Shares and Warrants shall
be sold free and clear of any Liens) and (ii) such other documents,
including evidence of ownership and authority, as the purchaser may
reasonably request, against which the purchaser shall pay the price
specified in the notice given by CCIC pursuant to clause 9.9(a). In
connection with such closing, CCIC and TdF shall also provide such other
customary closing certificates as TdF or, as the case may be, CCIC may
reasonably request.
<PAGE>
(f) The sale of any Shares and Warrants under the above provisions of this
clause shall comprise the entire legal and beneficial interest of the
Shares and Warrants in question, with a full title guarantee covenant.
9.10 Other options
For the avoidance of doubt, the Shareholders confirm that the rights
contained in Section 5 of the Governance Agreement are additional to those
set out in this Agreement.
9.11 Legends on Share Certificates
All certificates representing Company Shares shall bear the following
legend:
"The shares represented by this Certificate are subject to an agreement
among Castle Transmission Services (Holdings) Limited and its shareholders
which, inter alia, restricts transfer of these shares and in some
circumstances requires the transfer of these shares. Any transfer in
violation of that agreement will be void, and any transferee is required to
become party to that agreement."
9.12 Admission of Shareholders
No Shareholder may transfer any Company Shares to any person unless such
person has first executed and delivered to the other Shareholder a deed of
adherence in the form set out in Schedule 1.
9.13 The Company shall have no obligation to register the transfer of any
Company Shares if the proposed transfer does not comply with the provisions
of this clause 9.
9.14 TdF and CCIC each undertake to the other to use all reasonable endeavours
to obtain any consents or approvals required to give effect to the
provisions of this clause 9 and agree not to take any steps which may
adversely affect the prospects of obtaining any such consents or approvals.
10. SERVICES AGREEMENT WITH TeLeDIFFUSION DE FRANCE, S.A.; WARRANTS; OPERATING
AGREEMENT
10.1 Services Agreement
Each Shareholder shall, in its capacity as shareholder of the Company, pass
resolutions and procure the passing of resolutions by the Directors of CTI
and do everything else necessary (in each case, so far as they are able by
the exercise of their rights and powers as Shareholders so to pass, procure
and/or do) to cause CTI immediately following Completion to enter into and
thereafter to perform its obligations under a services agreement in the
agreed form between CTI and TeleDiffusion de France, S.A. TdF undertakes
immediately following Completion to procure that TeleDiffusion de France,
S.A. shall enter into and thereafter perform its obligations under the TDF
Services Agreement.
<PAGE>
10.2 Warrants
Each Shareholder shall, in its capacity as shareholder of the Company, pass
resolutions and procure the passing of resolutions by the Directors of the
Company and do everything else necessary (in each case, so far as they are
able by the exercise of their rights and powers as Shareholders so to pass,
procure and/or do) to cause the Company to execute and thereafter perform
its obligations under the Warrant Documentation provided always that TdF
may not exercise its Warrants if the effect would be to cause TdF to have
an interest in more than 20 per cent. of the Company Shares and CCIC may
not exercise its Warrants if the effect would be to cause TdF to have an
interest in less than 20 per cent. of the Company Shares.
10.3 Operating Agreement
Each Shareholder shall, in its capacity as shareholder of the Company, pass
resolutions and procure the passing of resolutions by the Directors of the
Company and CTI and do everything else necessary (in each case, so far as
they are able by the exercise of their rights and powers as Shareholders so
to pass, procure and/or do) to cause the Company and CTI on Completion to
execute and thereafter perform its obligations under the Operating
Agreement.
11. SPECIFIC PERFORMANCE
11.1 The Company Shares cannot be readily purchased or sold in the open market,
and for that reason, among others, the Company and the Shareholders will be
irreparably damaged in the event that this Agreement is not specifically
enforced. Accordingly each Shareholder and the Company agree that specific
performance and injunctive relief would be appropriate remedies in the
event of any breach or threatened breach of this Agreement. Without
limiting the generality of the foregoing, should any controversy arise
concerning a sale or disposition of any Company Shares, an injunction may
be issued restraining any sale or disposition pending the determination of
such controversy, and the resolution thereof shall be enforceable in a
court of equity by a decree of specific performance. The remedies
specified in this clause 12.1 shall be cumulative and not exclusive, and
shall be in addition to any other remedies which the parties may have.
11.2 Each party confirms to each other party that, for the purposes of entering
into the transactions contemplated by this Agreement:
(a) it has entered into such transactions entirely on the basis of its own
assessment of the risks and effect thereof;
(b) save as expressly set out in this Agreement is owed no duty of care or
other obligation by any other party in respect thereof; and
(c) in so far as it is owed any such duty or obligation as referred to in
subparagraph (b) above (whether in contract, tort or otherwise) (save
as expressly set out in this Agreement) by such other party it hereby
waives, to the extent permitted by law, any rights which it may have
in respect of such duty or obligation.
<PAGE>
12. TERM
12.1 Term
This Agreement shall continue in force until the date on which only one
Shareholder remains as a party to this Agreement (in accordance with clause
12.2).
12.2 This Agreement shall cease and determine in respect of a Shareholder, upon
that Shareholder ceasing to be Qualified. Upon TdF ceasing to be Qualified
after the TDF Rollup, TdF shall transfer its remaining Ordinary Share to
CCIC at par value and shall (a) deliver to CCIC a duly executed transfer in
respect thereof and the share certificate therefor and (b) shall cause the
directors nominated by TdF to resign without compensation.
12.3 Certain Rights and Obligations to Survive
Termination of this Agreement shall in no way affect the operation of
clauses 10, 11, 14, 20, 21, 22, 23, 25, 26, 27 and 28 or any rights of any
Shareholder arising from any happening or event prior to the date of
termination of this Agreement and any cause of action accruing prior to
that date shall survive and be disposed of as though the provisions of this
Agreement continued in full force and effect.
13. WARRANTIES
Each party warrants to the other parties as follows:
(a) Power to Enter into Agreement: It has the legal right and power to
enter into this Agreement and to consummate the transactions
contemplated hereby on and subject to the terms and conditions of this
Agreement, and the execution, delivery and performance of this
Agreement by it has been duly and validly authorised and this
Agreement is a valid and binding agreement enforceable in accordance
with its terms.
(b) No Further Authorisation: No further authorisation, consent or
approval of any person is required by or in relation to it as a
condition to the validity of this Agreement or to give effect to the
transactions contemplated hereby.
14. CONFIDENTIALITY
14.1 Confidentiality
Subject as provided in clause 14.4 below, all matters relating to this
Agreement and the negotiations relating to this Agreement and all
information acquired or received by any party under or in connection with
this Agreement shall be held confidential during the continuance of this
Agreement, and each party agrees that it shall not divulge any such
confidential information to any third party, without the prior written
approval of all other Shareholders provided that any party may, without
such approval, disclose such matters or information:
(a) Assignees: to a bona fide intending assignee of such party upon
obtaining a similar undertaking of confidentiality from such intending
assignee;
<PAGE>
(b) Professionals: to any outside professional consultants upon obtaining
a similar undertaking of confidentiality from such consultants;
(c) Banks etc.: to any bank or financial institution from whom such party
is seeking to obtain finance, upon obtaining a similar undertaking of
confidentiality from such bank or institution;
(d) Public Domain: to the extent that the same has become generally
available to the public other than as a result of unauthorised
disclosure by a party;
(e) Partners: in the case of a Shareholder which is a partnership, to the
Shareholder's constituent partners; and
(f) Law/Listing Regulations: to persons or the general public if
disclosure to such persons or the general public is required to comply
with any applicable law or regulation of any country or the rules or
regulations of the London Stock Exchange or any other exchange or
market on which securities of a Shareholder or the parent corporation
of a Shareholder are quoted, provided that any such information
disclosed pursuant to this paragraph (f) shall be disclosed only after
consultation with the other parties unless such consultation is
prohibited or the time limits within which such disclosure must be
made are such that consultation is impracticable.
14.2 Employees etc.
Each party shall use its reasonable endeavours to ensure that those of its
employees, agents, contractors and partners who are at any time in
possession of confidential information of a kind referred to in clause 16.1
and the employees, agents and contractors of the Company and each of the
Subsidiaries do not disclose or suffer or permit the disclosure of the
same.
14.3 The Company's Confidentiality Obligation
The Company shall (and the Company shall procure that each of the
Subsidiaries shall) observe a similar obligation of confidence in favour of
each of the parties to this Agreement.
14.4 Any Shareholder may communicate any information received by it pursuant to
this Agreement, and the Director nominated by it pursuant to clause 3.3(c)
may communicate any information received by him pursuant to this Agreement
or otherwise in his capacity as director of the Company, to that
Shareholder. Any Shareholder may communicate any such information (other
than information which relates to the business or affairs of a Shareholder
or its Affiliates) to any company which is its subsidiary or holding
company or a subsidiary of its ultimate holding company or to its manager
or investment or other professional adviser or any person or persons on
behalf of whom it holds Company Shares subject to the obligations set out
in clause 14.2; provided that nothing in this Agreement shall require such
disclosure unless the Director's fiduciary duty to the Company or any of
its Subsidiaries would be breached as a result.
15. PUBLIC ANNOUNCEMENTS
No party shall issue or make any public announcements or statement
regarding this Agreement, the Company's or any Subsidiary's Business or its
involvement in the Company or with any Subsidiary unless prior thereto such
party furnishes all Shareholders with a copy
<PAGE>
of such announcement or statement and obtains the approval of the other
Shareholders which approval shall not be unreasonably withheld provided
that, notwithstanding any failure to obtain approval, no party shall be
prohibited from issuing or making any such public announcement or statement
if it is necessary to do so in order to comply with any applicable law or
regulation of any country or the rules or regulations of the London Stock
Exchange or any other exchange or market on which securities of a party are
quoted, it being recognised, however that the parties will endeavour to
ensure that any such public announcements or statements are made
contemporaneously.
16. FURTHER ASSURANCES
The parties shall each execute and deliver such further and other documents
and instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.
17. OTHER AGREEMENTS AMONG SHAREHOLDERS
17.1 No Existing Agreements
Each of the Shareholders represents and warrants that as of the execution
of this Agreement it is not party to any written or other enforceable
agreement with any other Shareholder with respect to the subject matter of
this Agreement, except for this Agreement.
17.2 Disclosure of Future Agreements
Each of the Shareholders agrees that it will not enter into any written or
other enforceable agreement with any other Shareholder with respect to the
subject matter of this Agreement without first obtaining the prior written
approval of all of the Shareholders.
17.3 Competitive Bidding
Each of the Shareholders agrees that if it or any of its Affiliates bids or
intends to bid for any contract or project in competition with the Company
or CTI, then:
(a) it will promptly disclose that fact to the other Shareholders; and
(b) the Company, CTI and the other Shareholders will be entitled to
withhold from that Shareholder and its Group and its nominated
Director any confidential information relating to the proposed bid for
that contract or project by the Company or CTI.
17.4 Conflicts involving a Shareholder
Each Shareholder agrees that neither it, any of its Affiliates, any of its
Permitted Transferees nor its nominated Director will be entitled to
participate in decisions (but shall be entitled to participate in
discussions) of the Directors of the Company or any Subsidiary involving:
(a) any claim or prospective legal proceedings by the Company or any
Subsidiary against that Shareholder or any of its Affiliates;
(b) any claim or prospective legal proceedings by that Shareholder or any
of its Affiliates against the Company or any Subsidiary;
<PAGE>
(c) any bid by the Company or any Subsidiary for any contract or project
in respect of which that Shareholder or any of its Affiliates intends
to bid in competition with the Company or any Subsidiary; and
(d) any transaction or proposed transaction between the Company or a
Subsidiary and a Shareholder or an Affiliate of a Shareholder.
In relation to any of the circumstances set out in clause 17.4(a), (b), (c)
or (d), the Company, any Subsidiary and the other Shareholders shall be
entitled to withhold from that Shareholder and its Group and its nominated
Director any confidential information relating thereto.
18. SUBSIDIARIES TO ACKNOWLEDGE AGREEMENT
The Shareholders (in their capacity as shareholders of the Company) and the
Company will procure Subsidiaries to acknowledge the provisions hereof and
to agree to be bound by the same to the extent applicable, by execution of
deeds of adherence in a form approved by resolution of the Directors of the
Company.
19. COMPLIANCE BY THE COMPANY AND SUBSIDIARIES
The Shareholders each undertake (in their capacity as Shareholders) to:
(a) Exercise Voting Rights: exercise the voting rights attributable to
the Company Shares which they hold; and
(b) Cause Directors to Vote: cause the Directors of the Company and the
directors of each of the Subsidiaries nominated by them respectively
to vote,
to ensure that the Company and each of the Subsidiaries operate in
accordance with the provisions of this Agreement and the Finance Documents
and so as to give full effect to the terms of this Agreement and the
Finance Documents.
20. MODIFICATION
No purported variation of this Agreement shall be effective unless made in
writing and agreed by all the Shareholders.
21. EFFECT OF WAIVER
No waiver by any party of any default in the strict and literal performance
or compliance with any provision, condition or requirement herein shall be
deemed to be a waiver of strict and literal performance of and compliance
with any other provision, condition or requirement herein nor to be a
waiver of or in any manner release any other party from strict compliance
with any provision, condition or requirement in the future. Nor shall any
delay or omission by any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to such party
thereafter. Except when otherwise expressly stated therein, no remedy
expressly granted herein to any party shall exclude or be deemed to exclude
any other remedy which would otherwise be available.
<PAGE>
22. PARTIAL INVALIDITY
If any of the provisions of this Agreement is or becomes invalid, illegal
or unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired. The parties shall
nevertheless negotiate in good faith in order to agree the terms of a
mutually satisfactory provision, achieving as nearly as possible the same
commercial effect to be substituted for the provision so found to be void
or unenforceable.
23. IMPLIED RELATIONSHIPS
Nothing contained in this Agreement shall be deemed or constituted to
constitute any party a partner, agent or representative of any other party
or to create any trust or partnership. No party shall have the authority
to act for or to incur any obligation on behalf of any other party except
as expressly provided in this Agreement.
24. COSTS
Save as provided in the Share Exchange Agreement, all costs incurred by any
party in connection with this Agreement shall be borne by that party.
25. AGREEMENT TO TAKE PRIORITY
In the event of any conflict between the provisions of this Agreement and,
as the case may be, the provisions of the Company's Constitution or the
memorandum and articles of association of any Subsidiary, the provisions of
this Agreement shall take priority and apply to the exclusion of the
relevant provisions of the Company's Constitution or the memorandum and
articles of association of any Subsidiary, as the case may be. The parties
shall exercise all voting and other rights and powers available to them so
as to give effect to the provisions of this Agreement and shall also (if
necessary) procure any required amendment to the Company's Constitution or
the memorandum and articles of association of any Subsidiary as may be
necessary. The parties agree that the rights of CCIC and TdF under this
Agreement, the Governance Agreement and the Stockholders Agreement are
separate, cumulative rights independent of one another.
26. ENTIRE AGREEMENT
This Agreement (together with the Transaction Documents (as defined in the
Share Exchange Agreement), the Financing Documents, the Services Agreement
and the Operating Agreement) set out the entire agreement and understanding
between the parties with respect to the subject matter hereof and
supersedes any prior communication or correspondence with respect to the
subject matter hereof. It is agreed that:
(a) no party has entered into this Agreement in reliance upon any
representation, warranty or undertaking of any other party which is
not expressly set out or referred to in this Agreement;
(b) no party shall have any remedy in respect of misrepresentation or
untrue statement made by any other party unless and to the extent that
a claim lies for breach of warranty under this Agreement;
(c) this clause shall not exclude any liability for fraudulent
misrepresentation.
<PAGE>
27. GOVERNING LAW AND JURISDICTION
27.1 This Agreement shall be governed by and construed and interpreted in
accordance with the laws of England.
27.2 Each of the Shareholders (for itself and on behalf of its respective
holding and subsidiary companies and the directors, employees and agents of
each of them) agrees that the English Courts shall have exclusive
jurisdiction to hear and decide any and all claims, disputes, complaints,
actions or proceedings ("Claims or Proceedings"), whether in contract or
tort, which may arise at any time out of or in connection with any of the
matters referred to in this Agreement, including, but not limited to, any
Claim or Proceeding asserting dishonesty, improper or illegal conduct or
breach of trust or duty or based on the effects of any of those matters in
any jurisdiction and any Claim or Proceedings which may be material to any
of the Shareholders but of which any of the Shareholders is unaware or does
not suspect exists and for this purpose each of the Shareholders
irrevocably submits to the exclusive jurisdiction of the English Courts.
27.3 CCIC hereby irrevocably authorises and appoints Norose Notices Limited
(AMC/99/Z865000) (for the attention of the Director of Administration) at
the address of its registered office for the time being or such other
person resident in England as it may by notice to all other parties
substitute) to accept service of all legal process arising out of or
connected with this Agreement and service on Norose Notices Limited (or
such substitute) shall be deemed to be service on the party concerned.
27.4 TdF hereby irrevocably authorises and appoints Fleetside Legal
Representative Services Limited (for the attention of Denis Stewart) at the
address of its registered office for the time being (or such other person
resident in England as it may by notice to all other parties substitute) to
accept service of all legal process arising out of or connected with this
Agreement and service on Fleetside Legal Representative Services Limited
(or such substitute) shall be deemed to be service on the party concerned.
28. NOTICES
All notices and other communications required or permitted under this
Agreement shall be in writing and shall be delivered personally, sent by
air courier (in the case of notices given by a party in one jurisdiction to
a party in another), first class pre-paid post (in the case of a notices
given by a party in one jurisdiction to a party in the same jurisdiction),
telexed or sent by facsimile transmission (and promptly confirmed by air
courier service in the case of notices sent from one jurisdiction to
another and by first class pre-paid post in the case of notices sent by a
party in one jurisdiction to another party in the same jurisdiction). Any
such notice shall be deemed given when so delivered personally, telexed or
sent by facsimile transmission or air courier or first class pre-paid post
to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
<PAGE>
CCIC: if to CCIC, to:
Crown Castle International Corp.
510 Bering Drive
Suite 500
Houston
Texas TX 77057
Attention: President
Fax 001 713 570 3150
With a copy to:
Norton Rose
Kempson House
Camomile Street
London EC3A 7AN
Attention: Alan Crookes
Fax: 0171 283 6500
TdF: if to TdF, to:
TeleDiffusion de France International, S.A.
10 rue d'Oradour-sur-Glane
Paris Cedex 15
75732 France
Attention: Michel Azibert
Fax: 00 331 5595 2066
With a copy to:
Allen & Overy
One New Change
London EC4M 9QQ
Attention: Michael Scargill
Fax: 0171 330 9999
the Company: if to the Company, to:
the Company at its registered office
Attention: Managing Director
29. RESTRICTIONS IN THE AGREEMENT
Notwithstanding any other provision of this Agreement (or any other
agreement which, together with this Agreement, may form part of an
agreement for the purposes of the Restrictive Trade Practices Act 1976
(together the "RTPA Agreement")) the parties hereto
<PAGE>
agree that they will not give effect, and will procure that none of their
subsidiaries shall give effect, to any restriction or restrictions
contained in the RTPA Agreement which cause the RTPA Agreement to be
registrable under the Restrictive Trade Practices Act 1976 until one day
after particulars of the RTPA Agreement shall have been furnished to the
Director General of Fair Trading.
30. COUNTERPARTS
This Agreement may, be executed in any number of counterparts with the same
effect as if the signatures to each such counterpart were upon the same
instrument.
IN WITNESS of which this Agreement has been executed.
<PAGE>
SCHEDULE 1
DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made on 199
BETWEEN:
[insert name of New Shareholder] of [insert name of company] (the "New
Shareholder") in favour of the persons whose names are set out in the schedule
to this deed and is supplemental to the Shareholders' Agreement dated ,
199 between and others (the "Agreement").
THE PARTIES AGREE AS FOLLOWS:
1. The New Shareholder confirms that it has read a copy of the Agreement and
covenants with each person named in the schedule to this deed to perform
and be bound by all the terms of the Agreement as if the New Shareholder
were named in the Agreement as [CCIC/TdF] and there shall be substituted
for all references in the Agreement to [CCIC/TdF] references to the New
Shareholder.
2. This deed is governed by English law.
3. [Include jurisdiction clause and agent for service clause in appropriate
circumstances.]
IN WITNESS whereof this deed has been executed by the New Shareholder and is
intended to be and is hereby delivered on the date first above written.
<PAGE>
SCHEDULE 2
CONDITIONS PRECEDENT
TO PUT AND CALL RIGHTS
1. The delivery of all notices required by law or regulation in relation to
the transaction and the expiry of all waiting or notice periods in relation
to such notices;
2. The receipt of all governmental and other regulatory consents or
notifications required in relation to the transaction, including, without
limitation, where the grant or the exercise of any of the rights under
clause 9 requires a notification to be made to the European Commission
under the Merger Regulation (4064/89, as amended):
(a) the European Commission issuing a Phase I decision under Article
6(1)(a) or Article 6(1)(b) of the Merger Regulation and not making a
decision under Article 9(1) thereof; or
(b) in respect of the United Kingdom, as follows:
(i) the Office of Fair Trading indicating in terms satisfactory to
the parties, that it is not the intention of the Secretary of
State to refer the acquisition of the shares to the UK Monopolies
and Mergers Commission ("MMC") pursuant to the Fair Trading Act
1973; or
(ii) the Secretary of State accepting undertakings from the buyer of
the shares in lieu of a reference of the said acquisition to the
MMC as aforesaid;
3. The prior written consent of the BBC to the extent required in relation to
the transaction under or otherwise necessary to prevent triggering a right
of the BBC to terminate any of the Analogue Transmission Contract, the
Digital Transmission Contract, the Commitment Agreement pursuant to the
terms thereof and any other agreement containing substantially similar
restrictions and any agreement amending or replacing the same; and
4. The receipt of any consent required under the Finance Documents in relation
to the transaction or any agreement (whether or not with the same banks)
amending, replacing or refinancing (in whole or in part) the same or any
other agreement providing finance to the CTSH Group.
<PAGE>
SIGNED for and on behalf of )
CROWN CASTLE INTERNATIONAL )
CORP. ) /s/ Kathy Broussard
By )
in the presence of: )
SIGNED for and on behalf of )
TELEDIFFUSION DE FRANCE )
INTERNATIONAL S.A. ) /s/ M. Azibert
By )
in the presence of: )
SIGNED for and on behalf of )
CASTLE TRANSMISSION SERVICES )
(HOLDINGS) LIMITED ) /s/ George Reese
By )
in the presence of: )
<PAGE>
EXHIBIT 10.40
DATED August, 1998
CASTLE TRANSMISSION INTERNATIONAL LIMITED
and
TELEDIFFUSION DE FRANCE S.A.
---------------------------
AMENDED AND RESTATED
SERVICES AGREEMENT
---------------------------
ALLEN & OVERY
London
C2:209768.4
<PAGE>
THIS AMENDED AND RESTATED SERVICES AGREEMENT is dated August, 1998 and is made
BETWEEN:
(1) CASTLE TRANSMISSION INTERNATIONAL LIMITED (No. 3196207) whose registered
office is at Warwick Technology Park, Gallows Hill, Heathcote Lane, Warwick
CV34 6TN (the "Company"); and
(2) TELEDIFFUSION DE FRANCE S.A. of 10 rue d'Oradour sur Glane, 75015 Paris,
France (the "Contractor").
WHEREAS:
(A) The parties hereto entered into a services agreement dated 28th February,
1997 (the "Original Services Agreement"). The parties have agreed to amend
and restate such agreement on the terms set out in this Agreement.
(B) This Agreement sets out the terms on which the Contractor has agreed to
provide certain services to the Company.
(C) Without limiting the rights of the Company under this Agreement, it is the
current intention of the parties hereto that this Agreement shall continue
for a period of seven years, which period shall be deemed to have begun on
the Commencement Date (as defined below).
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
In this Agreement, unless the context otherwise requires:
"Applicable Rates" means normal commercial arm's length rates as agreed
between the Contractor and the Company from time to time for the provision
of any of the services under this Agreement;
"CCIC" means Crown Castle International Corp.;
"CCIC Group" means CCIC and its subsidiaries (other than members of the CTI
Group);
"Commencement Date" means 28th February, 1997;
"Committed Services" means services falling within the scope of the
categories of services listed in paragraph 1(b) of Part A of the Schedule;
"Company Default" means any material or persistent breach or persistent
non-performance by the Company of its obligations under this Agreement
which, if capable of remedy, is not remedied within 45 days after receiving
written notice from the Contractor requiring the Company so to do;
"Contract Year" means the period of 12 months commencing on the
Commencement Date and each successive period of 12 months thereafter;
<PAGE>
"Contractor Default" means any material or persistent breach or persistent
non-performance by the Contractor of the terms on which the Contractor is
to provide the services pursuant to the provisions of this Agreement which,
if capable of remedy, is not remedied within 45 days after receiving
written notice from the Company requiring the Contractor so to do;
"Contractor's Materials" means any property of the Contractor (other than
the New Material) including without limitation any know how, materials,
products and methodologies proprietary to the Contractor;
"CTI Group" means Castle Transmission Services Holdings Limited and its
subsidiaries (including the Company);
"group" means, in relation to a company, its subsidiaries, holding
companies and any subsidiaries of any such holding companies ("holding
companies" and "subsidiary" having ascribed thereto the meanings
respectively attributed to them by section 736 Companies Act 1985 (as
amended));
"Initial Period" means the period commencing on the Commencement Date and
ending on the sixth anniversary of the Commencement Date;
"International Business Opportunities" means business within a Permitted
Business Line undertaken and developed by members of the CCIC Group
anywhere in the world except the United Kingdom;
"Material Default" means, in relation to a party to this Agreement, that:
(a) it becomes unlawful for that party to perform its obligations pursuant
to and in accordance with the provisions of this Agreement;
(b) that party takes any action or legal proceedings are commenced for a
general reconstruction or rescheduling of its debts (or its equivalent
in the jurisdiction of incorporation of that party) or for its winding
up or dissolution;
(c) a liquidator, receiver or an administrative receiver or similar is
appointed over the assets of or a petition is granted for an
administration order (or its equivalent in the jurisdiction and
incorporation of that party) in respect of that party;
"New Material" means any works and materials to the extent created,
developed, written or prepared by the Contractor solely in relation to the
Services;
"Permitted Business Line" means (i) the ownership, operation or management
(for third party owners or otherwise) of terrestrial wireless communication
(including, without limitation, voice, data and video) infrastructure
(including equipment and facilities principally related thereto) and (ii)
the provision of infrastructure services principally related thereto,
including but not limited to network transmission and services (it being
understood for the avoidance of doubt that the transmission of radio and
television broadcasting shall be within the foregoing definition);
"Yearly Fee" means the sum determined in accordance with Clause 3(1) to
this Agreement (subject to adjustment for the sixth and subsequent Contract
Years by agreement between the
<PAGE>
parties) to be paid by the Company to the Contractor in respect of
Committed Services provided in the relevant Contract Year.
2. APPOINTMENT
(1) The Contractor agrees to provide the Committed Services to the Company as
may reasonably be required by the Company from time to time.
(2) Without limiting the generality of subclause 2(1), the Contractor agrees to
provide such additional services of the type described in paragraph 2 of
Part A of the Schedule to this Agreement as the Company may reasonably
request. Such additional services shall be provided on substantially the
same commercial terms as the Committed Services other than as to the Yearly
Fee. The fees for such additional services shall be determined in
accordance with normal commercial arm's length terms and shall be in
addition to the Yearly Fee.
(3) Without limiting the generality of subclause 2(1), the parties acknowledge
that the Company may request the Contractor to provide services relating to
training and research and development as described in Part B of the
Schedule to this Agreement on a contract basis on commercial arm's length
terms and conditions(including as to fees) to be separately agreed and the
parties shall negotiate in good faith with a view to agreeing such terms
and conditions as soon as practicable after the date of such request by the
Company. The fees for such services shall be in addition to the Yearly
Fee.
(4) The parties acknowledge that the Company may request the Contractor to
provide some or all of the Committed Services, additional services of the
type described in paragraph 2 of Part A of the Schedule (as referred to in
subclause 2(2)) and services relating to training and research and
development as described in Part B of the Schedule (as referred to in
subclause 2(3)), on its behalf to members of the CCIC Group in relation to
International Business Opportunities. The terms and conditions of any such
services, provided in relation to International Business Opportunities,
shall be negotiated in accordance with the provisions of subclauses 2(2)
and 2(3), as applicable, as soon as practicable after the date they are
requested by the Company. The fees for any Committed Services provided in
relation to International Business Opportunities to the Company, under this
subclause 2(4) ,shall be included in, and shall form part of the
calculation of, the Yearly Fee. The fees for any other services provided
to the Company in relation to International Business Opportunities shall be
in addition to the Yearly Fee.
3. FEES AND EXPENSES
(1) In consideration of the agreement of the Contractor to provide the
Committed Services the Company shall (subject to subclause 6(1)) pay to the
Contractor the Yearly Fee (together with value added tax thereon, if
applicable). The Yearly Fee in respect of Committed Services provided in
the relevant Contract Year shall be whichever is the greater of (i)
(Pounds)400,000 and (ii) a sum in pounds sterling equal to the product of
the number of man hours worked by the Contractor's personnel referred to in
paragraph 1(a) of Part A of the Schedule to this Agreement multiplied by
the Applicable Rates.
(2) The Company agrees to reimburse the Contractor for all reasonable out-of-
pocket expenses (together with any value added tax thereon) incurred by it
or its employees in connection with the provision of the Committed Services
(including any Committed Services provided
<PAGE>
under subclause 2(4)) and any additional services to be provided pursuant
to subclauses 2(2), 2(3) and 2(4). Such out-of-pocket expenses shall be
payable by the Company within 30 days after receipt by the Company of the
Contractor's invoice in respect of the same.
(3) The Yearly Fee shall be payable in such manner and at such times as the
parties may agree and, in the absence of agreement, shall be paid in 12
equal instalments monthly in arrears.
(4) Any instalment of the Yearly Fee and any amount in respect of the
Contractor's reasonable out-of-pocket expenses which is not paid on its due
date shall bear interest at 2 per cent. per annum above the base rate of
Barclays Bank PLC from time to time from the due date for payment until
payment is actually made.
(5) If this Agreement shall, in accordance with its terms, terminate other than
on the last day of a Contract Year, the Yearly Fee payable in respect of
that year shall be apportioned on a time apportionment basis.
(6) For the avoidance of doubt, the Contractor shall not be obliged to supply
and the Company shall not be obliged to accept Committed Services over and
above the level contemplated in paragraph 1(a) of Part A of the Schedule to
this Agreement. Any additional services shall be provided by agreement
between the Contractor and the Company on a contract by contract basis in
accordance with normal commercial arm's length terms .
4. OTHER OBLIGATIONS
(1) The Contractor shall provide the Committed Services and any additional
services using reasonable skill and care and reasonably promptly and to a
standard which might reasonably be expected of a person providing services
of the type which the Contractor is obliged to provide pursuant to the
provisions of this Agreement.
(2) The Company and the Contractor shall liaise together with a view to
agreeing a rolling schedule of future Committed Services which are likely
to be required by the Company either pursuant to subclauses 2(1) or 2(4).
(3) The Contractor shall in no circumstances be liable for indirect or
consequential loss (including loss of profits) deriving from the provision
or failure to provide any Committed Services or any additional services to
the Company.
(4) The Company acknowledges that the Contractor's Materials shall remain the
property of the Contractor and that, save as provided in Clause 4(5), the
Company shall not acquire any rights or interest in the Contractor's
Materials under this Agreement.
(5) The parties agree that any intellectual property which is created solely by
reason of the provision of the Committed Services shall either belong to
the Company or shall be licensed on a non-exclusive basis to the Company on
a royalty-free basis.
5. ANNUAL REVIEW
Not later than three months before the end of the fifth and each subsequent
Contract Year, the parties shall discuss in good faith the extent and
quality of the Committed Services provided during that Contract Year, the
extent to which the Yearly Fee for that Contract Year
<PAGE>
represents a fair and equitable fee for the provision of those Committed
Services and the extent to which the Yearly Fee would represent a fair and
equitable fee for the provision of those Committed Services which are then
forecast to be required by the Company during the Contract Year next
following, all with a view to agreeing a mutually acceptable Yearly Fee for
the Contract Year next following (but on the basis that the Yearly Fee
shall not be reduced unless any such reduction is justifiable on objective
grounds).
6. TERM AND TERMINATION
(1) Subject to the rights of the Company and the Contractor under the remaining
provisions of this Clause 6, this Agreement shall continue for the Initial
Period and thereafter may be terminated by the Company or the Contractor at
any time by giving twelve months notice in writing to the other party to
expire at the end of the seventh Contract Year or any anniversary thereof
save that the Company agrees that (subject to and without limiting its
rights under the remaining provisions of this Clause 6), it shall not give
notice to terminate this Agreement under this subclause 6(1) unless the
directors for the time being of the Company shall in good faith determine
that the Committed Services provided by the Contractor are not required or
are not value-enhancing or that they cease to be commercially acceptable or
cost effective for the Company.
(2) The Company shall be entitled at any time after the date of this Agreement
and by giving notice in writing to the Contractor to terminate this
Agreement with six months notice for Contractor Default.
(3) Either party shall be entitled by giving notice to the other to terminate
this Agreement with immediate effect if that other party is in Material
Default.
(4) The Contractor shall be entitled at any time after the date of this
Agreement and by giving notice in writing to the Company to terminate this
Agreement with six months' notice for Company Default.
(5) Any termination by either party of or the exercise by either party of its
rights to terminate the provisions of this Agreement in accordance with
this Clause 6 shall be without payment of compensation or damages
whatsoever to the defaulting party (but without prejudice to any sums due
and payable under the terms of this Agreement for Committed Services or
additional services already provided by the Contractor in accordance with
the terms of this Agreement).
(6) It is hereby acknowledged by the parties hereto that the Contractor shall
be given notification of any further services required by the Company from
time to time where the services required are of a type which, in the
opinion of the Company acting in good faith, the Contractor has the know-
how to so provide so as to give the Contractor the opportunity to tender.
The Company shall, in good faith, consider any application to tender for
services made by the Contractor in these circumstances and, in the event
that such tender is unsuccessful, shall provide the Contractor with a full
explanation of the reasons therefor.
(7) No director nominated by the Contractor or any company in its Group nor
shall the Contractor or any company in its Group be entitled to participate
in any decision of the Directors of the Company which is expressed in this
Agreement as being a decision to be made by the Company (provided however
that the Contractor shall be entitled to participate
<PAGE>
in any discussions leading up to such decisions). For the avoidance of
doubt, notwithstanding the provisions of this Clause 6(7), the Director
nominated by the Contractor or any member of its Group shall be entitled to
participate in any decision of the Directors of the Company regarding the
nature and level of services to be provided to the Company generally and
not specifically in relation to this Agreement to the extent to which it
otherwise has such rights.
7. ASSIGNMENT AND SUB-CONTRACTING
(1) Neither party may assign any of its rights under this Agreement without the
consent of the other, such consent not to be unreasonably withheld.
(2) The Contractor may not sub-contract or delegate the performance of its
obligations under this Agreement (save to a company which is a subsidiary
or holding company of the Contractor, or which is a subsidiary of' any such
holding company).
8. NOTICE
All notices and other communications required or permitted under this
Agreement shall be in writing and shall be delivered personally, sent by
air courier (in the case of' notices given by a party in one jurisdiction
to a party in another), first class pre-paid post (in the case of a notice
given by a party in one jurisdiction to a party in the same jurisdiction),
telexed or sent by facsimile transmission (and promptly confirmed by air
courier service in the case of notices sent from one jurisdiction to
another and by first class pre-paid post in the case of notices sent by a
party in one jurisdiction to another party in the same jurisdiction). Any
such notice shall be deemed given when so delivered personally, telexed or
sent by facsimile transmission or air courier or first class pre-paid post
to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
the Company: if to the Company, to:
the Company at its registered office for the time being
Attention: the Managing Director
the Contractor: if to the Contractor, to:
TeleDiffusion de France S.A.
10 rue d'Oradour sur Glane
75015
Paris
France
Attn: Michael Azibert
Fax: 331 5595 2066
9. CONFIDENTIALITY
(1) All information given by the Company to the Contractor or otherwise
obtained by the Contractor relating to the business or operations of the
Company or of any person, firm, company or organisation associated with the
Company including, without limitation, the names and other particulars of
the Company's customers or clients (except for information
<PAGE>
which is in or enters the public domain other than by breach of this Clause
9(1)) will be treated by the Contractor, its employees, agents and sub-
contractors as confidential and not used other than for the benefit of the
Company nor disclosed to third parties without the prior written consent of
the Company.
(2) All information given by the Contractor to the Company or otherwise
obtained by the Company relating to the business or operations of the
Contractor or of any person, firm, company or organisation associated with
the Contractor (other than information which is supplied in the provision
of the Committed Services and any additional services) including, without
limitation, the names and other particulars of the Contractor's customers
or clients (except for information which is in or enters the public domain
other than by breach of this Clause 9(2)) will be treated by the Company,
its employees, agents and sub-contractors as confidential and not used
other than for the benefit of the Contractor nor disclosed to third parties
without the prior written consent of the Contractor.
(3) The foregoing obligations as to confidentiality shall remain in full force
and effect notwithstanding any termination of this Agreement.
10. FORCE MAJEURE
Neither party will be liable to the other for any loss or damage suffered
as a direct or indirect result of any failure to provide any of the
Committed Services or any additional services or to perform or observe any
other obligation in this Agreement as a result of the occurrence of any of
the following: act of God, governmental act, war, fire, flood, explosion
and commotion or industrial dispute of a third party which prevents or
substantially hinders such performance and observance; provided that in the
event of any such circumstances arising the non-performing party shall as
soon as practical give notice thereof in writing to the other party with
reasonable details of' the nature of the particular circumstances and the
anticipated duration of suspension or other inhibition on performance and
shall further notify the other party on the cessation of any such
circumstances as are described in this Clause 10.
11. SECONDMENT
The provision of Committed Services or any additional services under this
Agreement may include the provision of services of an employee of the
Contractor made available on a full or part time basis to the Company by
means of secondment in which event the individual shall remain an employee
of the Contractor.
12. GENERAL
(1) Nothing in this Agreement shall be deemed to create a partnership or agency
relationship between the Company and the Contractor or be deemed to
authorise either party to incur any liabilities or obligations on behalf of
or in the name of the other.
(2) A waiver (whether express or implied) by one of the parties of any of the
provisions of this Agreement or of any breach of or default by the other
parry in performing any of those provisions shall not constitute a
continuing waiver and that waiver shall not prevent the waiving party from
subsequently enforcing any of the provisions of this Agreement not waived
or from acting on any subsequent breach of or default by the other party
under any of the provisions of this Agreement.
<PAGE>
(3) Any amendment, waiver or variation of this Agreement shall not be binding
on the parties unless set out in writing, expressed to amend this Agreement
and signed by or on behalf of each of the parties.
(4) The invalidity, illegality or unenforceability of any of the provisions of
this Agreement shall not affect the validity, legality and enforceability
of the remaining provisions of this Agreement.
(5) This Agreement supersedes in all respects the Original Services Agreement
which the parties agree shall be of no further force or effect except for
any liability arising before the date of this Agreement. For the avoidance
of doubt all services provided by the Contractor to the Company on and from
the date of this Agreement shall be provided on and subject to the terms of
this Agreement.
(6) This Agreement may, be executed in any number of counterparts with the same
effect as if the signatures to each such counterpart were upon the same
instrument.
13 GOVERNING LAW AND JURISDICTION
(1) This Agreement shall be governed by and construed and interpreted in
accordance with the laws of England.
(2) Each of the parties (for itself and on behalf of its respective holding and
subsidiary companies and the directors, employees and agents of each of
them) agrees that the English Courts shall have exclusive jurisdiction to
hear and decide any and all claims, disputes, complaints, actions or
proceedings ("Claims or Proceedings") whether in contract or tort, which
may arise at any time out of or in connection with any of the matters
referred to in this Agreement, including, but not limited to, any Claim or
Proceedings asserting dishonesty, improper or illegal conduct or breach of
trust or duty or based on the effects of any of those matters in any
jurisdiction and any Claim or Proceedings which may be material to either
of the parties but of which that party is unaware or does not suspect
exists and for this purpose each of the parties irrevocably submits to the
exclusive jurisdiction of the English Courts.
(3) The Contractor hereby irrevocably authorises and appoints Fleetside Legal
Representative Services Limited (for the attention of Denis Stewart) at its
registered office for the time being (or such other person resident in
England as the Contractor may by notice to all other parties substitute) to
accept service of all legal process arising out of or connected with this
Agreement and service on Fleetside Legal Representative Services Limited
(or such substitute) shall be deemed to be service on the party concerned.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
<PAGE>
Schedule
The Services
Part A
1. Transmission Operation
(a) The Contractor will commit on the availability of 10 engineers or
executives (7 "senior engineers" and 3 "experts" - the latter category
refers to executives occupying one of the top thirty positions in the
Contractor), such commitment to be for an average of a quarter of each
senior engineer or expert's working time, or 500 man-days per year
altogether.
(b) Committed Services from the Contractor to the Company will cover the
following range of skills:
- TV network planning and engineering (focus on digital networks),
including frequency planning, coverage prediction, network deployment.
- Radio network planning and engineering (focus on digital networks).
- Wireless communication network planning and engineering (focus on
digital networks)
- Technical and marketing (including pricing) support for launching new
services.
- Technical and commercial support for international projects (in relation
to International Business Opportunities).
- Other potential services include equipment expert evaluation, equipment
procurement (that captures economies of scale) and any technical
solutions and methodology capable of improving the Company's services.
- Spectrum and coverage planning for broadcasting and communications
systems (digital and analogue).
- Radio frequency environmental support.
The Contractor will (at no cost) provide a benchmark review of the Company,
including comparisons with the Contractor and other European transmission
companies.
2. Additional Services
Additional services (other than those set out in Part B) will be provided
by the Contractor on the basis set out in Clause 2(2). If needed, the
Contractor can further draw on expertise within the France Telecom Group to
provide the Company with advice and/or services such as conditional access
(CA), subscriber management systems (SMS) and electronic program guide
(EPG).
<PAGE>
Part B
1. Research and Development
Availability of research and development resources from the Contractor's
research centres: CCETT and TDF C2R The Contractor and the Company will
negotiate in good faith a Memorandum of Understanding defining the ways by
which the services are delivered to the Company and the Contractor's
remuneration.
Possible service areas, to be discussed with the Company, include:
- Digital terrestrial TV and radio, including digital MMDS.
- Additional services: traffic information and guidance, datacasting,
monitoring and remote management systems, Synchronous FM, multimedia
and interactive services.
2. Professional Training
Complementary training of the Company's employees in areas such as:
- Digital terrestrial TV and radio
- Cross-activity training: training of television technicians on
maintenance of radiocoms equipment (new standards and technologies)
- Sales and marketing
- In addition, the Contractor provides a proactive training methodology
based on anticipating and planning future development of the Company's
businesses. This allows the Contractor to define the skills that the
Company will require to remain competitive and the ways to foster
development of these skills throughout the organisation. The
Contractor will provide this methodology as well as its training
facilities to the Company in coordination with the Company's
management.
The Contractor and the Company will negotiate in good faith a Memorandum of
Understanding defining the ways by which the services are delivered to the
Company and the Contractor's remuneration.
3. Exchange of Middle Management/Engineers
In order to foster a cross-fertilisation approach between the Company and
the Contractor, the Contractor will use its best efforts to encourage the
exchange of middle management and engineers between both organisations.
<PAGE>
SIGNATORIES
SIGNED by )
George Reese )
for and on behalf ) /s/ Geroge Reese
of the Company ) .................................................
Duly authorised
SIGNED by )
M. Azibert )
for and on behalf ) /s/ M. Azibert
of the Contractor ) .................................................
Duly authorised
<PAGE>
EXHIBIT 10.43
Dated 1998
Castle Transmission Services (Holdings) Ltd.
- and -
Castle Transmission (Trustees) Limited
- -------------------------------------------------------------------------------
Employee Benefit Trust
- -------------------------------------------------------------------------------
KPMG
1 Puddle Dock
London EC4V 3PD
CAS4.DOC
<PAGE>
THIS TRUST DEED is made the day of 1998
BETWEEN:-
(1) Castle Transmission Services (Holdings) Limited whose registered office is
situate at Warwick Technology Park Gallows Hill Heathcote Lane Warwick CV34
6TN company number 3242381 ("the Company")
(2) Castle Transmission (Trustees) Limited whose registered office is situated
at Warwick Technology Park Gallows Hill Heathcote Lane Warwick CV34 6TN
company number 3507483 ("the Original Trustee")
WHEREAS:-
(A) The Company wishes to establish an employee share ownership trust to
encourage and facilitate the holding of Shares by or for the benefit of
Employees
(B) The Group Companies intend to make cash contributions and/or loans and/or
act as guarantor for loans made to the Trustees for the above purpose to be
held in accordance with the terms of the Trust
(C) It is intended that the Trustees will inter alia make awards pursuant to
any Scheme and/or transfer Shares pursuant to any such Scheme
(D) It is intended the Trust will be irrevocable and will be an "employees'
share scheme" as defined in section 743 of the Companies Act 1985 and that
section 75(6)(d) of the Financial Services Act 1986 and Section 86 of the
Act will apply to the Trust
(E) The Original Trustee is a Group Company
NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows:
1(a) In this Deed unless the context otherwise requires the following
expressions have the following meanings respectively:
"the Act" means the Inheritance Tax Act 1984;
"Beneficiaries" means Employees and former Employees and their
Dependants;
"The Bonus Share Plan" means the Castle Transmission Services
(Holdings) Ltd Bonus Share Plan;
"Close Company" means a company within the meaning of the Income
and Corporation Taxes Act 1988 which is (or
would be if resident in the United Kingdom) a
close company for the purposes of that Act;
"Dependants" means wives, husbands, widows, widowers and
children or step-children under the age of 18;
"Directors" means the board of directors of the Company;
"Employees" means employees and executive directors of any
Group Company;
"Group Company" means the Company and any company which is its
subsidiary, its holding company or a subsidiary
of its holding company. The definitions in
section 736 of the Companies Act 1985 (as
amended) apply for this purpose;
"Scheme" means any employees' share scheme (as defined by
section 743 of the Companies Act 1985)
<PAGE>
which any Group Company may from time to time
establish and includes, where the context
permits or requires the Bonus Share Plan;
"Shares" means shares or debentures in any Group Company;
"Trust" means the trust constituted by this document;
"Trustees" means the Original Trustees or other the trustee
or trustees for the time being of the Trust;
"Vesting Day" means the earlier of:
(i) the expiry of the period of 80 years less
one day from the date hereof (the period of
80 years being the perpetuity period
applicable for the purposes of the
Perpetuities and Accumulations Act 1964 to
the dispositions made by or pursuant to this
deed); and
(ii) such date as the Company appoints in writing
(which date shall not be earlier than the
date of such appointment);
(b) In this Trust, except insofar as the context otherwise requires:
(i) words denoting the singular shall include the plural and vice versa;
(ii) words importing a gender shall include every gender and
references to a person shall include bodies corporate and
unincorporated and vice versa;
(iii) reference to any enactment shall be constructed as a
reference to that enactment as from time to time amended, modified,
extended or re-enacted and shall include any orders, regulations,
instruments or other subordinate legislation made under the relevant
enactment.
2 The Trust is made for the above purpose for the benefit of the
Beneficiaries and shall be known as "The Castle Transmission Services
(Holdings) Employee Benefit Trust".
3(a) The Trustees shall hold the sum of (Pounds)100 transferred by the Company
to the Trustees on the date hereof (the receipt whereof the Trustees hereby
acknowledge) and all such further sums or property transferred to them to
be held upon the trusts of this deed and all accretions thereto whether by
way of accumulation of income or otherwise and all money and property from
time to time representing any of the foregoing ("the Trust Fund") upon
trust to invest so much thereof as consists of money in any investment or
asset authorised by this deed or by law and as to any part thereof not
consisting of money upon trust to sell the same with power in the Trustees'
absolute discretion to postpone sale and upon trust to reinvest the
proceeds of sale in any such authorised investment or asset with like power
to sell vary transpose or exchange the same until the Vesting Day.
(b) The Trustees shall divide the Trust Fund into sub-funds so that all assets
or sums contributed by any one Group Company and all income (if any) or
other assets derived therefrom shall be allocated to a single sub-fund
comprising only assets representing the contributions made by that same
Group Company and the Beneficiaries of which for so long as such company is
in existence shall be confined to the employees and former employees of
such Group Company and their Dependants unless the Trustees
<PAGE>
and the relevant Group Company otherwise agree.
4(a) Subject to clause 3(b) the Trustees shall stand possessed of the Trust
Fund and the income thereof upon trust to pay or apply the same to or for
the benefit or advancement of the Beneficiaries or any one or more of them
exclusive of the other or others of them at such times and in such shares
and in such manner as the Trustees shall in their absolute discretion think
fit PROVIDED THAT the Trustees may in their absolute discretion from time
to time accumulate the whole or any part of any income and shall hold such
accumulations as an accretion to the capital of the Trust Fund save that if
an individual makes a gift to the Trust the Trustees must not accumulate
any income arising from the subject matter of the gift or the property from
time to time representing it following the expiry of 21 years from the date
of such gift or following the Vesting Day if earlier.
(b) Subject as aforesaid and to clause 3(b) on the Vesting Day the Trustees
shall hold the capital and income of the Trust Fund upon trust for such of
the Beneficiaries as are living on the Vesting Day and in such shares (if
more than one) as the Trustees shall in their absolute discretion by
irrevocable deed appoint and subject to and in default of such appointment
in equal shares absolutely and subject the foregoing IN TRUST absolutely
for such charities as the Trustees shall in their absolute discretion think
fit
PROVIDED THAT no power conferred by this clause 4 or by clause 5 shall
authorise any payment transfer sale or advance to a Beneficiary or the
trustees of another trust if any of the Employees excluded from benefit
pursuant to clause 7 would or might benefit from the same in any
circumstances save where the proviso to clause 7(c) applies.
5 The Trustees shall without prejudice to all powers conferred upon them by
law have the powers set out in Schedule 1 hereto (provided that no such
power shall be exercised in a manner inconsistent with the terms of this
Trust) and without prejudice to the generality of such powers the Trustees
shall subject to clause 3(b) also have the following additional powers:
a) to invest the Trust Fund in Shares either by way of subscription or
purchase and deal with the Shares in any way permitted by the Trust
and in making such investments they shall not be obliged to have
regard to:
(i) whether the acquisition represents a prudent financial investment; or
(ii) whether the Shares produce or are likely to produce income; or
(iii) whether the Shares are being acquired at the most advantageous
price or on the most advantageous terms.
b) to grant options over Shares or other assets comprised in the Trust
Fund to any Beneficiary either for nothing or for an amount agreed by
the Beneficiary (which need not be market value) or otherwise on such
terms as the Trustees shall in their absolute discretion think fit.
c) to transfer Shares to any Beneficiary either for nothing or for an
amount agreed by the Beneficiary (which need not be market value) and
on such terms as the Trustees shall in their absolute discretion
determine including (without limitation) the transfer of Shares to
Beneficiaries in satisfaction of options granted by the Company
pursuant to any Scheme.
d) to make grants or loans to any Beneficiary on any terms with a view
to that Beneficiary acquiring Shares or for any or no specific
purpose.
<PAGE>
e) to enter into put and/or call option arrangements with any person in
respect of Shares on such terms as the Trustees shall in their
absolute discretion think fit.
f) (i) to bind themselves to provide particular benefits in the future
so far as the assets in the Trust Fund permit;
(ii) to agree or adopt rules setting out the way in which they will
exercise their powers;
(iii) to establish or co-operate in the establishment of Schemes for
providing benefits to Beneficiaries.
g) to transfer all or any part of the Trust Fund to the trustees of an
other settlement to be held by them on the trusts applicable to
capital monies comprised in such settlement if such transfer would not
infringe the rule against perpetuities and if the provisions of such
other settlement shall in the opinion of the Trustees be such that
such transfer would be beneficial to the persons whom it is thereby
sought to benefit.
h) to transfer Shares at such prices as the Trustees shall in their
absolute discretion determine.
i) to enter into an agreement with any Group Company (so as to bind the
Trust Fund) that, if that Group Company shall at any time by notice
direct the Trustees to transfer to any Beneficiary any number of
Shares in respect of which such Beneficiary shall have validly
exercised an option granted under a Scheme, the Trustees shall (to the
extent that such Shares are available in the Trust Fund) transfer to
such Beneficiary such Shares in consideration of the payment to the
Trustees of the exercise price.
6 The Trustees may apply any monies or other funds received by them or in their
hands in any of the following ways:
(a) in the acquisition of Shares or in the payment of any outstanding
costs charges and expenses of and incidental to the preparation
operation or determination of this Trust or any Scheme in accordance
with clause 15;
(b) in or towards repayment of the principal of or payment of the interest
(if any) on any loan from any Group Company or any other person;
(c) in payment to or for the benefit of any Beneficiary
PROVIDED THAT if there shall from time to time be monies or other funds
available after the application of monies and other funds in the ways set
out in (a) to (c) above such monies or other funds may be advanced by way
of loan evidenced by a debenture (within the meaning of paragraph 20(4) of
Schedule 1 to the Financial Services Act 1986) to any Group Company on
such terms as the Trustees shall in their absolute discretion think fit
and subject thereto such money or other funds shall be held by the
Trustees on a non-interest-bearing bank current account and the Trustees
shall not be liable to any person for any loss to the Trust as a result
direct or indirect of this proviso the exercise of any discretion
thereunder or the holding of money or other funds or a non interest
bearing bank current account.
7(a) When a Group Company is a Close Company no person may benefit under the
Trust if this would result in a charge to inheritance tax under section 72
of the Act unless the Company, the relevant Group Company (if different)
and the person concerned first agree in writing.
<PAGE>
(b) If the Trustees accept from a Group Company which is a Close Company a loan
or contribution or other disposition which is or would apart from clause
7(b)(i) hereof be a transfer of value for inheritance tax purposes:
(i) the Trustees shall hold it on the terms of the Trust only if before
they accept it all the persons who are or who may be liable under
section 202 of the Act for any inheritance tax chargeable on the
transfer of value agree in writing; otherwise
(ii) the Trustees shall hold it on the terms of the Trust except that no
person may benefit under the Trust if the benefit would prevent
section 13(1) of the Act from applying to the loan or contribution or
other disposition.
(c) Notwithstanding any other provision of this Trust no part of the Trust Fund
or the income thereof shall be applied at any time for the benefit of a
person falling within section 13(2) (and not section 13(3)) of the Act
whilst any Group Company is a Close Company PROVIDED THAT this clause 7(c)
shall not affect the power of the Trustees to make a payment which is the
income of such a person for any of the purposes of United Kingdom income
tax or would be so if he were resident in the United Kingdom.
(d) The Trustees shall be entitled to rely without further enquiry on all
information supplied to them by any Group Company.
8(a) The Trustees hereby waive any rights to receive dividends (or any part
thereof) in respect of Shares and shall not be liable for any loss to the
Trust Fund (for so long as such Shares remain in the beneficial ownership
of the Trustees) as a result of such waiver [save that this waiver shall
not extend to the full amount of any such dividends declared so that the
Trustees shall remain entitled to receive up to 0.01 pence per Share]. The
Group Companies to which this deed applies agree to accept this waiver and
to act in compliance with it PROVIDED THAT the Company may instruct the
Trustees in writing to accept a particular dividend or dividends paid on
the Shares comprised in the Trust Fund in whole or in part in which case
the waiver in relation to the specified dividend or dividends shall not
apply.
(b) The Trustees may vote or abstain from voting Shares or accept or reject any
offer relating to Shares in any way they see fit without incurring any
liability and without being required to give reasons for their decision.
They may take the following matters into account:
(i) the longer term interests of the Beneficiaries;
(ii) interests of the Beneficiaries other than financial interests;
(iii) interests of the Beneficiaries in their capacity as Employees or
former Employees or their Dependants;
(iv) interest of persons (whether or not identified) who may become
Beneficiaries in the future.
9 Notwithstanding any other provision of this Trust:
(i) no assets or income of the Trust Fund shall be applied at any time for
the benefit of any Group Company other than to repay any loan and
interest thereon made to the Trustees by a Group Company; and
10 If a person other than a Group Company makes a gift to the Trust or
transfers assets to the Trust otherwise than on bona fide commercial terms
with gratuitous intent then the
<PAGE>
Trustees may not provide any benefit under the Trust to that person nor
during that person's lifetime to his or her spouse.
11 The Trust shall vest on the Vesting Day in accordance with clause 4 and
the Trustees shall not accept any more assets on or after the Vesting Day.
12(a) The Company may at any time and from time to time with the consent of the
Trustees by irrevocable deed amend modify or add to all or any of the
provisions of the Trust and in particular but without prejudice to the
generality of the foregoing the Company may modify the Trust so as to
exclude any person from the class of Beneficiaries who would otherwise
qualify (but not so as to leave no member of the class or so as to
prejudice any prior benefit received from the Trust by such a person), to
reinstate any person so excluded and to add new beneficiaries provided
that:
(i) the proviso to clause 4(b), clauses 7 and 13 and this clause 12 may
not be altered;
(ii) no alteration may be made which would prevent the Trust being an
employees' share scheme as defined in the Companies Act 1985 or would
prevent section 86 of the Act or section 75(6)(d) of the Financial
Services Act 1986 applying to the Trust;
(iii) the perpetuity period applicable to the Trust may not be altered if
this would make the Trust void under the rule against perpetuities;
(iv) clauses 9 and 10 may not be altered so as to allow the Trustees to
provide any benefit to any Group Company or any other person who or
which has contributed money or property to the Trust or is otherwise a
settlor of the Trust for UK tax purposes;
(v) the power conferred by this clause 12 may not be exercised and shall
not be exercised in such a manner if to do so would result in the
Trust being void.
(b) A Group Company not being the Company shall become bound by the provisions
of this Deed if it makes a contribution to the Trust Fund pursuant to
clause 3(b) above and shall cease to be bound by this Deed with effect
from the date it ceases to be a Group Company.
13 No power herein shall be exercised by the Trustees in such a way as to
cause the trusts hereof not to comply with the provisions of section 86 of
the Act, section 743 of the Companies Act 1985 and section 75(6)(d) of the
Financial Services Act 1986 and insofar as any power is purportedly
exercised in such a way that purported exercise shall be invalid and
ineffective.
14(a) This clause 14 applies where a Beneficiary is liable to tax, duties or
other amounts on the payment or transfer of any property to the
Beneficiary and either his employer or former employer being a Group
Company or the Trustees would be liable to make a payment to the
appropriate authorities on account of that liability.
(b) The Trustees shall not make any payment or transfer any property to any
Beneficiary unless:
(i) the Beneficiary has made a payment to his employer or former employer
or the Trustees equal to the amount which the employer or former
employer or Trustees are required to pay to the appropriate
authorities; or
(ii) alternative arrangements are specified in the Scheme rules or agreed
between the
<PAGE>
Trustees and the Beneficiary whereby the liability for tax, duties
or other amounts will be satisfied.
(c) The Trustee shall, to the extent that they have withhheld or received
amounts from the Beneficiaries in accordance with sub-clause (b) above,
account for such amounts to the employer or former employer being a Group
company or, at such company's request, to the appropriate authorities.
15 All costs charges and expenses of and incidental to the preparation
operation and determination of the trusts hereof (including any stamp duty
payable by and remuneration of the Trustees) shall be payable by the Group
Companies bound by the provisions of this Deed if and to the extent that
there is insufficient money comprised in the Trust Fund when the same are
due and payable in such proportion as they shall inter se agree having
regard to the circumstances.
16(a) The Company may at any time by irrevocable deed or deeds and without any
other formality:-
(i) remove any person from the office of Trustee;
(ii) accept the resignation of any person as a Trustee; or
(iii) appoint a new or additional Trustee.
(b) Subject to sub-clause (c) below, the minimum number of Trustees shall be
two unless a company is a Trustee hereof in which event the company may be
may act as sole Trustee hereof.
(c) On the retirement of a Trustee he shall be entitled to be discharged by
deed from the trusts hereof notwithstanding that following his retirement
there will be a sole continuing Trustee which is not a company but the
Company shall in such latter event forthwith appoint an additional
Trustee.
(d) A person may be appointed to be a trustee hereof notwithstanding that such
person is not resident in the United Kingdom and remaining out of the
United Kingdom for more than 12 months shall not be a ground for the
removal of a Trustee.
17(a) Every Trustee shall be answerable only for losses arising from his own
fraud or wilful default or neglect and shall not be answerable for any act
neglect or default of his co-Trustee (unless he knew of or participated in
the same) and any Trustee who shall pay over to his co-Trustee or do any
act or thing or make any omission enabling such co-Trustee to receive any
moneys or other property for the purpose of these trusts shall not be
bound to see to their due application or be subsequently rendered liable
by any express notice of the misapplication of any such moneys or property
nor shall the Trustees be liable for any neglect or default of any
solicitor accountant banker valuer or other agent employed by the
Trustees.
(b) The Company shall keep the Trustees (and their estates where applicable)
indemnified against any loss or deficiency incurred by it in connection
with the Trust and against any claims liabilities and demands arising out
of anything lawfully done or caused or omitted to be done by them in the
exercise of the powers and discretion vested in them by this deed or
otherwise arising howsoever out of or in connection with the
administration and operation of the Trust but so that no Trustee shall be
indemnified in respect of any fraud or wilful default on his part or in
the case of a Trustee engaged in the business of providing a trustee
service for a fee his negligence.
(c) In addition the Trustees shall have the benefit of all indemnities
conferred upon trustees generally by law and by the Trustee Act 1925.
<PAGE>
18 Any Trustee who shall be or become a director of or holder of any other
office or employment within the Group may retain for his own absolute
benefit any fees or remuneration received by him in connection with such
office or employment notwithstanding that his appointment to or retention
of such office or employment may be directly or indirectly due to the
exercise or non-exercise of any votes in respect of Shares held by the
Trustees or other persons on their behalf under the trusts hereof.
19(a) Any Trustee (and any director or officer of a body corporate or a trust
corporation acting as Trustee) shall not on his own account be precluded
from acquiring holding or dealing with any Shares or any other company in
the shares of which any Group Company may be interested or from entering
into any contract or transaction with a view thereto and nor shall he be
in any way liable to account to any Group Company or any Beneficiary for
any profits made fees commissions shares of brokerage discounts allowed or
advantages obtained by him from or in connection with such acquisition
holding dealing contract or transaction.
(b) No officer or employee of the Trustees shall be liable to account to any
Beneficiary for any remuneration or other benefit received in connection
with the trusts hereof and no Trustee or officer or employee of the
Trustees shall be liable to account to other Beneficiaries for any profit
derived from the appointment of the whole or part of the Trust Fund.
20 Any individual Trustee shall be entitled to receive and retain as
remuneration for his services hereunder such sum or sums as the Directors
may from time to time vote and pay to him therefor and in particular but
without prejudice to the generality of the foregoing any Trustee being a
solicitor accountant stockbroker or other person engaged in any profession
or business shall be entitled to be paid all usual professional or other
proper charges for business transacted time expended or acts done by him
or any employee or partner of his firm in connection with these trusts
including acts which a Trustee not being in any profession or business
could have done personally. Any Trustee being a body corporate (whether or
not a trust corporation) may charge and be paid such reasonable
remuneration or charges as shall from time to time be agreed in writing
between the Company and such body corporate and any such body corporate
(being a bank) shall be entitled (without accounting for any resultant
profit) to act as banker and perform any services in relation to these
trusts on the same terms as would be made with a customer in the ordinary
course of its business as a banker.
21(a) The Trustees may meet together for the despatch of business adjourn and
otherwise regulate their meetings as they think fit and may determine the
quorum necessary for the transaction of business. Until so fixed and
unless a company shall for the time being be the sole Trustee hereof the
quorum shall be two. Questions arising at any meeting shall be decided by
a majority of votes and in case of any equality of votes the Chairman of
the meeting (who shall be elected by the meeting) shall have a second or
casting vote.
(b) A resolution in writing signed by all the Trustees for the time being
shall be as valid and effectual as a resolution passed at a meeting of the
Trustees. Such resolution may be contained in one document or in several
documents in like form each signed by one or more of the Trustees for the
time being.
(c) A meeting of the Trustees at which a quorum is present shall be competent
to exercise all the powers and discretion exercisable by the Trustees
generally.
(d) The Trustees shall cause proper minutes to be kept and entered in a book
provided for the purpose of all their resolutions and proceedings and any
such minutes of any meeting of the Trustees if purporting to be signed by
the Chairman of such meeting or by the Chairman of the next succeeding
meeting shall be admissible as prima facie
<PAGE>
evidence of the matters stated in such minutes.
(e) The Trustees shall keep adequate and proper accounts of all moneys and
other property comprised in and all transactions affecting these trusts
and shall once at least in every year cause such accounts to be made up
and audited by qualified accountants approved by the Company and shall
submit such accounts to the Company.
(f) The Trustees shall prepare and keep all such documents and records as may
be required for the purpose of the Trust.
(g) The Trustees may place any documents of title for the time being in their
possession in connection with the trusts hereof in any bank or safe
deposit and shall not be responsible for any loss incurred by their so
doing.
(h) The Trustees may in any particular case or cases in their sole discretion
decide not to commence proceedings for the recovery of any moneys due to
them whether from any Beneficiary or his legal personal representatives or
any other party and shall not be responsible for any loss incurred by
their so doing.
(i) Valid and effectual receipts and discharges for any moneys or other
property payable transferable or deliverable to the Trustees or any of
them may be given by any one Trustee or by any person from time to time
authorised in writing for the purpose by the Trustees.
(j) The Trustees may from time to time appoint and remunerate for the proper
administration and management of these trusts such secretarial or
executive officers or staff or other persons as they consider desirable
and the Company approves.
22(a) The proper law of the Trust shall be that of England and Wales and all
rights hereunder and its construction and effect shall be subject to the
jurisdiction of and construed according to the laws of England and Wales.
(b) The Courts of England and Wales shall be the forum for the administration
of these Trusts.
23 It is hereby confirmed by the parties hereto that this instrument falls
within category L in the Schedule to the Stamp Duty (Exempt Instruments)
Regulations 1987.
IN WITNESS whereof this document has been duly executed as a deed and has been
duly delivered on the day and year first before written.
EXECUTED as a DEED by )
Castle Transmission Services (Holdings) Ltd. )
acting by: )
--------------------------
Director
--------------------------
Director/Secretary
EXECUTED as a DEED by )
Castle Transmission (Trustees) Limited )
acting by: )
--------------------------
Director
--------------------------
Director/Secretary
<PAGE>
SCHEDULE ONE
The Trustees shall have the following powers:
1 Power to acquire and hold or dispose of any property (tangible or intangible,
movable or immovable), whether or not it produces income and whether
involving liabilities or not and the Trustees shall not be under a duty to
diversify the investments of the Trust Fund;
2 Power to transfer the whole or any part of the Trust Fund to nominees on such
terms as to remuneration or otherwise as the Trustees may think fit and the
trustees shall not be liable for any loss resulting from the proper use of
this power;
3 Power to enter into any contract or incur any obligation;
4 Power to borrow money or other property on any terms for any purposes
(including acquiring assets) from any person or persons;
5 Power to grant any mortgage or charge over or give any right of recourse
against any of or all of the Trust Fund;
6 Power to insure assets of the Trust Fund for any amount against any risk and
any moneys received under such assurance may be applied in the replacement
of any such asset and any premiums may be paid out of the Trust Fund;
7 Power to delegate all powers duties or discretion conferred hereby or by law
to any person or persons and on any terms;
8 Power to give warranties indemnities and undertakings in connection with the
disposal of any Shares comprised in the Trust Fund ;
9 Power to enter into any agreement in relation to shares debentures or
securities comprised in the Trust Fund or arrangement for the variations of
rights attaching thereto or to enter into a scheme for the reconstruction
or amalgamation of any company whose shares debentures or securities are
comprised in the Trust Fund and power to exercise all voting and other
rights conferred by such shares debentures or securities in such manner as
they shall deem fit;
10 Power to leave the management and conduct of the affairs and business of any
company the shares or securities of which are comprised in the Trust Fund
(including the payment or non-payment of dividends) to the directors of
such company without being under a duty to interfere with the management of
such company;
11 Power to lend any money comprised in the Trust Fund to any Beneficiary on
such terms and conditions as they shall in their absolute discretion think
fit provided that no such loan shall be made upon terms that repayment may
be made after the Vesting Day;
12 Power in any case where the Trustees are hereby or by law directed or
empowered to apply any income or capital of the Trust Fund for the benefit
of any Beneficiary who is an infant (instead of themselves so applying the
same) to pay or transfer the same to any parent or guardian of such infant
(whose receipt shall be a good discharge to them) without being liable to
see to the due application by such parent or guardian;
13 Power to enter into any indemnity in favour of any former Trustees or other
person or persons in respect of any tax or other liability arising out of
these trusts and power to
<PAGE>
charge or deposit any property comprised in the Trust Fund as security for
such indemnity;
14 Power to pay all taxes arising out of these trusts which may be assessed on
them whether or not by reason of the residence of the person assessed or
otherwise the assessment shall be unenforceable;
15 Power to disclose such information about such matters to such persons as
they may think fit PROVIDED THAT they shall not do so to persons other than
professional advisers and Group Companies without the prior consent in
writing of the Company;
16 Power to compromise any disputes affecting the Trust Fund or to submit the
same to arbitration and to compromise or compound any debts owing to the
Trustees or any other claim against them upon such evidence and such terms
as shall reasonably seem sufficient to the Trustees;
17 Power to appropriate any property from time to time comprised in the Trust
Fund in or towards satisfaction of the beneficial interest of any
Beneficiary and for the purpose of such appropriation the Trustees shall
have power to ascertain and fix the value of such property in all respects
as they shall in their absolute discretion think fit and every
appropriation and valuation made pursuant to this power shall be binding on
all persons then or thereafter interested hereunder;
18 Power generally to have and to exercise all the powers of an absolute
beneficial owner in respect of assets comprised in the Trust Fund including
without limitation power to exercise all voting and other rights in respect
of Shares in such manner as they shall deem fit;
<PAGE>
Exhibit 10.60
Date: 1999
One 2 One
and
Castle Transmission International Ltd
FRAMEWORK AGREEMENT
in relation to greenfield sites
<PAGE>
CONTENTS
--------
Recitals
Clause Heading Page
1. Definitions and Interpretation 1
3 Master Site Sharing Agreement 14
4. Assignment of Properties 16
5. New Sites 18
6. Representations 19
7. Additional Obligations of CTI 21
8. Rates, Insurance, Electricity. 22
9. Licensing 23
10 Employment 23
11. Continuing effects of this Agreement 24
12. Announcements 24
13. Releases and waivers 24
14. Notices 25
15. Entire Agreement 27
16. Alterations 27
17. Counterparts 27
18. Disputes Resolution 28
19. Expert Determination 28
<PAGE>
CONTENTS
--------
Recitals
Clause Heading Page
20. Restrictive Trade Practices 29
Assignment 29
22. Severability 30
23. Set Off 30
24. Waiver 31
25. Additional Documentation 31
26. Costs 31
27. Applicable Law 31
<PAGE>
Schedules
1. CTI Existing Shared Stations 32
2. Sites 37
3. Third party Site Sharing Contracts 38
4. Assignment Protocol 39
5. Assignment Deed 40
6. New Sites Protocol 44
7. Site Management Agreement 47
8. Special Conditions 71
9. Form of Limited Power of Attorney 75
10. Licence Fees and Site Licence Fee Supplement 76
11. Agreed inter-operator fees 79
12 Reserved Capacity 80
<PAGE>
THIS AGREEMENT is made the day of 1999
BETWEEN:
a) MERCURY PERSONAL COMMUNICATIONS being an English partnership between MEDIA
ONE PCN INC a company incorporated under the laws of the State of Colorado
with offices at 7800 East Orchard Road, Englewood, Colorado 80111 USA;
MERCURY PERSONAL COMMUNICATIONS LIMITED whose registered office is at
Elstree Tower, Elstree Way, Borehamwood, Hertfordshire, WD6 1DT and MPC 92
LIMITED whose registered office is at Elstree Tower, Elstree Way,
Borehamwood, Hertfordshire, WD6 1DT ("One 2 One"); and
b) CASTLE TRANSMISSION INTERNATIONAL LTD (registered number 3196207) whose
registered office is at Warwick Technology Park, Gallows Hill, Heathcote
Lane, Warwick CV34 6TN ("CTI");
and the expressions "CTI" and "One 2 One," shall include their respective
successors and permitted assigns
1. Definitions and Interpretation
1.1 In this Agreement the following expressions shall have the following
meanings:
"ADC Contractor" means any third party appointed by One 2 One to
inter alia acquire design manage and construct
Sites and New Sites
"Apparatus" means on a site by site basis telecommunication
apparatus (as the same is defined in the Code)
including but not limited to antennas, aerials,
cables, radio frequency and transceiver equipment
and all
<PAGE>
types of equipment containers, cabins and
other housing provided by One 2 One
"Assets" means all those physical assets located or to be
located on the Properties including the Towers (but
excluding One 2 One Retained Apparatus and any
exclusive assets owned by third parties and
installed on the Properties pursuant to the
provisions of a Third Party Site Sharing Contract)
"Assignment Deed" means the Deed of Assignment to be completed to
give effect to the assignment of the Properties or
any of them where no variation to the terms of the
Leases is required, the agreed form of which is set
out in Schedule 5
"Assignment Protocol" means the protocol for assignment of the Properties
described in Schedule 4
"the Confidentiality means the Confidentiality and Exclusivity Agreement
Agreement" entered into between CTI and One 2 One dated 30 day
of November 1998.
"Code" means the Telecommunications Code set out at
Schedule 2 to the Telecommunications Act 1984
"CTI Existing Shared means those existing 166 Stations owned and/or
Stations" managed by CTI listed in Schedule 1 upon which One
2 One has located Apparatus and shares facilities
under the terms of the Master Site Sharing
Agreement
<PAGE>
"CTI Existing Shared means a rent holiday for the CTI Existing
Stations Discount" Shared Stations between the period 1st April
1998 to 31 March 2000
"CTI's Group" means CTI and any Subsidiary or parent company or
any Subsidiaries of the same.
"CTI New Sites" means greenfield sites to be acquired in the name
of CTI after the date of this Agreement in
accordance with the New Sites Protocol.
"Expert" means an expert appointed in accordance with Clause
19
"Expert Determination" means determination of any issue, disagreement or
dispute between the parties pursuant to the
provisions of Clause 19
"Framework means in respect of this Agreement the date
Commencement Date" calculated in accordance with the provisions
contained in Clause 2.2 save for the purpose of
calculating the Commencement Date of the Licence
Fees and the Commencement Date of the Option Period
it shall be either the Framework Commencement Date
or the date of completion of commissioning if later
in respect of each of the Properties and CTI New
Sites.
"greenfield site" means a site defined in accordance with the
provisions contained in Clause 2.1 hereof. (and any
Non-Compliant Greenfield Site,
<PAGE>
which the parties agree to treat as a greenfield
site for the purposes of this Agreement)
"Guarantee" means any guarantee, indemnity, letter of comfort
or other assurance, security or right of set-off
given or undertaken by a person to secure or
support the obligations (actual or contingent) of
any third party and whether given directly or by
way of counter-indemnity to any third party who has
been provided a Guarantee.
"Interest" means interest at a daily rate on any outstanding
amounts at a rate equal to 4% above the Royal Bank
of Scotland base lending rate as current from time
to time
"Landlords" means the respective grantors of the Leases
"Leases" means the freehold title deeds, leases, licences or
letter arrangements and all supplemental
documentation pursuant to which One 2 One occupy
the Sites or One 2 One New Sites and the expression
"Leases" shall mean the Leases as renewed varied
extended or replaced from time to time
"Licence Fees" means the licence fees payable by One 2 One to CTI
for the Properties and the CTI New Sites in
accordance with the provisions for payment
contained in the Master Site Sharing Agreement and
calculated in
<PAGE>
accordance with the formulae set out in Schedule 10
"Limited Power of means the document set out in agreed form in
Attorney" Schedule 9 to be provided by One 2 One to CTI on
the Framework Commencement Date to enable CTI
(subject to the provisions of Clause 4) to act in
One 2 One's name to procure the assignment of the
Sites from One to One to CTI
"Master Site Sharing means the site sharing Agreement granted by CTI to
Agreement" One 2 One for the CTI Existing Shared Stations
dated 27 June 1996
"Master Site Sharing means the individual site Schedules
Agreement"
"Schedules" incorporating any agreed Special Conditions,
appended to the Master Site Sharing Agreement
"New Assets" means those physical assets to be located on the
CTI New Sites (excluding the One 2 One Retained
Apparatus)
"New Sites Protocol" means the agreed procedure for location, building
and ownership of New Sites described in Schedule 6.
"New Sites" means One 2 One and CTI New Sites
"NonCompliant means sites which do not meet the criteria
Greenfield Sites" set out in the definition of greenfield sites, but
which the parties agree to include in this
Agreement subject to the provisions contained in
Clause 2 and in Schedule 10.
<PAGE>
"One 2 One's Group" means One 2 One or any of the partnership of
companies which comprise One 2 One and any
Subsidiary or parent company or any Subsidiaries of
the same
"One 2 One's Licence" means the Licence to operate One 2 One's business
issued to Mercury Personal Communications on 9th
May 1995 under the Telecommunications Act 1984
including any renewal or extension of the same
granted to One 2 One at any time during the Term.
"One 2 One New Sites" means new greenfield sites to be acquired in name
of One 2 One after the date of this Agreement in
accordance with the New Sites Protocol
"One 2 One's Permitted means the right to locate and retain the
Use" relevant Permitted Equipment on the Sites and the
New Sites for the purposes of creating radio base
stations forming part of One 2 One's network
"One 2 One Retained means the Towers located on the Properties
Apparatus" until the assignment of those Properties and any
One 2 One Permitted Equipment located on the
Properties and CTI New Sites
"the Option" means the option for CTI to take an assignment of
the Sites the One 2 One New Sites and the Third
Party Site Sharing Contracts during the Option
Period.
<PAGE>
"The Option Period" means the period from the Framework Commencement
Date until the third anniversary of the Framework
Commencement Date and in relation to One 2 One New
Sites until the third anniversary of the date of
completion of their commissioning or legal
completion of One 2 One's acquisition of the One 2
One's New Sites if later
"Permitted Equipment" means the Apparatus already installed by One 2 One
on the Sites as at the date of this Agreement and
the Apparatus reserved for installation by One to
One on the Sites or the New Sites to the full
extent of the relevant Reserved Capacity
"Properties" means the Sites and the One 2 One New Sites which
are to be managed by CTI in accordance with the
provisions of this Agreement
"Retail Price Index" means the General Index of Retail Prices as
published in the Digest of Statistics by the Office
for National Statistics or if such Index shall
cease to be published such other index as may be
published officially in substitution therefor
"Reserved Capacity" means such Client's Equipment referred to in
Schedule 8 (Special Conditions) which is notated
reserved in respect of any site for which a Master
Site Sharing Schedule is issued or any substitute
Apparatus which has
<PAGE>
an equivalent windloading, an equivalent weight
where weight is a material factor, does not
increase the requirement for antenna separation
between the Permitted Equipment and other users and
if installed would occupy the same space on the
Tower as such Client Equipment is shown on the
annexed data sheets in respect of the Sites and to
be illustrated in respect of New Sites as described
in Schedule 12
"Security Interest" means a mortgage, lien, pledge, charge or other
security interest (or agreement or commitment to
create any of them).
"Sites" means the 821 greenfield sites owned leased or
licensed by One 2 One at the date of this Agreement
and listed (or to be listed) in Schedule 2
"Site Licence Fee means the supplemental licence fee payable by One 2
Supplement" One to CTI for the Sites calculated in accordance
with the formula set out in Schedule 10
"Site Management means the agreement between One 2 One and CTI in
Agreement" respect of the Properties as the same is set out in
agreed form in Schedule 7
"Special Conditions" means those special conditions to be incorporated
into the Master Site Sharing Agreement Schedules
granted to One 2 One for site sharing of the
Properties and the CTI
<PAGE>
New Sites, as such Special Conditions are set out
in Schedule 8.
"Subsidiary" means a subsidiary (as defined by sections 736 and
736A of the Companies Act 1985) or a subsidiary
undertaking as defined by section 258 of that Act.
"Taxation" means any liability to any form of taxation,
whenever created or imposed and whether of the
United Kingdom or elsewhere (and without limitation
includes income tax, P.A.Y.E., corporation tax,
advance corporation tax, capital gains tax,
inheritance tax, stamp duty, stamp duty reserve
tax, value added tax, development land tax,
withholding tax, rates, Customs and Excise duties,
National Insurance contributions, Social Security
and other similar liabilities or contributions) and
generally any amount payable to the revenue,
customs or fiscal authorities, whether of the
United Kingdom or elsewhere, and all interest
and/or penalties related to or arising in respect
thereof.
"Tower" means the mast, tower or other antenna mounting
structure located on any of the Properties or CTI
New Site.
"the Term" means collectively the period of
(a) 10 years from the Framework Commencement
Date ("the Initial Period"), and
<PAGE>
(b) at CTI's option by giving written notice not
more than one year and not less than 6
months before the expiry of the Initial
Period, the further period of 15 years from
the expiry of the Initial Period or, if
shorter, the duration unexpired of One 2
One's Licence
"Third Party Site means those agreements entered into prior to the
Sharing Contracts" date of this Agreement whether formal or informal
whereby One 2 One has permitted others to share
occupation of the Sites or One 2 One New Sites
subject to any requisite Landlords' consent
including but not limited to those contracts
referred to in Schedule 3
"VAT" means value added tax as provided for in the Value
Added Tax Act 1994.
1.2 In this Agreement unless the context otherwise requires:
(a) a document expressed to be "in agreed form" means a document in a form
which has been agreed by the parties contemporaneously with or before
the execution of this Agreement and which has for the purposes of
identification been initialled by them or on their behalf;
(b) references to statutes or other enactments shall be construed as
including a reference to:-
(i) any enactment which that enactment has directly or indirectly
replaced (whether with or without modification); and
(ii) that enactment as re-enacted, replaced or modified from time to
<PAGE>
time, whether before, on or after the date hereof;
(c) references to a Clause or a Schedule are to a clause of, or a schedule
to this Agreement, references to this Agreement include its Schedules
and references in a Schedule or part of a Schedule to a paragraph are
to a paragraph to that Schedule or that part of that Schedule;
(d) words importing the singular include the plural and vice versa, words
importing a gender include every gender and references to persons
include corporations, partnerships and other unincorporated
associations or bodies or persons;
(e) descriptive headings to Clauses, Schedules and paragraphs are inserted
for convenience only, have no legal effect and shall be ignored in the
interpretation of this Agreement;
(f) all agreements, obligations and liabilities (whether under warranties,
representations, indemnities or otherwise) on the part of the
partnership known as One 2 One are joint and several in relation to
the members of that partnership and shall be construed accordingly.
2. The Site Management Agreement
2.1 The provisions of this Agreement relate to the management acquisition
assignment and sharing of greenfield sites. For the purposes of this
Agreement a greenfield site shall mean a site that:-
(a) is not less than 90 m2;
(b) has been or is to be acquired on a freehold or leasehold basis;
(c) has at the date it is intended to include the site in the
Management Agreement or otherwise assign the same from One 2 One
to CTI (whichever is the earlier);
<PAGE>
. a commencing rental which does not increase the average rental
of the total number of New Sites which have been included in
the Management Agreement to greater than X, where X is a sum
equivalent to (Pounds)4,000 as adjusted by annual increases in
the Retail Prices Index calculated from the Framework
Commencement Date to the date of such inclusion or assignment
as aforesaid); or alternatively
. has in place of rent a capital acquisition cost or premium
payable which is not greater than (Pounds)X x 8 ;
(d) has a minimum term of 15 years;
(e) has no material restrictions on access;
(f) has no restrictions on shared use by One 2 One and has no
material restrictions on third party site sharing;
(g) upon which no Tower has been constructed or if constructed is not
owned or partly owned or funded by a third party and which site
does not form part of or include any third party owned buildings
or structures.
And where any one or more of the above criteria do not apply to any
site then CTI will not be required to treat the same as greenfield
site for the purposes of this Agreement unless the provisions of
Clause 2.7 below apply.
2.2.1 The Framework Commencement Date shall be the working day immediately
following the date by which both:-
(a) One 2 One has given written notice to CTI that it has received
written confirmation from its bankers that the Properties will be
released from any Security Interests on or prior to assignment to
CTI, and confirmation it has received its accountants and Board
<PAGE>
approval to this transaction; and
(b) CTI has given written notice to One 2 One that it has received
approval of its bankers, accountants and Board to this
transaction;
provided if the Framework Commencement Date is delayed beyond 31 March
1999 or such later date as the parties may agree then either party
will be at liberty to determine this Agreement by notice
2.2.2 With effect from the Framework Commencement Date the parties will
perform their other obligations hereunder and One 2 One will enter
into the Site Management Agreement with CTI for the duration of the
Term as therein described
2.3 In consideration of the sum of (Pounds)1 per each of the Sites listed
in Schedule 2 payable or otherwise credited to One 2 One on the
Framework Completion Date, One 2 One will use all reasonable
endeavours to assist CTI in procuring the assignment of the Sites and
the One 2 One New Sites and the Third Party Contracts to CTI as herein
after provided and with effect from the Framework Commencement Date
One 2 One will grant the Option to CTI for the Option Period for this
purpose.
2.4 With effect from the Framework Commencement Date the beneficial right
to receipt of income from Third Party Site Sharing Contracts contained
in the Framework Agreement and the obligations of CTI in relation to
payment of rents and other outgoings will take effect in accordance
with the provisions contained in the Framework Agreement save in
respect of any apportionment of sums payable by One 2 One to CTI or
CTI to One 2 One in consequence, where the due date shall be 14 days
calculated from the Framework Commencement Date or the date CTI
receive written confirmation of the amount required whichever is the
later, and any payment not received by the due date shall give rise to
Interest on the unpaid amount calculated from the due date to the date
of actual payment
<PAGE>
2.5 The Site Management Agreement will not apply to CTI New Sites or to
any Properties once the Leases and any relevant Third Party Site
Sharing Contracts in relation to such Properties have been assigned to
CTI pursuant to Clause 4 but without prejudice to the obligations of
CTI contained in Clause 3.1
2.6 The Site Management Agreement shall be dated co-incident with the
Framework Commencement Date and shall apply to the Properties in
accordance with its terms including One 2 One New Sites from the date
of completion of site commissioning and handover from the relevant One
2 One ADC Contractor and the Schedule of Sites annexed thereto shall
be updated as appropriate to record this information.
2.7 It is agreed that where any of the criteria contained in Clause 2.1
are not met by any site then One 2 One and CTI will discuss the extent
to which this Agreement can be applied to such site and the variations
to the terms of this Agreement that may reasonably need to be agreed
between the parties before such site can be deemed a greenfield site
for the purposes of this Agreement but there shall be no obligation on
One 2 One to deem any site which does not meet the said criteria a
greenfield site
2.8 One 2 One shall not with effect from the date of this Agreement sell
or otherwise dispose, assign, sub-let, part with possession or share
possession of any Properties or any rights relating thereto
(including without limitation any access rights) without the previous
consent in writing of CTI, such consent not to be unreasonably
withheld or delayed in respect of any applications in process at the
date of this Agreement, unless CTI is in material breach of this
Agreement
3 Master Site Sharing Agreement
3.1 In respect of the Properties and CTI New Sites CTI shall with effect
from the Framework Commencement Date (or the date of completion of
commissioning and hand over of New Sites if later), grant to One 2 One
<PAGE>
site sharing facilities in respect of One 2 One's Permitted Equipment
for the Term in accordance with the terms and conditions set out in
the Master Site Sharing Agreement as amended by the Special
Conditions, and will issue supplemental Master Site Sharing Agreement
Schedules to One 2 One in respect of the relevant Permitted Equipment
for the Properties and the CTI New Sites incorporating the Special
Conditions and the relevant Licence Fees
3.2 One 2 One will pay the Licence Fees in accordance with the provisions
set out in relevant Special Condition and will pay the Site Licence
Fee Supplement if due in accordance with the provisions of Schedule 10
3.3 The consent of CTI is not required for One 2 One to locate Permitted
Equipment on a Site or New Site to the extent of the Reserved Capacity
(which for the avoidance of doubt will include any additional
Permitted Equipment capable of being placed in the One 2 One
container(s), cabin(s) or other housing forming part of the Permitted
Equipment) Further, CTI will not unreasonably withhold or delay its
consent to a request by One 2 One for further site sharing rights of
any Site or New Site for Apparatus in addition to the Permitted
Equipment, such site sharing rights to be subject to the terms and
conditions of the Master Site Sharing Agreement as amended by the
Special Conditions, the licence fees to be calculated in accordance
with CTI's standard ratecard for site sharing applicable at the
Framework Commencement Date adjusted by no greater than any annual
increase in Retail Price Index following that date.
3.4 On the Framework Commencement Date CTI will pay or otherwise credit
One 2 One with the CTI Existing Shared Stations Discount to be paid
within 14 days of the Framework Commencement Date ("the due date") and
any payment not received by the due date shall give rise to Interest
on the unpaid amount calculated from the due date to the date of
actual payment.
<PAGE>
3.5 For the avoidance of doubt in the event of conflict between the
conditions contained in the Master Site Sharing Agreement and the
Special Conditions the Special Conditions shall prevail
4. Assignment of Properties
4.1 In consideration of the Option Fee One 2 One will use all reasonable
endeavours during the Option Period to assist CTI to procure the
assignment of the Leases, the Assets, the Towers and the Third Party
Site Sharing Contracts in relation to the Properties to CTI free from
any Security Interest in accordance with the Assignment Protocol and
the New Sites Protocol
4.2 CTI will, at its own expense, issue notifications to and seek
Landlords' consent to the assignment from One 2 One to CTI of the
Leases and the Third Party Site Sharing Contracts, such notifications
and consents to be in a form reasonably approved by One 2 One and to
contain an acknowledgement by the Landlord that One 2 One will be
permitted to share occupation of the Property after assignment for One
2 One's Permitted Use and confirmation that CTI can re-assign the
Lease to One 2 One without requiring additional consent and
confirmation by the Landlord that before forfeiting any Lease notice
of breach will be given to One 2 One and One 2 One given the
opportunity to take a re-assignment of the Property and remedy the
breach (provided where the parties consider the landlord is alleging
breach where CTI is not in material breach of its obligations then One
2 One agrees to apply the provisions of Clause 4.6(c) to any such re-
assigned lease and in the event of dispute to apply the provisions of
Clause 19 to determine between the parties whether such material
breach has in fact occurred.)
4.3 Subject to Clause 4.2 One 2 One will issue the Limited Power of
Attorney to CTI to enable CTI to seek Landlords' consent to assign the
Leases from One 2 One to CTI and the Third Party Site Sharing
Contracts and to
<PAGE>
execute the Assignment Deed on behalf of One 2 One
4.4 On a site by site basis the completion of the transfer or other
assignment of the Lease, and Third Party Site Sharing Contracts in
respect of any of the Properties will also operate to transfer title
to the relevant Assets (including the Tower) to CTI free of any
Security Interest.
4.5 CTI will ensure that in exercising the Option and generally in
carrying out any acquisition, assignment, variation, renewal or other
dealings with the Leases such dealings will not prohibit prevent or in
any way adversely affect One 2 One's Permitted Use during the Term (or
in the event of Clause 4.6 applying, prejudice One 2 One's dealings
with the Landlord at the end of the Term)
4.6 If at any time during the Term CTI is given notice of any landlord's
intention to oppose any application to renew any lease for any of the
Properties or the CTI New Sites (an "expiring lease"), and that
expiring lease is due to expire prior to the end of the Term and CTI
is unable to reach agreement with the landlord to renew an expiring
lease on terms acceptable to CTI or CTI is unwilling to extend the
Term beyond the Initial Period or One 2 One is required to perform any
of the grantee's, tenant's or licensee's covenants in the Leases
because of a breach by CTI, CTI will give such notice as is
reasonable, but in the case of an expiring lease or if the Term is not
to be renewed beyond the Initial Period not less than 6 month's notice
of such circumstances to One 2 One whereupon:-
(a) One 2 One shall have an option to require CTI to assign the
expiring lease together with relevant Apparatus and Assets
(including the Tower) the Third Party Contracts and any existing
Site Sharing Agreements, but otherwise free of any CTI Security
Interests to One 2 One at CTI's expense; and
(b) if appropriate One 2 One will seek with all assistance from CTI
to
<PAGE>
novate the expiring lease to One 2 One by exercising its
powers under the Code; and
(c) if appropriate any of the Properties or CTI New Sites to which
the expiring lease relates shall to the extent that One 2 One has
renewed or novated an expiring Lease be treated as a "Site" as
defined in and for the purposes of the Site Management Agreement
and the provisions of the Site Management Agreement shall apply.
4.7 Until the assignments or novations referred to in Clause 4.1 are
completed or otherwise for the duration of the Term, One 2 One agrees
that CTI is irrevocably authorised to manage and maintain the
Properties as agent for One 2 One under the terms of the Site
Management Agreement.
4.8 If in CTI's reasonable opinion completion of the assignment of any of
the Properties is impractical to achieve during the Option Period CTI
will give notice to One 2 One confirming such Properties will remain
part of the Site Management Agreement for the remainder of the Term,
and further confirming One 2 One's obligations in respect of the
relevant Property under Clauses 4.1 have ceased.
4.9 Conditions 4.5, 6.3, 6.5, 6.6, 7.8 and 9 of the Standard Conditions of
Sale (Third Edition) shall apply to an assignment of any Property
5. New Sites
5.1 New Sites required by One 2 One will continue to be developed by ADC
Contractors, the cost of the site acquisition and development
(including the cost of those Assets specified in the specification for
any New Sites provided to the ADC Contractor) to be met by One 2 One
in accordance with the New Site Protocol
5.2 One 2 One will use reasonable endeavours to permit CTI to act in
concert
<PAGE>
with third party ADC Contractors for New Sites in the ways
described in the New Site Protocol
5.3 Ownership of Assets on One 2 One New Sites will transfer to CTI in
accordance with the provisions contained in Clause 4.4. In relation
to CTI New Sites, CTI shall own all New Assets including those for
which it has received a contribution payment from One 2 One.
5.4 It is agreed the Site Licence Fee Supplement payable for the Sites
will be reduced in accordance with the formula set out in Schedule 10
in proportion to the volume of New Site builds contracted to be
performed by CTI on behalf of One 2 One during the Option Period
5.5 For the purposes of the New Sites Protocol and determination of the
relevant Licence Fees, Sites not acquired as at the date of this
Agreement shall be treated as New Sites
6. Representations
6.1 One 2 One hereby confirms that it will take all necessary corporate
action to obtain financial, bank and board approval to this
transaction with CTI.
6.2 One to One confirms:-
(a) that it will meet outstanding commitments for capital expenditure
in relation to the Properties or the Assets and the New Assets
and in respect of the Third Party Site Sharing Contracts as at
the date of this Agreement and otherwise in accordance with
Clause 5.1 and the New Sites Protocol;
(b) that all Taxation in relation to the Properties, the Assets, the
New Assets and the Third Party Site Sharing Contracts for which
One 2 One is liable will remain payable by One 2 One and One to
One shall fully indemnify CTI in respect of the same;
<PAGE>
(c) that One 2 One has not made an election pursuant to paragraph 2
Schedule 10 Value Added Tax Act 1994 in respect of each of the
Properties but shall do so at the request and expense of CTI;
(d) that all documents relating to the Properties which attract stamp
or transfer duty in the United Kingdom or elsewhere have been or
will be duly stamped;
(e) that One 2 One has paid all rent or licence fees and all other
outgoings which have become due in respect of each of the
Properties and has performed and observed in all material
respects all its obligations under all covenants, conditions,
agreements, statutory requirements, planning consents and
regulations affecting any of the Properties and no notice of any
breach of any such matter has been received and no existing use
of any of the Properties contravenes any of such covenants,
conditions, agreements, statutory requirements, planning consents
or regulations;
(f) that One 2 One is not engaged in any capacity in any litigation,
arbitration, prosecution or other legal proceedings (including
Landlord and Tenant Act renewals or rent or rates tribunals) or
in any proceedings or hearings before any statutory or
Governmental body, department, board or agency; no such matters
are pending or threatened; and One 2 One is not aware of any
circumstances which may give rise to any such matter;
(g) there are no outstanding orders or notices affecting the
Properties or any judgements, orders, decrees, arbitral awards or
decisions of any court, tribunal, arbitrator, local or national
government or governmental agency or licensing body or industry
regulator against One 2 One in respect of the Properties;
<PAGE>
(h) that One 2 One is not a party to any recurring payments paid to
third parties in respect of the Properties details of which have
not been disclosed to CTI;
(i) that the Third Party Site Sharing Contracts in place at the date
of this Agreement produce an annual revenue recoverable by CTI in
excess of (Pounds)112,000.
and to the extent such representations are incorrect One 2 One will
seek to remedy the same at its own cost and to indemnify CTI to the
extent of any direct costs incurred in consequence.
6.3 That all information disclosed in One 2 One's answers to due diligence
questions and all other information in writing which has been given by
any of the One 2 One's employees or officials or professional advisers
to any employees, Directors, officials or professional advisers of CTI
in the course of the negotiations leading to this Agreement was when
given and remains true and accurate in all material respects and is
not misleading.
7. Additional Obligations of CTI
7.1 CTI confirms that it will take all necessary corporate action to
obtain financial, bank and board approval to the transaction with One
2 One.
7.2 From the Framework Commencement Date, CTI confirms and agrees to
perform and discharge the obligations and liabilities of One 2 One
under the Leases and Third Party Sharing Contracts which remain in
whole or in part to be performed in accordance with the terms of this
Agreement and the Framework Agreement and to fully indemnify One 2 One
in respect of all claims, costs, proceedings or demands arising out of
any breach thereof.
7.3 CTI confirms and agrees it will with effect from the Framework
Commencement Date:-
<PAGE>
(a) issue supplemental Master Site Sharing Schedules to One 2 One in
respect of all the Properties and the CTI New Sites,
incorporating the Special Conditions and including but without
limiting the generality of the foregoing a list of One 2 One's
Permitted Equipment notated either to be installed or reserved in
accordance with Schedule 12;
(b) perform its obligations under the Site Management Agreement in
accordance with its terms;
(c) provide One 2 One with copies of all documents in agreed form
executed by CTI on behalf of One 2 One under the Limited Power of
Attorney and consult with One 2 One in respect of any such
documents which are not in the agreed form prior to their
execution by CTI;
(d) where applicable reduce the Site Licence Fee Supplement payable
by One 2 One in respect of the Sites in accordance with the
provisions contained in Schedule 10.
(e) apply the agreed inter operator fees set out in Schedule 11
including any Retail Prices Indexation therein described to Third
Party Site Sharing Contracts unless otherwise agreed between CTI
and the third party sharers.
8. Rates, Insurance, Electricity.
8.1 One 2 One will be responsible for payment of any rates assessed on One
2 One Retained Apparatus and a reasonable proportion (according to
user) of any Assets and New Assets, the use of which is shared by One
2 One which shall in the case of New Assets be no greater than the
rates which would have been payable had the New Assets been installed
in accordance with the specification for the New Sites provided by One
2 One to an ADC Contractor.
<PAGE>
8.2 One 2 One will be responsible for insuring One 2 One Retained
Apparatus against any accidental loss or damage and also for insuring
against third party liability in respect of such One 2 One Retained
Apparatus and arising out of One 2 One's continuing use of the
Properties and the CTI New Sites.
8.3 One 2 One will pay or otherwise indemnify CTI against any costs and
expenses incurred by CTI in providing and maintaining the requisite
electricity supply to One 2 One's Retained Apparatus and in arranging
any telephone connections and charges in relation to One 2 One's
Retained Apparatus and the costs and expenses incurred under any
service contracts retained by One 2 One relating to annual electricity
safety checks of the Apparatus.
9. Licensing
One to One confirms it currently holds the One 2 One Licence, which is not
due to, expire until May 2020. It further confirms that it is not
presently aware of any matter likely to jeopardise the continuation and
renewal of the Licence and further confirms it has no intention to do or
cause to be done any act which deliberately seeks to end that Licence prior
to its expiry date or cause it not to be renewed for a further period
expiring on or after the 25th anniversary of the Framework Commencement
Date.
10 Employment
10.1 It is not intended by the parties that the contract of employment of
any of the employees of the One 2 One shall be transferred to CTI.
10.2 One 2 One confirms that the transfer of the Properties and the Assets
will not be a transfer to which the Transfer of Undertakings
(Protection of Employment) Regulations 1981 (as amended) will apply
and that One 2 One shall be liable for and shall indemnify CTI in
respect of all or any redundancy payments unfair dismissal or other
compensation (whether
<PAGE>
statutory or contractual) salaries wages commissions remuneration
national insurance contributions damages costs claims PAYE tax
deductions or expenses which may be incurred by CTI as a result of any
persons being employees of One 2 One or otherwise engaged in
connection with the Properties in such a way that their employment
transfers to CTI pursuant to or by virtue of the relevant TUPE
regulations
11. Continuing effects of this Agreement
All provisions of this Agreement shall so far as they are capable of being
performed or observed continue in full force and effect notwithstanding
completion except in respect of those matters then already performed and
completion shall not constitute a waiver of any of CTI's rights in relation
to this Agreement.
12. Announcements
The parties agree to keep the financial terms of this Agreement
confidential and not to release or make any publicity statement,
advertisement or make any other disclosure to any party in relation to this
Agreement save as herein expressly permitted, without the express consent
of the other party, such consent not to be unreasonably withheld or
delayed.
13. Releases and waivers
13.1 CTI may, in its discretion, in whole or in part release, compound or
compromise, or waive its rights or grant time or indulgence in
respect of any liability to it under this Agreement.
13.2 Subject to clause 13.1, neither the single or partial exercise or
temporary or partial waiver by CTI of any right, nor the failure by
CTI to exercise in whole or in part any right or to insist on the
strict performance of any provision of this Agreement, nor the
discontinuance, abandonment or adverse determination of any
proceedings taken by CTI to enforce any
<PAGE>
right or any such provision shall (except for the period or to the
extent covered by any such temporary or partial waiver) operate as a
waiver of, or preclude any exercise or enforcement or (as the case
may be) further or other exercise or enforcement by CTI of, that or
any other right or provision.
13.3 The giving by CTI of any consent to any act which by the terms of
this Agreement requires such consent shall not prejudice the right of
CTI to withhold or give consent to the doing of any similar act.
14. Notices
14.1 Each of the parties to the partnership which comprises One 2 One
("the appointor") hereby irrevocably authorises and appoints One 2
One's in-house General Counsel (or such other person or persons, being
a firm of solicitors resident in England, as the appointor may
hereafter as regards himself by notice in writing to all the other
parties hereto from time to time substitute) to accept on his behalf
service of all legal process arising out of or connected with this
Agreement.
14.2 Except as otherwise provided in this Agreement, every notice under
this Agreement shall be in writing and shall be deemed to be duly
given if it (or the envelope containing it) identifies the party to
whom it is intended to be given as the addressee and:
(i) it is delivered by being handed personally to the addressee (or,
where the addressee is a corporation, any one of its Directors or
its Secretary); or
(ii) it is delivered by being left in a letter box or other
appropriate place for the receipt of letters at the addressee's
authorised address; or
(iii) the envelope containing the notice is properly addressed to the
<PAGE>
addressee at his authorised address and duly posted by first
class mail (or by airmail registered post if overseas) or the
notice is duly transmitted to that address by facsimile
transmission;
and, in proving the giving or service of such notice, it shall be
conclusive evidence to prove that the notice was duly given within the
meaning of this clause 14.2.
14.3 A notice sent by post (or the envelope containing it) shall not be
deemed to be duly posted for the purposes of clause 14.2 (iii) unless
it is put into the post properly stamped or with all postal or other
charges in respect of it otherwise prepaid.
14.4 For the purposes of this clause 14 the authorised address of One 2
One shall be the address of One 2 One's in-house General Counsel or
(in the case of notices transmitted by facsimile transmission) the
facsimile number (if any) of One 2 One's in-house General Counsel and
the authorised address of CTI shall be the address of its registered
office for the time being or (in the case of notices transmitted by
facsimile transmission) its facsimile number at that address.
14.5 Any notice duly given within the meaning of clause 14.2 shall be
deemed to have been both given and received:
(i) if it is delivered in accordance with clause 14.2(i) or 14.2(ii),
on such delivery;
(ii) if it is duly posted or transmitted in accordance with clause
14.2(iii) by any of the methods there specified, on the second
(or, when sent airmail, fifth) business day after the day of
posting or in the case of a notice transmitted by facsimile
transmission upon receipt by the sender of the correct
transmission report.
14.6 For the purposes of this Clause 14 "notice" shall include any
request,
<PAGE>
demand, instruction, communication or other document.
15. Entire Agreement
15.1 This Agreement (together with all documents which are required by its
terms to be entered into by the parties or any of them and all other
documents which are in the agreed form and are entered into by the
parties or any of them in connection with this Agreement) set out the
entire agreement and understanding between the parties in connection
with this Agreement and other matters described in it.
15.2 Without prejudice to the generality of Clause 15.1, this Agreement
shall supersede as from the date hereof the Confidentiality Agreement.
15.3 Notwithstanding the provisions contained in Clause 15.1, the parties
acknowledge that save only as herein elsewhere specifically provided,
nothing in this Agreement is intended to modify, supersede or to
replace any site sharing agreement (including the Master Site Sharing
Agreement) now or in the future entered into between the parties,
whether in respect of the CTI Existing Shared Stations, the
Properties, or the CTI New Sites or any other sites owned, operated or
maintained by CTI.
16. Alterations
No purported alteration of this Agreement shall be effective unless it is
in writing, refers to this Agreement and is duly executed by each party
hereto.
17. Counterparts
This Agreement may be entered into in the form of two or more counterparts
each executed by one or more of the parties but, taken together, executed
by all and, provided that all the parties so enter into the Agreement, each
of the executed counterparts, when duly exchanged or delivered, shall be
deemed to be an original, but, taken together, they shall constitute one
instrument.
<PAGE>
18 Disputes Resolution
If, representatives of CTI and One 2 One fail to agree any matter relating
to this Agreement and are unable to resolve such dispute within 30 days the
matter will be referred for resolution to the Chief Operating Officer of
CTI and the General Counsel of One 2 One, and failing their agreement,
either party will be at liberty to refer the matter to Expert Determination
19. Expert Determination
19.1 This Clause shall apply to any issue, disagreement or dispute which
falls to be determined under this Agreement by Expert Determination
19.2 Whenever this Clause applies, the issue, disagreement or dispute
shall be referred to an Expert agreed between the parties or, in
default of agreement, an Expert nominated at the request of either
party by the President or other duly appointed Officer of such UK
professional body as the parties may agree or in the absence of
agreement:
(a) in the case of a dispute as to the interpretation or
construction of this Agreement, to an officer of the Law Society
of England and Wales (or for sites in Scotland to the President
of the Scottish Law Society)
(b) in the case of a dispute concerning the operation and
maintenance of Apparatus, to an officer of the Institution of
Civil Engineers or the Institution of Mechanical Engineers or
the Institute of Electrical Engineers (each with not less than 5
years relevant experience of telecommunications technology) as
appropriate in the circumstances
(c) in the case of all other disputes concerning any obligations
under this Agreement to an officer of the Royal Institution of
Chartered Surveyors
<PAGE>
19.3 Each of the parties shall be entitled to provide the Expert with such
information and such written representations as may be necessary to
assist in the determination of the dispute in question provided such
information and/or representations are made within 30 days of the date
of referral. Each of the parties shall simultaneously send copies of
any correspondence with the Expert to the other party save where the
Expert agrees that such copies should not be sent to the other party
for reasons of commercial confidentiality
19.4 The Expert shall be required by the parties to reach a determination
of the issues referred to him as soon as is reasonably practicable and
unless the parties otherwise agree within 45 days of his appointment
19.5 The Expert shall act as an expert and not as an arbitrator and his
decision shall be notified to both parties simultaneously and
implemented as soon as is practicable upon notification Unless both
parties agree in writing prior to the appointment of the Expert, the
Expert's decision (including his decision as to costs) shall be final
and binding upon the parties except in the case of fraud or manifest
error
20. Restrictive Trade Practices
Notwithstanding any other provisions of this Agreement, no provision of
this Agreement which is of such a nature as to make this Agreement liable
to registration under the Restrictive Trade Practices Act 1976 shall take
effect until the day after that on which particulars thereof have been duly
furnished to the Director General of Fair Trading.
21. Assignment
21.1 This Agreement shall be binding on and shall enure for the benefit of
the successors in title and personal representatives of each party.
21.2 Save as provided in Clause 21.3 none of the parties hereto shall be
entitled
<PAGE>
to assign the any rights and obligations under this Agreement without
the prior consent of the other(s), such consent not to be unreasonably
withheld or delayed.
21.3 The benefit (but not the burden) of this Agreement may be assignable
by CTI (in all or in part) to any CTI Group Company or other CTI
Subsidiary and, in the case of One 2 One (in all or in part) to any
company in the One 2 One Group or in the event of a change in the
partnership trading under the name or style "One 2 One", and in the
event of any such assignment all references in this Agreement to CTI
or One 2 One shall be deemed to include such assigns.
21.4 CTI may sub-contract part or parts (but not the whole) of its
obligations under this Agreement without One 2 One's consent
provided it ensures that any such sub-contractor shall comply with the
obligations on the part of CTI contained in this Agreement.
22. Severability
22.1 Each and every undertaking contained herein shall be read as a
separate and distinct undertaking and the invalidity or
unenforceability of any part of this Agreement shall not affect the
validity or enforceability of the remainder.
22.2 If any provision of this Agreement is illegal or unenforceable as a
result of any time period being stated to endure for a period in
excess of that permitted by a regulatory authority, that provision
shall take effect with a time period that is acceptable to the
relevant regulatory authorities subject to it not negating the
commercial intent of the parties under this Agreement.
23. Set Off
Any party to this Agreement (the "Paying Party") shall be entitled to
withhold or
<PAGE>
set off against any amount due and payable by it to any other party to this
Agreement (the "Receiving Party") any amount which, under or in relation to
this Agreement, has become due and payable by the Receiving Party to the
Paying Party.
24. Waiver
No waiver by either CTI or One 2 One of any of its rights hereunder shall
be deemed a continuing waiver of any rights hereunder.
25. Additional Documentation
Without prejudice to the other provisions contained in this Agreement, One
2 One and CTI acknowledge that while this Agreement is legally binding on
the parties, additional contractual documentation may be required to give
full legal effect to this Agreement. The parties each agree to enter into
such additional contracts as are reasonably required in order to give full
effect to this Agreement, in accordance with the intention and spirit of
the principles set out elsewhere herein, and to progress diligently and in
good faith to complete the negotiation of the remaining terms of any such
additional contracts
26 Costs
Each party will be responsible for its own legal fees in connection with
this Agreement. CTI will be responsible for any third party fees arising
in connection with the exercise of the Option and any additional legal
documentation referred to in Clause 25
27. Applicable Law
The parties agree this Agreement is to be governed by the laws of England
and the jurisdiction of the English Courts.
<PAGE>
Schedule I
CTI Existing Shared Stations
(166 Station List)
<PAGE>
<TABLE>
<CAPTION>
STATION NAME SHARER NAME SS NO. Cell ID Licence Term Start Date Start Date 2 Review Date Licence Expiry Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Abercraf Mercury 6996 92926 12 01/09/97 01/09/99 31/08/09
One 2 One
Aberdeen Mercury 7027 97305 3 01/10/97 01/10/99 02/10/00
One 2 One
Abertillery Mercury 7019 92966 12 01/09/97 01/09/01 31/08/09
One 2 One
Aberystwyth Mercury 7459 94333 12 01/11/98 01/11/01 31/10/10
One 2 One
Acklam Wold Mercury 5915 36750 3 01/10/96 01/10/99 01/10/99
One 2 One
Afon Dyfi Mercury 7681 94322 12 01/12/98 01/12/01 28/11/10
One 2 One
Aldeburgh Mercury 5975 96370 3 01/12/96 01/12/99 03/12/99
One 2 One
Alexandra Palace Mercury 930 80003 9 01/08/97 01/08/00 01/08/06
One 2 One
Ascott-under-Wychwood Mercury 6946 92770 12 01/05/98 01/05/03 30/04/10
One 2 One
Ashbourne Mercury 6977 93929 3 30/09/97 30/09/00 29/09/00
One 2 One
Ashford-in-the-Water Mercury 7739 93910 12 01/12/98 01/12/01 28/11/10
One 2 One
Ashkirk Mercury 5927 97411 3 01/10/96 01/10/99 01/10/99
One 2 One
Bargoed Mercury 7215 92159 12 01/12/97 01/12/00 28/11/09
One 2 One
Barnstaple VHF Mercury 6978 94910 3 30/09/97 30/09/00 01/10/00
One 2 One
Bath Mercury 1405 94043 12 01/04/95 01/04/98 31/03/07
One 2 One
Beecroft Hill Mercury 1363 30008 12 01/05/94 01/05/97 30/04/06
One 2 One
Bethesda North Mercury 6892 97176 12 01/12/97 01/12/00 30/11/09
One 2 One
Betws-y-Coed Mercury 7669 94305 12 01/11/98 01/11/01 31/10/10
One 2 One
Bexhill MF Mercury 5523 94660 12 01/01/96 01/01/99 31/12/07
One 2 One
Bincombe Hill Mercury 6796 92475 12 01/07/97 01/07/99 01/07/00
One 2 One
Bishops Stortford Mercury 5750 94747 12 01/07/96 30/06/99 30/06/08
One 2 One
Blaenavon Mercury 7102 92961 12 01/09/97 01/09/99 31/08/09
One 2 One
Blaenplwyf Mercury 7460 94336 12 01/09/98 01/09/01 31/08/10
One 2 One
Blair Atholl Mercury 742 97909 12 01/10/98 01/10/01 30/09/10
One 2 One
Bolehill Mercury 7742 93927 12 01/12/98 01/12/01 30/11/10
One 2 One
Bow Brickhill Mercury 1254 501066 12 01/10/93 01/10/99 30/09/05
One 2 One
Brierley Hill Mercury 866 93277 12 01/09/97 01/09/00 31/08/09
One 2 One
Brighton MF Mercury 6159 94559 12 01/08/97 01/08/04 31/07/09
One 2 One
Bristol Ilchester Mercury 5764 94034 12 01/05/96 30/04/99 30/04/08
Crescent One 2 One
Broneirion Mercury 7683 94329 12 01/01/99 01/01/02 31/12/10
One 2 One
Brookmans Park Mercury 7600 91358 3 01/09/98 01/09/99 31/08/01
One 2 One
Buxton Mercury 6979 93908 3 30/09/97 30/09/00 29/09/00
One 2 One
Carmarthen Mercury 6980 94909 3 01/01/98 01/01/01 02/01/01
One 2 One
Carmel Mercury 6981 94912 3 30/09/97 30/09/00 01/10/00
One 2 One
Carno Mercury 7603 94325 12 01/12/98 01/12/01 30/11/10
One 2 One
Cerne Abbas Mercury 6780 THS 45020 12 01/05/97 01/05/99 30/04/09
One 2 One
Chesham Mercury 949 91207 12 01/05/93 01/05/96 01/05/99 30/04/08
One 2 One
Churchdown Hill Mercury 1415 94013 9 01/08/97 01/08/00 01/08/06
One 2 One
Clarborough Mercury 5905 96634 3 01/10/96 01/01/10 99/10/99
One 2 One
Clevedon Mercury 6141 94078 12 01/10/96 01/10/99 30/09/08
One 2 One
Clyro Mercury 7686 94214 12 01/12/98 01/12/01 28/11/10
One 2 One
Conway Mercury 5939 97173 3 01/08/97 01/08/00 31/07/00
One 2 One
Corfe Castle Mercury 6850 92524 12 01/12/97 01/12/00 30/11/09
One 2 One
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATION NAME SHARER NAME SS NO. Cell ID Licence Term Start Date Start Date 2 Review Date Licence Expiry Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Corwen Mercury 7687 94311 12 01/12/98 01/12/01 30/11/10
One 2 One
Cow Hill Mercury 7445 97919 12 01/10/98 01/10/01 30/09/10
One 2 One
Creteway Down Mercury 5637 94661 12 01/01/96 01/01/02 31/12/07
One 2 One
Daventry Mercury 1344 93155 12 01/01/94 01/01/97 01/01/00 31/12/08
One 2 One
Deiniolen Mercury 6950 97179 3 01/08/97 01/08/99 31/07/00
One 2 One
Dolgellau Mercury 7896 94318 12 01/12/98 01/12/01 30/11/10
One 2 One
Dorking Mercury 5708 90617 12 01/07/96 01/07/99 30/06/08
One 2 One
Dunkeld Mercury 7446 94261 12 01/10/98 01/10/01 28/09/10
One 2 One
Durham Mercury 5896 96992 3 01/10/96 01/10/99 01/10/99
One 2 One
East Grinstead Mercury 5529 12 01/09/96 01/09/99 31/08/08
One 2 One
Ebbw Vale Mercury 7101 92962 12 01/12/97 01/12/00 28/11/09
One 2 One
Exeter MF Mercury 5995 92340 12 01/11/96 01/11/99 31/10/08
One 2 One
Fenton Mercury 6930 12 01/11/96 31/10/99 31/10/08
One 2 One
Findon Mercury 1416 94532 12 01/02/95 01/02/01 31/01/07
One 2 One
Fishguard Mercury 7461 94220 12 01/04/98 01/04/01 31/03/10
One 2 One
Fort William Mercury 7449 97978 12 01/12/98 01/12/01 30/11/10
One 2 One
Geddington Mercury 5940 96585 3 01/01/97 01/01/00 01/01/00
One 2 One
Glossop Mercury 1469 95054 12 01/08/96 01/08/99 31/07/08
One 2 One
Grantown Mercury 7736 97971 12 01/12/98 01/12/01 30/11/10
One 2 One
Great Missenden Mercury 1200 91297 12 01/05/93 01/05/96 01/05/99 30/04/08
One 2 One
Guildford Mercury 1239 202-11A 12 01/09/93 01/09/96 01/09/99 31/08/08
One 2 One
Guisborough Mercury 6129 96791 3 01/01/97 01/01/99 01/01/00
One 2 One
Haltwhistle Mercury 5963 97225 3 01/01/97 01/01/00 01/01/00
One 2 One
Hameldon Hill Mercury 5943 6104T 3 01/01/97 01/01/00 01/01/00
One 2 One
Hannington Mercury 1448 94500 12 01/11/95 31/11/01 31/10/07
One 2 One
Haslemere Mercury 5649 94718 12 01/05/96 01/05/99 30/04/08
One 2 One
Hastings Mercury 5526 94764 12 01/05/97 30/05/00 30/04/09
One 2 One
Haverfordwest Mercury 7462 94225 12 01/09/98 01/09/01 29/08/10
One 2 One
Hazler Hill Mercury 6879 12 01/05/98 01/05/01 30/04/10
One 2 One
Heathfield Mercury 5557 94641 12 01/04/96 01/04/99 31/03/08
One 2 One
Helston Mercury 7475 94288 12 01/10/98 01/10/01 30/09/10
One 2 One
Henley-On-Thames Mercury 958 91226 12 01/06/93 01/06/99 31/05/05
One 2 One
High Hunsley Mercury 5922 36780 3 01/10/96 01/10/99 01/10/99
One 2 One
High Wycombe Mercury 1199 91214 12 01/05/93 01/05/99 30/04/05
One 2 One
Holme Moss Mercury 1462 95047 12 01/08/96 01/08/99 31/07/08
One 2 One
Hunmanby Mercury 6130 96759 3 01/01/97 01/01/00 01/01/00
One 2 One
Icomb Hill Mercury 6137 92764 12 01/05/97 01/05/00 30/04/09
One 2 One
Kendal Mercury 6113 97205 3 01/01/97 01/01/00 01/01/00
One 2 One
Kenley Mercury 915 90305 12 01/12/92 01/12/01 30/11/04
One 2 One
Kerry Mercury 7463 94327 12 01/04/98 01/04/01 31/03/10
One 2 One
Kidderminster Mercury 1419 94058 12 01/05/95 01/05/98 30/04/07
One 2 One
Kilmacolm Mercury 5929 97682 3 01/01/97 01/01/00 01/01/00
One 2 One
Kilvey Hill Mercury 5898 92103 12 01/10/96 01/10/99 30/09/08
One 2 One
Kirk O'Shotts Mercury 5937 92047 3 01/10/96 01/10/99 01/10/99
One 2 One
Kirkton Mailer Mercury 6871 97705 3 01/10/97 01/10/99 30/09/00
One 2 One
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATION NAME SHARER NAME SS NO. Cell ID Licence Term Start Date Start Date 2 Review Date Licence Expiry Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ladder Hill Mercury 6982 93907 3 30/09/97 30/09/00 29/09/00
One 2 One
Leek Mercury 6983 93919 3 30/09/97 30/09/00 01/10/00
One 2 One
Llanbrynmair Mercury 7690 94323 12 01/12/98 01/12/01 30/11/10
One 2 One
Llandinam Mercury 7464 94330 12 01/09/98 01/09/01 31/08/10
One 2 One
Llandrindod Wells Mercury 7692 94204 12 01/12/98 01/12/01 30/11/10
One 2 One
Llanelli Mercury 6819 92258 12 01/05/97 01/05/00 30/04/09
One 2 One
Llangeinor Mercury 6997 92933 12 01/09/97 01/09/99 31/08/09
One 2 One
Llangollen VHF Mercury 5979 3 01/08/97 01/08/99 31/07/00
One 2 One
Llwyn Onn Mercury 7648 94319 12 01/11/98 01/11/01 29/10/10
One 2 One
Long Mountain Mercury 6984 94916 3 30/09/97 30/09/00 29/09/00
One 2 One
Ludlow Mercury 6120 97145 3 01/07/97 01/07/00 02/07/00
One 2 One
Luton Mercury 867 90334 12 01/08/93 01/08/96 01/08/99 31/07/08
One 2 One
Madingley Mercury 5569 94682 12 01/07/95 01/07/01 30/06/07
One 2 One
Maesteg Mercury 6949 92268 12 01/09/97 01/09/00 31/08/09
One 2 One
Malvern Mercury 1388 94005 9 01/07/97 01/07/00 01/07/06
One 2 One
Manningtree Mercury 6169 96400 12 01/06/97 01/06/00 31/05/09
One 2 One
Mansfield Mercury 5941 96668 3 01/07/97 01/07/00 30/06/00
One 2 One
Marlow Bottom Mercury 954 91101 12 01/05/93 01/05/99 30/04/05
One 2 One
Meldrum Mercury 7557 97940 12 01/10/98 01/01/01 28/09/10
One 2 One
Mendip Mercury 6114 THS 12 01/12/96 01/12/99 30/11/08
One 2 One
Merseyside Mercury 1398 5504T 18 mths 01/07/96 01/07/96 01/07/98
One 2 One
Merthyr Tydfil Mercury 6108 92162 12 01/11/96 01/11/99 31/10/08
One 2 One
Mickleham Mercury 5812 90629 12 01/01/97 01/01/00 31/12/08
One 2 One
Midhurst Mercury 1423 50034 12 01/01/95 01/01/01 31/12/06
One 2 One
Millburn Muir Mercury 7159 97665 3 01/04/98 01/04/01 02/04/01
One 2 One
Morecambe Bay Mercury 6985 94900 3 30/09/97 30/09/00 01/10/00
One 2 One
Netherton Braes Mercury 5930 97659 3 01/10/96 01/10/99 01/10/99
One 2 One
Newmarket Hill Mercury 5524 94656 12 01/01/96 01/01/02 31/12/07
One 2 One
Newton Mercury 5895 97031 3 01/10/96 01/10/99 01/10/99
One 2 One
Oakeley Mynd Mercury 6885 97141 12 01/04/98 01/04/01 31/03/10
One 2 One
Okehampton Mercury 7476 94263 12 01/10/98 01/10/01 30/09/10
One 2 One
Oliver's Mount Mercury 5989 96785 3 01/10/97 01/10/99 30/09/00
One 2 One
Penmaen Rhos Mercury 6889 97188 3 01/08/97 01/08/00 31/07/00
One 2 One
Pennar Mercury 6948 92248 12 01/09/97 01/09/00 29/08/09
One 2 One
Penrhyn-Coch Mercury 7700 94331 12 01/11/98 01/11/01 31/10/10
One 2 One
Penryn Mercury 7477 94285 12 01/10/98 01/10/01 28/09/10
One 2 One
Perranporth Mercury 7619 94294 12 01/11/98 01/11/01 29/10/10
One 2 One
Peterborough Mercury 6154 96416 12 01/06/97 01/06/00 31/05/09
One 2 One
Pitlochry Mercury 7555 97911 12 01/10/98 01/10/01 30/09/10
One 2 One
Pontop Pike Mercury 5936 97044 3 01/10/96 01/10/99 01/10/99
One 2 One
Pontypool Mercury 6103 92190 12 01/04/97 01/04/00 31/03/09
One 2 One
Poole Mercury 1412 94552 3 01/08/97 01/08/99 31/07/00
One 2 One
Porth Mercury 6102 92183 12 01/01/97 01/01/00 31/12/08
One 2 One
Redruth Mercury 6986 94901 3 30/09/97 30/09/00 01/10/00
One 2 One
Reigate Mercury 1181 500154 12 01/12/92 01/12/01 30/11/04
One 2 One
Rheola Mercury 6797 45024 12 01/04/97 01/04/00 31/03/09
One 2 One
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATION NAME SHARER NAME SS NO. Cell ID Licence Term Start Date Start Date 2 Review Date Licence Expiry Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rhymney Mercury 7018 92151 12 01/09/97 01/09/99 29/08/09
One 2 One
Richmond Mercury 6131 97006 3 01/03/97 01/03/00 29/02/00
One 2 One
Rosemarkie Mercury 7454 97943 12 01/11/98 01/11/01 31/10/10
One 2 One
Rowridge Mercury 1425 34584 12 01/05/95 01/05/01 30/04/07
One 2 One
Salisbury Mercury 5996 32900 1 01/07/97 01/01/98 31/12/98 01/01/99
One 2 One
Sandale Mercury 6987 94918 3 30/09/97 30/09/00 29/09/00
One 2 One
Scarborough Mercury 6127 96704 3 01/03/97 01/03/02 29/02/00
One 2 One
Seaham Mercury 5897 96986 3 01/10/96 01/10/99 01/10/99
One 2 One
Sheffield Mercury 1379 30010 9 01/07/97 01/07/00 01/07/06
One 2 One
Shotleyfield Mercury 6881 97029 3 01/10/97 01/10/99 02/10/00
One 2 One
South Knapdale Mercury 7560 97860 12 01/10/98 01/10/01 28/09/10
One 2 One
St. Marks Mercury 1266 THS 201-6 12 01/09/93 01/09/96 01/09/99 31/08/08
One 2 One
Storeton Mercury 1382 93579 12 01/05/97 01/05/00 30/04/09
One 2 One
Sudbury Mercury 5990 7106T 3 01/02/97 01/02/00 01/02/00
One 2 One
Sutton Coldfield Mercury 939 501474 12 01/01/94 01/01/97 31/12/05
One 2 One
Tarbert Loch Fyne Mercury 7932 97859 12 01/12/98 01/12/01 30/11/10
One 2 One
Tideswell Moor Mercury 6988 93909 3 30/09/97 30/09/00 01/10/00
One 2 One
Ton Pentre Mercury 6104 92185 12 01/02/97 01/02/00 31/01/09
One 2 One
Torosay Mercury 7566 97921 12 01/10/98 01/10/01 28/09/10
One 2 One
Tunbridge Wells Mercury 1240 500589 12 01/09/93 01/09/95 01/09/98 28/08/07
One 2 One
Waltham Mercury 5909 96616 3 01/12/96 01/12/99 01/12/99
One 2 One
Wenvoe Mercury 5861 92090 12 01/11/96 01/11/99 31/10/08
One 2 One
West Runton Mercury 5976 96417 3 01/11/96 01/11/99 01/11/99
One 2 One
Westwood Mercury 1418 94047 12 01/11/95 01/11/01 31/10/07
One 2 One
Weymouth Mercury 6795 92476 12 01/06/97 01/06/00 31/05/09
One 2 One
Whitehaven FM Mercury 6989 94902 3 30/09/97 30/09/00 30/09/00
One 2 One
Whitehawk Hill Mercury 1417 94540 12 01/09/94 01/09/00 31/08/06
One 2 One
Whittingslow Mercury 6884 97140 3 01/12/97 01/12/00 02/12/00
One 2 One
Windermere Mercury 6990 94917 3 30/09/97 30/09/00 01/10/00
One 2 One
Winterborne Stickland Mercury 7540 708168 12 01/11/98 01/11/01 31/10/10
One 2 One
Wooburn Mercury 6087 91318 12 01/07/97 01/07/00 30/06/09
One 2 One
Wrotham Mercury 6171 91311 12 01/07/97 01/07/00 30/06/09
One 2 One
</TABLE>
<PAGE>
Schedule 2
The Sites
<PAGE>
Schedule 3
List of Third Party Site Sharing Contracts
It is agreed this list will be provided by One 2 One on or after completion,
<PAGE>
Schedule 4
Assignment Protocol
On the date of execution of the Management Agreement , or in respect of One 2
One New Sites on the date the said sites become the responsibility of CTI under
the terms of the Management Agreement , One 2 One will
. hand over the Limited Power of Attorney in favour of CTI,
. deliver all the title deeds to the Properties to CTI's solicitors
together with any relevant Properties documents and other available
information including reports on title, planning consents, and Third
Party Site Sharing Contracts
. give written confirmation to CTI's Solicitors that all Security
Interests and Guarantees given by One 2 One in respect of the Property
have been or will be released before completion of the assignment; and
. deliver to CTI a list of Assets (including the Tower) transferred or to
be transferred with the Properties
<PAGE>
Schedule 5
Assignment Deed for the Properties
<PAGE>
Date: 1999
[ . ]
(1)
Castle Transmission International Ltd
(2)
ASSIGNMENT
<PAGE>
THIS ASSIGNMENT is made the 1999
BETWEEN:
(1) [Insert name of relevant assignor] whose regional office is at Elstree
Tower, Elstree Way, Borehamwood, Hertfordshire, WD6 1DT ("One 2 One")
(2) CASTLE TRANSMISSION INTERNATIONAL LTD whose registered office is at Warwick
Technology Park, Gallows Hill, Heathcote Lane, Warwick CV34 6TN ("CTI")
WHEREAS:
(A) by the lease or leases ("the Leases)" short particulars of which are set
out in the schedule hereto the premises mentioned in the said schedule
("the Premises") were demised for the term or terms ("the Terms") and
subject to the rent reserved by and the tenant's or lessee's covenants and
the conditions contained in the Leases;
(B) One 2 One has agreed to assign the Premises to CTI in consideration only of
the covenant by CTI implied as mentioned below
NOW THIS DEED WITNESSES:
1. As agreed One 2 One assigns the Premises to CTI for the unexpired residue
of the Terms subject to the Assignee paying the rent reserved by and
observing the lessees' covenants and the conditions contained in the Leases
for the residue of the Terms or (in the case of any leases which are "new"
tenancies for the purposes of the Landlord and Tenant (Covenants) Act 1995)
whilst the relevant Terms are vested in it).
2. There are implied into this Deed such covenants (by One 2 One and CTI
respectively) as would have been implied had this Deed been a conveyance
for valuable consideration and in which One 2 One conveyed and was
expressed to convey with full title guarantee
IN WITNESS of which this Deed has been duly executed by One 2 One the date first
before written
The Schedule
Particulars of the Lease(s)
<PAGE>
Date Parties The Premises The Term Current Annual Rent
- ---- ------- ------------ -------- -------------------
THE COMMON SEAL of.................. )
was hereunto.................. )
affixed in the presence of:.................. )
............................ Director
............................ Secretary
<PAGE>
Schedule 6
New Sites Protocol
1. One 2 One will free issue any One 2 One Retained Apparatus to be installed
on the new greenfield sites together with a Tower design specification for
the purposes of identifying Reserved Capacity and meet the cost of the New
Assets installed by the ADC Contractor to meet One 2 One's Permitted
Equipment specification. One 2 One will also meet the development costs of
such new greenfield sites including acquisition, design and legal costs,
provided that where legal work has not already commenced, early access or
any other operational requirements are not compromised and the landlord is
willing, CTI may at any time during the period of 3 years from the
Framework Commencement Date take over responsibility to complete the legal
acquisition of such new greenfield sites in its own name and at its own
cost and will procure the Landlord and all others with a superior interest
in the CTI New Sites consent in writing to the occupation of the CTI New
Sites by One 2 One and will use all reasonable endeavours not to agree any
restrictions on access to the CTI New Sites for One 2 One's Permitted Use
and any such restrictions will require the consent of One 2 One (such
consent not to be unreasonably withheld or delayed ) To the extent One 2
One has paid a premium in place of rent, then CTI will reimburse such
premium to One 2 One.
2. One 2 One will use all reasonable endeavours to permit CTI to require the
ADC Contractor to modify the design and construction of New Sites to meet
CTI's business interests and to enable CTI to better perform its rights and
obligations under the Management Agreement provided in doing so: -
(a) CTI agrees to meet any additional costs and expenses incurred in
consequence which exceed those applicable to One 2 One's Permitted
Equipment specification , including
<PAGE>
(i) incentive payments to third party ADC Contractors in order that
they submit an alternative planning application in accordance
with CTI's requirement for the relevant New Site to run in
parallel with but without prejudice to any application made by
such third party ADC Contractor for One 2 One's Permitted
Equipment specification;
(ii) incentive payments to the third party ADC Contractor in order to
acquire the New Site in a condition more suitable for multi-
occupational site sharing provided such incentives do not exceed
any bonuses offered by One 2 One for meeting or exceeding the New
Site delivery timetable set out in One 2 One's Permitted
Equipment specification.
(b) a dual purpose base designed by CTI may be substituted for One 2 One's
standard mast base set out in One 2 One's Permitted Equipment
specification provided that CTI pay any difference in costs arising as
a result of making this substitution
(c) Subject to sub-paragraph (d) below, an alternative Tower may be
substituted by CTI for One 2 One's free issue Tower provided the
alternative CTI Tower is capable of carrying One 2 One's Permitted
Equipment specification and One 2 One shall where CTI has elected not
to use a free issue Tower provided by One 2 One pay to CTI a
contribution equal to the cost of the Tower requisite for the
Permitted Equipment specification which One 2 One would otherwise have
installed and CTI will agree with One 2 One a Tower design
specification for the purpose of identifying Reserved Capacity.
(d) in making any arrangements with the third party ADC Contractor CTI
will not seek to carry out any modifications or alterations to One 2
One's Permitted Equipment specification which:
<PAGE>
(i) jeopardise the timetable for access by One 2 One to the relevant
New Site; or
(ii) adversely compromise One 2 One's Permitted Equipment
specification or One 2 One's Permitted Use; or
(iii) compromise One 2 One's rights under the Master Site Sharing
Agreement as amended by the Special Conditions in relation to the
relevant New Site.
2. The rates payable by One 2 One on New Sites shall be the lower of the rates
payable on the hypothetical site which would have been built in accordance
with One 2 One's Permitted Equipment specification for its sole occupation
or a fair proportion (according to user) of the rates payable for the site
as built.
3. Where One 2 One completes the acquisition of New Site then such site shall
on completion form part of the portfolio of sites from time to time managed
by CTI under the Site Management Agreement and the parties shall record
such inclusion by formally completing a memorandum within 10 working days
of such completion to be annexed to the Site Management Agreement.
4. One 2 One shall instruct its ADC Contractors in relation to this Protocol
and shall at all times during the Term give CTI sufficient advance details
of new greenfield sites and Non-Compliant Greenfield Sites being acquired
to enable CTI to establish the New Sites Protocol and manage their
incorporation, if appropriate, into the Site Management Agreement
<PAGE>
Schedule 7
Site Management Agreement
<PAGE>
EXECUTION COPY
================================================================================
EXHIBIT 10.61
______________________________________________
CROWN CASTLE INTERNATIONAL CORP.
As Issuer
______________________________________________
SERIES A AND SERIES B
SENIOR EXCHANGE NOTES DUE 2007
______________________________
INDENTURE
Dated as of March 15, 1999
______________________________
______________________________
United States Trust Company of New York
As Trustee
______________________________
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1).............................................. 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.
(a)(4).............................................. N.A.
(a)(5).............................................. 7.10
(b)................................................. 7.10
(c)................................................. N.A.
311 (a)................................................. 7.11
(b)................................................. 7.11
(c)................................................. N.A.
312 (a)................................................. 2.05
(b)................................................. 11.03
(c)................................................. 11.03
313 (a)................................................. 7.06
(b)(1).............................................. 11.03
(b)(2).............................................. 7.07
(c)................................................. 7.06; 11.02
(d)................................................. 7.06
314 (a)................................................. 4.03; 11.02
(b)................................................. 11.02
(c)(1).............................................. 11.04
(c)(2).............................................. 11.04
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 11.05
(f)................................................. N.A.
315 (a)................................................. 7.01
(b)................................................. 7.05, 11.02
(c)................................................. 7.01
(d)................................................. 7.01
(e)................................................. 6.11
316 (a)(last sentence).................................. 2.09
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. N.A.
(b)................................................. 6.07
(c)................................................. 2.12
317 (a)(1).............................................. 6.08
(a)(2).............................................. 6.09
(b)................................................. 2.04
318 (a)................................................. 11.01
(b)................................................. N.A.
(c)................................................. 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
Section 1.01. Definitions......................................................................................1
Section 1.02. Other Definitions...............................................................................20
Section 1.03. Incorporation by Reference of Trust Indenture Act...............................................21
Section 1.04. Rules of Construction...........................................................................21
Section 1.05. Effectiveness of Indenture......................................................................22
ARTICLE 2. THE NOTES.............................................................................................22
Section 2.01. Form and Dating.................................................................................22
Section 2.02. Execution and Authentication....................................................................23
Section 2.03. Registrar and Paying Agent......................................................................24
Section 2.04. Paying Agent to Hold Money in Trust.............................................................24
Section 2.05. Holder Lists....................................................................................24
Section 2.06. Transfer and Exchange...........................................................................25
Section 2.07. Replacement Notes...............................................................................35
Section 2.08. Outstanding Notes...............................................................................35
Section 2.09. Treasury Notes..................................................................................36
Section 2.10. Temporary Notes.................................................................................36
Section 2.11. Cancellation....................................................................................36
Section 2.12. Defaulted Interest..............................................................................36
ARTICLE 3. REDEMPTION AND PREPAYMENT.............................................................................37
Section 3.01. Notices to Trustee..............................................................................37
Section 3.02. Selection of Notes to Be Redeemed...............................................................37
Section 3.03. Notice of Redemption............................................................................37
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Section 3.04. Effect of Notice of Redemption..................................................................38
Section 3.05. Deposit of Redemption Price.....................................................................38
Section 3.06. Notes Redeemed in Part..........................................................................38
Section 3.07. Optional Redemption.............................................................................39
Section 3.08. Mandatory Redemption............................................................................39
Section 3.09. Offer to Purchase by Application of Excess Proceeds.............................................39
ARTICLE 4. COVENANTS.............................................................................................41
Section 4.01. Payment of Notes................................................................................41
Section 4.02. Maintenance of Office or Agency.................................................................41
Section 4.03. Reports.........................................................................................42
Section 4.04. Compliance Certificate..........................................................................42
Section 4.05. Taxes...........................................................................................43
Section 4.06. Stay, Extension and Usury Laws..................................................................43
Section 4.07. Restricted Payments.............................................................................43
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries..................................46
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock......................................48
Section 4.10. Asset Sales.....................................................................................51
Section 4.11. Transactions with Affiliates....................................................................52
Section 4.12. Liens...........................................................................................53
Section 4.13. Business activities.............................................................................53
Section 4.14. Corporate Existence.............................................................................53
Section 4.15. Offer to Repurchase Upon Change of Control......................................................54
Section 4.16. Limitation on Sale and Leaseback Transactions...................................................55
Section 4.17. Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries...................55
Section 4.18. Limitation on Issuances of Guarantees of Indebtedness...........................................55
ARTICLE 5. SUCCESSORS............................................................................................56
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Section 5.01. Merger, Consolidation or Sale of Assets.........................................................56
Section 5.02. Successor Corporation Substituted...............................................................56
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................57
Section 6.01. Events of Default...............................................................................57
Section 6.02. Acceleration....................................................................................58
Section 6.03. Other Remedies..................................................................................58
Section 6.04. Waiver of Past Defaults.........................................................................59
Section 6.05. Control by Majority.............................................................................59
Section 6.06. Limitation on Suits.............................................................................59
Section 6.07. Rights of Holders of Notes to Receive Payment...................................................60
Section 6.08. Collection Suit by Trustee......................................................................60
Section 6.09. Trustee May File Proofs of Claim................................................................60
Section 6.10. Priorities......................................................................................60
Section 6.11. Undertaking for Costs...........................................................................61
ARTICLE 7. TRUSTEE...............................................................................................61
Section 7.01. Duties of Trustee...............................................................................61
Section 7.02. Rights of Trustee...............................................................................62
Section 7.03. Individual Rights of Trustee....................................................................63
Section 7.04. Trustee's Disclaimer............................................................................63
Section 7.05. Notice of Defaults..............................................................................63
Section 7.06. Reports by Trustee to Holders of the Notes......................................................63
Section 7.07. Compensation and Indemnity......................................................................63
Section 7.08. Replacement of Trustee..........................................................................64
Section 7.09. Successor Trustee by Merger, etc................................................................65
Section 7.10. Eligibility; Disqualification...................................................................65
Section 7.11. Preferential Collection of Claims Against Company...............................................65
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ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................66
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........................................66
Section 8.02. Legal Defeasance and Discharge..................................................................66
Section 8.03. Covenant Defeasance.............................................................................66
Section 8.04. Conditions to Legal or Covenant Defeasance......................................................67
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions...68
Section 8.06. Repayment to Company............................................................................69
Section 8.07. Reinstatement...................................................................................69
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER......................................................................69
Section 9.01. Without Consent of Holders of Notes.............................................................69
Section 9.02. With Consent of Holders of Notes................................................................70
Section 9.03. Compliance with Trust Indenture Act.............................................................71
Section 9.04. Revocation and Effect of Consents...............................................................71
Section 9.05. Notation on or Exchange of Notes................................................................71
Section 9.06. Trustee to Sign Amendments, etc.................................................................72
ARTICLE 10 NOTE GUARANTEES.......................................................................................72
Section 10.01. Guarantee......................................................................................72
Section 10.02. Limitation on Guarantor Liability..............................................................73
Section 10.03. Execution and Delivery of Note Guarantee.......................................................73
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.............................................74
Section 10.05. Releases Following Sale of Assets..............................................................74
ARTICLE 11. MISCELLANEOUS........................................................................................75
Section 11.01. Trust Indenture Act Controls...................................................................75
Section 11.02. Notices........................................................................................75
Section 11.03. Communication by Holders of Notes with Other Holders of Notes..................................76
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Section 11.04. Certificate and Opinion as to Conditions Precedent.............................................76
Section 11.05. Statements Required in Certificate or Opinion..................................................77
Section 11.06. Rules by Trustee and Agents....................................................................77
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders.......................77
Section 11.08. Governing Law..................................................................................77
Section 11.09. No Adverse Interpretation of Other Agreements..................................................77
Section 11.10. Successors.....................................................................................78
Section 11.11. Severability...................................................................................78
Section 11.12. Counterpart Originals..........................................................................78
Section 11.13. Table of Contents, Headings, etc...............................................................78
</TABLE>
EXHIBITS
EXHIBIT A1 FORM OF NOTE
EXHIBIT A2 FORM OF REGULATION S GLOBAL NOTE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY THE GUARANTORS
EXHIBIT E FORM OF NOTATION OF GUARANTEE
v
<PAGE>
INDENTURE dated as of March 15, 1999 between Crown Castle
International Corp., a Delaware corporation (the "Company"), and United States
Trust Company of New York, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Series A
Senior Exchange Notes due 2007 (the "Series A Notes") and the Series B Senior
Exchange Notes due 2007 (the "Series B Notes" and, together with the Series A
Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note substantially in the form of
----------------
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person:
-------------
(1) Indebtedness or Disqualified Stock of any other Person existing at the
time such other Person is merged with or into or became a Subsidiary of
such specified Person, including, without limitation, Indebtedness incurred
in connection with, or in contemplation of, such other Person merging with
or into or becoming a Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Adjusted Consolidated Cash Flow" has the meaning given to such term
-------------------------------
in the definition of "Debt to Adjusted Consolidated Cash Flow Ratio."
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
-----
"Applicable Procedures" means, with respect to any transfer or
---------------------
exchange of or for beneficial interests in any Global Certificate, the rules and
procedures of the Depositary that apply to such transfer or exchange.
1
<PAGE>
"Asset Sale" means:
----------
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback),
provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken
as a whole shall be governed by Section 4.15 and/or Section 5.01 hereof and
not by Section 4.10 hereof; and
(2) the issue or sale by the Company or any of its Restricted Subsidiaries
of Equity Interests of any of the Company's Subsidiaries (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary), in the
case of either clause (1) or (2), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess
of $1.0 million or (b) for net proceeds in excess of $1.0 million.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary;
(2) an issuance of Equity Interests by a Subsidiary to the Company or to
another Restricted Subsidiary;
(3) a Restricted Payment that is permitted by Section 4.07 hereof;
(4) grants of leases or licenses in the ordinary course of business; and
(5) disposals of Cash Equivalents.
"Attributable Debt" in respect of a sale and leaseback transaction
-----------------
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"BAM" means Cellco Partnership, a Delaware general partnership doing
---
business as Bell Atlantic Mobile.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
--------------
state law for the relief of debtors.
"Berkshire Group" means Berkshire Fund III, A Limited Partnership,
---------------
Berkshire Fund IV, Limited Partnership, Berkshire Investors LLC and Berkshire
Partners LLC.
"Board of Directors" means the Board of Directors of the Company, or
------------------
any authorized committee of the Board of Directors.
"Broker-Dealer" means any broker or dealer registered under the
-------------
Exchange Act.
2
<PAGE>
"Business Day" means any day other than a Legal Holiday.
------------
"Capital Lease Obligation" means, at the time any determination
------------------------
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
-------------
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets
of, the issuing Person.
"Cash Equivalents" means:
----------------
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than six months from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each
case with any lender party to the Senior Credit Facility or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group and in each case
maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1)-(5) of this definition.
"CCAIC" means CCA Investment Corp., which is an indirect wholly owned
-----
Subsidiary of the Company and was formed to hold the Company's Equity Interests
in Crown Atlantic Holding Company LLC.
3
<PAGE>
"Cedel" means Cedel Bank, S.A.
-----
"Centennial Group" means Centennial Fund IV, L.P., Centennial Fund V,
----------------
L.P. and Centennial Entrepreneurs Fund V, L.P.
"Change of Control" means the occurrence of any of the following:
-----------------
(1) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Restricted Subsidiaries, taken as a whole, to any "person" (as such
term is used in Section 13(d)(3) of the Exchange Act) other than a
Principal or a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of
the Company;
(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their Related Parties,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly
or indirectly, of more than 50% of the Voting Stock of the Company
(measured by voting power rather than number of shares); provided that
transfers of Equity Interests in the Company between or among the
beneficial owners of the Company's Equity Interests and/or Equity Interests
in CTSH, in each case as of November 20, 1997, shall not be deemed to cause
a Change of Control under this clause (3) so long as no single Person
together with its Affiliates acquires a beneficial interest in more of the
Voting Stock of the Company than is at the time collectively beneficially
owned by the Principals and their Related Parties;
(4) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; or
(5) the Company consolidates with, or merges with or into, any Person, or
any Person consolidates with, or merges with or into, the Company, in any
such event pursuant to a transaction in which any of the outstanding Voting
Stock of the Company is converted into or exchanged for cash, securities or
other property, other than any such transaction where (x) the Voting Stock
of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified
Stock) of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance) or (y) the
Principals and their Related Parties own a majority of such outstanding
shares after such transaction.
"Company" means Crown Castle International Corp. and any and all
-------
successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for any
----------------------
period, the Consolidated Net Income of such Person for such period plus:
4
<PAGE>
(1) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision
for taxes was included in computing such Consolidated Net Income, plus
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to
the extent that any such expense was deducted in computing such
Consolidated Net Income, plus
(3) depreciation, amortization (including amortization of goodwill and
other intangibles and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income, minus
(4) non-cash items increasing such Consolidated Net Income for such period
(excluding any items that were accrued in the ordinary course of business),
in each case on a consolidated basis and determined in accordance with
GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of
-------------------------
any date of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries, plus
(2) the total amount of Indebtedness of any other Person, to the extent
that such Indebtedness has been Guaranteed by the referent Person or one or
more of its Restricted Subsidiaries, plus
(3) the aggregate liquidation value of all Disqualified Stock of such
Person and all preferred stock of Restricted Subsidiaries of such Person,
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
-----------------------
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP, provided that:
(1) the Net Income (but not loss) of any Person other than the Company that
is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person or a
Restricted Subsidiary thereof;
(2) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(3) the cumulative effect of a change in accounting principles shall be
excluded; and
5
<PAGE>
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded whether or not distributed to the Company or one of its Restricted
Subsidiaries.
"Consolidated Tangible Assets" means, with respect to the Company, the
----------------------------
total consolidated assets of the Company and its Restricted Subsidiaries, less
the total intangible assets of the Company and its Restricted Subsidiaries, as
shown on the most recent internal consolidated balance sheet of the Company and
such Restricted Subsidiaries calculated on a consolidated basis in accordance
with GAAP.
"Continuing Directors" means, as of any date of determination, any
--------------------
member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Loan Date;
(2) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election; or
(3) is a designee of a Principal or was nominated by a Principal.
"Corporate Trust Office of the Trustee" shall be at the address of the
-------------------------------------
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means one or more debt facilities (including,
-----------------
without limitation, the Senior Credit Facility) or commercial paper facilities
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Crown Transition Agreements" means collectively (i) the Crown
---------------------------
Memorandum of Understanding among the Company, Robert A. Crown and Barbara A.
Crown, dated as of July 2, 1998, (ii) the Crown Services Agreement between the
Company and Robert A. Crown, dated as of July 2, 1998 and (iii) the
Registration Rights Crown Side Letter Agreement, among the Company, Robert A.
Crown and Barbara A. Crown, dated as of August 18, 1998.
"CTI" means Castle Transmission International Limited.
---
"CTI Operating Agreement" means the memorandum of understanding among
-----------------------
the Company, CTSH, CTI and TdF, dated as of August 21, 1998, relating to the
development of certain business opportunities outside of the United States and
the provision of certain business support and technical services in connection
therewith.
"CTI Services Agreement" means the amended and restated services
----------------------
agreement between CTI and TdF, dated as of August 21, 1998, relating to the
provisions of certain services to CTI.
"CTSH" means Castle Transmission Services (Holdings) Ltd and its
----
successors.
6
<PAGE>
"CTSH Shareholders' Agreement" means the agreement entered into by the
----------------------------
Company, CTSH and TdF, dated as of August 21, 1998, to govern the relationship
between the Company and TdF as shareholders of CTSH.
"Custodian" means the Trustee, as custodian with respect to the Notes
---------
in global form, or any successor entity thereto.
"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date
---------------------------------------------
of determination, the ratio of:
(1) the Consolidated Indebtedness of the Company as of such date to
(2) the sum of (a) the Consolidated Cash Flow of the Company for the four
most recent full fiscal quarters ending immediately prior to such date for
which internal financial statements are available, less the Company's Tower
Cash Flow for such four-quarter period, plus (b) the product of four times
the Company's Tower Cash Flow for the most recent quarterly period (such
sum being referred to as "Adjusted Consolidated Cash Flow"),
-------------------------------
in each case determined on a pro forma basis after giving effect to all
acquisitions or dispositions of assets made by the Company and its Subsidiaries
from the beginning of such four-quarter period through and including such date
of determination (including any related financing transactions) as if such
acquisitions and dispositions had occurred at the beginning of such four-quarter
period. For purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the reference period or subsequent to
such reference period and on or prior to the Calculation Date shall be deemed to
have occurred on the first day of the reference period and Consolidated Cash
Flow for such reference period shall be calculated without giving effect to
clause (ii) of the proviso set forth in definition of Consolidated Net Income,
and (ii) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to Calculation Date, shall be excluded.
"Default" means any event that is, or with the passage of time or the
-------
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
---------------
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A1 hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
----------
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
------------------
the terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in
7
<PAGE>
part, on or prior to the date that is 91 days after the date on which the Notes
mature; provided, however, that any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to require
the Company to repurchase such Capital Stock upon the occurrence of a Change of
Control or an Asset Sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.07 hereof.
"Eligible Indebtedness" means any Indebtedness other than (i)
---------------------
Indebtedness in the form of, or represented by, bonds or other securities or any
guarantee thereof and (ii) Indebtedness that is, or may be, quoted, listed or
purchased and sold on any stock exchange, automated trading system or over-the-
counter or other securities market (including, without prejudice to the
generality of the foregoing, the market for securities eligible for resale
pursuant to Rule 144A under the Securities Act).
"Eligible Receivables" means the accounts receivable (net of any
--------------------
reserves and allowances for doubtful accounts in accordance with GAAP) of the
Company and its Restricted Subsidiaries that are not more than 60 days past
their due date and that were entered into in the ordinary course of business on
normal payment terms as shown on the most recent internal consolidated balance
sheet of the Company and such Restricted Subsidiaries, all calculated on a
consolidated basis in accordance with GAAP.
"Equity Interests" means Capital Stock and all warrants, options or
----------------
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
---------
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Existing Indebtedness" means Indebtedness of the Company and its
---------------------
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the Loan Date, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Loan Date.
"Global Notes" means, individually and collectively, each of the
------------
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A1 or A2 hereto issued in accordance with Section 2.01,
2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
------------------
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Governance Agreement" means the agreement among the Company, TdF and
--------------------
its affiliates, dated as of August 21, 1998, to provide for certain rights and
obligations of the Company, TdF and its affiliates with respect to the
management of the Company.
8
<PAGE>
"Government Securities" means direct obligations of, or obligations
---------------------
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of negotiable
---------
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
-------------------
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
------
"Indebtedness" means, with respect to any Person, any indebtedness of
------------
such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property;
or
(6) representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person whether or not such
Indebtedness is assumed by such Person (the amount of such Indebtedness as of
any date being deemed to be the lesser of the value of such property or assets
as of such date or the principal amount of such Indebtedness of such other
Person so secured) and, to the extent not otherwise included, the Guarantee by
such Person of any Indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time.
9
<PAGE>
"Indirect Participant" means a Person who holds a beneficial interest
--------------------
in a Global Note through a Participant.
"Investments" means, with respect to any Person, all investments by
-----------
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company or a Restricted Subsidiary of the Company issues any of its Equity
Interests such that, in each case, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of Section 4.07 hereof.
"Joint Venture Operating Agreement" means the Crown Atlantic Holding
---------------------------------
Company LLC Operating Agreement to be entered into by the Company and BAM,
substantially in the form of Exhibit 3.5 to the Formation Agreement, dated as of
December 8, 1998, by and among BAM, the Transferring Partnerships (as defined
therein), the Company and CCA Investment Corp.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
------------------
to Section 3(c) of the Registration Rights Agreement.
"Loan Date" means March 15, 1999, the date of the Term Loan Agreement.
---------
"Nassau Group" means Nassau Capital Partners II, L.P. and NAS Partners
------------
I, L.L.C.
"Net Income" means, with respect to any Person, the net income (loss)
----------
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on such
gain or loss, realized in connection with (a) any Asset Sale (including,
without limitation, dispositions
10
<PAGE>
pursuant to sale and leaseback transactions) or (b) the disposition of any
securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries; and
(2) any extraordinary gain or loss, together with any related provision for
taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
------------
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of:
(1) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof;
(2) taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements);
(3) amounts required to be applied to the repayment of Indebtedness (other
than Indebtedness under a Credit Facility) secured by a Lien on the asset
or assets that were the subject of such Asset Sale;
(4) all distributions and other payments required to be made to minority
interest holders in Restricted Subsidiaries as a result of such Asset Sale;
(5) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale; and
(6) without duplication, any reserves that the Company's Board of Directors
determines in good faith should be made in respect of the sale price of
such asset or assets for post closing adjustments; provided that in the
case of any reversal of any reserve referred to in clause (5) or (6) above,
the amount so reserved shall be deemed to be Net Proceeds from an Asset
Sale as of the date of such reversal.
"New Notes" means the Company's Series B Senior Notes due 2007 issued
---------
pursuant to this Indenture in connection with a resale of Notes in reliance on
the Shelf Registration Statement.
"Non-Recourse Debt" means Indebtedness:
-----------------
(1) as to which neither the Company nor any of its Restricted Subsidiaries
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable (as a guarantor or otherwise) or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of the Company or any of its Restricted
11
<PAGE>
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity;
and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries (except that this clause (3) shall not apply to any
Indebtedness incurred by CTSH and its Subsidiaries prior to August 21,
1998).
"Non-U.S. Person" means a Person who is not a U.S. Person.
---------------
"Notes" means (i) the Senior Exchange Notes due 2007 of the Company
-----
issued pursuant to this Indenture on the Loan Date and held in escrow pursuant
to an escrow agreement executed by the Company under the Term Loan Agreement and
(ii) the New Notes.
"Obligations" means any principal, interest, penalties, fees,
-----------
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
-------
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
---------------------
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means, with respect to any Asset Sale Offer,
-----------------------
all other senior subordinated Indebtedness of the Company containing provisions
similar to those set forth in this Indenture.
"Participant" means, with respect to the Depositary, Euroclear or
-----------
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Permitted Business" means any business conducted by the Company, its
------------------
Restricted Subsidiaries or CTSH and its Subsidiaries on the Loan Date and any
other business related, ancillary or complementary to any such business.
"Permitted Investments" means:
---------------------
(1) RESERVED;
(2) any Investment in the Company or in a Restricted Subsidiary of the
Company;
12
<PAGE>
(3) any Investment in Cash Equivalents;
(4) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company;
(5) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof;
(6) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company;
(7) receivables created in the ordinary course of business;
(8) loans or advances to employees made in the ordinary course of business
not to exceed $1.0 million at any one time outstanding;
(9) securities and other assets received in settlement of trade debts or
other claims arising in the ordinary course of business;
(10) purchases of additional Equity Interests in CTSH for cash pursuant to
the Governance Agreement as the same is in effect on the Loan Date for
aggregate cash consideration not to exceed $20.0 million since the Loan
Date;
(11) the Investment of up to an aggregate of $100.0 million (i) to be used
to consummate the formation of the Crown Atlantic Holding Company LLC joint
venture with BAM or (ii) if the Company does not consummate the formation
of the Crown Atlantic Holding Company LLC joint venture with BAM, in one or
more other Subsidiaries of the Company (which may be Unrestricted
Subsidiaries of the Company), each of which derives or expects to derive a
majority of its revenues from one or more Permitted Businesses (each such
Investment being measured as of the date made and without giving effect to
subsequent changes in value);
(12) additional Investments in an aggregate amount equal to (x) $200.0
million, minus (y) the aggregate amount of Investments made or permitted to
be made pursuant to clause (11) of this paragraph, minus (z) the aggregate
amount of Indebtedness incurred and/or Disqualified Stock issued pursuant
to clause (11) of the second paragraph of Section 4.09 hereof (each such
Investment being measured as of the date made and without giving effect to
subsequent changes in value); and
(13) other Investments in Permitted Businesses not to exceed an amount
equal to $10.0 million plus 10% of the Company's Consolidated Tangible
Assets at any one time outstanding (each such Investment being measured as
of the date made and without giving effect to subsequent changes in value).
"Permitted Liens" means:
---------------
13
<PAGE>
(1) Liens securing Eligible Indebtedness of the Company under one or more
Credit Facilities that was permitted by the terms of this Indenture to be
incurred;
(2) Liens securing any Indebtedness of any of the Company's Restricted
Subsidiaries that was permitted by the terms of this Indenture to be
incurred;
(3) Liens in favor of the Company;
(4) Liens existing on the date of this Indenture;
(5) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity
with GAAP shall have been made therefor;
(6) Liens securing Indebtedness permitted to be incurred under clause (4)
of the second paragraph of the covenant described in Section 4.09; and
(7) Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do
not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
----------------------------------
Company or any of its Restricted Subsidiaries or Disqualified Stock of the
Company issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund other Indebtedness of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness) or
Disqualified Stock of the Company; provided that:
(1) the principal amount, initial accreted value or liquidation preference,
as applicable, of such Permitted Refinancing Indebtedness does not exceed
the principal amount, accreted value or liquidation preference, as
applicable, of, plus accrued interest or accumulated dividends on, the
Indebtedness or Disqualified Stock so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of expenses and prepayment
premiums incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
14
<PAGE>
(4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded or such
Disqualified Stock is issued by the Company.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principals" means Berkshire Group, Centennial Group, Nassau Group,
----------
TdF and any Related Party of the foregoing.
"Private Placement Legend" means the legend set forth in Section
------------------------
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Prospectus" means the prospectus included in a Registration Statement
----------
at the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
"Public Equity Offering" means an underwritten primary public offering
----------------------
of common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
---
"Registration Rights Agreement" means the registration rights
-----------------------------
agreement in the form of Exhibit C to the Term Loan Agreement to be entered into
by the Company on or before the Loan Date relating to the registration of the
Notes with the Commission.
"Registration Statement" means any registration statement of the
----------------------
Company relating to an offering of New Notes that is filed pursuant to the
provisions of the Registration Rights Agreement, and includes the Prospectus
included therein, all amendments and supplements thereto (including post-
effective amendments) and all exhibits and material incorporated by reference
therein.
"Regulation S" means Regulation S promulgated under the Securities
------------
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
------------------------
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note
----------------------------------
substantially in the form of Exhibit A1 hereto bearing the Global Note Legend
and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Note upon expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note
----------------------------------
substantially in the form of Exhibit A2 hereto bearing the Private Placement
Legend and deposited with or on behalf of
15
<PAGE>
and registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal means:
-------------
(1) any controlling stockholder, 80% (or more) owned Subsidiary of such
Principal; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, members, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal and/or
such other Persons referred to in the immediately preceding clause (1).
"Responsible Officer", when used with respect to the Trustee, means
-------------------
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a definitive certificate evidencing
--------------------------
Notes, registered in the name of the holder thereof, in the form of Exhibit A1
or A2 hereto and bearing the Private Placement Legend.
"Restricted Global Note" means a 144A Global Note or a Regulation S
----------------------
Global Note, as appropriate.
"Restricted Investment" means an Investment other than a Permitted
---------------------
Investment.
"Restricted Period" means the 40-day restricted period as defined in
-----------------
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
---------------------
referent Person that is not an Unrestricted Subsidiary.
"Rights Agreement" means the agreement between the Company and
----------------
ChaseMellon Shareholders Services, L.L.C., as rights agent, dated as of August
21, 1998, relating to the dividend declared by the Company consisting of the
right to purchase 1/1000th of a share of the Company's Series A Participating
Cumulative Preferred Stock, par value $.01 per share.
"Rule 144" means Rule 144 promulgated under the Securities Act.
--------
"Rule 144A" means Rule 144A promulgated under the Securities Act.
---------
"Rule 903" means Rule 903 promulgated under the Securities Act.
--------
"Rule 904" means Rule 904 promulgated the Securities Act.
--------
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
16
<PAGE>
"Senior Credit Facility" means that certain Amended and Restated Loan
----------------------
Agreement, dated as of July 10, 1998, by and among Key Corporate Capital Inc.
and PNC Bank, National Association, as arrangers and agents for the financial
institutions listed therein, and Crown Communication Inc. and Crown Castle
International Corp. de Puerto Rico, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time.
"Senior Discount Notes Indenture" means that certain Indenture, dated
-------------------------------
as of November 20, 1997, governing the Company's 10-5/8% Senior Discount Notes
due 2007.
"Shelf Registration Statement" means the Shelf Registration Statement
----------------------------
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means, with respect to any Person, any
----------------------
Restricted Subsidiary of such Person that would be a "significant subsidiary" of
such Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof, except that all references to "10 percent" in Rule 1-02(w)(1), (2) and
(3) shall mean "5 percent" and that all Unrestricted Subsidiaries of the Company
shall be excluded from all calculations under Rule 1-02(w).
"Specified Premium" means, with respect to each Note,
(1) during the one-year period commencing on the fourth anniversary of the
Loan Date, a percentage of the principal amount of such Note equal to one-
half of the fixed interest rate on such Note;
(2) during the one-year period commencing on the fifth anniversary of the
Loan Date, a percentage of the principal amount of such Note equal to one-
third of the fixed interest rate on such Note;
(3) during the one-year period commencing on the sixth anniversary of the
Loan Date, a percentage of the principal amount of such Note equal to one-
sixth of the fixed interest rate on such Note; and
(4) during the period commencing on the seventh anniversary of the Loan
Date and ending on the day prior to the Stated Maturity of the Notes, zero
percent.
For example, if the fixed interest rate on a Note was equal to 15%, then the
Specified Premium would equal (a) 7.5% during the one-year period commencing on
the fourth anniversary of the Loan Date and ending on the day prior to the fifth
anniversary of the Loan Date; (b) 5% during the one-year period commencing on
the fifth anniversary of the Loan Date and ending on the day prior to the sixth
anniversary of the Loan Date; (c) 2.5% during the one-year period commencing on
the sixth anniversary of the Loan Date and ending on the day prior to the
seventh anniversary of the Loan Date; and (d) zero percent during the period
commencing on the seventh anniversary of the Loan Date and ending on the day
prior to the Stated Maturity of the Notes.
"Stated Maturity" means, with respect to any installment of interest
---------------
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent
17
<PAGE>
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Stockholders' Agreement" means the agreement among the Company and
-----------------------
certain stockholders of the Company, dated as of August 21, 1998, to provide for
certain rights and obligations of the Company and such stockholders with respect
to the governance of the Company and such stockholders' shares of Common Stock
and/or Class A Common Stock of the Company.
"Strategic Equity Investment" means a cash contribution to the common
---------------------------
equity capital of the Company or a purchase from the Company of common Equity
Interests (other than Disqualified Stock), in either case by or from a Strategic
Equity Investor and for aggregate cash consideration of at least $50.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted
-------------------------
Business whose Total Equity Market Capitalization exceeds $1.0 billion.
"Subsidiary" means, with respect to any Person:
----------
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the
only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Term Loan Agreement" means the Term Loan Agreement dated as of March
-------------------
15, 1999, among the Company, the Lenders named therein, and Goldman Sachs Credit
Partners L.P., Salomon Brothers Holding Company Inc. and Credit Suisse First
Boston Corporation, as arrangers.
"Term Notes" means the Term Notes representing Indebtedness of the
----------
Company incurred pursuant to the Term Loan Agreement.
"TdF" means TeleDiffusion de France International S.A.
---
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Total Equity Market Capitalization" of any Person means, as of any
----------------------------------
day of determination, the sum of:
(1) the product of (A) the aggregate number of outstanding primary shares
of common stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into,
shares of common stock of such person) multiplied by (B) the average
closing price of such common stock listed on a national securities exchange
or the Nasdaq National Market System over the 20 consecutive business days
immediately preceding such day; plus
18
<PAGE>
(2) the liquidation value of any outstanding shares of preferred stock of
such Person on such day.
"Tower Asset Exchange" means any transaction in which the Company or
--------------------
one of its Restricted Subsidiaries exchanges assets for Tower Assets and/or cash
or Cash Equivalents where the fair market value (evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the Tower Assets and cash or Cash Equivalents received by the
Company and its Restricted Subsidiaries in such exchange is at least equal to
the fair market value of the assets disposed of in such exchange.
"Tower Assets" means wireless transmission towers and related assets
------------
that are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of
---------------
the Company and its Restricted Subsidiaries for such period that is directly
attributable to site rental revenue or license fees paid to lease or sublease
space on communication sites owned or leased by the Company, all determined on a
consolidated basis and in accordance with GAAP. Tower Cash Flow shall not
include revenue or expenses attributable to non-site rental services provided by
the Company or any of its Restricted Subsidiaries to lessees of communication
sites or revenues derived from the sale of assets.
"Trustee" means the trustee under the indenture governing the Notes.
-------
"Unrestricted Definitive Certificate" means a definitive certificate
-----------------------------------
evidencing the Notes, registered in the name of the holder thereof,
substantially in the form of Exhibit A1 hereto, representing a series of Notes
that do not bear the Private Placement Legend.
"Unrestricted Global Certificate" means a permanent global certificate
-------------------------------
substantially in the form of Exhibit A1 attached hereto that bears the Global
Certificate Legend and that has the "Schedule of Exchanges of Interests in the
Global Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
-----------------------
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution; but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of the
Company;
(3) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
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(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of the Company or any of its Restricted Subsidiaries.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet
the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.09 hereof, the Company
shall be in default of such covenant). The Board of Directors of the Company may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default would occur
or be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
-----------
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
------------
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness or series or class of preferred stock at any date, the number of
years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other required
payments of principal or liquidation preference, including payment at final
maturity, in respect thereof, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of
such payment, by
(2) the then outstanding principal amount of such Indebtedness or the
aggregate liquidation preference of the then outstanding preferred stock,
as the case may be.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
----------------------------------
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
Section 1.02. Other Definitions.
Defined in
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Term Section
"Affiliate Transaction".......................... 4.11
"Asset Sale Offer"............................... 3.09
"Authentication Order"........................... 2.02
"Change of Control Offer"........................ 4.15
"Change of Control Payment"...................... 4.15
"Change of Control Payment Date"................. 4.15
"Covenant Defeasance"............................ 8.03
"Event of Default"............................... 6.01
"Excess Proceeds"................................ 4.10
"incur".......................................... 4.09
"Legal Defeasance"............................... 8.02
"Offer Amount"................................... 3.09
"Offer Period"................................... 3.09
"Paying Agent"................................... 2.03
"Payment Default"................................ 6.01
"Pari Passu Notes................................ 4.10
"Permitted Debt"................................. 4.09
"Purchase Date".................................. 3.09
"Registrar"...................................... 2.03
"Restricted Payments"............................ 4.07
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
Section 1.05. Effectiveness of Indenture.
The provisions of this Indenture as set forth in Article 4, Article 5
and Article 6 shall not be effective unless and until the Trustee exchanges any
of the Notes issued by the Company hereunder for one or more Term Notes.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A1 or A2 hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibit A1 or A2 attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A1
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
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represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office or at such other office of the Trustee as the
Trustee may designate, as custodian for the Depositary, and registered in the
name of the Depositary or the nominee of the Depositary for the accounts of
designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
Restricted Period shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note bearing a Private Placement Legend, all as contemplated by Section
2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by
Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
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The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
--------------------
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
---------
office or agency where Notes may be presented for payment ("Paying Agent"). The
------------
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
---
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA
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(S) 312(a). If the Trustee is not the Registrar, the Company shall furnish to
the Trustee at least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company shall otherwise comply with
TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
All Global Notes will be exchanged by the Company for Definitive Notes if (i)
the Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee; provided that in no event shall the Regulation S Temporary Global
Note be exchanged by the Company for Definitive Notes prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities
Act. Upon the occurrence of either of the preceding events in (i) or (ii)
above, Definitive Notes shall be issued in such names as the Depositary shall
instruct the Trustee. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b),(c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Restricted
Global Note in accordance with the transfer restrictions set forth in the
Private Placement Legend; provided, however, that prior to the expiration of
the Restricted Period, transfers of beneficial interests in the Temporary
Regulation S Global Note may not be made to a U.S. Person or for the account
or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial
interests in any Unrestricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this Section
2.06(b)(i).
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(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial interests
that are not subject to Section 2.06(b)(i) above, the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit
or cause to be credited a beneficial interest in another Global Note in an
amount equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such
increase or (B) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Definitive Note in
an amount equal to the beneficial interest to be transferred or exchanged and
(2) instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall be
registered to effect the transfer or exchange referred to in (1) above;
provided that in no event shall Definitive Notes be issued upon the transfer
or exchange of beneficial interests in the Regulation S Temporary Global Note
prior to (x) the expiration of the Restricted Period and (y) the receipt by
the Registrar of any certificates required pursuant to Rule 903 under the
Securities Act. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this Indenture
and the Notes or otherwise applicable under the Securities Act, the Trustee
shall adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(g) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note.
A beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the requirements
of Section 2.06(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
in item (1) thereof; or
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Temporary Global Note or the Regulation S
Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2) thereof;
and
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
Note for Beneficial Interests in the Unrestricted Global Note. A beneficial
interest in any Restricted Global Note may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Note or transferred to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) above and:
(A) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(B) the Registrar receives the following:
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(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the certifications
in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (A) or (B)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (A) or (B) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Restricted Definitive Note, then, upon
receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted
Definitive Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the
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Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be exchanged for a
Definitive Note or transferred to a Person who takes delivery thereof in the
form of a Definitive Note prior to (x) the expiration of the Restricted Period
and (y) the receipt by the Registrar of any certificates required pursuant to
Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a
transfer pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive Note
or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note only if:
(A) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement; or
(B) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of
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a Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute
and the Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.
Any Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or to
transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under
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the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(F) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the 144A Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note only if:
(A) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement; or
(B) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such
Notes for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
If any such transfer is effected pursuant to subparagraph (A) or (B) above
at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate
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one or more Unrestricted Global Notes in an aggregate principal amount
equal to the aggregate principal amount of beneficial interests transferred
pursuant to subparagraph (A) or (B) above.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder shall present or surrender to the
Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of a Restricted Definitive Note
if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from
the registration requirements of the Securities Act, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
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(A) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement; or
(B) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of an Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the Registrar
so requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note.
Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof.
(f) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the
following form.
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT
TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE
PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER OR ANOTHER EXEMPTION UNDER
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THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR
THE BENEFIT OF CROWN CASTLE INTERNATIONAL CORP. THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A
FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO CROWN CASTLE INTERNATIONAL
CORP. OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive Note
issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv), (d)(ii),
(d)(iii), (e)(ii) or (e)(iii) to this Section 2.06 (and all Notes issued
in exchange therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. HEDGING TRANSACTIONS
INVOLVING THESE
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SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT."
(g) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive Notes
upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10,
4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (c) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment Date.
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(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
Section 2.07. Replacement Notes
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
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Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before the special record date,
the Company (or, upon the written request of the Company, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price (expressed as a
percentage of principal amount).
Section 3.02. Selection of Notes to Be Redeemed
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. In the
event of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
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(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
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Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to the fourth anniversary of the Loan Date. Thereafter, the Company
shall have the option to redeem the Notes, in whole or in part, at a redemption
price equal to 100% of the principal amount thereof plus the Specified Premium
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date.
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
during the first 36 months after the Loan Date, the Company may on any one or
more occasions redeem up to $35.0 million aggregate principal amount of Notes at
a redemption price equal to 100% of the principal amount thereof plus a
percentage of the principal amount of such Note equal to the fixed interest rate
on such Note on the redemption date, plus Liquidated Damages thereon, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive Liquidated Damages, if any, due on the relevant interest
payment date), with the net cash proceeds of one or more Public Equity Offerings
and/or Strategic Equity Investments; provided that at least $65.0 million
aggregate principal amount of Notes and Term Notes remains outstanding
immediately after the occurrence of such redemption (excluding Notes held by the
Company or any of its Subsidiaries);and provided, further, that such redemption
shall occur within 60 days of the date of the closing of such Public Equity
Offering and/or Strategic Equity Investment.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to holders of Notes and Pari Passu Indebtedness
(an "Asset Sale Offer") to purchase the maximum principal amount (or accreted
----------------
value, as applicable, of Notes and Pari Passu Indebtedness that may be purchased
out of Excess Proceeds), of Notes and Pari Passu Indebtedness it shall follow
the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
------------
five Business Days after the termination of the Offer Period (the "Purchase
--------
Date"), the Company shall purchase the principal amount (or accreted value, as
applicable) of Notes and Pari Passu Indebtedness required to be purchased
pursuant to Section 4.10 hereof (on a pro rata basis if Notes and Pari Passu
Indebtedness tendered are in excess of the Excess Proceeds) (which maximum
principal amount of Notes shall be the "Offer Amount") or, if less than the
------------
Offer Amount has been tendered, all Notes and Pari Passu Indebtedness tendered
in response to the Asset Sale Offer. Payment for any Notes so purchased shall
be made in the same manner as interest payments are made.
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If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount (or accreted value, as
applicable) of Notes and Pari Passu Indebtedness tendered by Holders exceeds the
Offer Amount, the Company shall select the Notes to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by the Company so that
only Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased and Pari Passu Indebtedness); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
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On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes, Pari Passu
Indebtedness or portions thereof tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Notes, and Pari Passu Indebtedness or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest and Liquidated Damages, if any, on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, interest
and Liquidated Damages, if any, shall be considered paid on the date due if the
Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, interest and Liquidated Damages, if any, then due.
The Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
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The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the Holders
of Notes:
(i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of the
Company and its consolidated Subsidiaries (showing in reasonable detail, in
the footnotes to the financial statements and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" (in each
case to the extent not prohibited by the SEC's rules and regulations), (A)
the financial condition and results of operations of the Company and its
Restricted Subsidiaries separate from the financial condition and results
of operations of the Unrestricted Subsidiaries of the Company and (B) the
Tower Cash Flow for the most recently completed fiscal quarter and the
Adjusted Consolidated Cash Flow for the most recently completed four-
quarter period) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants, in each case
within the time periods specified in the SEC's rules and regulations; and
(ii) all current reports that would be required to be filed with the SEC on
Form 8-K if the Company were required to file such reports, in each case
within the time periods specified in the SEC's rules and regulations.
In addition, whether or not required by the rules and regulations of
the SEC, the Company shall file a copy of all such information and reports with
the SEC for public availability within the time periods specified in the SEC's
rules and regulations (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. In addition, the Company will, for so long as any Notes remain
outstanding, furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(iv) under the Securities Act. The Company shall at times comply
with TIA (S) 314(a).
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its
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Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
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(1) declare or pay any dividend or make any other payment or distribution
on account of the Company's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Company's or any
of its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Company or to the Company or a Restricted
Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including
without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company (other than any such Equity Interests owned
by the Company or any Restricted Subsidiary of the Company);
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated
to the Notes, except a payment of interest or the payment of principal at
Stated Maturity; or
(4) make any Restricted Investment, (all such payments and other actions
set forth in clauses (1) through (4) above being collectively referred to
as "Restricted Payments"),
-------------------
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default shall have occurred and be continuing or would occur as a
consequence thereof; and
(2) the Company would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Adjusted Consolidated Cash
Flow Ratio test set forth in the first paragraph of Section 4.09 hereof;
provided that the Company and its Restricted Subsidiaries shall not be
required to comply with this clause (2) in order to make any Restricted
Investment; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Loan Date (excluding Restricted Payments permitted
by clauses (2), (3) and (4) of the next succeeding paragraph), is less than
the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the Loan Date to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit); plus
(b) 100% of the aggregate net cash proceeds received by the
Company since December 20, 1998 (the day preceding the issuance of the
12 3/4% Senior Exchangeable Preferred Stock due 2010) as a
contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock and
except to the extent such net cash proceeds are used to incur new
Indebtedness
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outstanding pursuant to clause (10) of the second paragraph of Section
4.09 hereof) or from the issue or sale of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and
other than Disqualified Stock or convertible debt securities that have
been converted into Disqualified Stock); plus
(c) to the extent that any Restricted Investment that was made
after the Loan Date is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment; plus
(d) to the extent that any Unrestricted Subsidiary of the Company
and all of its Subsidiaries are designated as Restricted Subsidiaries
after the Loan Date, the lesser of (A) the fair market value of the
Company's Investments in such Subsidiaries as of the date of such
designation, or (B) the sum of (x) the fair market value of the
Company's Investments in such Subsidiaries as of the date on which
such Subsidiaries were originally designated as Unrestricted
Subsidiaries and (y) the amount of any Investments made in such
Subsidiaries subsequent to such designation (and treated as Restricted
Payments) by the Company or any Restricted Subsidiary; provided that:
(i) in the event the Unrestricted Subsidiaries designated as
Restricted Subsidiaries are CTSH and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair
market value of the Company's Investments in such Subsidiaries
shall mean the amount by which the fair market value of all such
Investments exceeds 34.3% of the fair market value of CTSH and
its Subsidiaries as a whole; and
(ii) in the event the Unrestricted Subsidiaries designated
as Restricted Subsidiaries are CCAIC and its Subsidiaries, the
references in clauses (A) and (B) of this clause (d) to fair
market value of the Company's Investments in such Subsidiaries
shall mean the amount by which the fair market value of all such
Investments exceeds $250.0 million; plus
(e) 50% of any dividends received by the Company or a Restricted
Subsidiary after the Loan Date from an Unrestricted Subsidiary of the
Company, to the extent that such dividends were not otherwise included
in Consolidated Net Income of the Company for such period.
The foregoing provisions shall not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(2) the making of any Investment or the redemption, repurchase, retirement,
defeasance or other acquisition of any subordinated Indebtedness or Equity
Interests of the Company in exchange for, or out of the net cash proceeds
of the sale after the Loan Date (other than to a
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Subsidiary of the Company) of, any Equity Interests of the Company (other
than any Disqualified Stock); provided that such net cash proceeds are not
used to incur new Indebtedness pursuant to clause (10) of the second
paragraph of Section 4.09 hereof); and provided further that, in each such
case, the amount of any such net cash proceeds that are so utilized shall
be excluded from clause (3) (b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the Company
to the holders of its common Equity Interests on a pro rata basis; or
(5) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Company or any Restricted Subsidiary of the
Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the Loan Date; provided
that the aggregate price paid for all such repurchased, redeemed, acquired
or retired Equity Interests shall not exceed (a) $500,000 in any twelve-
month period and (b) $5.0 million in the aggregate.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this Section 4.07. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation shall only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary if such designation
would not cause a Default.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or the applicable
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any property, assets or Investments required by this
Section 4.07 to be determined shall be determined by the Board of Directors
whose resolution with respect thereto shall be delivered to the Trustee.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
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(1) pay dividends or make any other distributions to the Company or any of
its Restricted Subsidiaries on its Capital Stock or with respect to any
other interest or participation in, or measured by, its profits;
(2) pay any indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(3) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(4) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries.
However, the foregoing restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness or Indebtedness under the Senior Credit Facility,
in each case as in effect on the Loan Date, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive, taken as a whole,
with respect to such dividend and other payment restrictions than those
contained in the applicable series of Existing Indebtedness or in the
Senior Credit Facility, in each case as in effect on the Loan Date;
(2) encumbrances and restrictions applicable to any Unrestricted
Subsidiary, as the same are in effect as of the date on which such
Subsidiary becomes a Restricted Subsidiary, and as the same may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced; provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings
are no more restrictive, taken as a whole, with respect to such dividend
and other payment restrictions than those contained in the applicable
series of Indebtedness of such Subsidiary as in effect on the date on which
such Subsidiary becomes a Restricted Subsidiary;
(3) any Indebtedness (incurred in compliance with Section 4.09 hereof) or
any agreement pursuant to which such Indebtedness is issued if the
encumbrance or restriction applies only in the event of a payment default
or default with respect to a financial covenant contained in such
Indebtedness or agreement and such encumbrance or restriction is not
materially more disadvantageous to the holders of the Notes than is
customary in comparable financings (as determined by the Company) and the
Company determines that any such encumbrance or restriction will not
materially affect the Company's ability to pay interest on or the principal
of the Notes;
(4) this Indenture and the Notes;
(5) applicable law;
(6) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so
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acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred;
(7) by reason of customary non-assignment provisions in leases or licenses
entered into in the ordinary course of business;
(8) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions of the nature described in clause (4)
in the prior paragraph on the property so acquired;
(9) the provisions of agreements governing Indebtedness incurred pursuant
to clause (4) of the second paragraph of Section 4.09 hereof;
(10) any agreement for the sale of a Restricted Subsidiary that restricts
that Restricted Subsidiary pending its sale;
(11) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(12) Liens permitted under Section 4.12 hereof that limit the right of the
debtor to transfer the assets subject to such Liens;
(13) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements; and
(14) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively "incur") any Indebtedness (including Acquired
-----
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock and the Company's Restricted
Subsidiaries may incur Indebtedness if, in each case, the Company's Debt to
Adjusted Consolidated Cash Flow Ratio at the time of incurrence of such
Indebtedness or the issuance of such Disqualified Stock, after giving pro forma
effect to such incurrence or issuance as of such date and to the use of proceeds
therefrom as if the same had occurred at the beginning of the most recently
ended four full fiscal quarter period of the Company for which internal
financial statements are available, would have been no greater than 7.5 to 1.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness or to the
issuance of any of the following items of Disqualified Stock or preferred stock
(collectively, "Permitted Debt"):
--------------
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(1) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness (including Indebtedness under Credit Facilities) in an
aggregate principal amount (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
and its Restricted Subsidiaries thereunder) at any one time outstanding not
to exceed the greater of (x) $200.0 million less the aggregate amount of
all Net Proceeds of Asset Sales applied after the Loan Date to repay
Indebtedness under a Credit Facility pursuant to Section 4.10 hereof and
(y) 70% of the Eligible Receivables that are outstanding as of such date of
incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by the Company of Indebtedness represented by the Notes;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Restricted Subsidiary, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (4), not to exceed $10.0 million at any one time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund
Indebtedness of the Company or any of its Restricted Subsidiaries or
Disqualified Stock of the Company (other than intercompany Indebtedness)
that was permitted by this Indenture to be incurred under the first
paragraph hereof or clauses (2) or (3) or this clause (5) of this
paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, that (i) if the Company is the obligor
on such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the Notes
and (ii)(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary and (B) any sale or other transfer of
any such Indebtedness to a Person that is not either the Company or a
Restricted Subsidiary shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be;
(7) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding or currency
exchange risk;
(8) the guarantee by the Company or any of its Restricted Subsidiaries of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this Indenture;
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(9) the incurrence by the Company or any of its Restricted Subsidiaries of
Acquired Debt in connection with the acquisition of assets or a new
Subsidiary and the incurrence by the Company's Restricted Subsidiaries of
Indebtedness as a result of the designation of an Unrestricted Subsidiary
as a Restricted Subsidiary; provided that, in the case of any such
incurrence of Acquired Debt, such Acquired Debt was incurred by the prior
owner of such assets or such Restricted Subsidiary prior to such
acquisition by the Company or one of its Restricted Subsidiaries and was
not incurred in connection with, or in contemplation of, such acquisition
by the Company or one of its Restricted Subsidiaries; and provided further
that, in the case of any incurrence pursuant to this clause (9), as a
result of such acquisition by the Company or one of its Restricted
Subsidiaries, the Company's Debt to Adjusted Consolidated Cash Flow Ratio
at the time of incurrence of such Acquired Debt, after giving pro forma
effect to such incurrence as if the same had occurred at the beginning of
the most recently ended four full fiscal quarter period of the Company for
which internal financial statements are available, would have been less
than the Company's Debt to Adjusted Consolidated Cash Flow Ratio for the
same period without giving pro forma effect to such incurrence;
(10) the incurrence by the Company of Indebtedness not to exceed, at any
one time outstanding, the sum of (i) 2.0 times the aggregate net cash
proceeds plus (ii) 1.0 times the fair market value of non-cash proceeds
(evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee), in each case, from the
issuance and sale, other than to a Subsidiary, of Equity Interests (other
than Disqualified Stock) of the Company since [December 20, 1998] (less the
amount of such proceeds used to make Restricted Payments as provided in
clause (3)(b) of the first paragraph or clause (2) of the second paragraph
of Section 4.07 hereof); provided that such Indebtedness does not mature
prior to the Stated Maturity of the Notes and the Weighted Average Life to
Maturity of such Indebtedness is longer than that of the Notes; and
(11) the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness and/or the issuance by the Company of Disqualified
Stock in an aggregate principal amount, accreted value or liquidation
preference, as applicable, at any time outstanding, not to exceed an amount
equal to $100.0 million less the aggregate amount of all Investments made
pursuant to clause (12) of the definition of Permitted Investments;
provided that, notwithstanding the foregoing, the aggregate principal
amount, accreted value or liquidation preference, as applicable, permitted
to be incurred or issued pursuant to this clause (11) shall not be reduced
to less than $25.0 million.
The Company shall not (i) incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially identical terms; provided, however, that no Indebtedness
of the Company shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Company solely by virtue of being
unsecured and (ii) the Company shall not permit any of its Unrestricted
Subsidiaries to incur any Indebtedness other than Non-Recourse Debt.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (11) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify (or later reclassify in
whole or in part) such item
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of Indebtedness in any manner that complies with this Section 4.09. Accrual of
interest, accretion or amortization of original issue discount and the payment
of interest in the form of additional Indebtedness shall not be deemed to be an
incurrence of Indebtedness for purposes of this Section 4.09.
Section 4.10. Asset Sales
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of; and
(2) except in the case of a Tower Asset Exchange, at least 75% of the
consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed
to be cash:
(1) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary
from further liability; and
(2) any securities, notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are converted by
the Company or such Restricted Subsidiary into cash within 20 days of the
applicable Asset Sale (to the extent of the cash received).
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or the applicable Restricted Subsidiary may apply such Net
Proceeds to:
(1) reduce any Indebtedness of the Company under a Credit Facility;
(2) reduce any Indebtedness of any of the Company's Restricted
Subsidiaries;
(3) the acquisition of all or substantially all the assets of a Permitted
Business;
(4) the acquisition of Voting Stock of a Permitted Business from a Person
that is not a Subsidiary of the Company; provided, that, after giving
effect thereto, the Company or its Restricted Subsidiary owns a majority of
such Voting Stock and designates such Permitted Business as a Restricted
Subsidiary; or
(5) the making of a capital expenditure or the acquisition of other long-
term assets that are used or useful in a Permitted Business.
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Pending the final application of any such Net Proceeds, the Company
may temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph shall be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall be required to make an offer (an "Asset Sale Offer")
to all Holders of Notes and all holders of other senior Indebtedness of the
Company containing provisions similar to those set forth in this Indenture with
respect to offers to purchase or redeem with the proceeds of sales of assets
(such other senior Indebtedness of the Company, "Pari Passu Notes") to purchase
the maximum principal amount (or accreted value, as applicable) of Notes and
Pari Passu Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount (or accreted
value, as applicable) thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, due on the relevant interest payment date), in accordance with
the procedures set forth in this Indenture and any indenture governing the Pari
Passu Notes. To the extent that any Excess Proceeds remain after consummation
of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose
not otherwise prohibited by this Indenture. If the aggregate principal amount
of Notes and Pari Passu Notes tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and Pari Passu Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
The Asset Sale provisions described above shall be applicable whether
or not any other provisions of this Indenture are applicable. The Company shall
comply, to the extent applicable, with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations applicable to any
Asset Sale Offer. To the extent that the provisions of any such securities laws
or securities regulations conflict with the provisions of this Section 4.10, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.10 by
virtue thereof.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
---------------------
(1) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board of Directors set
forth in an Officers' Certificate certifying that such Affiliate
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Transaction complies with clause (1) above and that such Affiliate
Transaction has been approved by a majority of the disinterested
members of the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $10.0 million, an opinion as to the fairness to the Holders
of such Affiliate Transaction from a financial point of view issued by
an accounting, appraisal or investment banking firm of national
standing.
The following items shall not be deemed to be Affiliate Transactions
and therefore shall not be subject to the provisions of the prior paragraph:
(1) any employment arrangements with any executive officer of the Company
or a Restricted Subsidiary that is entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and
consistent with compensation arrangements of similarly situated executive
officers at comparable companies engaged in Permitted Businesses;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of directors fees in an aggregate annual amount not to exceed
$25,000 per Person;
(4) Restricted Payments that are permitted by Section 4.07 hereof;
(5) the issuance or sale of Equity Interests (other than Disqualified
Stock) of the Company; and
(6) transactions pursuant to the provisions of the Governance Agreement,
the Rights Agreement, the Stockholders' Agreement, the CTSH Shareholders'
Agreement, the CTI Services Agreement, the CTI Operating Agreement and the
Crown Transition Agreements, as the same are in effect on the Loan Date.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
Section 4.13. Business activities.
The Company shall not, and shall not permit any Subsidiary to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to the Company and its Subsidiaries taken as a whole.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Significant Subsidiaries, in accordance with the respective
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organizational documents (as the same may be amended from time to time) of the
Company or any such Significant Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Significant Subsidiaries, if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Significant Subsidiaries, taken as a whole, and
that the loss thereof is not adverse in any material respect to the Holders of
the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
If a Change of Control occurs, each Holder of Notes shall have the
right to require the Company to repurchase all or any part (but not any
fractional shares) of such Holder's Notes pursuant to the offer described below
(the "Change of Control Offer"). In the Change of Control Offer, the Company
-----------------------
shall offer a payment in cash equal to 101% of the aggregate principal amount of
the Notes repurchased plus accrued and unpaid interest and Liquidated Damages
thereon, if any (subject to the right of Holders of record on the relevant
record date to receive interest and Liquidated Damages, if any, due on the
relevant interest payment date), to the date of purchase (the "Change of Control
-----------------
Payment"). Within 30 days following any Change of Control, the Company shall
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mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
-----------------
Payment Date"), pursuant to the procedures required by this Indenture and
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described in such notice.
On the Change of Control Payment Date, the Company shall, to the
extent lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company.
The Company shall promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new certificate representing the Notes equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof.
The Change of Control provisions described above shall be applicable
whether or not any other provisions of this Indenture are applicable. The
Company shall comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer. To the extent that the provisions of
any such securities laws or securities regulations conflict with the provisions
of this Section 4.15, the Company shall comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
under this Section 4.15 by virtue thereof.
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The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.16. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any of its Restricted Subsidiaries may enter into a sale and
leaseback transaction if (i) the Company or such Restricted Subsidiary, as
applicable, could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Debt to Adjusted Consolidated Cash Flow Ratio test set forth in the first
paragraph of the covenant described in Section 4.09 and (b) incurred a Lien to
secure such Indebtedness pursuant to the covenant described in Section 4.12,
(ii) the gross cash proceeds of such sale and leaseback transaction are at least
equal to the fair market value (as determined in good faith by the Board of
Directors) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the covenant described Section 4.10.
Section 4.17. Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries.
The Company:
(1) shall not, and shall not permit any Restricted Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Restricted Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Restricted Subsidiary of the
Company); and
(2) shall not permit any Restricted Subsidiary of the Company to issue any
of its Equity Interests (other than, if necessary, shares of its Capital
Stock constituting directors' qualifying shares) to any Person other than
to the Company or a Wholly Owned Restricted Subsidiary of the Company,
unless, in each such case: (a) as a result of such transfer, conveyance, sale,
lease or other disposition or issuance such Restricted Subsidiary no longer
constitutes a Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition or issuance are applied in
accordance with Section 4.10.
Section 4.18. Limitation on Issuances of Guarantees of Indebtedness.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company unless such Subsidiary simultaneously executes and
delivers a supplemental indenture to this Indenture in the form of Exhibit D
hereto providing for the Guarantee of the payment of the Notes by such
Subsidiary, which Guarantee shall be senior to or pari passu with such
Subsidiary's Guarantee of or pledge to secure such other Indebtedness.
Notwithstanding the foregoing, any such Guarantee by a Subsidiary of the
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Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any Person other than a Subsidiary of the Company, of all of the Company's stock
in, or all or substantially all the assets of, such Subsidiary, which sale,
exchange or transfer is made in compliance with the applicable provisions of
this Indenture. The obligations of any Subsidiary under its Guarantee to the
Holders of Notes and to the Trustee are set forth in Article 10 of this
Indenture, and the form of such Guarantee is attached as Exhibit D hereto.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless:
(1) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under the Notes
and this Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default exists; and
(4) except in the case of a merger of the Company with or into a Wholly
Owned Restricted Subsidiary of the Company and except in the case of a
merger entered into solely for the purpose of reincorporating the Company
in another jurisdiction, the Company or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will, at the time of such transaction
after giving pro forma effect thereto as if such transaction had occurred
at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to
Adjusted Consolidated Cash Flow Ratio test set forth in the first paragraph
of Section 4.09 hereof.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company"
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shall refer instead to the successor corporation and not to the Company), and
may exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
provided, however, that and the predecessor Company shall not be relieved from
the obligation to pay the principal of and interest on the Notes except in the
case of a sale of all of the Company's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues
for a period of 30 days;
(2) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;
(3) the Company fails to comply with any of the provisions of Section 4.10,
4.15 or 5.01 hereof;
(4) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes
for 30 days after notice to the Company by the Trustee or the Holders of at
least 25% in aggregate principal amount at maturity of the Notes then
outstanding voting as a single class;
(5) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Significant Subsidiaries), whether such Indebtedness or guarantee
now exists, or is created after the date of this Indenture, which default
(a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of such
Indebtedness, under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more;
(6) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary and such
judgment or judgments remain undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate of all such undischarged judgments exceeds $5.0 million;
(7) the Company or any of its Restricted Subsidiaries pursuant to or within
the meaning of Bankruptcy Law:
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(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(8) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Restricted Subsidiary in
an involuntary case;
(ii) appoints a Custodian of the Company or any Restricted Subsidiary
or for all or substantially all of the property of the Company or any
Restricted Subsidiary; or
(iii) orders the liquidation of the Company or any Restricted
Subsidiary; and the order or decree remains unstayed and in effect for 60
consecutive days.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the principal of, and accrued and unpaid interest and
Liquidated Damages, if any, on such Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (7) or (8) of Section 6.01 hereof occurs with respect to the Company, any
of its Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, the Notes shall become due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a
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Note in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
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Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
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Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of that person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
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(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written and oral advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the willful misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
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Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (S) 313(a) (but if no event described in
TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
(S) 313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in
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addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
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ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation or (ii)
all outstanding Notes have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Notes, including interest thereon to
maturity or such redemption date (other than Notes replaced pursuant to Section
2.07), and if in either case the Company pays all other sums payable hereunder
by the Company, then this Indenture shall, subject to the proviso set forth in
Section 8.02, cease to be of further effect. The Company may, at the option of
its Board of Directors evidenced by a resolution set forth in an Officers'
Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
-----
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
- ----------
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same); provided that the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages on such Notes when such payments are due, (b) the Company's obligations
with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (d) this Article 8. Subject
to compliance with this Article 8, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.13, 4.15, 4.17 and 4.18 hereof with respect to the outstanding Notes on
and after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
-------------------
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
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Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03 hereof, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through
6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
(1) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
and Liquidated Damages on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(2) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the Loan Date, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(3) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the
proceeds of which will be used to defease the Notes pursuant to this
Article 8 concurrently with such incurrence) or insofar as Sections 6.01(7)
or 6.01(8) hereof with respect to the Company are concerned, at any time in
the period ending on the 91st day after the date of deposit;
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(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or
any of its Restricted Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(7) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
-------
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
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Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(3) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(4) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any such Holder; or
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(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, this Indenture
(including Section 3.09, 4.10 and 4.15 hereto) and the Notes may be amended or
supplemented with the consent of the Holders of a majority of the aggregate
principal amount of the Notes then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes) or, if no Notes are
outstanding, the holders of a majority in aggregate principal amount of Term
Notes then outstanding, and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture or the Notes may be waived
with the consent of the Holders of a majority of the aggregate principal amount
of the then outstanding Notes voting as a single class (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes) or, if no Notes are outstanding, the holders of a majority in
aggregate principal amount of the Term Notes then outstanding. Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the
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consent of each Holder affected, an amendment or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption (but not
any required repurchase in connection with an Asset Sale Offer or Change of
Control Offer) of the Notes;
(3) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(5) make any Note payable in money other than that stated in the
Notes;
(6) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, premium, if any, or interest on the Notes;
(7) waive a redemption payment (but not any payment upon a required
repurchase in connection with an Asset Sale Offer or Change of Control Offer)
with respect to any Note; or
(8) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the
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Trustee shall, upon receipt of an Authentication Order, authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
NOTE GUARANTEES
Section 10.01. Guarantee.
The provisions of this Article 10 shall apply only to those
Subsidiaries of the Company, if any, that execute one or more supplemental
indentures to this Indenture in the form of Exhibit E to this Indenture in
compliance with the requirements of Section 4.18 of this Indenture.
Subject to this Article 10, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant
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that this Note Guarantee shall not be discharged except by complete performance
of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.
Section 10.02. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 10, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
Section 10.03. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit E shall be endorsed by an Officer of such Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Presidents.
Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
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The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.18 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Note Guarantees in accordance with Section 4.18 hereof and
this Article 10, to the extent applicable.
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 10.05, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 10.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set
forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 10.05. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Subsidiary of the Company, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation
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acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be released and relieved
of any obligations under its Note Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.10 hereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 10.
ARTICLE 11.
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address
If to the Company:
Crown Castle International Corp.
150 Bering Drive, Suite 500
Houston, TX 77057
Telecopier No.: 713-570-3150
Attention: Chief Financial Officer
With a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopier No.: 212-474-3700
Attention: Stephen L. Burns
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If to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Telecopier No.: 212-852-1626
Attention: Margaret Ciesmelewski
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
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Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Persons making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he, she has or
they have made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Persons,
such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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Section 11.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of March 15, 1999
CROWN CASTLE INTERNATIONAL CORP.
By: /s/ Charles C. Green, III
------------------------------
Name: Charles C. Green, III
Title: Executive Vice President and
Chief Financial Officer
Attest:
/s/ Jason G. Gregory
- --------------------
Name: Jason G. Gregory
Title: Assistant Secretary
United States Trust Company of New York
By: /s/ John Guiliano
------------------------------
Authorized Signatory
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<PAGE>
Exhibit 10.61 (A)(1)
EXHIBIT A1
(Face of Note)
================================================================================
CUSIP/CINS ____________
_____% Senior Exchange Notes due 2007
No. ______ Principal Amount $________
CROWN CASTLE INTERNATIONAL CORP.
promises to pay to _________________________________, or registered assigns, the
principal sum of _____________________________________________ Dollars on
November 30, 2007.
Interest Payment Dates: [May 31] and [November 30] commencing the first such
date following issuance of this Note in exchange for Term Notes.00
Record Dates: [May 15] and [November 15]
Dated: March 15, 1999
Crown Castle International Corp.
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
(SEAL)
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
United States Trust Company of New York,
as Trustee
By:______________________________
================================================================================
A1-1
<PAGE>
(Back of Note)
_____% Senior Exchange Notes due 2007
[Insert Global Note Legend, if applicable pursuant to the provisions of the
Indenture.]
[Insert Private Placement Legend, if applicable pursuant to the provisions
of the Indenture.]
THIS NOTE IS BEING ISSUED TO THE REGISTERED HOLDER NAMED ON THE FACE
HEREOF IN EXCHANGE FOR ONE OR MORE TERM NOTES ISSUED PURSUANT TO THE TERM LOAN
AGREEMENT.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Crown Castle International Corp., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
-------
this Note at _____% per annum from and including the most recent date on which
interest has been paid by the Company with respect to the Term Notes in exchange
for which this Note has been issued (or, if this Note is issued in a transfer of
or exchange for another Note, from the date on which interest was payable with
respect to such other Note) until maturity and shall pay the Liquidated Damages,
if any, payable pursuant to Section 3(c) of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages, if
any, semi-annually on [May 31] and [November 30] of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"); provided that the first such interest payment date
- ----------------------
shall be the first such date to occur following issuance of this Note to the
registered holder hereof in exchange for one or more Term Notes. The Company
shall pay interest in cash only. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from and including the most recent date on which interest has been paid by
the Company with respect to the Term Notes in exchange for which this Note has
been issued. The Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on this Note
(except defaulted interest) and Liquidated Damages to the Persons who are the
registered Holders of this Note at the close of business on the [May 15] or
[November 15] next preceding the Interest Payment Date, even if it is canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
Notwithstanding the foregoing, if this Note is issued in exchange for one or
more Term Notes during the period beginning on the day after any record date and
ending on the next succeeding Interest Payment Date, then the Company will pay
interest on this Note (except defaulted interest) and Liquidated Damages to the
Persons who were the registered holder of such Term Notes for which this Note
has been exchanged at the close of business on the relevant record date next
preceeding the first Interest Payment Date following issuance of this Note.
This Note will be payable as to principal, premium and Liquidated Damages, if
any, and interest (in the case of the payment of interest in cash) at the office
or agency of the Company maintained for such purpose within or without the City
and State of New York, or, at the option of the Company, payment of interest and
Liquidated Damages may be made by check mailed to the Holders at their addresses
set forth
A1-2
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in the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest (in the case of the payment of interest in cash), premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided that Liquidated Damages may be paid through the issuance
of additional Notes having a principal amount at the time of issuance equal to
the amount of Liquidated Damages so paid. In the case of payment of interest in
additional Notes having an aggregate principal amount equal to the amount of
such interest, such additional Notes shall be issued and registered in the name
of the registered Holder of the Note with respect to which such interest is
being paid in the manner set forth in the first sentence of this paragraph.
3. Paying Agent and Registrar. Initially, United States Trust
Company of New York, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of March 15, 1999 ("Indenture") between the Company and the Trustee. The
---------
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $100.0 million
in aggregate principal amount, plus amounts, if any, issued to pay Liquidated
Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. Optional Redemption.
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
COMPANY SHALL NOT HAVE THE OPTION TO REDEEM THE NOTES PRIOR TO THE FOURTH
ANNIVERSARY OF THE LOAN DATE. THEREAFTER, THE COMPANY SHALL HAVE THE OPTION TO
REDEEM THE NOTES, IN WHOLE OR IN PART, AT A REDEMPTION PRICE EQUAL TO 100% OF
THE PRINCIPAL AMOUNT THEREOF PLUS THE SPECIFIED PREMIUM (AS DEFINED IN THE
INDENTURE) PLUS ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF
ANY, TO THE APPLICABLE REDEMPTION DATE (SUBJECT TO THE RIGHT OF HOLDERS OF
RECORD ON THE RELEVANT RECORD DATE TO RECEIVE INTEREST AND LIQUIDATED DAMAGES
DUE ON THE RELEVANT INTEREST PAYMENT DATE.
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, DURING THE FIRST 36 MONTHS AFTER THE LOAN DATE, THE COMPANY MAY ON
ANY ONE OR MORE OCCASIONS REDEEM UP TO $35.0 MILLION AGGREGATE PRINCIPAL AMOUNT
OF NOTES AT A REDEMPTION PRICE EQUAL TO 100% OF THE PRINCIPAL AMOUNT THEREOF
PLUS A PERCENTAGE OF THE PRINCIPAL AMOUNT OF SUCH NOTE EQUAL TO THE FIXED
INTEREST RATE ON SUCH NOTE ON THE REDEMPTION DATE, PLUS LIQUIDATED DAMAGES
THEREON, IF ANY, TO THE REDEMPTION DATE (SUBJECT TO THE RIGHT OF HOLDERS OF
RECORD ON THE RELEVANT RECORD DATE TO RECEIVE LIQUIDATED DAMAGES, IF ANY, DUE ON
THE
A1-3
<PAGE>
RELEVANT INTEREST PAYMENT DATE), WITH THE NET CASH PROCEEDS OF ONE OR MORE
PUBLIC EQUITY OFFERINGS AND/OR STRATEGIC EQUITY INVESTMENTS; PROVIDED THAT AT
LEAST $65.0 MILLION AGGREGATE PRINCIPAL AMOUNT OF NOTES AND TERM NOTES REMAINS
OUTSTANDING IMMEDIATELY AFTER THE OCCURRENCE OF SUCH REDEMPTION (EXCLUDING NOTES
HELD BY THE COMPANY OR ANY OF ITS SUBSIDIARIES);AND PROVIDED, FURTHER, THAT SUCH
REDEMPTION SHALL OCCUR WITHIN 60 DAYS OF THE DATE OF THE CLOSING OF SUCH PUBLIC
EQUITY OFFERING AND/OR STRATEGIC EQUITY INVESTMENT.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(A) Upon the occurrence of a change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
-----------------------
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any (subject to the right of
Holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, due on the relevant interest payment date), to the date of
purchase (the "Change of Control Payment"). within 30 days following any Change
-------------------------
of Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall commence an offer (an "Asset
-----
Sale Offer") to all Holders of Notes and all Holders of other senior
- ----------
Indebtedness of the Company containing provisions similar to those set forth in
the Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets (such other Senior Indebtedness of the Company, "Pari Passu
----------
Notes") pursuant to Section 3.09 of the Indenture to purchase the maximum
- -----
principal amount (or accreted value, as applicable) of Notes and Pari Passu
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount (or accreted value, as
applicable) thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest and Liquidated Damages,
if any, due on the relevant interest payment date), in accordance with the
procedures set forth in the indenture and the Indenture governing the Pari Passu
Notes. To the extent that any Excess Proceeds remain after consummation of an
Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by the Indenture. If the aggregate principal amount of
Notes and Pari Passu Notes tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and Pari Passu Notes to be purchased on a pro rata basis. Upon
completion of such Offer to purchase, the amount of Excess Proceeds shall be
reset to zero. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
A1-4
<PAGE>
The Change of Control and Asset Sale provisions described above shall
be applicable whether or not any other provisions of the Indenture are
applicable. The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations applicable to any Change of Control Offer or Asset Sale Offer.
To the extent that the provisions of any such securities laws or securities
regulations conflict with the provisions of Section 4.10 or 4.15 of the
Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
Section 4.10 or 4.15 by virtue thereof.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of a majority of the aggregate principal amount of the Notes then
outstanding voting as a single class (including, without limitation, consents
obtained in connection with a purchase of or tender offer or exchange offer for,
Notes) or, if no Notes are outstanding, the holders of a majority in aggregate
principal amount of Term Notes then outstanding, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority of the aggregate principal amount of
the then outstanding Notes voting as a single class (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes) or, if no Notes are outstanding, the holders of a
majority in aggregate principal amount of Term Notes then outstanding. Without
the consent of any Holder of a Note, the Indenture or the Notes may be amended
or supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes; (ii) default in
A1-5
<PAGE>
payment when due of principal of or premium, if any, on the Notes, (iii) failure
by the Company or any of its Subsidiaries for 30 days after notice to comply
with Section 4.10 or 4.15 or 5.01 of the Indenture; (iv) failure by the Company
or any of its Subsidiaries for 30 days after notice to comply with its other
agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company which default (a) is caused
by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default or (b) results in the acceleration of
such Indebtedness prior to its express maturity, in either case the principal
amount of such Indebtedness together with the principal amount of any other such
Indebtedness under which there has been a payment default or the maturity of
which has been accelerated, aggregates $5.0 million or more; (vi) certain final
judgments for the payment of money aggregating in excess of $5.0 million that
remain undischarged for a period of 60 consecutive days; and (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the
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<PAGE>
Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes
shall have all the rights set forth in the A/B Exchange Registration Rights
Agreement dated as of December 21, 1998, between the Company and the parties
named on the signature pages thereof (the "Registration Rights Agreement").
-----------------------------
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
Attention: Chief Financial Officer
A1-7
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:
Your Signature: ___________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
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<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:__________ Your Signature:____________________________
(Sign exactly as your name appears
on the Note)
Tax Identification No:_________________________
Signature Guarantee.
A1-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Principal Amount Signature of
in in Principal Amount of this Global Note authorized officer
Principal Amount of following such of Trustee or Note
Date of Exchange of this Global Note this Global Note decrease (or increase) Custodian
- ------------------ ------------------- -------------------- --------------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A1-10
<PAGE>
EXHIBIT 10.61 (A2)
EXHIBIT A2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP/CINS ____________
_____% Senior Exchange Notes due 2007
No. ____ Principal Amount $_____________
CROWN CASTLE INTERNATIONAL CORP.
promises to pay to Cede & Co., or registered assigns, the principal sum of
________________________ Dollars on November 30, 2007.
Interest Payment Dates: [May 31] and [November 30], commencing the first such
date to occur following original issuance of the Notes.
Record Dates: [May 31] and [November 15]
Dated: March 15, 1999
Crown Castle International Corp.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
[(SEAL)]
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
United States Trust Company of New York,
as Trustee
By:_____________________
================================================================================
A2-1
<PAGE>
(Back of Note)
_____% Senior Exchange Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON. HEDGING TRANSACTIONS INVOLVING THESE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO
WHICH THIS SECURITY IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER OR ANOTHER
EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF CROWN CASTLE INTERNATIONAL CORP. THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO CROWN CASTLE INTERNATIONAL CORP. OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE
A2-2
<PAGE>
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
THIS NOTE IS BEING ISSUED TO THE REGISTERED HOLDER NAMED ON THE FACE
HEREOF IN EXCHANGE FOR ONE OR MORE TERM NOTES ISSUED PURSUANT TO THE TERM LOAN
AGREEMENT.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Crown Castle International Corp., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
-------
this Note at _____% per annum from and including the most recent date on which
interest has been paid by the Company with respect to the Term Notes in exchange
for which this Note has been issued (or, if this Note is issued in a transfer of
or exchange for another Note, from the date on which interest was payable with
respect to such other Note) until maturity and shall pay the Liquidated Damages,
if any, payable pursuant to Section 3(c) of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages, if
any, semi-annually on [May 31] and [Novmeber 30] of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"); provided that the first such interest payment date
- ----------------------
shall be the first such date to occur following original issuance of this Note
to the registered holder hereof in exchange for one or more Term Notes. The
Company shall pay interest in cash only. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from and including the most recent date on which interest has been paid by
the Company with respect to the Term Notes in exchange for which this Note has
been issued. The Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
2. Method of Payment. The Company will pay interest on this Note
(except defaulted interest) and Liquidated Damages to the Persons who are the
registered Holders of this Note at the close of business on the [May 15] or
[November 15] next preceding the Interest Payment Date, even if it is canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
Notwithstanding the foregoing, if this Note is issued in exchange for one or
more Term Notes during the period beginning on the day after any record date and
ending on the next succeeding Interest Payment Date, then the Company will pay
interest on this Note (except defaulted interest) and Liquidated Damages to the
Persons who were the registered holder of such Term Notes for which this Note
has been exchanged at the close of business on the relevant record date next
preceeding the first Interest Payment Date following issuance of this Note.
This Note will be payable as to principal, premium and Liquidated Damages, if
any, and interest (in the case of the payment of interest in cash) at the office
or agency of the Company maintained for such purpose within or without the City
and State of New York, or, at the option of the Company, payment of
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<PAGE>
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of and interest (in the case of the payment of interest in cash),
premium and Liquidated Damages on, all Global Notes and all other Notes the
Holders of which shall have provided wire transfer instructions to the Company
or the Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided that Liquidated Damages may be paid
through the issuance of additional Notes having a principal amount at the time
of issuance equal to the amount of Liquidated Damages so paid. In the case of
payment of interest in additional Notes having an aggregate principal amount
equal to the amount of such interest, such additional Notes shall be issued and
registered in the name of the registered Holder of the Note with respect to
which such interest is being paid in the manner set forth in the first sentence
of this paragraph.
3. Paying Agent and Registrar. Initially, United States Trust
Company of New York, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of March 15, 1999 ("Indenture") between the Company and the Trustee. The
---------
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $100.0 million
in aggregate principal amount, plus amounts, if any, issued to pay Liquidated
Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. Optional Redemption.
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
COMPANY SHALL NOT HAVE THE OPTION TO REDEEM THE NOTES PRIOR TO THE FOURTH
ANNIVERSARY OF THE LOAN DATE. THEREAFTER, THE COMPANY SHALL HAVE THE OPTION TO
REDEEM THE NOTES, IN WHOLE OR IN PART, AT A REDEMPTION PRICE EQUAL TO 100% OF
THE PRINCIPAL AMOUNT THEREOF PLUS THE SPECIFIED PREMIUM (AS DEFINED IN THE
INDENTURE) PLUS ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES THEREON, IF
ANY, TO THE APPLICABLE REDEMPTION DATE (SUBJECT TO THE RIGHT OF HOLDERS OF
RECORD ON THE RELEVANT RECORD DATE TO RECEIVE INTEREST AND LIQUIDATED DAMAGES
DUE ON THE RELEVANT INTEREST PAYMENT DATE.
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, DURING THE FIRST 36 MONTHS AFTER THE LOAN DATE, THE COMPANY MAY ON
ANY ONE OR MORE OCCASIONS REDEEM UP TO $35.0 MILLION AGGREGATE PRINCIPAL AMOUNT
OF NOTES AT A REDEMPTION PRICE EQUAL TO 100% OF THE PRINCIPAL AMOUNT THEREOF
PLUS A PERCENTAGE OF THE PRINCIPAL AMOUNT OF SUCH NOTE EQUAL TO THE FIXED
INTEREST RATE ON SUCH NOTE ON THE REDEMPTION DATE, PLUS LIQUIDATED DAMAGES
THEREON, IF ANY, TO THE REDEMPTION DATE (SUBJECT TO THE RIGHT OF HOLDERS OF
RECORD ON THE
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<PAGE>
RELEVANT RECORD DATE TO RECEIVE LIQUIDATED DAMAGES, IF ANY, DUE ON THE RELEVANT
INTEREST PAYMENT DATE), WITH THE NET CASH PROCEEDS OF ONE OR MORE PUBLIC EQUITY
OFFERINGS AND/OR STRATEGIC EQUITY INVESTMENTS; PROVIDED THAT AT LEAST $65.0
MILLION AGGREGATE PRINCIPAL AMOUNT OF NOTES AND TERM NOTES REMAINS OUTSTANDING
IMMEDIATELY AFTER THE OCCURRENCE OF SUCH REDEMPTION (EXCLUDING NOTES HELD BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES);AND PROVIDED, FURTHER, THAT SUCH REDEMPTION
SHALL OCCUR WITHIN 60 DAYS OF THE DATE OF THE CLOSING OF SUCH PUBLIC EQUITY
OFFERING AND/OR STRATEGIC EQUITY INVESTMENT.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
-----------------------
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any (subject to the right of
Holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, due on the relevant interest payment date), to the date of
purchase (the "Change of Control Payment"). Within 30 days following any Change
-------------------------
of Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5 million, the Company shall commence an offer (an "Asset Sale
----------
Offer") to all Holders of Notes and all holders of other senior Indebtedness of
- -----
the Company containing provisions similar to those set forth in the Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets (such other senior Indebtedness of the Company, "Pari Passu Notes")
----------------
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount (or accreted value, as applicable) of Notes and Pari Passu Notes that may
be purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount (or accreted value, as applicable) thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest and Liquidated Damages, if any, due on the
relevant interest payment date), in accordance with the procedures set forth in
the Indenture and the indenture governing the Pari Passu Notes. To the extent
that any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
the Indenture. If the aggregate principal amount of Notes and Pari Passu Notes
tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and Pari Passu
Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset to zero. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
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<PAGE>
The Change of Control and Asset Sale provisions described above shall
be applicable whether or not any other provisions of the Indenture are
applicable. The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations applicable to any Change of Control Offer or Asset Sale Offer.
To the extent that the provisions of any such securities laws or securities
regulations conflict with the provisions of Section 4.10 or 4.15 of the
Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
Section 4.10 or 4.15 by virtue thereof.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of a majority of the aggregate principal amount of the Notes then
outstanding voting as a single class (including, without limitation, consents
obtained in connection with a purchase of or tender offer or exchange offer for,
Notes) or, if no Notes are outstanding, the holders of a majority in the
aggregate principal amount of Term Notes then outstanding, and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority of the aggregate principal
amount of the then outstanding Notes voting as a single class (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes) or, if no Notes are outstanding, the
holders of a majority in the aggregate principal amount of Term Notes then
outstanding. Without the consent of any Holder of a Note, the Indenture or the
Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
A2-6
<PAGE>
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes; (ii) default in payment when due of principal of or
premium, if any, on the Notes, (iii) failure by the Company or any of its
Subsidiaries for 30 days after notice to comply with Section 4.10 or 4.15 or
5.01 of the Indenture; (iv) failure by the Company or any of its Subsidiaries
for 30 days after notice to comply with its other agreements in the Indenture or
the Notes; (v) default under certain other agreements relating to Indebtedness
of the Company which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default or (b)
results in the acceleration of such Indebtedness prior to its express maturity,
in either case the principal amount of such Indebtedness together with the
principal amount of any other such Indebtedness under which there has been a
payment default or the maturity of which has been accelerated, aggregates $5.0
million or more; (vi) certain final judgments for the payment of money
aggregating in excess of $5.0 million that remain undischarged for a period of
60 consecutive days; and (vii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Significant Subsidiaries. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
A2-7
<PAGE>
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of December 21, 1998, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
-------------------
Agreement").
- ---------
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
Attention: Chief Financial Officer
A2-8
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_______________________________________________________
to transfer this Note on the books of the Company. The agent June substitute
another to act for him.
______________________________________________________________________________
Date:_______________
Your Signature:____________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A2-9
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
______________________________________________________________________________
Date: ___________________ Your Signature:__________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:____________
Signature Guarantee.
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Signature of
Amount of Principal Amount authorized officer
decrease in Amount of increase of this Global Note of Trustee or Note
Principal Amount in Principal Amount following such ----
Date of Exchange of this Global Note of this Global Note decrease (or increase) Custodian
- ------------------ ------------------- -------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE>
Exhibit 10.61 (B)(1)
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Re: % Senior Notes due 2007
----------------------------
Reference is hereby made to the Indenture, dated as of March 15, 1999
(the "Indenture"), between Crown Castle International Corp., as issuer (the
---------
"Company"), and United States Trust Company of New York, as trustee.
- --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
----------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
--------
to __________ (the "Transferee"), as further specified in Annex A hereto. In
----------
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
---------- ---
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
Temporary Regulation S Global Note, the Regulation S Global Note or a Definitive
- --------------------------------------------------------------------------------
Note pursuant to Regulation S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
B-1
<PAGE>
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. [ ] Check and complete if Transferee will take delivery of a beneficial
-------------------------------------------------------------------
interest in a 144A Global Note or a Definitive Note pursuant to any provision of
- --------------------------------------------------------------------------------
the Securities Act other than Rule 144A or Regulation S. The Transfer is being
- -------------------------------------------------------
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act.
4. [ ] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [ ] Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
B-2
<PAGE>
(b) [ ] Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
______________________________________________
[Insert Name of Transferor]
By:___________________________________________
Name:
Title:
Dated:____________, _______
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _________), or
(ii) [ ] Regulation S Global Note (CUSIP _________), or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note (CUSIP ________), or
(iii) [ ] Unrestricted Global Note (CUSIP ________); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
Exhibit 10.61 (C)(1)
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Re: % Senior Notes due 2007
----------------------------
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of March 15, 1999
(the Indenture"), between Crown Castle International Corp., as issuer (the
---------
"Company"), and United States Trust Company of New York, as trustee.
- --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
-----
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
--------
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Note to beneficial interest in an Unrestricted Global Note. In
- -----------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
--------------
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [ ] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
- -------------------------------------------
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
C-1
<PAGE>
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [ ] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
beneficial interest in an Unrestricted Global Note. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Note to Restricted Definitive Note. In connection with the Exchange of
- -----------------------------------------
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [ ] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
beneficial interest in a Restricted Global Note. In connection with the
- -----------------------------------------------
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE>
This certificate and the statements contained herein are
made for your benefit and the benefit of the Company.
_______________________________________
[Insert Name of Owner]
By:____________________________________
Name:
Title:
Dated: March 15, 1999
C-3
<PAGE>
Exhibit 10.61 (D)(1)
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
March 15, 1999 among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of CROWN CASTLE INTERNATIONAL CORP. (or its permitted successor), a
Delaware corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and UNITED STATES TRUST COMPANY OF
NEW YORK, as trustee under the Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 15, 1999 providing for
the issuance of an aggregate principal amount of up to $100.0 million of ___%
Senior Notes due 2007 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby
agrees as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful,
and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms hereof
and thereof; and
D-1
<PAGE>
(ii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Notes or
the Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment, demand
of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all
demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the
Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right
of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not due
and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
D-2
<PAGE>
(h) The Guarantors shall have the right to seek contribution from
any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Guarantee.
(i) Pursuant to Section 10.02 of the Indenture, after giving effect
to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any
collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect
of the obligations of such other Guarantor under Article 10 of
the Indenture shall result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer
or conveyance.
3 Execution and Delivery. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) The Guaranteeing Subsidiary may not consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such
Guarantor unless:
(i) subject to Section 10.05 of the Indenture, the Person formed by
or surviving any such consolidation or merger (if other than a
Guarantor or the Company) unconditionally assumes all the
obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee
on the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no Default
or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in
form to the Trustee, of the Note Guarantee endorsed upon the Notes and
the due and punctual performance of all of the covenants and
conditions of the Indenture to be performed by the Guarantor, such
successor corporation shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a
Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Note Guarantees to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Note Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as
though all of such Note Guarantees had been issued at the date of the
execution hereof.
D-3
<PAGE>
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in the
Indenture or in any of the Notes shall prevent any consolidation or
merger of a Guarantor with or into the Company or another Guarantor,
or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or
another Guarantor.
5. Releases.
(a) In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all to the capital stock of any Guarantor,
then such Guarantor (in the event of a sale or other disposition, by
way of merger, consolidation or otherwise, of all of the capital stock
of such Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all or substantially all of
the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds
of such sale or other disposition are applied in accordance with the
applicable provisions of the Indenture, including without limitation
Section 4.10 of the Indenture. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including without
limitation Section 4.10 of the Indenture, the Trustee shall execute
any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Note Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor
under the Indenture as provided in Article 10 of the Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
8. Counterparts The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
D-4
<PAGE>
9. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
D-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: March 15, 1999
[Guaranteeing Subsidiary]
By:____________________________________________
Name:
Title:
Crown Castle International Corp.
By:____________________________________________
Name:
Title:
[Other Guarantors]
By:____________________________________________
Name:
Title
United States Trust Company of New York
as Trustee
By:____________________________________________
Name:
Title:
D-6
<PAGE>
Exhibit E1
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of March 15, 1999 (the "Indenture") among
CROWN CASTLE INTERNATIONAL CORP. and UNITED STATES TRUST COMPANY OF NEW YORK, as
trustee (the "Trustee"), (a) the due and punctual payment of the principal of,
premium, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium, and, to the
extent permitted by law, interest, and the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee all in accordance
with the terms of the Indenture and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise. The obligations of the Guarantors to the Holders of Notes and to the
Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Note Guarantee. Each Holder of a Note, by accepting
the same, agrees to and shall be bound by such provisions.
[Name of Guarantor(s)]
By:____________________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT 10.62
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
among
CROWN CASTLE INTERNATIONAL CORP.
and
GOLDMAN SACHS CREDIT PARTNERS L.P.
SALOMON BROTHERS HOLDING COMPANY INC.
CREDIT SUISSE FIRST BOSTON
Dated as of March 15, 1999
================================================================================
<PAGE>
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of March 15, 1999, among Crown Castle International Corp., a
Delaware corporation (the "Borrower") and Goldman Sachs Credit Partners L.P.,
Salomon Brothers Holding Company Inc. and Credit Suisse First Boston, as
("Arrangers").
RECITALS
This Agreement is made pursuant to the Term Loan Agreement, dated as
of the date hereof (the "Term Loan Agreement"), among the Borrower, the Lenders
referred to therein (the "Lenders") and the Arrangers. In order to induce the
Lenders to enter into the Term Loan Agreement, the Borrower has agreed to
provide the registration rights set forth in this Agreement. The execution of
this Agreement is a condition to the funding of any Term Loan.
AGREEMENT
The parties agree as follows:
1. Definitions.
-----------
Capitalized terms used herein without definition have the meanings assigned
to them in the Term Loan Agreement. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
Effectiveness Date: See Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Notes: As defined in the Term Loan Agreement.
Exchange Note Indenture: The Exchange Note Indenture, dated as of March
15, 1999, between the Borrower and United States Trust Company of New York, as
trustee, pursuant to which the Exchange Notes are issued, as the same may be
amended from time to time in accordance with the terms thereof.
Exchange Note Indenture Trustee: See Section 5(r) hereof.
Filing Date: See Section 3(a) hereof.
Interest Payment Date: As defined in the Term Loan Agreement.
Interest Period: As defined in the Term Loan Agreement.
Liquidated Damages: See Section 3(c) hereof.
Loan: As defined in the Term Loan Agreement.
NASD: National Association of Securities Dealers, Inc.
Registration Rights Agreement Page 1
<PAGE>
Person: An individual, partnership, limited liability company,
corporation, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in the Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Recommencement Date: See Section 5 hereof.
Registrable Securities: All Exchange Notes; provided that an Exchange Note
ceases to be a Registrable Security when it is no longer a Transfer Restricted
Security.
Registration Default: See Section 3(c) hereof.
Registration Expenses: See Section 6 hereof.
Registration Statement: Any registration statement of the Borrower which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
Shelf Registration: See Section 3(a) hereof.
Suspension Notice: See Section 5 hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section 77aaa-
77bbbb) as in effect on the date of the Exchange Note Indenture.
Transfer Restricted Securities: The Registrable Securities upon original
issuance thereof, and with respect to any particular such Registrable Security,
until such securities are sold to the public in unrestricted sales.
"underwritten registration" or "underwritten offering": A registration in
which securities of the Borrower are sold to an underwriter for reoffering to
the public.
2. Holders of Registrable Securities.
---------------------------------
A Person is deemed to be a holder of Registrable Securities whenever such
Person owns Registrable Securities of record or has provided evidence reasonably
satisfactory to the Borrower that such Person has the right to acquire such
Registrable Securities, whether or not such acquisition has actually been
effected and disregarding any legal restrictions upon the exercise of such
right.
Registration Rights Agreement Page 2
<PAGE>
3. Shelf Registration.
------------------
(a) Filing of Shelf Registration. The Borrower shall file a "shelf"
----------------------------
registration statement on any appropriate form pursuant to Rule 415 (or
similar rule that may be adopted by the SEC) under the Securities Act (a
"Shelf Registration") as promptly as practicable and in no event later than
the date that is 270 days after the initial funding of the Term Loans (the
"Filing Date") to permit resales of all of the Registrable Securities. The
Borrower agrees to use its best efforts to cause such Shelf Registration to
become effective as promptly as possible after the filing thereof, but in no
event later than 90 days after the Filing Date (the "Effectiveness Date").
The Borrower shall use its best efforts to keep any Shelf Registration
required by this Section 3(a) continuously effective, supplemented and
amended as required by and subject to the provisions of Section 5 hereof to
the extent necessary to ensure that it is available for sales of Registrable
Securities by the holders thereof entitled to the benefit of this Section
3(a) and to ensure that it conforms with the requirements of this Agreement,
the Securities Act and the policies, rules and regulations of the SEC as
announced from time to time until all Registrable Securities covered by the
Shelf Registration have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with
--------------------------------------------------------------
the Shelf Registration. No holder of Registrable Securities may include
----------------------
any of its Registrable Securities in any Shelf Registration pursuant to
this Agreement unless and until such holder furnishes to the Borrower in
writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable,
of the Securities Act for use in connection with any Shelf Registration or
Prospectus or preliminary Prospectus included therein. No holder of
Registrable Securities shall be entitled to Liquidated Damages pursuant to
Section 3(c) hereof unless and until such holder shall have provided all
such information. Each selling holder of Registrable Securities agrees to
promptly furnish additional information required to be disclosed in order
to make the information previously furnished to the Borrower by such holder
not materially misleading.
(c) Liquidated Damages. If (i) the Registration Statement required
------------------
by this Agreement is not filed with the SEC on or prior to the Filing Date,
(ii) the Registration Statement has not been declared effective by the SEC
on or prior to the Effectiveness Date or (iii) the Registration Statement
required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended
purpose without being succeeded immediately by a post-effective amendment
to the Registration Statement that cures such failure and that is itself
declared effective immediately (such period of time during which a
Registration Statement or the related Prospectus is not usable being
referred to as a "Blackout Period") except as permitted in the paragraph
immediately below (each such event referred to in clauses (i) through
(iii), a "Registration Default"), then the Borrower agrees to pay to each
holder of Registrable Securities and Loans liquidated damages ("Liquidated
Damages") in an amount equal to 50 basis points per annum times the
principal amount of Registrable Securities or Loans, as the case may be,
for each week or portion thereof that the Registration Default continues
for the first 90-day period immediately following the occurrence of such
Registration Default (such 90-day period to begin on the date on which the
first such Registration Default occurs). The amount of such Liquidated
Damages shall increase by an additional 50 basis points per annum on the
principal amount of Registrable Securities or Loans, as the case may be,
with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of
200 basis points per annum on the principal amount of Registrable
Securities or Loans, as the case may be; provided that the Borrower shall
Registration Rights Agreement Page 3
<PAGE>
in no event be required to pay Liquidated Damages for more than one
Registration Default on any Registrable Securities or Loans, as the case
may be, at any given time. All Liquidated Damages shall be calculated
based on the actual number of days elapsed in a 360 day year and all
accrued Liquidated Damages shall be paid on the applicable Interest Payment
Date in accordance with the Exchange Note Indenture or the Term Loan
Agreement, as the case may be, to each holder of Registrable Securities or
Loans, as the case may be, in cash. Notwithstanding anything to the
contrary set forth herein, (1) upon filing the Registration Statement, in
the case of (i) above, (2) upon the effectiveness of the Registration
Statement, in the case of (ii) above or (3) upon the filing of a post-
effective amendment to the Registration Statement or an additional
Registration Statement that causes the Registration Statement to again be
declared effective or made usable in the case of (iii) above, the
Liquidated Damages payable with respect to the Registrable Securities or
Loans, as the case may be, as a result of such clause (i), (ii) or (iii),
as applicable, shall cease.
A Registration Default referred to in Section 3(c)(iii) shall be deemed not
to have occurred and be continuing in relation to a Registration Statement or
the related Prospectus if (i) the Blackout Period has occurred solely as a
result of (x) the filing of a post-effective amendment to such Registration
Statement to incorporate annual audited financial information with respect to
the Borrower where such post-effective amendment is not yet effective and needs
to be declared effective to permit holders to use the related Prospectus or (y)
the occurrence of other material events with respect to the Borrower that would
need to be described in such Registration Statement or the related Prospectus
and (ii) in the case of clause (y), the Borrower is proceeding promptly and in
good faith to amend or supplement (including by way of filing documents under
the Exchange Act which are incorporated by reference into the Registration
Statement) such Registration Statement and the related Prospectus to describe
such events; provided, however, that in any case if such Blackout Period occurs
for a continuous period in excess of 30 days, a Registration Default shall be
deemed to have occurred on the 31st day of such Blackout Period and liquidated
damages shall be payable in accordance with the above paragraph from the day
such Registration Default occurs until such Registration Default is cured or
until the Borrower is no longer required pursuant to this Agreement to keep such
Registration Statement effective or such Registration Statement or the related
Prospectus usable; provided further, however, that in no event shall the total
of all Blackout Periods exceed 60 days in the aggregate in any 12-month period.
All obligations of the Borrower set forth in the preceding paragraphs that
are outstanding with respect to any Registrable Security or Loan at the time
such security ceases to be a Registrable Security or Loan shall survive until
such time as all such obligations with respect to such Registrable Securities or
Loans have been satisfied in full. Any holder of Registrable Securities or any
Lender may notify the Exchange Note Indenture Trustee (and any paying agent
under the Exchange Note Indenture) and/or the Administrative Agents under the
Term Loan Agreement immediately after the occurrence of each and every event
which pursuant to this Section 3(c) results in the accrual of Liquidated Damages
with respect to such Registrable Securities or Loans, as the case may be.
4. Hold-Back Agreements.
--------------------
(a) Restrictions on Public Sale by Holder of Registrable Securities.
---------------------------------------------------------------
Each holder of Registrable Securities whose Registrable Securities are
covered by a Registration Statement filed pursuant to Section 3 hereof
agrees, if requested by the managing underwriters in an underwritten
offering, not to effect any public sale or distribution of securities of
the Borrower of the same class as the securities included in such
Registration Statement, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten registration),
Registration Rights Agreement Page 4
<PAGE>
during the 10-day period prior to, and during the 90-day period beginning
on, the closing date of each underwritten offering made pursuant to such
Registration Statement, to the extent timely notified in writing by the
Borrower or the managing underwriters; provided, however, that each holder
of Registrable Securities shall be subject to the hold-back restrictions of
this Section 4(a) only once during the term of this Agreement.
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation
from entering any such agreement; provided, however, that any such holder
shall undertake, in its request to participate in any such underwritten
offering, not to effect any public sale or distribution of any Registrable
Securities held by such holder and covered by a Registration Statement
commencing on the date of sale of the Registrable Securities covered by
such Registration Statement unless it has provided 90 days prior written
notice of such sale or distribution to the underwriter or underwriters.
(b) Restrictions on Sale of Securities by the Borrower and Others.
-------------------------------------------------------------
The Borrower agrees (1) not to effect any public or private offer, sale or
distribution of any of its debt securities or any class or series of its
capital stock having a preference in liquidation or with respect to
dividends, including a sale pursuant to Regulation D under the Securities
Act, during the 10-day period prior to, and during the 90-day period
beginning with, the effectiveness of a Registration Statement filed under
Section 3 to the extent timely notified in writing by a holder of
Registrable Securities or the managing underwriters in an underwritten
offering and (2) to cause each holder of the Borrower's privately placed
debt securities or any class or series of the Borrower's capital stock
having a preference in liquidation or with respect to dividends purchased
from the Borrower at any time on or after the date of this Agreement to
agree not to effect any public sale or distribution of any such securities
during such period, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such registration, if permitted).
5. Registration Procedures.
-----------------------
In connection with the Borrower's registration obligations set forth in
Section 3 hereof, the Borrower shall use its best efforts to effect such
registration to permit the sale of such Registrable Securities being sold in
accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Borrower pursuant to Section 3(b)
hereof), and pursuant thereto the Borrower shall, as expeditiously as possible
prepare and file with the SEC a Registration Statement or Registration
Statements relating to the Shelf Registration on any appropriate form under the
Securities Act, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution
thereof within the time periods and otherwise in accordance with the provisions
hereof and shall cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is required
to be retained in accordance with the rules and regulations of the NASD. In
connection with any Registration Statement and any related Prospectus required
by this Agreement, the Borrower shall:
(a) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 of this Agreement, as applicable. Upon
the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (1) to contain a material
misstatement or omission or (2) not to be effective and usable for resale
of Registrable Securities during the period required by this Agreement, the
Borrower shall promptly file an appropriate amendment
Registration Rights Agreement Page 5
<PAGE>
to such Registration Statement curing such defect, and, if SEC review is
required, use its best efforts to cause such amendment to be declared
effective as soon as practicable;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the applicable Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period set
forth in Section 3 hereof; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act, and to comply fully with Rules 424,
430A and 462, as applicable under the Securities Act in a timely manner;
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus; the Borrower shall not be deemed
to have used its best efforts to keep such Registration Statement effective
during the applicable period if it voluntarily takes any action that would
result in selling holders of the Registrable Securities covered thereby
being unable to sell such Registrable Securities during that period unless
such action is required under applicable law, provided that the foregoing
shall not apply to actions taken by the Borrower in good faith and for
valid business reasons, including without limitation the acquisition or
divestiture of assets, so long as the Borrower promptly thereafter complies
with the requirements of Section 5(k) hereof, if applicable;
(c) advise the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and, if requested by any such
Person, confirm such advice in writing, (1) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to any applicable Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the
SEC for amendments to the Registration Statement or for amendments or
supplements to the Prospectus or for additional information relating
thereto, (3) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of
the Registrable Securities for offering or sale in any jurisdiction or the
initiation of any proceedings for that purpose and (4) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue or that requires the making of any addition to or changes in
the Registration Statement in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
that requires the making of any additions to or changes in the Prospectus
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the SEC shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Registrable Securities under state securities or Blue
Sky laws, the Borrower shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(d) furnish to each selling holder of Registrable Securities covered
by any Registration Statement or Prospectus in connection with such sale,
and each underwriter, if any, before filing with the SEC, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration
Registration Rights Agreement Page 6
<PAGE>
Statement), which documents will be subject to the review and comment of
such Persons in connection with such sale, if any, for a period of at least
five Business Days, and the Borrower will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the selling holders of the Registrable
Securities covered by such Registration Statement in connection with such
sale, or the underwriters, if any, shall reasonably object within five
Business Days after the receipt thereof. A selling holder of Registrable
Securities or underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission or fails to comply with the applicable
requirements of the Securities Act;
(e) if reasonably requested by the managing underwriter or
underwriters in connection with an underwritten offering or any selling
holders of Registrable Securities in connection with such sale, promptly
include in any Registration Statement or Prospectus pursuant to a
supplement or post-effective amendment, if necessary, such information as
the managing underwriters or such selling holders may reasonably request to
have included therein, including, without limitation, information relating
to the "Plan of Distribution," with respect to the principal amount of
Registrable Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and any other terms of the
underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all required filings of
such Prospectus supplement or post-effective amendment as soon as
practicable after the Borrower is notified of the matters to be included in
such Prospectus supplement or post-effective amendment; provided, however,
that the Borrower shall not be required to take any action pursuant to this
Section 5(e) that would, in the opinion of counsel for the Borrower
reasonably satisfactory to such selling holders, violate applicable law;
(f) furnish to each selling holder of Registrable Securities and each
managing underwriter, if any, without charge, at least one signed copy of
the Registration Statement, as first filed with the SEC, and of each
amendment thereto, all documents incorporated by reference therein and all
exhibits (including exhibits incorporated by reference therein);
(g) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons may reasonably request; the Borrower hereby
consents to the use (in accordance with law) of the Prospectus or any
amendment or supplement thereto by each of the selling holders of
Registrable Securities and the underwriters, if any, in connection with the
offering and the sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities, cooperate
with the selling holders of Registrable Securities, the underwriters, if
any, and their respective counsel in connection with the registration and
qualification of such Registrable Securities under the securities or Blue
Sky laws of such jurisdictions as any such seller or underwriter, if any,
may request and do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of such Registrable
Securities covered by the applicable Registration Statement; provided,
however, that the Borrower will not be required to register or qualify as a
foreign corporation where the Borrower is not then so qualified or to take
any action that would subject the Borrower to the service of process in
suits or to taxation, other than as to matters and
Registration Rights Agreement Page 7
<PAGE>
transactions relating to the Registration Statement in any jurisdiction
where the Borrower is not then so subject;
(i) in connection with any sale of Registrable Securities that will
result in such securities no longer being Transfer Restricted Securities,
cooperate with the selling holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing such Registrable Securities to be
sold and not bearing any restrictive legends; and to register such
Registrable Securities in such denominations and such names as such
managing underwriters or selling holders may request at least two Business
Days prior to such sale of Registrable Securities;
(j) use its best efforts to cause the disposition of the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriters, if any, to consummate the disposition of such Registrable
Securities, subject to the proviso in clause (h) above;
(k) subject to Section 5(a) hereof, if any fact or event contemplated
by Section 5(c)(4) hereof shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made, not misleading;
(l) if requested by the holders of a majority in aggregate principal
amount of the Registrable Securities or the managing underwriters, if any,
use commercially reasonable efforts to cause the Registrable Securities
covered by a Registration Statement to be rated with such rating agencies
as such holders or managing underwriters may designate;
(m) provide a CUSIP number for all Registrable Securities not later
than the effective date of a Registration Statement covering such
Registrable Securities, and provide the Exchange Note Indenture Trustee
with printed certificates for the Registrable Securities which are in a
form eligible for deposit with The Depository Trust Company;
(n) enter into such agreements (including an underwriting agreement)
and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities
pursuant to the Registration Statement contemplated by this Agreement and
in such connection, whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten registration
(1) make such representations and warranties in a certificate signed on
behalf of the Borrower by (x) the President and (y) the principal financial
officer of the Borrower, to the holders of such Registrable Securities and
the underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters in primary underwritten offerings; (2) if
requested by any selling holder, obtain opinions of counsel to the Borrower
and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters,
if any, and the holders of a majority in principal amount of the
Registrable Securities) addressed to each selling holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by
Registration Rights Agreement Page 8
<PAGE>
such selling holders and underwriters and in any event including a
statement to the effect that such counsel has participated in conferences
with officers and other representatives of the Borrower, representatives of
the independent public accountants for the Borrower; and that such counsel
advises that, on the basis of the foregoing, no facts came to such
counsel's attention that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such Registration Statement
as of its date contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and financial data set forth or referred to
in any Registration Statement contemplated by this Agreement or the related
Prospectus; (3) obtain "comfort" letters and updates thereof from the
Borrower's independent certified public accountants addressed to such
selling holders and underwriters, if any, such letters to be in customary
form and covering matters of the type customarily covered in "comfort"
letters to underwriters in connection with primary underwritten offerings;
(4) if an underwriting agreement is entered into, the same shall set forth
in full the indemnification provisions and procedures of Section 7 hereof
with respect to all parties to be indemnified pursuant to Section 7; and
(5) deliver such documents and certificates as may be requested by the
holders of a majority of the Registrable Securities being sold and the
managing underwriters, if any, to evidence compliance with Section 5(k)
hereof and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Borrower. The above shall
be done at each closing under such underwriting or similar agreement or as
and to the extent required thereunder. If at any time the representations
and warranties of the Borrower set forth in the certificate contemplated in
clause (o)(1) above cease to be true and correct, the Borrower shall so
advise the underwriters, if any, and each selling holder promptly and, if
requested by such Persons, shall confirm such advice in writing;
(o) make available at reasonable times for inspection by the selling
holders of Registrable Securities and any underwriter participating in any
disposition of such Registrable Securities pursuant to a Shelf
Registration, and any attorney or accountant retained by such selling
holders or underwriters, if any, all financial and other records and
pertinent corporate documents of the Borrower, and cause the Borrower's
officers, directors and employees to supply all information reasonably
requested by any such selling holders, underwriter, attorney or accountant
in connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness; provided, however, that the foregoing inspection and
information gathering shall be coordinated on behalf of such selling
holders by the Administrative Agents and on behalf of the other parties by
one counsel designated by and on behalf of such other parties as described
in Section 6 hereof, provided, further, that any records, documents,
properties or information that are designated by the Borrower as
confidential at the time of delivery of such records, documents, properties
or information shall be kept confidential by such person, unless (i) such
records, documents, properties or information are in the public domain or
otherwise publicly available, (ii) disclosure of such records, documents,
properties or information is required by court or administrative order or
(iii) disclosure of such records, documents, properties or information, in
the written
Registration Rights Agreement Page 9
<PAGE>
opinion of counsel to such person, is otherwise required by law (including,
without limitation, pursuant to the requirements of the Securities Act);
(p) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available
to their security holders, with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Securities Act);
(q) cause the Exchange Note Indenture to be qualified under the TIA,
and provide an indenture trustee for the Registrable Securities (the
"Exchange Note Indenture Trustee") not later than the effective date of the
first Registration Statement required by this Agreement and, and in
connection therewith, cooperate with the Exchange Note Indenture Trustee
and the holders of the Exchange Notes to effect such changes to the
Exchange Note Indenture as may be required for the Exchange Note Indenture
to be so qualified in accordance with the terms of the TIA and execute, and
use their respective best efforts to cause the Exchange Note Trustee to
execute, all documents as may be required to effect such changes and all
other forms and documents required to be filed with the SEC to enable the
Exchange Note Indenture to be so qualified in a timely manner;
(r) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or Prospectus,
provide copies of such document to the selling holders of Registrable
Securities covered by such Registration Statement and to the managing
underwriters, if any, make the Borrower's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
such selling holders or underwriters, if any, may reasonably request;
(s) make appropriate officers of the Borrower available to such
holders and the underwriters, if any, for meetings with prospective
purchasers of the Registrable Securities and prepare and present to
potential investors "road show" material in a manner consistent with other
new issuances of high yield debt securities; provided, however, that the
Borrower shall not be obligated to conduct more that one "road show" in any
90-day period; and
(t) provide promptly to each holder, upon request, each document
filed with the SEC pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
Each holder of Registrable Securities agrees by acceptance of such
Registrable Securities that, upon receipt of any notice referred to in Section
5(a) hereof or any notice from the Borrower of the existence of any fact or
event of the kind described in Section 5(c)(4) hereof (in each case, a
"Suspension Notice"), such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the applicable Registration Statement until
(i) such holder has received copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or (ii) such holder is advised in writing
by the Borrower that the use of such Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in such Prospectus, (in each case, the "Recommencement Date"). Each
holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
holder's possession that have been replaced by the Borrower with more recently
dated Prospectuses or (ii) deliver
Registration Rights Agreement Page 10
<PAGE>
to the Borrower (at the Borrower's expense) all copies, other than permanent
file copies, then in such holder's possession of the Prospectus covering such
Registrable Securities that was current at the time of receipt of the Suspension
Notice. The time period regarding the effectiveness of such Registration
Statement set forth in Section 3(a) hereof shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the Recommencement Date.
(6) Registration Expenses.
---------------------
(a) All expenses incident to the Borrower's performance of or
compliance with this Agreement will be borne by the Borrower, regardless of
whether a Registration Statement becomes effective, including without
limitation, (i) all registration and filing fees and expenses, fees and
expenses associated with filings required to be made with the NASD
(including, if applicable, the fees and expenses of any "qualified
independent underwriter" and their counsel as may be required by the rules
and regulations of the NASD); (ii) all fees and expenses of compliance with
federal securities and state Blue Sky laws or securities laws (including
fees and disbursements of counsel for the underwriters or selling holders
in connection with Blue Sky qualifications of the Registrable Securities
and determination of their eligibility for investment under the laws of
such jurisdictions as the managing underwriters or holders of a majority in
aggregate principal amount of the Registrable Securities being sold may
designate); (iii) all expenses of printing (including printing certificates
for the Registrable Securities in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses), messenger and
delivery services and telephone; (iv) all reasonable fees and disbursements
of counsel for the Borrower and for the sellers of the Registrable
Securities (subject to the provisions of Section 6(b) hereof); (v) all fees
and disbursements of independent certified public accountants of the
Borrower (including the expenses of any special audit and "comfort" letters
required by or incident to such performance), and of underwriters
(excluding discounts, commissions or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals relating to
the distribution of the Registrable Securities or legal expenses of any
Person other than the Borrower and the selling holders); (vi) all "road
show" travel and other expenses incurred in connection with the marketing
and sale of the Registrable Securities; (vii) all fees and expenses in
connection with the rating of the Registrable Securities by rating
agencies, if any; and (viii) all application and filing fees in connection
with listing the Registrable Securities on a national securities exchange
or automated quotation system pursuant to the requirements hereof; (all
such expenses being herein called "Registration Expenses").
The Borrower will, in any event, bear its own internal expenses
(including, without limitation, all salaries and expenses of their
respective officers and employees performing legal or accounting duties),
the expense of any annual audit and fees and expenses of any Person,
including special experts, retained by the Borrower.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Shelf Registration), the
Borrower will reimburse the selling holders of Registrable Securities being
registered in such registration for the reasonable fees and disbursements
of not more than one counsel who shall be Latham & Watkins unless another
firm shall be chosen by the selling holders of a majority in principal
amount of Registrable Securities for whose benefit such Registration
Statement is being prepared.
Registration Rights Agreement Page 11
<PAGE>
(c) Each holder of Registrable Securities will pay all underwriting
discounts, if any, and commissions and transfer taxes, if any, relating to the
sale or disposition of such holder's Registrable Securities.
(7) Indemnification.
---------------
(a) The Borrower agrees to indemnify and hold harmless each holder of
Registrable Securities to be included in such registration and each person
who participates as a placement or sales agent or as an underwriter in any
offering or sale of such Registrable Securities, (any such person may
hereinafter be referred to as an "Indemnified Holder"), against any losses,
claims, damages or liabilities to which such Indemnified Holder may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto), or arise
out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading,
and will reimburse each Indemnified Holder for any legal or other expenses
reasonably incurred by such Indemnified Holder in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Borrower shall not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written
information furnished to the Borrower by any Indemnified Holder expressly
for use therein.
(b) Each Indemnified Holder will indemnify and hold harmless the
Borrower against any losses, claims, damages or liabilities to which the
Borrower may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or
supplement thereto), or arise out of or are based upon the omission or
alleged omission to state therein a material fact or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement
thereto), in reliance upon and in conformity with written information
furnished to the Borrower by such Indemnified Holder expressly for use
therein; and will reimburse the Borrower for any legal or other expenses
reasonably incurred by the Borrower in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with
Registration Rights Agreement Page 12
<PAGE>
counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action
or employ counsel reasonably satisfactory to the indemnified party or (iii)
the named parties to any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the
indemnifying party shall not, in connection with any one action or separate
but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by holders of a majority in aggregate
principal amount of Registrable Securities in the case of the parties
indemnified pursuant to Section 7(a), and by the Borrower in the case of
parties indemnified pursuant to Section 7(b). No indemnifying party shall,
without the written consent of the indemnified party, effect the settlement
or compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the
consent of the indemnifying party or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Borrower on
the one hand and the Indemnified Holders on the other from the sale of the
Registrable Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Borrower on the one hand and the Indemnified Holders on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as
any other relevant equitable
Registration Rights Agreement Page 13
<PAGE>
considerations. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Borrower on the one hand or the
Indemnified Holders on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Borrower and the Indemnified Holders agree that
it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Indemnified Holders were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Indemnified Holder shall be required
to contribute any amount in excess of the amount by which the total amount
received by such Indemnified Holder with respect to its sale of Registrable
Securities pursuant to a Registration Statement exceeds the sum of the (i)
amount paid by such Indemnified Holder for such Registrable Security and
(ii) amount of any damages which such Indemnified Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The holders' and any underwriter's
obligations in this subsection (d) to contribute are several in proportion
to the respective principal amount of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(e) The obligations of the Borrower under this Section 7 shall be in
addition to any liability which the Borrower may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Indemnified Holder within the meaning of the Securities Act;
and the obligations of the Indemnified Holders under this Section 7 shall
be in addition to any liability which the respective Indemnified Holders
may otherwise have and shall extend, upon the same terms and conditions, to
each officer and director of the Borrower and to each person, if any, who
controls the Borrower within the meaning of the Securities Act.
8. Rule 144.
--------
The Borrower covenants for so long as any Registrable Securities remain
outstanding that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder (or, if any of them is not required to file such reports, the
applicable party will, upon the request of any holder of Registrable Securities
make publicly available other information so long as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and it will take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Borrower will deliver to such holder a written statement as to
whether they have complied with such information and filing requirements.
Registration Rights Agreement Page 14
<PAGE>
9. Miscellaneous.
-------------
(a) Remedies. Each holder of Registrable Securities and Loans, in
--------
addition to being entitled to exercise all rights provided herein, in the
Exchange Note Indenture or granted by law, including recovery of damages,
in connection with the breach by the Borrower of their obligations to
register the Registrable Securities will be entitled to specific
performance of its rights under this Agreement. The Borrower acknowledges
and agrees that monetary damages (including the Liquidated Damages
contemplated hereby) would not be adequate compensation for any loss
incurred by reason of a breach by any of them of the provisions of this
Agreement and each agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Borrower will not on or after
--------------------------
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The Borrower has not previously entered into, any
agreement with respect to its securities granting any registration rights
to any Person other than the Registration Rights Agreement entered into
pursuant to the sale of the Senior Exchangeable Preferred Stock. The
rights granted to the holders of Registrable Securities hereunder do not in
any way conflict with and are not inconsistent with the rights granted to
the holders of the Borrower's respective securities under any other
agreements.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures
from the provisions of this Agreement may not be given unless (i) in the
case of Section 3(c) and this Section 9(c)(i), the Borrower has obtained
the written consent of the holders of all of the outstanding (x)
Registrable Securities and (y) Loans (excluding Registrable Securities held
by the Borrower or one of its affiliates) and (ii) in the case of all other
provisions hereof, the Borrower has obtained the written consent of holders
of majority of the outstanding principal amount of the (x) Registrable
Securities and (y) Loans (excluding Registrable Securities held by the
Borrower or one of its affiliates).
(d) Third Party Beneficiary. The holders of Registrable Securities
-----------------------
shall be third party beneficiaries to the agreements made hereunder between
the Borrower, on the one hand, and the Arrangers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they
may deem such enforcement necessary or advisable to protect its rights or
the rights of holders hereunder.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, facsimile or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Borrower in accordance
with the provisions of this Section 9(e), which address initially is,
with respect to the Arrangers to them at the address set forth in the
Term Loan Agreement, with a copy to Latham & Watkins, 885 Third
Avenue, Suite 1000, New York, New York 10022-4802, Attention: Kirk A.
Davenport, Esq.; and
(ii) if to the Borrower, initially to them at the address set
forth in the Term
Registration Rights Agreement Page 15
<PAGE>
Loan Agreement and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 9(e), with
a copy to Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue,
New York, New York 10010, Attn.: Stephen L. Burns, Esq.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if delivered by facsimile; and on the next Business
Day if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Exchange Note
Indenture Trustee at the address specified in the Exchange Note Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties hereto, including without limitation and without the need for an
express assignment, all subsequent holders of Registrable Securities or
Loans; provided, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in
violation of the terms hereof or the Exchange Note Indenture. If any
transferee of any holder shall acquire Registrable Securities in any
manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement, and
by taking and holding such Registrable Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and such Person shall be entitled to
receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
---------------------------------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW RULES
THEREOF. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
Registration Rights Agreement Page 16
<PAGE>
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of any such
provision in such jurisdiction in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
Registration Rights Agreement Page 17
<PAGE>
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement with respect to the subject matter
contained herein and intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Borrower with
respect to the securities sold pursuant to the Term Loan Agreement. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
Registration Rights Agreement Page 18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CROWN CASTLE INTERNATIONAL CORP.
By: /s/ Charles C. Green, III
---------------------------------
Name: Charles C. Green, III
Title: Executive Vice President and
Chief Financial Officer
Registration Rights Agreement Page 19
<PAGE>
ARRANGERS:
Goldman Sachs Credit Partners L.P.
By: Goldman, Sachs & Co.
By: /s/ Stephen B. King
----------------------------------------------
(Authorized Signatory)
Salomon Brothers Holding Company Inc.
By: /s/ Steven M. Joans
----------------------------------------------
(Authorized Signatory)
Credit Suisse First Boston
By: /s/ Marisa J. Harney
----------------------------------------------
(Authorized Signatory)
By: /s/ Judith E. Smith
----------------------------------------------
(Authorized Signatory)
Registration Rights Agreement Page 20
<PAGE>
EXHIBIT 10.63
EXECUTION COPY
================================================================================
ESCROW AGREEMENT
among
CROWN CASTLE INTERNATIONAL CORP.,
as Borrower,
GOLDMAN SACHS CREDIT PARTNERS L.P.
SALOMON BROTHERS HOLDING COMPANY INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
as Arrangers
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Escrow Agent
Dated as of March 15, 1999
================================================================================
<PAGE>
THIS ESCROW AGREEMENT (this "Agreement"), dated as of March 15, 1999
(the "Closing Date"), is by and among Crown Castle International Corp., a
Delaware corporation (the "Borrower"), Goldman Sachs Credit Partners L.P.,
Salomon Brothers Holding Company Inc. and Credit Suisse First Boston
Corporation, as the Arrangers under the Term Loan Agreement referred to below
(the "Arrangers"), and United States Trust Company of New York, (in its capacity
as escrow agent, the "Escrow Agent"). Capitalized terms used herein and not
otherwise defined have the meanings assigned to them in the Term Loan Agreement
referred to below.
RECITALS
WHEREAS, the Borrower and the Arrangers have entered into a Term Loan
Agreement dated as of March 15, 1999 (as amended, restated or otherwise modified
from time to time, the "Term Loan Agreement") providing for certain Term Loans
to be made by the Lenders thereunder to the Borrower (the "Term Loans"), which
Term Loans will be evidenced by certain promissory notes of the Borrower (the
"Term Notes");
WHEREAS, the Borrower has agreed to place in escrow various Senior
Exchange Notes due 2007 (the "Exchange Notes") in the form of Exhibit A1 and
Exhibit A2 to the Exchange Note Indenture dated as of the date hereof (the
"Exchange Note Indenture") duly executed by the Borrower and United States Trust
Company of New York, as trustee (the "Exchange Note Indenture Trustee"); and
WHEREAS, it is a condition to the making of Term Loans under the Term
Loan Agreement that the Exchange Notes be delivered into escrow pursuant to this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Deposit of Escrowed Notes by the Borrower.
On the Closing Date, concurrently with the execution and delivery of
this Agreement, the Borrower is delivering to the Escrow Agent 25 undated
Exchange Notes, duly executed by the Borrower and authenticated by the Exchange
Note Indenture Trustee, with the payee, interest rate and aggregate principal
amount in blank (the "Escrowed Notes").
2. Release of Escrowed Notes.
The Escrow Agent shall hold the Escrowed Notes in escrow pursuant to
this Agreement, until authorized hereunder to deliver them as follows:
(a) Release to Holder or its Designees. If, on any Business Day on
or after the Anniversary Date, the Escrow Agent receives one or more Term
Notes from the Administrative Agents accompanied by a properly completed
and executed written notice from the Administrative Agents in the form of
Annex A hereto (each, an "Exchange Notice"), the Escrow Agent shall on or
within five Business Days after the Escrow Agent's receipt of such Exchange
Notice, (i) date, complete and deliver one or more Exchange Notes in
accordance with such Exchange Notice, and (ii) return the Term Note(s) so
surrendered to the Borrower for cancellation upon receipt of evidence that
all cash interest thereon required to be paid pursuant to
Escrow Agreement Page 1
<PAGE>
this Section 2(a) and in accordance with the Term Loan Agreement has been
paid. If less than all of the surrendered Term Note(s) are to be exchanged
for Exchange Notes, the Borrower shall deliver to the Person specified in
the Exchange Notice on or within three Business Days after the Escrow
Agent's receipt of the Exchange Notice, a replacement Term Note dated the
date specified in the Exchange Notice as the Exchange Date, equal to the
amount of any principal not so exchanged, all as specified in Section 6 of
the Exchange Notice and in accordance with the Term Loan Agreement. Upon
delivery of any Exchange Notes pursuant to this clause (a), the Borrower
shall within five Business Days after the Escrow Agent's receipt of the
Exchange Notice make payment in cash in accordance with Section 2.3(f) of
the Term Loan Agreement of all accrued and unpaid interest up to but not
including the date specified in the Exchange Notice as the Exchange Date.
(b) Release to the Borrower. On or within one Business Day after
receipt by the Escrow Agent of certificates from the Administrative Agents
certifying that all Obligations with respect to the Term Loans have been
paid in full, the Escrow Agent shall deliver to the Borrower all Escrowed
Notes then remaining in escrow.
3. Certain Additional Agreements. The Borrower and the Administrative
Agents shall, upon request by the Escrow Agent, execute and deliver to the
Escrow Agent such additional written instructions and certificates hereunder as
may be reasonably required by the Escrow Agent to give effect to the provisions
of Sections 1 and 2 hereof.
4. Escrow Agent.
(a) The Escrow Agent shall have no duties or responsibilities,
including, without limitation, a duty to review or interpret the Term Loan
Agreement, except those expressly set forth herein. Except for this
Agreement, the Escrow Agent, in its capacity as such, is not a party to, or
bound by, any agreement that may be required under, evidenced by, or arise
out of the Term Loan Agreement.
(b) If the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions from any of the undersigned with
respect to the Escrowed Notes, which, in its opinion, are in conflict with
any of the provisions of this Agreement, it shall be entitled to refrain
from taking any action until it shall be directed otherwise in writing by
the Borrower or the Administrative Agents or by order of a court of
competent jurisdiction. The Escrow Agent shall be protected in acting upon
any notice, request, waiver, consent, receipt or other document reasonably
believed by the Escrow Agent to be signed by the proper party or parties.
(c) The Escrow Agent shall not be liable for any error or judgment or
for any act done or step taken or omitted by it in good faith or for any
mistake of fact or law, or for anything that it may do or refrain from
doing in connection herewith, except for its own gross negligence or
willful misconduct, and the Escrow Agent shall have no duties to anyone
except the Borrower or the Administrative Agents and their respective
successors and permitted assigns.
(d) The Escrow Agent may consult legal counsel in the event of any
dispute or question as to the construction of this Agreement, or the Escrow
Agent's duties hereunder, and the Escrow Agent shall incur no liability and
shall be fully protected with respect to any action taken or omitted in
good faith in accordance with the opinion and instructions of counsel.
Escrow Agreement Page 2
<PAGE>
(e) In the event of any disagreement between the undersigned or any
of them, and/or any other person, resulting in adverse claims and demands
being made in connection with or for the Escrowed Notes, the Escrow Agent
shall be entitled at its option to refuse to comply with any such claim or
demand, so long as such disagreement shall continue, and in so doing the
Escrow Agent shall not be or become liable for damages or interest to the
undersigned or any of them or to any person named herein for its failure or
refusal to comply with such conflicting or adverse demands. The Escrow
Agent shall be entitled to continue to so refrain and refuse to so act
until all differences shall have been resolved by agreement and the Escrow
Agent shall have been notified thereof in writing signed by the Borrower
and the Administrative Agents. In the event of such disagreement which
continues for 90 days or more, the Escrow Agent in its discretion may, but
shall be under no obligation to, file a suit in interpleader for the
purpose of having the respective rights of the claimants adjudicated and
may deposit with the court all documents and property held hereunder. The
Borrower agrees to pay all reasonable out-of-pocket costs and expenses
incurred by the Escrow Agent in such action, including reasonable
attorney's fees and disbursements.
(f) The Escrow Agent is hereby indemnified by the Borrower from all
losses, costs and expenses of any nature incurred by the Escrow Agent
arising out of or in connection with this Agreement or with the
administration of its duties hereunder, unless such losses, costs or
expenses shall have been caused by the Escrow Agent's willful misconduct or
gross negligence. Such indemnification shall survive termination of this
Agreement until extinguished by any applicable statute of limitations.
(g) The Escrow Agent does not have any interest in the Escrowed Notes
deposited hereunder but is serving as escrow holder only and having only
possession thereof. This paragraph shall survive notwithstanding any
termination of this Agreement or the resignation of the Escrow Agent.
(h) The Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by giving written notice of its resignation to the parties
hereto at least 30 days prior to the date specified for such resignation to
take effect. Upon the effective date of such resignation, the Escrowed
Notes shall be delivered by it to such successor escrow agent or as
otherwise shall be instructed in writing by the Borrower and the
Administrative Agents; whereupon the Escrow Agent shall be discharged of
and from any and all further obligations arising in connection with this
Agreement. If at that time the Escrow Agent has not received such
instruction, the Escrow Agent's sole responsibility after that time shall
be to safekeep the Escrowed Notes until receipt of a designation of
successor Escrow Agent, or a joint written instruction as to disposition of
the Escrowed Notes by the Borrower and the Administrative Agents or a final
order of a court of competent jurisdiction mandating disposition of the
Escrowed Notes.
(i) The Escrow Agent hereby accepts its appointment and agrees to act
as escrow agent under the terms and conditions of this Agreement and
acknowledges receipt of the Escrowed Notes. The Borrower agrees to pay to
the Escrow Agent as payment in full for its services hereunder the Escrow
Agent's compensation set forth in Schedule I hereto. The Borrower further
agrees to reimburse the Escrow Agent for all reasonable out-of-pocket
expenses, disbursements and advances incurred or made by the Escrow Agent
in the performance of its duties hereunder (including reasonable fees, and
out-of-pocket expenses and disbursements, of its counsel).
Escrow Agreement Page 3
<PAGE>
5. Notices. Any notices or other communications required or permitted
hereunder shall be effective if in writing and delivered personally or sent by
telecopier, overnight courier, Federal Express, United Parcel Service,
registered or certified mail, postage prepaid, addressed as follows:
If to the Administrative Agents or the Arrangers, to:
Goldman Sachs Credit Partners L.P.
Salomon Brothers Holding Company Inc.
Credit Suisse First Boston Corporation
c/o Goldman Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Amy Shapero
Facsimile No.: (212) 902-3000
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Kirk A. Davenport
Facsimile No.: (212) 751-4864
If to the Borrower, to:
Crown Castle International Corp.
510 Bering Drive
Suite 500
Houston, Texas 77057
Attention: Chief Financial Officer
Facsimile No.: (713) 570-3150
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 8th Avenue
New York, New York 10019
Attention: Stephen L. Burns
Facsimile No.: (212) 474-3700
If to the Escrow Agent, to:
United States Trust Company of New York, N.A.
114 West 47th Street, 25th Floor
New York, New York, 10036
Attention: Margaret Ciesmelewski
Facsimile No.:(212) 852-1626
Escrow Agreement Page 4
<PAGE>
with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
Attention: Vincent Monte-Sano
Telephone No.: (212) 238-8808
Facsimile No.: (212) 238-8802
If to the Exchange Note Indenture Trustee, to:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036-1532
Attention: Margaret Ciesmelewski
Facsimile No.:(212) 852-1626
with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
Attention: Vincent Monte-Sano
Telephone No.: (212) 238-8808
Facsimile No.: (212) 238-8802
Unless otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date delivered, if delivered personally, (b) one
Business Day after being delivered, if delivered by telecopier with confirmation
of good transmission, (c) one Business Day after being sent by overnight
courier, if sent by overnight courier, (d) two Business Days after being sent by
Federal Express or United Parcel Service, if sent by Federal Express or United
Parcel Service, or (e) three Business Days after being sent, if sent by
registered or certified mail. Each of the parties hereto shall be entitled to
specify a different address by giving notice as aforesaid to each of the other
parties hereto.
6. Termination. This Agreement shall automatically terminate upon the
final distribution of the Escrowed Notes in accordance with the terms hereof.
7. Governing Law; Jurisdiction.
7.1. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of law rules thereof.
7.2. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or the
subject matter hereof may be brought and maintained in the federal district
court in the Southern District of New York and of any New York state court
sitting in New York City (each, a "New York Court"). Each of the parties hereto
by execution hereof (i) hereby irrevocably submits to the jurisdiction of such
court in New York, New York, for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject
Escrow Agreement Page 5
<PAGE>
matter hereof and (ii) hereby waives to the extent not prohibited by applicable
law, and agrees not to assert, by way of motion, as a defense or otherwise, in
any such action, suit or proceeding, any claim that it is not subject personally
to the jurisdiction of one of the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief, that its property
is exempt or immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in one of the above-named courts
should be dismissed on the grounds of forum non conveniens, should be
transferred to any court other than one of the above-named courts, should be
stayed by virtue of the pendency of any other action, suit or proceeding in any
court other than one of the above-named courts, or that this Agreement or the
subject matter hereof may not be enforced in or by the above-named courts. Each
of the parties hereto hereby consents to service of process in any such suit,
action or proceeding in any manner permitted by the laws of the State of New
York, agrees that service of process by registered or certified mail, return
receipt requested, at the address specified in or pursuant to Section 5 hereof
is reasonably calculated to give actual notice and waives and agrees not to
assert by way of motion, as a defense or otherwise, in any such action, suit or
proceeding any claim that service of process made in accordance with Section 5
hereof does not constitute good and sufficient service of process. The
provisions of this Section 7.2 shall not restrict the ability of any party to
enforce in any court any judgment obtained in the federal district court in the
Southern District of New York or any New York Court.
7.3. Waiver of Jury Trial. To the extent not prohibited by any
applicable law that cannot be waived, each of the parties hereto hereby waives,
and covenants that it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in any respect of any issue,
claim, demand, cause of action, action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof, in each case whether now
existing or hereafter arising and whether in contract or tort or otherwise. Any
of the parties hereto may file an original counterpart or a copy of this Section
7.3 with any court as written evidence of the consent of each of the parties
hereto to the waiver of his or its right to trial by jury.
7.4. Reliance. Each of the parties hereto acknowledges that it has
been informed by each other party that the provisions of this Section 7
constitute a material inducement upon which such party is relying and will rely
in entering into this Agreement and the transactions contemplated hereby.
8. Miscellaneous.
8.1. Entire Agreement; Waivers. This Agreement constitutes the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to such subject matter. No waiver of any provision of this Agreement
(a) shall be deemed to or shall constitute a waiver of any other provision
hereof (whether or not similar), (b) shall constitute a continuing waiver unless
otherwise expressly provided therein or (c) shall be effective unless in writing
and executed by each party against whom it is to be enforced.
8.2. Amendment or Modification, etc. The parties hereto may not
amend or modify this Agreement except in such manner as may be agreed upon by a
written instrument executed by all of the parties hereto and that is consented
to in writing by the Majority Lenders. Any written amendment, modification or
waiver executed by all of the parties hereto shall be binding upon all such
parties and their respective successors and assigns.
Escrow Agreement Page 6
<PAGE>
8.3. Headings, etc. Section and subsection headings are not to be
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof. This Agreement shall be deemed to express
the mutual intent of the parties, and no rule of strict construction shall be
applied against any party.
8.4. Severability. In the event that any provision hereof would,
under applicable law, be invalid or unenforceable in any respect, such provision
shall (to the extent permitted by applicable law) be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law. The provisions hereof are severable,
and in the event any provision hereof should be held invalid or unenforceable in
any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision hereof.
8.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
8.6. Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted transferees, successors and assigns (each
of which shall be deemed to be a party hereto for all purposes hereof). Except
as expressly provided herein, this Agreement shall not confer any right or
remedy upon any person other than the parties and their respective transferees,
successors and assigns.
Escrow Agreement Page 7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Crown Castle International Corp.
By: /s/ Charles C. Green, III
--------------------------------------
Name: Charles C. Green, III
Title: Executive Vice President and
Chief Financial Officer
Escrow Agreement Page 8
<PAGE>
The Arrangers:
Goldman Sachs Credit Partners L.P.
By: Goldman, Sachs & Co.
By: /s/ Stephen B. King
---------------------------------------
(Authorized Signatory)
Salomon Brothers Holding Company Inc.
By: /s/ Steven M. Jones
--------------------------------------
(Authorized Signatory)
Credit Suisse First Boston
By: /s/ Marisa J. Harney
--------------------------------------
(Authorized Signatory)
By: /s/ Judith E. Smith
--------------------------------------
(Authorized Signatory)
Escrow Agreement Page 9
<PAGE>
United States Trust Company of New York,
as Escrow Agent
By: /s/ Louis P. Young
----------------------------
Name: Louis P. Young
Title:
Escrow Agreement Page 10
<PAGE>
Schedule I to Escrow Agreement
Escrow Agent's Fees
Escrow Agent's Fees
Annual Fee $5,000.00
Schedule I of the Escrow Agreement Page 1
<PAGE>
Annex A to Escrow Agreement
Form of Exchange Notice
GOLDMAN SACHS CREDIT PARTNERS L.P.
SALOMON BROTHERS HOLDING COMPANY INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
C/O GOLDMAN SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
EXCHANGE NOTICE
Date: __________
United States Trust Company of New York
114 West 47th Street
New York, NY 10036-1532
Attention: Margaret Ciesmelewski
Re: Crown Castle International Corp. Escrow Agreement
-------------------------------------------------
Ladies and Gentlemen:
Reference is hereby made to the Escrow Agreement dated as of March 15,
1999 (the "Escrow Agreement"), by and among Crown Castle International Corp., a
Delaware corporation (the "Borrower"), Goldman Sachs Credit Partners L.P.,
Salomon Brothers Holding Company Inc. and Credit Suisse First Boston
Corporation, as the Arrangers under the Term Loan Agreement referred to below
(the "Arrangers"), and United States Trust Company of New York, (in its capacity
as escrow agent, the "Escrow Agent"). Capitalized terms used herein and not
otherwise defined in this Exchange Notice have the meanings assigned to them in
the Escrow Agreement.
1. Surrender of Term Note(s). Enclosed herewith [is an/are]
original Term Note[s] issued to the order of the Lender specified in Section 4
below in the aggregate principal amount of $_____________ (the "Surrendered
Note(s)").
2. Accrued and Unpaid Interest. The [aggregate] amount of accrued
and unpaid interest on the Surrendered Note(s) as of the date hereof (the
"Exchange Date") is $______, all of which is required by Section 2.3(f) of the
Term Loan Agreement to be paid in cash.
3. Interest Rate. The undersigned hereby certifies that the
interest rate on the Surrendered Note(s) on the Exchange Date will equal ___%
per annum. Pursuant to Section 2.2(c) of the Term Loan Agreement, the Exchange
Notes to be issued pursuant to this Exchange Notice will bear interest at the
rate of __% per annum [insert the interest rate then in effect on the
Surrendered Note(s) as of the Exchange Date] and shall not thereafter be subject
to adjustment or change.
4. Request for Exchange. _____________ [name of Lender] wishes to
exchange [all/$_______] of the Surrendered Note(s) to be exchanged for ____
[number] Exchange Note(s) each
Annex A of the Escrow Agreement Page 1
<PAGE>
dated the Exchange Date, bearing interest at the rate specified in Section 3
above and made payable to the following payees:
Amount(s) Name(s) of Payee(s) Address(es) of Payee(s)
------------ -------------------- ------------------------
$______________ ____________________ ________________________
$______________ ____________________ ________________________
5. Issuance of Exchange Notes; Cancellation of Surrendered Note(s).
Not later than three Business Days after receipt of this Exchange Notice please
(a) issue the Exchange Note(s) dated the Exchange Date, bearing interest at the
rate specified in Section 3 above from and including the Exchange Date, in the
amount(s) and to the payee(s) set forth in Section 4 above, (b) deliver such
Exchange Note(s) by hand or by overnight courier to the [respective] payee(s)
identified in Section 4 above at the address(es) specified therein and (c)
deliver the Surrendered Note(s) to the Borrower for cancellation upon receipt of
evidence that all cash interest has been paid in accordance with Section 7 below
and the terms of the Term Loan Agreement.
6. Issuance of Replacement Term Note. Not later than three Business
Days from the date hereof, the Borrower shall (a) issue replacement Term Note(s)
dated the Exchange Date, bearing interest at the rate then in effect on the
Surrendered Note(s), in the aggregate amount of $_____, representing $____ of
principal on the Surrendered Note(s) not so exchanged, in the respective
amount(s) and to the payee(s) set forth below and (b) deliver such replacement
Term Note(s) by hand or by overnight courier to the [respective] payee(s)
identified in this Section 6 at the address(es) specified below:
Amount(s) Name(s) of Payee(s) Address(es) of Payee(s)
------------ -------------------- ------------------------
$______________ ____________________ ________________________
$______________ ____________________ ________________________
7. Payment of Accrued and Unpaid Interest. Not later than three
Business Days after receipt of this Exchange Notice, and in any event prior to
the cancellation of the Surrendered Notes contemplated by Section 5 above, the
Borrower shall make payment in cash in accordance with Section 2.3(f) of the
Term Loan Agreement of all accrued and unpaid interest specified in Section 2
above.
Annex A of the Escrow Agreement Page 2
<PAGE>
Thank you in advance for your prompt attention to this Exchange
Notice.
Very truly yours,
By:
------------------------------------------
Name:
Title:
cc: United States Trust Company of New York,
in its capacity as Exchange Note
Indenture Trustee
Annex A of the Escrow Agreement Page 3
<PAGE>
EXECUTION COPY
================================================================================
EXHIBIT 10.64
TERM LOAN AGREEMENT
dated as of
March 15, 1999
among
CROWN CASTLE INTERNATIONAL CORP.
as Borrower,
____________________
THE LENDERS named herein,
____________________
GOLDMAN SACHS CREDIT PARTNERS L.P.
SALOMON BROTHERS HOLDING COMPANY INC.
and
CREDIT SUISSE FIRST BOSTON,
as Arrangers
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I. DEFINITIONS............................................................................................1
Section 1.1. Defined Terms........................................................................................1
Section 1.2. Interpretation......................................................................................22
ARTICLE II. THE CREDIT FACILITY..................................................................................22
Section 2.1. Commitments to Make Term Loans......................................................................22
Section 2.2. Option to Exchange Term Loans for Exchange Notes....................................................22
Section 2.3. Interest; Default Interest..........................................................................23
Section 2.4. Mandatory Prepayment................................................................................24
Section 2.5. Optional Prepayment.................................................................................25
Section 2.6. Breakage Costs; Indemnity...........................................................................26
Section 2.7. Effect of Notice of Prepayment......................................................................26
Section 2.8. Payments............................................................................................26
Section 2.9. Taxes...............................................................................................28
Section 2.10. Right of Set Off; Sharing of Payments, Etc.........................................................31
Section 2.11. Certain Fees.......................................................................................32
ARTICLE III. REPRESENTATIONS AND WARRANTIES......................................................................32
Section 3.1. Acquisition Agreements..............................................................................32
Section 3.2. Organization; Powers................................................................................33
Section 3.3. Due Authorization and Enforceability................................................................33
Section 3.4. No Conflicts; No Consents...........................................................................33
Section 3.5. No Violations; Material Contracts...................................................................34
Section 3.6. Capital Stock; Subsidiaries.........................................................................34
Section 3.7. Liens...............................................................................................34
Section 3.8. Governmental Regulations............................................................................34
Section 3.9. [Reserved.].........................................................................................34
Section 3.10. Financial Statements; No Undisclosed Liabilities...................................................34
Section 3.11. Full Disclosure....................................................................................36
Section 3.12. Private Offering; Rule 144A Matters................................................................36
Section 3.13. Absence of Proceedings.............................................................................37
Section 3.14. Taxes..............................................................................................37
Section 3.15. Financial Condition; Solvency......................................................................37
Section 3.16. Absence of Certain Changes.........................................................................37
Section 3.17. Year 2000 Compliance...............................................................................37
Section 3.18. Properties.........................................................................................37
Section 3.19. Permits; Registration..............................................................................38
Section 3.20. ERISA..............................................................................................38
Section 3.21. Environmental Matters..............................................................................38
Section 3.22. Available Cash for the BAM Joint Venture...........................................................39
ARTICLE IV. COVENANTS............................................................................................39
Section 4.1. Use of Proceeds.....................................................................................39
Section 4.2. Notice of Default and Related Matters...............................................................39
Section 4.3. Reports.............................................................................................39
Section 4.4. Compliance Certificate..............................................................................40
Section 4.5. Taxes...............................................................................................40
Section 4.6. Stay, Extension and Usury Laws......................................................................41
Section 4.7. Restricted Payments.................................................................................41
Section 4.8. Dividend and Other Payment Restrictions Affecting Subsidiaries......................................43
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Stock..........................................44
Section 4.10. Asset Sales........................................................................................46
Section 4.11. Transactions with Affiliates.......................................................................46
Section 4.12. Liens..............................................................................................47
Section 4.13. Business Activities................................................................................47
Section 4.14. Corporate Existence................................................................................47
Section 4.15. Offer to Prepay Upon a Change of Control...........................................................47
Section 4.16. Limitation on Sale and Leaseback Transactions......................................................48
Section 4.17. Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries......................48
Section 4.18. Limitation on Issuances of Guarantees of Indebtedness..............................................49
Section 4.19. Merger; Sale of All or Substantially All Assets....................................................49
Section 4.20. Inspection Rights..................................................................................50
Section 4.21. Special Rights.....................................................................................50
ARTICLE V. CONDITIONS............................................................................................51
Section 5.1. Corporate and Other Proceedings.....................................................................51
Section 5.2. [Reserved.].........................................................................................52
Section 5.3. Absence of Certain Changes..........................................................................52
Section 5.4. Market Disruption...................................................................................52
Section 5.5. Financial Statements................................................................................52
Section 5.6. Litigation, etc.....................................................................................53
Section 5.7. Payment of Fees and Expenses........................................................................53
Section 5.8. Escrow Agreement....................................................................................53
Section 5.9. Exchange Notes......................................................................................53
Section 5.10. Registration Rights Agreement......................................................................53
Section 5.11. Delivery of Opinions...............................................................................53
Section 5.12. Solvency...........................................................................................53
Section 5.13. No Breach; No Default..............................................................................53
Section 5.14. Special Conditions.................................................................................54
ARTICLE VI. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH LOANS AND THE SECURITIES; REPRESENTATIONS OF LENDERS;
PARTICIPATIONS...................................................................................................54
Section 6.1. Transfer of the Loans, the instruments evidencing the Loans and the Securities......................54
Section 6.2. Permitted Assignments...............................................................................54
Section 6.3. Permitted Participants; Effect......................................................................55
Section 6.4. Dissemination of Information........................................................................55
Section 6.5. Tax Treatment.......................................................................................56
Section 6.6. Replacement Securities Upon Transfer or Exchange....................................................56
Section 6.7. Register............................................................................................56
ARTICLE VII. EVENTS OF DEFAULT...................................................................................56
Section 7.1. Events of Default...................................................................................56
Section 7.2. Acceleration........................................................................................57
Section 7.3. Rights and Remedies Cumulative......................................................................58
Section 7.4. Delay or Omission Not Waiver........................................................................58
Section 7.5. Waiver of Past Defaults.............................................................................58
Section 7.6. Rights of Lenders To Receive Payment................................................................58
ARTICLE VIII.....................................................................................................58
PERMANENT SECURITIES.............................................................................................58
Section 8.1. Permanent Securities................................................................................58
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE IX. TERMINATION..........................................................................................59
Section 9.1. Termination.........................................................................................59
Section 9.2. Survival of Certain Provisions......................................................................59
ARTICLE X. INDEMNITY.............................................................................................59
Section 10.1. Indemnification....................................................................................59
Section 10.2. Counsel............................................................................................60
Section 10.3. Settlement of Claims...............................................................................60
Section 10.4. Appearance Expenses................................................................................60
Section 10.5. Indemnity for Taxes, Reserves and Expenses.........................................................61
Section 10.6. Survival of Indemnification........................................................................61
Section 10.7. Liability Not Exclusive; Payments..................................................................62
ARTICLE XI. THE ADMINISTRATIVE AGENTS; THE ARRANGERS.............................................................62
Section 11.1. Appointment........................................................................................62
Section 11.2. Delegation of Duties...............................................................................62
Section 11.3. Exculpatory Provisions.............................................................................62
Section 11.4. Reliance by the Administrative Agents..............................................................62
Section 11.5. Notice of Default..................................................................................63
Section 11.6. Non-Reliance on the Administrative Agents and Other Lenders........................................63
Section 11.7. Indemnification....................................................................................64
Section 11.8. Administrative Agents, in their Individual Capacities..............................................64
Section 11.9. Successor Administrative Agents....................................................................64
Section 11.10. Successor Administrative Agent...................................................................64
ARTICLE XII. MISCELLANEOUS.......................................................................................65
Section 12.1. Expenses; Documentary Taxes........................................................................65
Section 12.2. Notices............................................................................................65
Section 12.3. Consent to Amendments and Waivers..................................................................66
Section 12.4. Parties............................................................................................67
Section 12.5. New York Law; Submission to Jurisdiction; Waiver of Jury Trial.....................................67
Section 12.6. Replacement Notes..................................................................................67
Section 12.7. Appointment of Agent For Service...................................................................67
Section 12.8. Marshalling; Recapture.............................................................................67
Section 12.9. Limitation of Liability............................................................................68
Section 12.10. Independence of Covenants.........................................................................68
Section 12.11. Currency Indemnity................................................................................68
Section 12.12. Waiver of Immunity................................................................................68
Section 12.13. Freedom of Choice................................................................................68
Section 12.14. Successors and Assigns...........................................................................69
Section 12.15. Merger...........................................................................................69
Section 12.16. Severability Clause..............................................................................69
Section 12.17. Representations, Warranties and Agreements To Survive Delivery...................................70
</TABLE>
Exhibits:
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Term Note
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Escrow Agreement
Exhibit E Form of Exchange Note Indenture
Exhibit F-1 Opinion of Cravath, Swaine & Moore
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Exhibit F-2 Opinion of Norton Rose
Exhibit F-3 Opinion of General Counsel
Schedules:
Schedule 3.10(a) Consolidated Balance Sheet and Consolidated
Statements of Income and Cash Flows of the Borrower
Schedule 3.10(b) Statement of Net Assets and Statements of Revenues
and Direct Expenses of the Bell Atlantic Mobile Tower
Operations
Schedule 3.10(c) Consolidated Balance Sheet and Statement of Revenues and
Direct Expenses of the operations acquired pursuant to the
Powertel Acquisition
Schedule 3.10(d) Unaudited Statement of Income of the assets acquired
pursuant to the Bell South Letter Agreement
Schedule 3.10(e) Pro Forma Consolidated Balance Sheet and Consolidated
Statements of Income and Cash Flows of the Borrower
Schedule 3.13 Absence of Proceedings
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THIS TERM LOAN AGREEMENT, dated as of March 15, 1999 (as amended,
restated and/or otherwise modified from time to time, this "Agreement"), is by
and among:
(a) Crown Castle International Corp., a Delaware corporation (the
"Borrower"), and
(b) Goldman Sachs Credit Partners L.P., Salomon Brothers Holding
Company Inc. and Credit Suisse First Boston, as arrangers (the
"Arrangers").
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Acquisition Agreements" means the Formation Agreement, the Bell South
Letter Agreement and the Powertel Acquisition Agreement.
"Acquisition Escrow Payments" means the Powertel Escrow Payment and
the Bell South Escrow Payment.
"Acquisitions" means the Powertel Acquisition and the Bell South
Lease.
"Adjusted Consolidated Cash Flow" has the meaning given to such term
in the definition of "Debt to Adjusted Consolidated Cash Flow Ratio."
"Administrative Agents" means Salomon Brothers Holding Company Inc.
and Credit Suisse First Boston, acting as co-administrative agents pursuant to
Article XI, or any successor or replacement Administrative Agent in accordance
therewith, acting in such capacity.
"Affected Party" means any Lender, any Lender's LIBOR Lending Office,
any beneficial owner of any Lender, and their respective successors and assigns.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that for
purposes of Section 4.11, beneficial ownership of 10% or more of the Voting
Stock of a
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Person shall be deemed to be control. Neither the Lenders nor any of their
Affiliates will be treated as an Affiliate of the Borrower or any of its
Subsidiaries for purposes of this Agreement.
"Agreement" has the meaning specified in the preamble to this
Agreement, as the same may be amended or supplemented from time to time.
"Anniversary Date" means the first anniversary of the Closing Date, or
the next Business Day if such date is not a Business Day.
"Arrangers" means Goldman Sachs Credit Partners L.P., Salomon Brothers
Holding Company Inc. and Credit Suisse First Boston, acting as arrangers in
connection with the Term Loans.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Borrower and its
Subsidiaries taken as a whole will be governed by the provisions of Section 4.15
and/or the provisions described in Section 4.19 and not by the provisions of
Section 4.10, and (ii) the issue or sale by the Borrower or any of its
Restricted Subsidiaries of Equity Interests of any of the Borrower's
Subsidiaries (other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Borrower or a Restricted
Subsidiary), in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for Net Proceeds in excess of $1.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by the Borrower to a Restricted
Subsidiary or by a Restricted Subsidiary to the Borrower or to another
Restricted Subsidiary, (ii) an issuance of Equity Interests by a Subsidiary to
the Borrower or to another Restricted Subsidiary, (iii) a Restricted Payment
that is permitted by Section 4.7, (iv) grants of leases or licenses in the
ordinary course of business and (v) disposals of Cash Equivalents.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agents, in the form of Exhibit A or such other form as shall be approved by the
Administrative Agents.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"BAM" means Cellco Partnership, a Delaware general partnership doing
business as Bell Atlantic Mobile.
"BAM Funds" means Cash Equivalents in an aggregate amount that is
sufficient to fund the Borrower's cash obligations under the Formation Agreement
to consummate the BAM Joint Venture.
"BAM Joint Venture" means the Crown Atlantic Holding Company LLC joint
venture with BAM to be created by the Borrower through its Subsidiaries pursuant
the Formation Agreement.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
federal or state law for the relief of debtors.
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"Base Rate" means, for any day, the sum of higher of (i) the Federal
Funds Rate for such day plus 50 basis points and (ii) the Prime Rate for such
day. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Term Loan at any time that the interest rate
thereon is computed with reference to the Base Rate.
"beneficial owner" and "beneficial ownership" each has the meaning as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act.
"Bell South Commitment" means, with respect to any Lender, the amount
set forth opposite such Lender's signature on the signature pages of this
Agreement as its "Bell South Commitment".
"Bell South Escrow Payment" means the $50.0 million escrow payment by
the Borrower to Kilpatrick Stockton L.L.P. for the benefit of BellSouth Mobility
pursuant to the Bell South Letter Agreement.
"Bell South Funding Date" means the date on which the conditions set
forth in Article V are satisfied or waived in accordance with Section 12.3 and
the Bell South Term Loans are funded by the Lenders.
"Bell South Lease" means that certain long-term master lease agreement
between the Borrower and BellSouth Mobility to lease or sublease approximately
1,850 communication towers owned by BellSouth Mobility to be executed pursuant
to the Bell South Letter Agreement.
"Bell South Letter Agreement" means the Letter Agreement dated March
5, 1999, between the Borrower and BellSouth Mobility Inc.
"Bell South Term Loan" means up to $50.0 million in aggregate
principal amount of Loans made by Lenders to the Borrower pursuant to Section
2.1 to be applied to the Bell South Escrow Payment.
"Berkshire Group" means Berkshire Fund III, A Limited Partnership,
Berkshire Fund IV, Limited Partnership, Berkshire Investors LLC and Berkshire
Partners LLC.
"Board" means the Board of Governors of the Federal Reserve System of
the United States or any successor.
"Board of Directors" means the Board of Directors of the Borrower, or
any authorized committee of the Board of Directors.
"Borrower" has the meaning specified in the preamble to this
Agreement.
"Business Day" means each day other than a Legal Holiday.
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"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Markets Transaction" has the meaning specified in Section
2.4(a).
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the Senior Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500.0 million and a
Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from either Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group and in each case
maturing within six months after the date of acquisition and (vi) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (i)-(v) of this definition.
"CCAIC" means CCA Investment Corp., a Delaware corporation and an
indirect Wholly Owned Subsidiary of the Borrower that was formed to hold the
Borrower's Equity Interests in Crown Atlantic Holding Company LLC.
"CC Investment Corp." means Crown Castle Investment Corp., a Delaware
corporation and a Wholly Owned Subsidiary of the Borrower.
"CC Investment Corp. II" means Crown Castle Investment Corp. II, a
Delaware corporation and a Wholly Owned Subsidiary of the Borrower.
"CCP Inc." means CCP Inc., a Delaware corporation and an indirect
Wholly Owned Subsidiary of the Borrower that was formed to effect the Powertel
Acquisition.
"Centennial Group" means Centennial Fund IV, L.P., Centennial Fund V,
L.P. and Centennial Entrepreneurs Fund V, L.P.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Borrower and its Restricted Subsidiaries,
taken as a whole, to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Principal or a Related Party of a Principal; (ii)
the adoption of a plan relating to the
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liquidation or dissolution of the Borrower; (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Borrower (measured by voting power rather than number of shares); provided that
transfers of Equity Interests in the Borrower between or among the beneficial
owners of the Borrower's Equity Interests and/or Equity Interests in CTSH, in
each case as of November 20, 1997, shall not be deemed to cause a Change of
Control under this clause (iii) so long as no single Person together with its
Affiliates acquires a beneficial interest in more of the Voting Stock of the
Borrower than is at the time collectively beneficially owned by the Principals
and their Related Parties; (iv) the first day on which a majority of the members
of the Board of Directors of the Borrower are not Continuing Directors; or (v)
the Borrower consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Borrower, in any such
event pursuant to a transaction in which any of the outstanding Voting Stock of
the Borrower is converted into or exchanged for cash, securities or other
property, other than any such transaction where (x) the Voting Stock of the
Borrower outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person (immediately after giving
effect to such issuance) or (y) the Principals and their Related Parties own a
majority of such outstanding shares after such transaction.
"Change of Control Offer" has the meaning specified in Section
4.15(a).
"Change of Control Payment" has the meaning specified in Section
4.15(a).
"Change of Control Payment Date" has the meaning specified in Section
4.15(a).
"Closing Date" means March 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulation promulgated thereunder.
"Commitment" means, with respect to any Lender, such Lender's Powertel
Commitment and such Lender's Bell South Commitment, collectively.
"Commitment Letter" means that certain letter agreement, dated as of
March 15, 1999, among the Borrower and the Arrangers.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) consolidated
interest expense of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
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letter of credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iii) depreciation,
amortization (including amortization of goodwill and other intangibles and other
non-cash expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future period) of
such Person and its Restricted Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (iv) non-cash items increasing
such Consolidated Net Income for such period (excluding any items that were
accrued in the ordinary course of business), in each case on a consolidated
basis and determined in accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of
any date of determination, the sum, without duplication, of (i) the total amount
of Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the
total amount of Indebtedness of any other Person, to the extent that such
Indebtedness has been Guaranteed by the referent Person or one or more of its
Restricted Subsidiaries, plus (iii) the aggregate liquidation value of all
Disqualified Stock of such Person and all preferred stock of Restricted
Subsidiaries of such Person, in each case, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person other
than the Borrower that is not a Restricted Subsidiary or that is accounted for
by the equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Restricted Subsidiary thereof, (ii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iii) the cumulative effect of a change in
accounting principles shall be excluded and (iv) the Net Income (but not loss)
of any Unrestricted Subsidiary shall be excluded whether or not distributed to
the Borrower or one of its Restricted Subsidiaries.
"Consolidated Tangible Assets" means, with respect to the Borrower,
the total consolidated assets of the Borrower and its Restricted Subsidiaries,
less the total intangible assets of the Borrower and its Restricted
Subsidiaries, as shown on the most recent internal consolidated balance sheet of
the Borrower and such Restricted Subsidiaries calculated on a consolidated basis
in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Borrower who (i) was a member of such
Board of Directors on the date hereof, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) is a designee of a Principal or was nominated by
a Principal.
"Continuing Rate" will be determined on the Anniversary Date and will
be the greatest of the following (expressed as a percentage per annum):
(i) the interest rate borne by the Term Loans on the Business Day
immediately preceding the Anniversary Date;
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(ii) the sum of the yield (expressed as a percentage per annum) then
in effect for United States Treasury Notes with a remaining maturity
closest to 10 years (provided, however, that if the remaining term of the
Term Loans is not equal to the constant maturity of a United States
Treasury Note for which a weekly average yield is given, such yield on
United States Treasury Notes shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury Notes for which such yields are given)
plus 650 basis points; and
(iii) the sum of the Goldman Sachs Liquid High Yield Index Rate then
in effect plus 250 basis points;
provided that the rates referenced in clauses (ii) and (iii) shall be determined
two Business Days prior to the Anniversary Date.
"Continuing Interest Rate Loan" means a Term Loan at any time the
interest thereon is computed with reference to the Continuing Rate.
"Continuing Spread" means 50 basis points at all times during the
period commencing on and including the Anniversary Date and ending on the 90th
day thereafter, and increasing by 50 basis points on the 90th day after the
Anniversary Date and by an additional 50 basis points on the last day of each
90-day period thereafter for so long as any Term Loans are outstanding.
"Credit Facilities" means one or more debt facilities (including,
without limitation, the Senior Credit Facility) or commercial paper facilities
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Crown Transition Agreements" means collectively (i) the Crown
Memorandum of Understanding among the Borrower, Robert A. Crown and Barbara A.
Crown, dated as of July 2, 1998, (ii) the Crown Services Agreement between the
Borrower and Robert A. Crown, dated as of July 2, 1998 and (iii) the
Registration Rights Crown Side Letter Agreement, among the Borrower, Robert A.
Crown and Barbara A. Crown, dated as of August 18, 1998.
"CTI" means Castle Transmission International Limited.
"CTI Operating Agreement" means the memorandum of understanding among
the Borrower, CTSH, CTI and TdF, dated as of August 21, 1998, relating to the
development of certain business opportunities outside of the United States and
the provision of certain business support and technical services in connection
therewith.
"CTI Services Agreement" means the amended and restated services
agreement between CTI and TdF, dated as of August 21, 1998, relating to the
provisions of certain services to CTI.
"CTSH" means Castle Transmission Services (Holdings) Ltd and its
successors.
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"CTSH Shareholders' Agreement" means the agreement entered into by the
Borrower, CTSH and TdF, dated as of August 21, 1998, to govern the relationship
between the Borrower and TdF as shareholders of CTSH.
"Custodian" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date
of determination, the ratio of (a) the Consolidated Indebtedness of the Borrower
as of such date to (b) the sum of (1) the Consolidated Cash Flow of the Borrower
for the four most recent full fiscal quarters ending immediately prior to such
date for which internal financial statements are available, less the Borrower's
Tower Cash Flow for such four-quarter period, plus (2) the product of four times
the Borrower's Tower Cash Flow for the most recent quarterly period (such sum
being referred to as "Adjusted Consolidated Cash Flow"), in each case determined
on a pro forma basis after giving effect to all acquisitions or dispositions of
assets made by the Borrower and its Subsidiaries from the beginning of such
four-quarter period through and including such date of determination (including
any related financing transactions) as if such acquisitions and dispositions had
occurred at the beginning of such four-quarter period. For purposes of making
the computation referred to above, (i) acquisitions that have been made by the
Borrower or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (ii) of the proviso set forth in
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to Calculation Date, shall be
excluded.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Term Notes mature; provided, however, that any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof have
the right to require the Borrower to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Borrower
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.7.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Eligible Indebtedness" means any Indebtedness other than (i)
Indebtedness in the form of, or represented by, bonds or other securities or any
guarantee thereof and (ii) Indebtedness that is, or may be, quoted, listed or
purchased and sold on any stock exchange, automated trading system or over-the-
counter or other securities market (including, without prejudice to the
generality of the foregoing, the market for securities eligible for resale
pursuant to Rule 144A under the Securities Act).
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"Eligible Receivables" means the accounts receivable (net of any
reserves and allowances for doubtful accounts in accordance with GAAP) of the
Borrower and its Restricted Subsidiaries that are not more than 60 days past
their due date and that were entered into in the ordinary course of business on
normal payment terms as shown on the most recent internal consolidated balance
sheet of the Borrower and such Restricted Subsidiaries, all calculated on a
consolidated basis in accordance with GAAP.
"Engagement Letter" means that certain letter agreement, dated as of
March 15, 1999, among the Borrower, Goldman, Sachs & Co., Salomon Smith Barney
Inc. and Credit Suisse First Boston Corporation entered into in connection with
the Commitment Letter.
"Equity Interests" means the Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"Escrow Agent" means United States Trust Company of New York, in its
capacity as escrow agent pursuant to the Escrow Agreement.
"Escrow Agreement" means the escrow agreement among the Borrower, the
Arrangers on behalf of the Lenders, and the Escrow Agent, in the form attached
as Exhibit D.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board, as in effect from time to time.
"Event of Default" means any event specified in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Note Indenture" means, the indenture relating to the
Exchange Notes, among the Borrower, as issuer, and the Exchange Note Trustee, in
the form attached as Exhibit E, as the same may be amended or supplemented from
time to time.
"Exchange Note Trustee" means, on any date of determination, the
trustee under the Exchange Note Indenture.
"Exchange Notes" means the senior unsecured Exchange Notes of the
Borrower, placed into escrow on the Closing Date, to be issued in exchange for
certain Term Loans pursuant to Section 2.2, in the form attached as an exhibit
to the Exchange Note Indenture.
"Exchange Notice" has the meaning specified in Section 2.2(a).
"Exchange Period" means the period (i) commencing on and including the
last day of the first Interest Period to expire on a date on or after the
Anniversary Date and (ii) ending on the Maturity Date.
"Existing Indebtedness" means Indebtedness of the Borrower and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on November 25, 1997, until such amounts are repaid.
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"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Lenders (in
their individual capacity) on such day on such transactions as determined by the
Administrative Agents.
"Fee Letter" means that certain Fee Letter, dated as of March 15,
1999, among the Borrower, Goldman Sachs Credit Partners L.P., Salomon Brothers
Holding Company Inc., Credit Suisse First Boston, Goldman, Sachs & Co., Salomon
Smith Barney Inc. and Credit Suisse First Boston Corporation, entered into in
connection with the Commitment Letter.
"Foreign Lender" means a Lender that is a foreign person for purposes
of the U.S. federal income tax.
"Foreign Participant" means a Participant that is a foreign person for
purposes of the U.S. federal income tax.
"Formation Agreement" means the Formation Agreement, dated as of
December 8, 1998, by and among BAM, the Transferring Partnerships (as defined
therein), the Borrower and CCAIC, pursuant to which the Borrower and BAM are to
enter into the Crown Atlantic Holding Company LLC Operating Agreement,
substantially in the form of Exhibit 3.5 thereto.
"Funding Date" means, collectively, the Powertel Funding Date and the
Bell South Funding Date.
"Funding Notice" has the meaning specified in Section 2.1.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Agreement.
"Goldman Sachs Liquid High Yield Index Rate" means the rate (expressed
as a percentage per annum) determined by Goldman, Sachs & Co. to represent the
weighted average of the market yields during the preceding month on high-yield
debt securities issued in minimum issue sizes of $100 million each.
"Governance Agreement" means the agreement among the Borrower, TdF and
its affiliates, dated as of August 21, 1998, to provide for certain rights and
obligations of the Borrower, TdF and its affiliates with respect to the
management of the Borrower.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
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"Governmental Entity" means any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality thereof, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person whether or not such
Indebtedness is assumed by such Person (the amount of such Indebtedness as of
any date being deemed to be the lesser of the value of such property or assets
as of such date or the principal amount of such Indebtedness of such other
Person so secured) and, to the extent not otherwise included, the Guarantee by
such Person of any Indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"Indemnified Party" has the meaning specified in Section 10.1.
"Initial Period" means the period beginning on the Closing Date and
ending on the last day of the first Interest Period to expire on a date on or
after the Anniversary Date.
"Initial Spread" means 550 basis points at all times during the period
commencing on and including the Closing Date and ending on the 90th day
thereafter, and increasing by 50 basis points on the 90th day after the Closing
Date and by an additional 50 basis points on the last day of each 90-day period
thereafter for so long as any Term Loans are outstanding during the Initial
Period.
"Interbank Offered Rate" means, for any LIBOR Rate Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100th of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Interbank Offered Rate" shall
mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
dollars at approximately 11:00
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a.m. (London Time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.
"Interest Payment Date" means (i) the last day of each February, May,
August and November after the Closing Date in the case of the Base Rate Loans,
(ii) the last day of each Interest Period in the case of LIBOR Rate Loans, (iii)
the 90th day after the last day of the first Interest Period to expire on a date
on or after the Anniversary Date, and the last day of each 90-day period
thereafter, in the case of Term Loans outstanding at any time during the
Exchange Period, (iv) the Maturity Date and (v) the date of any prepayment of
all or any portion of the principal of the Loans.
"Interest Period" means, in respect of any LIBOR Rate Loan, (i) in the
case of the first Interest Period applicable to the Term Loans, the period
commencing on and including the Closing Date and ending on the numerically
corresponding date (or, if there is no numerically corresponding date, on the
last date) in the calendar month that is 3 months thereafter, and (ii) in the
case of each subsequent Interest Period, the period beginning on the last day of
the prior Interest Period and ending on the numerically corresponding date (or,
if there is no numerically corresponding date, on the last date) in the calendar
month that is 3 months thereafter; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended until the next succeeding Business Day unless the next Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day. Interest shall accrue from the first
day of an Interest Period to but excluding the last day of such Interest Period.
Notwithstanding the foregoing, no Interest Period in respect of the Term Loans
may extend beyond the Maturity Date and each Interest Period that would
otherwise commence before and end after the Maturity Date shall end on the
Maturity Date.
"Investment Banks" means, collectively, Goldman, Sachs & Co., Salomon
Smith Barney Inc. and Credit Suisse First Boston Corporation.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Borrower or any Restricted Subsidiary of the Borrower sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Borrower or a Restricted Subsidiary of the Borrower issues any of its Equity
Interests such that, in each case, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Borrower,
the Borrower shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of Section 4.7.
"Legal Holiday" means a Saturday, a Sunday or any other day on which
banking institutions in the City of New York, or at a place of payment are
authorized by law, regulation or executive order to remain closed and, if such
day relates to a payment or prepayment of principal of, or interest on, or an
Interest Period for, LIBOR Rate Loans, any day which is also a day on which
dealings in dollar deposits are carried out in the London interbank markets.
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"Lenders" shall mean (a) each financial institution that has executed
a counterpart to this Agreement (other than any such financial institution that
has ceased to be a party hereto pursuant to an Assignment and Acceptance) and
(b) any financial institution that has become a party hereto pursuant to an
Assignment and Acceptance.
"LIBOR Lending Office" means, with respect to any Lender, the office,
if any, of such Lender specified from time to time as its "LIBOR Lending Office"
in a written notice to the Borrower.
"LIBOR Rate" means the interest rate per annum calculated according to
the following formula:
LIBOR Rate = Interbank Offered Rate
1 LIBOR Reserve Percentage
"LIBOR Rate Loan" means a Term Loan at any time the interest rate
thereon is computed with reference to the LIBOR Rate.
"LIBOR Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
or any successor regulation, as the maximum reserve requirement (including any
basic, supplemental, emergency, special, or marginal reserves) applicable with
respect to Eurocurrency Liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of LIBOR Rate Loans is determined), whether or not any
Administrative Agent or any Lender has any Eurocurrency liabilities subject to
such requirements, without benefits of credits or proration, exceptions or
offsets that may be available from time to time to any Administrative Agent or
any Lender. The LIBOR Rate shall be adjusted automatically on and as of the
effective date of any change in the LIBOR Reserve Percentage.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owning pursuant
to Section 3(c) of the Registration Rights Agreement.
"Loan" means a Term Loan.
"Loan Documents" means this Agreement, the Term Notes and the Related
Documents.
"Loan Register" means the register maintained by the Administrative
Agents on behalf of the Borrower pursuant to Section 6.7.
"Majority Lenders" means, at any time, Lenders holding at least a
majority of the then aggregate unpaid principal balance of the Loans, or, if no
such principal amount is then outstanding, Lenders having at least a majority of
the total Commitments; provided that, for purposes hereof, neither the Borrower
nor any of its Affiliates shall be included in (i) the Lenders holding such
amount of the
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Loans or having such amount of the Commitments or (ii) determining the aggregate
unpaid principal amount of the Loans or the total Commitments.
"Material Adverse Effect" means, except as otherwise specifically
stated, a material adverse effect on the condition (financial or other),
business, prospects, properties or results of operations of the Borrower and its
"significant subsidiaries" as defined in Rule 405 of the rules and regulations
of the Commission promulgated under the Securities Act, taken as a whole.
"Maturity Date" means November 30, 2007.
"Nassau Group" means Nassau Capital Partners II, L.P. and NAS Partners
I, L.L.C.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (a) any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or (b) the disposition of any
securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(i) the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, (ii) taxes paid or payable as
a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), (iii) amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under a Credit
Facility) secured by a Lien on the asset or assets that were the subject of such
Asset Sale, (iv) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such Asset
Sale, (v) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by the Borrower or any
Restricted Subsidiary after such Asset Sale and (vi) without duplication, any
reserves that the Borrower's Board of Directors determines in good faith should
be made in respect of the sale price of such asset or assets for post closing
adjustments; provided that in the case of any reversal of any reserve referred
to in clause (v) or (vi) above, the amount so reserved shall be deemed to be Net
Proceeds from an Asset Sale as of the date of such reversal.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Borrower nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Borrower or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accellerated or payable
prior to its stated maturity; and (iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or assets
of the
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Borrower or any of its Restricted Subsidiaries (except that this clause (iii)
shall not apply to any Indebtedness incurred by CTSH and its Subsidiaries prior
to August 21, 1998).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Documents" means an offering memorandum or prospectus
together with such other documents, instruments and agreements as the Investment
Banks may request in their sole discretion in connection with the issuance of
the Permanent Securities.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operation Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Borrower by two Officers of the Borrower, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Borrower.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Administrative Agents. The counsel may be an
employee of or counsel to the Borrower, any Subsidiary of the Borrower or the
Administrative Agents.
"Other Taxes" has the meaning specified in Section 2.9(b).
"Other Term Loans" means up to $100 million in aggregate principal
amount of loans to CTSH or a Subsidiary thereof under a term loan agreement
among CTSH, the Arrangers and the lenders named therein, which term loan
agreement may be executed pursuant to a letter agreement substantially similar
to the Commitment Letter that may be entered into among CTSH and the Arrangers.
"Participations" has the meaning specified in Section 6.3.
"Permanent Securities" means securities to be issued by the Borrower
in connection with the Proposed Offerings to refinance the Loans.
"Permitted Business" means any business conducted by the Borrower, its
Restricted Subsidiaries or CTSH and its Subsidiaries on the date of this
Agreement and any other business related, ancillary or complementary to any such
business.
"Permitted Investments" means (a) any Investment in the Borrower or in
a Restricted Subsidiary of the Borrower; (b) any Investment in Cash Equivalents;
(c) any Investment by the Borrower or any Restricted Subsidiary of the Borrower
in a Person, if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary of the Borrower or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Borrower or a Restricted
Subsidiary of the Borrower; (d) any Restricted Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with Section 4.10; (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Borrower; (f) receivables created in the ordinary course of business; (g)
loans or advances to employees made in the ordinary course of business not to
exceed $1.0
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million at any one time outstanding; (h) securities and other assets received in
settlement of trade debts or other claims arising in the ordinary course of
business; (i) purchases of additional Equity Interests in CTSH for cash pursuant
to the Governance Agreement as the same is in effect on the date of this
Agreement for aggregate cash consideration not to exceed $20 million since
November 26, 1997; and (j) other Investments in Permitted Businesses not to
exceed 5% of the Borrower's Consolidated Tangible Assets at any one time
outstanding (each such Investment being measured as of the date made and without
giving effect to subsequent changes in value).
"Permitted Liens" means (i) Liens securing Eligible Indebtedness of
the Borrower under one or more Credit Facilities that was permitted by the terms
of this Agreement to be incurred or (ii) Liens securing any Indebtedness of any
of the Borrower's Restricted Subsidiaries that was permitted by the terms of
this Agreement to be incurred; (iii) Liens in favor of the Borrower; (iv) Liens
existing on the date of this Agreement; (v) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (vi)
Liens securing Indebtedness permitted to be incurred under clause (iv) of the
second paragraph of Section 4.9; and (vii) Liens incurred in the ordinary course
of business of the Borrower or any Restricted Subsidiary of the Borrower with
respect to obligations that do not exceed $5.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Borrower or such Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Borrower or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Borrower or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or initial accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of expenses and
prepayment premiums incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is subordinated in right of payment to, the Notes on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Borrower or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
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"Powertel" means Powertel Atlantic Towers, LLC, Powertel Birmingham
Towers, LLC, Powertel Jacksonville Towers, LLC, Powertel Kentucky Towers, LLC,
Powertel Memphis Towers, LLC and Powertel, Inc.
"Powertel Acquisition" means the acquisition of all or substantially
all of the communications tower assets of Powertel pursuant to the Powertel
Acquisition Agreement.
"Powertel Acquisition Agreement" means that certain asset purchase
agreement between the Borrower, CCP Inc. and Powertel, dated as of March 15,
1999, with respect to the purchase of certain communications tower assets of
Powertel.
"Powertel Commitment" means, with respect to any Lender, the amount
set forth opposite such Lender's signature on the signature pages of this
Agreement as its "Powertel Commitment."
"Powertel Escrow Payment" means a $50.0 million escrow payment by the
Borrower to SunTrust Bank, N.A. for the benefit of Powertel upon execution of
the Powertel Acquisition Agreement.
"Powertel Funding Date" means the date on which the conditions set
forth in Article V are satisfied or waived in accordance with Section 12.3 and
the Powertel Term Loans are funded by the Lenders, which shall be the Closing
Date or such other date mutually agreed between the Borrower and the
Administrative Agents.
"Powertel Term Loan" means up to $50.0 million in aggregate principal
amount of Loans made by any Lender to the Borrower pursuant to Section 2.1 to be
applied to the Powertel Escrow Payment.
"Prepayment Date" has the meaning specified in Section 2.7.
"Prime Rate" means the rate of interest per annum established and
publicly announced from time to time by Credit Suisse First Boston as its prime
rate. The Prime Rate is not necessarily the best or the lowest rate of interest
offered by the Administrative Agents.
"Principals" means Berkshire Group, Centennial Group, Nassau Group,
TdF and any Related Party of the foregoing.
"Proposed Offerings" means the Borrower's proposal to issue and/or
cause one of its affiliates to issue (i) up to $300 million in gross proceeds of
debt securities or preferred stock and (ii) up to $400 million in gross proceeds
of equity securities, in each case contemplated by the Engagement Letter.
"Public Equity Offering" means an underwritten primary public offering
of common stock of the Borrower pursuant to an effective registration statement
under the Securities Act.
"Recovered Escrow Funds" means any and all amounts received by the
Borrower or any of its Subsidiaries as a distribution or payment on, or refund,
reimbursement, repayment or other recovery of, any amounts paid by the Borrower
and its Subsidiaries with respect to the Powertel Escrow Payment and/or the Bell
South Escrow Payment; provided that any such amounts that are given by the
Borrower or any of its Subsidiaries to Powertel or BellSouth Mobility as
consideration in connection
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with the Powertel Acquisition or the Bell South Lease, as the case may be, shall
not constitute Recovered Escrow Funds.
"Registration Rights Agreement" means the registration rights
agreement among the Borrower and the Arrangers pursuant to which the Exchange
Notes are required to be registered for public sale, in the form attached as
Exhibit C.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Related Documents" means the Exchange Notes, the Exchange Note
Indenture, the Registration Rights Agreement, the Escrow Agreement, the
Engagement Letter and the Fee Letter.
"Related Party" with respect to any Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary of such Principal or (B)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, members, partners, owners or Persons beneficially holding an 80%
or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A).
"Request" has the meaning specified in Section 8.1(b).
"Responsible Officer" of any corporation shall mean any executive
officer or financial officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payments" has the meaning specified in Section 4.7.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rights Agreement" means the agreement between the Borrower and
ChaseMellon Shareholders Services, L.L.C., as rights agent, dated as of August
21, 1998, relating to the dividend declared by the Borrower consisting of the
right to purchase 1/1000th of a share of the Borrower's Series A Participating
Cumulative Preferred Stock, par value $.01 per share.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Exchange Notes.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means that certain Amended and Restated Loan
Agreement, dated as of July 10, 1998, by and among Key Corporate Capital Inc.
and PNC Bank, National Association, as arrangers and agents for the financial
institutions listed therein, and Crown Communication Inc. and Crown Castle
International Corp. de Puerto Rico, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time.
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"Senior Discount Notes" means the Borrower's 10-5/8% Senior Discount
Notes due 2007.
"Senior Discount Notes Indenture" means that certain Indenture, dated
as of November 25, 1997, between the Borrower and United States Trust Company of
New York, as trustee, governing the Senior Discount Notes.
"Significant Subsidiary" means, with respect to any Person, any
Restricted Subsidiary of such Person that would be a "significant subsidiary" of
such Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
this Agreement, except that all references to "10 percent" in Rule 1-02(w)(1),
(2) and (3) shall mean "5 percent."
"Solvent" means, with respect to any Person on a pro forma basis
immediately after the consummation of a transaction, that (i) the fair value of
such Person's assets exceeds its stated liabilities, including all contingent
liabilities, (b) the present fair saleable value of such Person's assets exceeds
that amount that will be required to pay its probable liability on its debts as
they become absolute and mature, (c) such Person will not have incurred debts
beyond its ability to pay such debts as they mature, and (d) the then remaining
assets of such Person will not constitute an unreasonably small capital for such
Person's businesses.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders' Agreement" means the agreement among the Borrower and
certain stockholders of the Borrower, dated as of August 21, 1998, to provide
for certain rights and obligations of the Borrower and such stockholders with
respect to the governance of the Borrower and such stockholders' shares of
Common Stock and/or Class A Common Stock of the Borrower.
"Strategic Equity Investment" means a cash contribution to the common
equity capital of the Borrower or a purchase from the Borrower of common Equity
Interests (other than Disqualified Stock), in either case by or from a Strategic
Equity Investor and for aggregate cash consideration of at least $50.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted
Business whose Total Equity Market Capitalization exceeds $1.0 billion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
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"Taxes" has the meaning specified in Section 2.9(a).
"TdF" means TeleDiffusion de France International S.A, or any
controlled affiliate of TdF.
"Term Loan" means, collectively, the Powertel Term Loan and the Bell
South Term Loan, in an aggregate principal amount not to exceed $100.0 million.
"Term Note" means a promissory note of the Borrower in the form
attached as Exhibit B hereto evidencing the Term Loan of any Lender.
"Total Equity Market Capitalization" of any Person means, as of any
day of determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such person) multiplied by (B) the
average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Tower Asset Exchange" means any transaction in which the Borrower or
one of its Restricted Subsidiaries exchanges assets for Tower Assets and/or cash
or Cash Equivalents where the fair market value (evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the Tower Assets and cash or Cash Equivalents received by the
Borrower and its Restricted Subsidiaries in such exchange is at least equal to
the fair market value of the assets disposed of in such exchange.
"Tower Assets" means wireless transmission towers and related assets
that are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of
the Borrower and its Restricted Subsidiaries for such period that is directly
attributable to site rental revenue or license fees paid to lease or sublease
space on communication sites owned or leased by the Borrower, all determined on
a consolidated basis and in accordance with GAAP. Tower Cash Flow will not
include revenue or expenses attributable to non-site rental services provided by
the Borrower or any of its Restricted Subsidiaries to lessees of communication
sites or revenues derived from the sale of assets.
"Transactions" means, collectively, the Acquisitions, the related
financing transactions and each of the other transactions contemplated by the
Transaction Documents.
"Transaction Documents" means the Loan Documents and the Acquisition
Agreements.
"Transferee" has the meaning specified in Section 6.4.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Borrower
that is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a)
has no Indebtedness other than Non-Recourse Debt; (b) is not party to any
agreement, contract, arrangement or understanding with the Borrower or any
Restricted Subsidiary
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of the Borrower unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Borrower or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Borrower; (c) is a Person with respect to which neither
the Borrower nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Borrower or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Borrower or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Borrower or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Administrative Agents by filing with the
Administrative Agents a certified copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.7 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Borrower as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.9 hereof, the Borrower shall be in
default of such covenant). The Board of Directors of the Borrower may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.9 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default would occur
or be in existence following such designation. For avoidance of doubt, for
purposes of this Agreement the following Subsidiaries of the Borrower shall be
deemed as of the date hereof to be Unrestricted Subsidiaries: (i) CTSH and each
of its Subsidiaries as of the date of this Agreement; and (ii) CC Investment
Corp. and CC Investment Corp. II and each of their Subsidiaries (including CCAIC
and the BAM Joint Venture) as of the date of this Agreement.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the board of
directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"West Street" means West Street Fund I, L.L.C., an Affiliate of
Goldman Sachs Credit Partners L.P.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person, 100% of the Capital Stock and other Equity Interests of which is owned
directly or indirectly by such Person.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned (i) by such Person, (ii) by one or more Wholly
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Owned Restricted Subsidiaries of such Person or (iii) by such Person and one or
more Wholly Owned Restricted Subsidiaries of such Person.
"Year 2000 Problem" has the meaning specified in Section 3.17.
Section 1.2. Interpretation.
In this Agreement, the singular includes the plural and the plural
includes the singular; words implying any gender include the other genders;
references to any section, exhibit or schedule are to sections, exhibits or
schedules hereto unless otherwise indicated; references to statutes are to be
construed as including all statutory provisions consolidating, amending or
replacing the statute referred to; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
"including" following a word or phrase shall not be construed to limit the
generality of such word or phrase; "or" is not exclusive; provisions apply to
successive events and transactions; and an accounting term not otherwise defined
has the meaning assigned to it in accordance with GAAP.
ARTICLE II.
THE CREDIT FACILITY
Section 2.1. Commitments to Make Term Loans.
In reliance upon the representations and warranties of the Borrower
set forth herein and subject to the terms and conditions herein set forth, each
of the Lenders severally agrees to make (a) a Powertel Term Loan to the Borrower
on the Powertel Funding Date in the amount of such Lender's Powertel Commitment
and (b) a Bell South Term Loan to the Borrower on the Bell South Funding Date in
the amount of such Lender's Bell South Commitment. Not later than three
Business Days prior to a Funding Date, the Borrower shall irrevocably notify the
Administrative Agents in a written notice (a "Funding Notice") the principal
amount of Term Loans to be drawn on such Funding Date. The proceeds of each
Term Loan shall be disbursed by wire transfer on the relevant Funding Date as
provided in written instructions delivered by the Borrower to the Administrative
Agents on the Business Day prior to such Funding Date. Each Term Loan will
mature on the Maturity Date.
Section 2.2. Option to Exchange Term Loans for Exchange Notes.
(a) On any Business Day on or after the Anniversary Date (if any), any
Lender may elect to exchange all or any portion of its Term Loan for one or more
Exchange Notes by giving not less than five Business Days' prior irrevocable
written notice of such election to the Borrower, the Escrow Agent, the
Administrative Agents and the Exchange Note Trustee specifying the principal
amount of its Term Loan to be exchanged (which shall be at least $1,000,000 and
integral multiples of $1,000 in excess thereof) and subject to Section 6.1, the
name of the proposed registered holder and, subject to the terms of the Exchange
Note Indenture, the amount of each Exchange Note requested (each such notice, an
"Exchange Notice"); provided, that in no event shall the aggregate principal
amount of the Term Loans initially exchanged pursuant to this Section 2.2(a) be
less than $15,000,000. Any such exchanging Lender shall deliver its Term Notes
to the Administrative Agents within five Business Days following delivery of an
Exchange Notice. Term Notes exchanged for Exchange Notes pursuant to this
Section 2.2 shall be deemed repaid and canceled and the Exchange Notes so issued
shall be governed by and construed in accordance with the provisions of the
Exchange Note Indenture.
(b) Not later than the fifth Business Day after delivery of an
Exchange Notice:
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(i) the Administrative Agents shall deliver to the Escrow Agent the
original Term Notes delivered to them by the exchanging Lender pursuant to
Section 2.2(a);
(ii) the Escrow Agent shall cancel each Term Note so delivered to it
and, if applicable, the Borrower shall issue a replacement Term Note to
such Lender in an amount equal to the principal amount of such Lender's
Term Loan that is not being exchanged, or the Escrow Agent shall make a
notation on the surrendered Term Note to the effect that a portion of the
Term Loan represented thereby has been repaid; and
(iii) upon completion of the actions set forth in clauses (b)(i) and
(ii) the Escrow Agent shall deliver the applicable Exchange Note(s) to the
Exchange Note Trustee for authentication and delivery to the holder or
holders thereof specified in the Exchange Notice.
(c) Each Exchange Note issued pursuant to this Section 2.2 shall bear
interest at a fixed rate equal to the rate per annum borne by the Term Loan on
the date of the Exchange Notice. Accrued interest on Term Loans so exchanged
shall be canceled and the Exchange Notes received in such exchange shall bear
interest from and including the most recent date to which interest has been paid
on the Term Loans so exchanged.
Section 2.3. Interest; Default Interest.
(a) Interest Rate Applicable to Term Loans During the Initial Period.
Subject to Sections 2.3(d) and (e) below, the unpaid principal balance of all
Term Loans outstanding at any time during the Initial Period shall accrue
interest at a rate per annum equal to the sum of the LIBOR Rate plus the Initial
Spread, changing on the first day of each Interest Period when and as the LIBOR
Rate and/or the Initial Spread changes.
(b) Interest Rate Applicable to Term Loans As Of and Following the
Anniversary Date. Subject to Sections 2.3(d) and (e) below, interest on the
unpaid principal balance of all Term Loans outstanding at any time following the
Anniversary Date shall accrue interest at a rate per annum equal to the
Continuing Rate plus the Continuing Spread, changing when and as the Continuing
Spread changes.
(c) Basis of Computation of Interest; Payment of Interest. All
interest shall be payable in arrears not later than 12:00 noon (New York City
time) on each Interest Payment Date by wire transfer of immediately available
funds in accordance with Section 2.8. All interest (i) in respect of LIBOR Rate
Loans shall be calculated for actual days elapsed on the basis of a 360-day
year, (ii) in respect of Base Rate Loans shall be calculated for actual number
of days elapsed over a year of 365 or 366 days, as the case may be, when the
Base Rate is determined by reference to the Prime Rate, and over a year of 360
days at all other times, and (iii) in respect of Continuing Interest Rate Loans
shall be calculated on the basis of a year comprised of twelve months of 30 days
each.
(d) Default Interest. Subject to Section 2.3(e) below, if an Event of
Default described in clause (a) or (b) of Section 7.1 occurs, the Borrower shall
on demand from time to time pay interest on such defaulted amount, to the extent
permitted by law, from the date such Default in the payment of interest or Event
of Default first occurred to but excluding the date of actual payment or cure or
waiver (after as well as before judgment) to the extent lawful, at a rate per
annum equal to 200 basis points in excess of the otherwise applicable interest
rate on the Loans. The Borrower shall pay such default interest and all
interest accruing on any overdue Obligation in cash on demand from time to time,
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provided, however, that the sum of such default interest rate and rate of
interest accruing on any overdue Obligations shall not at any time exceed 16%
per annum.
(e) Maximum Interest Rate. Notwithstanding anything contained in
Section 2.3(a), 2.3(b) or 2.3(d) above, in no event shall the interest rate on
the Loans for any Interest Period exceed an annual rate equal to the lesser of
(i) 16% per annum and (ii) the maximum interest rate permitted by law.
(f) Payment of Interest and Liquidated Damages. Except as otherwise
set forth herein, interest and Liquidated Damages on each Loan shall be payable
in arrears on and to (i) each Interest Payment Date applicable to that Loan;
(ii) any prepayment of that Loan, to the extent accrued on the amount being
prepaid; (iii) at maturity, including final maturity; and (iv) if such Loan is a
Term Loan that is exchanged for an Exchange Note, the date of exchange as
specified in the relevant Exchange Notice. All interest and Liquidated Damages
payments shall be made not later than 12:00 noon (New York City time) on the
date specified for payment by wire transfer of immediately available funds in
accordance with Section 2.8.
Section 2.4. Mandatory Prepayment.
(a) The Borrower shall prepay the Loans ratably in accordance with the
aggregate outstanding principal balances thereof, with:
(1) the net cash proceeds of:
(i) any direct or indirect public offering or private placement
of the Permanent Securities, or any other debt or equity securities of
the Borrower or any of its controlled Affiliates issued after the
Closing Date (including without limitation any equity contributions
from TeleDiffusion de France International S.A.) other than (A) any
issuance of directors' qualifying shares and (B) any issuance or sale
of common stock (or common stock equivalents) of the Borrower to
officers and employees under employee benefit clients or compensation
plans";
(ii) the incurrence of any other Indebtedness by the Borrower or
any of its controlled Affiliates after the Closing Date (other than
Indebtedness permitted to be incurred under the Senior Credit Facility
pursuant to clauses (i), (iv) and (vi) of the second paragraph of
Section 4.9); and
(iii) any Asset Sale by the Borrower or any of its controlled
Affiliates after the Closing Date; provided that the following shall
not be deemed an "Asset Sale" for purposes of this covenant: (A) the
sale of any asset encumbered by Liens of third-party creditors
permitted under Section 4.12 solely to the extent that the Net
Proceeds of such Asset Sale are applied to pay the claims of such
third party creditors and (B) sales of Tower Assets in an aggregate
amount not to exceed $5.0 million during any calendar year if (y) the
Borrower advises the Administrative Agents in writing that it will
utilize the net cash proceeds of each such sale within six months of
the date of closing such sale to purchase additional Tower Assets and
(z) the Borrower in fact uses the net cash proceeds to purchase
additional Tower Assets within such six-month period,
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(each of the transactions in the foregoing clauses (i), (ii) and (iii), a
"Capital Markets Transaction"), or
(2) all of the Recovered Escrow Funds if at any time the Borrower or
any of its Subsidiaries receives any Recovered Escrow Funds (any such
event, an "Escrow Recovery"),
(3) all of the BAM Funds if the Borrower abandons the BAM Joint
Venture or if the Formation Agreement expires or is otherwise terminated
(any such event, a "Joint Venture Termination").
Subject to Section 2.6 and Section 2.7, the Borrower shall, not later than the
fifth Business Day following any Capital Markets Transaction, Escrow Recovery or
Joint Venture Termination, apply such net cash proceeds, Recovered Escrow Funds
or BAM Funds to prepay the Loans pursuant to this Section 2.4, without premium
or penalty, by paying to each Lender an amount equal to 100% of such Lender's
pro rata share of the aggregate principal amount of the Loans to be prepaid,
plus accrued and unpaid interest thereon to the Prepayment Date.
(b) Notwithstanding the provisions of Section 2.4(a) above:
(i) in the case of any Capital Markets Transaction, the Borrower shall
be required to apply the net cash proceeds from such Capital Markets
Transaction to prepay the Loans pursuant to this Section 2.4 only after
making any repayment of amounts outstanding under the Senior Credit
Facility that are required to be made prior to the application of such net
cash proceeds to the prepayment of the Loans;
(i) in the case of any Capital Markets Transaction specified in clause
(i) of the definition thereof, to the extent that the Borrower receives any
equity contributions from TdF, the Borrower shall be required to apply the
net cash proceeds from such Capital Markets Transaction (1) first, to
prepay the Loans and Other Term Loans pursuant to this Section 2.4 in
accordance with clause (iii) below; (2) second, to permanently reduce any
remaining unfunded Commitments hereunder on a pro rata basis and (3) third,
to permanently reduce any remaining unfunded commitments under the letter
agreement with CTSH or related term loan agreement, if any, with respect to
the Other Term Loans on a pro rata basis; and
(ii) if Other Term Loans are outstanding at the time that any
mandatory prepayment is required pursuant to this Section 2.4, then the net
cash proceeds from any Capital Markets Transaction, the Recovered Escrow
Funds or the BAM Funds, as the case may be, shall be applied pro rata to
repay the principal of and accrued and unpaid interest on all Term Loans
and such Other Term Loans.
(c) Subject to and in accordance with Section 4.15, in the event of
any Change of Control, the Borrower shall offer to prepay the Loans pursuant to
Section 4.15.
Section 2.5. Optional Prepayment.
Subject to Section 2.6 and Section 2.7, the Borrower may prepay the
Loans at any time without premium or penalty, in whole or in part, on a pro rata
basis, by paying to each applicable Lender an amount equal to 100% of such
Lender's pro rata share of the aggregate principal amount of Loans to be
prepaid, plus accrued and unpaid interest thereon to the Prepayment Date.
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Section 2.6. Breakage Costs; Indemnity.
The Borrower agrees to indemnify and hold each Affected Party harmless
from and against any loss or expense which such Affected Party sustains or
incurs as a consequence of:
(a) the failure by the Borrower to borrow LIBOR Rate Loans on the
Closing Date after the Borrower has given a notice with respect thereof in
accordance with Section 2.1,
(b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of
Section 2.4 or 2.5, as applicable, or
(c) the mandatory or optional prepayment of LIBOR Rate Loans on a day
that is not the last day of an Interest Period.
Such indemnification may include an amount equal to the excess, if any of (i)
such Affected Party's actual loss and expenses incurred (excluding consequential
damages) in connection with, or by reason of, any of the foregoing events and
(ii) the excess, if any of (A) the amount of interest that would have accrued on
the principal amount of Term Loans not so made or the principal amount of Loans
so prepaid from the date of such proposed issuance or prepayment in the case of
a failure to make Term Loans, to the last day of the Interest Period that would
have commenced on the proposed date of funding, or in the case of any such
prepayment, to the last day of the Interest Period in which such prepayment
occurred, in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Initial Spread or the Continuing
Spread, as the case may be, included therein, if any) over (B) the amount of
interest (as reasonably determined by such Affected Party) which would have
accrued to such Affected Party on such amount by placing such amount on deposit
for a period comparable to such Interest Period with leading banks in the
interbank LIBOR market. A certificate as to any amounts payable pursuant to
this Section 2.6 submitted to the Borrower by any Affected Party shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Obligations.
Section 2.7. Effect of Notice of Prepayment.
The Borrower shall notify the Lenders of any prepayment in writing at
their addresses shown in the Loan Register, which notice shall be given at least
five Business Days prior to any date set for prepayment of Loans (each such day,
a "Prepayment Date"). Once such notice is sent or mailed, the Loans to be
prepaid shall become due and payable on the Prepayment Date set forth in such
notice. Such notice may not be conditional.
Section 2.8. Payments.
(a) Wire Transfer. The principal of, fees, premium, if any, and
interest on each Loan and all other Obligations arising under the Loan Documents
shall be payable by wire transfer in immediately available funds (in United
States dollars) to the Administrative Agents for the respective accounts of the
Lenders set forth below their signatures on the signature pages of this
Agreement or otherwise designated in the Loan Register from time to time to the
Borrower by any Lender at least three Business Days prior to the due date
therefor.
(b) Change in Costs. If prior to the first day of any Interest Period
with respect to a LIBOR Rate Loan, any Lender shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that: (i) by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the LIBOR Rate for
such Interest Period, or (ii) the LIBOR Rate determined or to be determined for
such Interest Period will not
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adequately and fairly reflect the cost to such Lender or its LIBOR Lending
Office of maintaining its LIBOR Rate Loan during such Interest Period, then such
Lender shall give facsimile or telephone notice thereof to the Borrower as soon
as practicable thereafter. If such notice is given, the interest rate on each
Term Loan for such Interest Period and for each subsequent Interest Period until
such Lender gives notice to the Borrower otherwise shall equal the sum of the
Base Rate plus the Initial Spread or the Continuing Spread, as the case may be.
(c) Change in Law. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Borrower that subsequent to the date
hereof the introduction of, or any change in the interpretation of, any law or
regulation makes it unlawful, or any Governmental Entity asserts that it is
unlawful, for such Lender or its LIBOR Lending Office to make or maintain LIBOR
Rate Loans hereunder, (i) the obligation of such Lender to make or maintain
LIBOR Rate Loans shall be suspended until such Lender shall notify the Borrower
that the circumstances causing such suspension no longer exist and (ii) any
LIBOR Rate Loan then outstanding from such Lender shall immediately be converted
into a Base Rate Loan.
(d) Payments on Business Days. If any payment to be made hereunder or
under any Term Note shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and such extension of
time shall be included in computing interest in connection with such payment);
provided, however, that, in the case of a LIBOR Rate Loan, if such succeeding
Business Day falls in the next calendar month, such payment shall be made on the
next preceding Business Day.
(e) Partial Prepayments and Redemptions. All partial prepayments and
redemptions of the outstanding principal balance of the Loans shall be made
ratably amongst the applicable Lenders in accordance with their respective
shares of the aggregate outstanding principal balance of the Loans eligible for
prepayment or redemption.
(f) No Defense. To the fullest extent permitted by law, the Borrower
shall make all payments hereunder and under the Term Notes regardless of any
defense or counterclaim.
(g) Allocation. Any money paid to, received by, or collected by any
Administrative Agent or any Lender pursuant to this Agreement or any other Loan
Document, shall be applied in the following order, at the date or dates fixed by
the Administrative Agents:
First: to any unpaid fees and reimbursement or unpaid expenses of the
Arrangers (in their capacity as Administrative Agent and/or as Lender)
hereunder and under the Fee Letter;
Second: to the payment of all costs, expenses, other fees,
commissions and taxes owing to any Lender hereunder;
Third: to the indefeasible payment of all accrued interest to the
date of such payment or collection;
Fourth: to the indefeasible payment of the amounts then due and
unpaid under this Agreement, the Term Notes or any other Loan Document for
principal, in respect of which or for the benefit of which such money has
been paid or collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Term Notes for
principal; and
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Fifth: the balance, if any, to the Person lawfully entitled thereto.
Section 2.9. Taxes.
(a) Taxes. Any and all payments by the Borrower hereunder or under
the Term Notes, the Exchange Notes or any other Loan Document shall be made, in
accordance with Section 2.8 or the other applicable provision of the applicable
Loan Document, free and clear of and without deduction or withholding for or on
account of any and all present or future taxes, levies, imports, deductions,
charges or withholdings additions to tax, interest, penalties and all other
liabilities with respect thereto, excluding (i) income, franchise or similar
taxes imposed or levied on the Administrative Agents or the Lenders as a result
of a present or former connection between the Administrative Agents or the
Lenders 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 Administrative Agents or such Lenders
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement) and (ii) in the case of any Foreign Lender,
any taxes that are in effect and that would apply to a payment hereunder or
under the Term Notes, the Exchange Notes or any other Loan Document made to such
Foreign Lender as of the date such Foreign Lender becomes a party to this
Agreement, or in the case of any other Lender which changes its lending office
with respect to the Loan or the Exchange Notes to an office outside the U.S.,
any taxes that are in effect and would apply to a payment to such Lender as of
the date of the change of the lending office (all such non-excluded taxes,
levies, imports, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law
to deduct or withhold any Taxes from, or in respect of, any sum payable
hereunder or under the Term Notes, the Exchange Notes or any other Loan Document
to the Administrative Agents or the Lenders or any of their respective
Affiliates who may become a Lender: (i) the sum payable thereunder shall be
increased as may be necessary so that after making all required deductions or
withholdings (including deductions or withholdings applicable to additional sums
payable under this Section 2.9) the Administrative Agents or the Lenders or any
of their respective Affiliates receives an amount equal to the sum it would have
received had no such deductions or withholdings been made; (ii) the Borrower
shall make such deductions or withholdings; and (iii) the Borrower shall pay the
full amount deducted to the relevant tax authority or other authority in
accordance with applicable laws.
(b) Other Taxes. In addition, the Borrower agrees to pay any present
or future stamp, mortgage recording or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or under a Term Note, Exchange Note or other Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the other Loan Documents (hereinafter referred to as "Other Taxes")
and hold each Administrative Agent and each Lender harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to such Lender) to pay such Other Taxes.
Each Lender represents that, to the best of its knowledge, except for any such
Other Taxes that may be imposed under the federal, state or local laws of the
United States (or any political subdivision thereof), it is not aware of any
such stamp, mortgage recording or documentary taxes or any other excise or
property taxes, charges or similar levies.
(c) Indemnity. The Borrower will indemnify any Administrative Agent
and any Lender for the full amount of Taxes or Other Taxes arising in connection
with payments made under this Agreement or any other Loan Document (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.9) paid by any Administrative
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Agent or any Lender or any of their respective Affiliates and any liability
(including penalties, additions to tax interest and expenses) arising therefrom
or with respect thereto. Payment under this indemnification shall be made within
fifteen days from the date any Administrative Agent or any Lender or any of
their respective Affiliates makes written demand therefor; provided, however,
that the Borrower shall not be obligated to make payment to the Lender or the
Administrative Agent (as the case may be) pursuant to this Section 2.9(c) in
respect of penalties, interest and other liabilities attributable to any Taxes
or Other Taxes, if (i) written demand therefor has not been made by such Lender
or such Administrative Agent within 60 days from the date on which such Lender
or such Administrative Agent received written notice of the imposition of Taxes
or Other Taxes by the relevant taxing or governmental authority, but only to the
extent such penalties, interest and other similar liabilities are attributable
to such failure or delay by the Administrative Agent or the Lender in making
such written demand, (ii) such penalties, interest and other liabilities have
accrued after the Borrower had indemnified or paid an additional amount due as
of the date of such payment pursuant to this Section 2.9(c) or (iii) such
penalties, interest and other liabilities are attributable to the gross
negligence or willful misconduct of the Lender or the Administrative Agent or
such Affiliates. After the Lender or the Administrative Agent (as the case may
be) receives written notice of the imposition of the Taxes or Other Taxes which
are subject to this Section 2.9(c), such Lender and the Administrative Agents
will act in good faith to promptly notify the Borrower of its obligations
hereunder; provided, however, that the failure to so act shall not, standing
alone, affect the rights of the Administrative Agents or the Lenders under this
Section 2.9(c).
(d) Furnish Evidence to Administrative Agents. The Borrower will make
reasonable efforts to obtain certified copies of tax receipts evidencing the
payment of any Taxes deducted or withheld from each taxing authority imposing
such Taxes. The Borrower will furnish to the Lenders, within 60 days after the
date the payment of any Taxes so deducted or withheld is due pursuant to
applicable law, original or certified copies of tax receipts evidencing such
payment by the Borrower or, if such receipts are not obtainable, other evidence
of such payments by the Borrower reasonably satisfactory to the Lenders.
(e) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.9 shall survive the payment in full of all
amounts due hereunder and under the Term Notes.
(f) Mitigation. If the Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to this Section 2.9 as a result of
a change in law or treaty occurring after such Lender first became a party to
this Agreement, then such Lender will, at the request of the Borrower, change
the jurisdiction of its Applicable Lending Office if such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) is, in such Lender's sole, reasonable discretion, determined not to be
materially disadvantageous or cause unreasonable hardship to such Lender,
provided that fees, charges, costs or expenses that are related to such change
shall be borne by the Borrower on behalf of a Lender, and the mere existence of
such expenses, fees or costs shall not be deemed to be materially
disadvantageous or cause undue hardship to the Lender.
Each Lender and each Administrative Agent agrees that it will (i) take
all reasonable actions reasonably requested by the Borrower in writing that are
without material risk and cost to such Lender or such Administrative Agent and
consistent with the internal policies of such Lender and applicable legal and
regulatory restrictions (as the case may be) to maintain all exemptions, if any,
available to it from withholding taxes (whether available by treaty or existing
administrative waiver) and (ii) to the extent reasonable and without material
risk and cost to it, otherwise cooperate with the
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Borrower to minimize any amounts payable by the Borrower under this Section 2.9;
provided, however, that in each case, any cost relating to such action or
cooperation requested by the Borrower shall be borne by the Borrower.
(g) Certification. Each Foreign Lender and Foreign Participant shall
deliver to the Borrower and the Administrative Agents, and if applicable, the
assigning Lender (and, in the case of a Foreign Participant, to the Lender from
which the related participation shall have been purchased) on or before the date
on which it becomes a party to this Agreement (or, in the case of a Foreign
Participant, on or before the date on which such Participant purchases the
related Participation) either:
(i) two duly completed and signed copies of either Internal Revenue
Service Form 1001 or its successor form or Form 4224 or its successor form
and related applicable forms, as the case may be; or
(ii) in the case of a Foreign Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that does not comply with
the requirements of clause (A) hereof, (x) a statement to the effect that
such Lender is eligible for a complete exemption from withholding of U.S.
Taxes under Code Section 871(h) or 881(c), and (y) two duly completed and
signed copies of Internal Revenue Service Form W-8 or successor and related
applicable form.
Further, each Foreign Lender or Foreign Participant agrees (x) to
deliver to the Borrower and the Administrative Agents, and if applicable, the
assigning Lender (and, in the case of a Foreign Participant, to the Lender from
which the related Participation shall have been purchased) two further duly
completed and signed copies of such Forms 1001 or 4224, as the case may be, or
successor and related applicable forms, on or before the date that any such form
expires or becomes obsolete and promptly after the occurrence of any event
requiring a change from the most recent form(s) previously delivered by it in
accordance with applicable U.S. laws and regulations and (y) in the case of a
Foreign Lender that delivers a statement pursuant to Section 2.9(g)(ii) above,
to deliver to the Borrower and the Administrative Agents, and if applicable, the
assigning Lender, such statement on an annual basis on the anniversary of the
date on which such Foreign Lender became a party to this Agreement and to
deliver promptly to the Borrower and the Administrative Agents, and if
applicable, the assigning Lender, such additional statements and forms as shall
be reasonably requested by the Borrower from time to time unless, in any such
case, any change in law or regulation has occurred subsequent to the date such
Foreign Lender became a party to this Agreement (or in the case of a Foreign
Participant, the date on which such Foreign Participant purchased the related
Participation) which renders all such forms inapplicable or which would prevent
such Lender (or Participant) from properly completing and executing any such
form with respect to it and such Lender promptly notifies the Borrower and the
Administrative Agents (and, in the case of a Foreign Participant, the Lender
from which the related participation shall have been purchased) if it is no
longer able to deliver, or if it is required to withdraw or cancel, any form or
statement previously delivered by it pursuant to this Section 2.9(g).
(h) Failure to Provide Certification. Notwithstanding any provision
of this Agreement, the Borrower shall not be required to pay any Taxes or Other
Taxes pursuant to this Section 2.9 in respect of U.S. federal income taxes if
the obligation to withhold with respect to such Taxes or Other Taxes results
from, or would not have occurred but for, the failure of any Foreign Lender or
Foreign Participant to deliver the forms described in the preceding Section 2.9
in the manner and at the times specified in such paragraphs. A Foreign Lender
or Foreign Participant shall not be required to deliver any form or statement
pursuant to Section 2.9(g) that such Foreign Lender or Foreign Participant is
not legally able to deliver.
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(i) Tax Benefit. If and to the extent that any Lender is able, in its
sole opinion, to apply or otherwise take advantage of any offsetting tax credit
or other similar tax benefit arising out of or in conjunction with any deduction
or withholding which gives rise to an obligation on the Borrower to pay any
Taxes or Other Taxes pursuant to this Section 2.9 then such Lender shall, to the
extent that in its sole opinion it can do so without prejudice to the retention
of the amount of such credit or benefit and without any other adverse tax
consequences for such Lender, reimburse to the Borrower at such time as such tax
credit or benefit shall have actually been received by such Lender such amount
as such Lender shall, in its sole opinion, have determined to be attributable to
the relevant deduction or withholding and as will leave such Lender in no better
or worse position than it would have been in if the payment of such Taxes or
Other Taxes had not been required.
Nothing in this Section 2.9 shall oblige any Lender to disclose to the
Borrower or any other person any information regarding its tax affairs or tax
computations or interfere with the right of any Lender to arrange its tax
affairs in whatever manner it thinks fit and, in particular, no Lender shall be
under any obligation to claim relief from its corporate profits or similar tax
liability in credits or deductions available to it and, if it does claim, the
extent, order and manner in which it does so shall be at its absolute
discretion.
Section 2.10. Right of Set Off; Sharing of Payments, Etc.
(a) Right of Set-Off. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default or if the Borrower becomes insolvent, however evidenced, the Borrower
authorizes each Lender at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final, whether or not collected or available) in any currency and
any other indebtedness at any time held by or owing to such Lender or any of its
Affiliates (including, without limitation, by branches and agencies of such
Lender wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations of the Borrower to such Lender under
this Agreement or under any of the other Loan Documents, including, without
limitation, all interests in or participation in the Obligations purchased by
such Lender, and all other claims of any nature or description arising out of or
in connection with this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand hereunder and although the
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. A Lender may exercise such rights notwithstanding that the amounts
concerned may be expressed in different currencies and each Lender is authorized
to effect any necessary conversions at a market rate of exchange selected by it.
A Lender exercising its rights under this Section 2.10(a) shall provide prompt
notice to the Borrower following such exercise.
(b) Sharing. If any Lender shall obtain from the Borrower payment of
any principal of or interest on any Loan owing to it or payment of any other
amount under this Agreement, a Loan Document or any Term Note held by it though
the exercise of any right of set-off, banker's lien or counterclaim or similar
right or otherwise (other than from the Administrative Agents as provided
herein) and, as a result of such payment, such Lender shall have received a
greater percentage of the principal of or interest on the Loans or such other
amounts then due to such Lender by the Borrower than the percentage received by
any other Lenders, it shall promptly purchase from such other Lenders
participation in (or, if and to the extent specified by such Lender, direct
interests in) the Loans or such
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other amounts, respectively, owing to such other Lenders (or any interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Lenders shall
share the benefit of such excess payment (net of any expenses which may be
incurred by such Lender in obtaining or preserving such excess payment) pro rata
in accordance with the unpaid principal of and/or interest on the Loans or such
other amounts, respectively, owing to each of the Lenders. To such end all the
Lenders shall make appropriate adjustments among themselves (by the resale of
participation sold or otherwise) if such payment is rescinded or must otherwise
be restored.
(c) No Requirement. Nothing in this Agreement shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of the Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a set-off to which this Section 2.10 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders entitled under this Section
2.10 to share in the benefits of any recovery on such secured claim.
Section 2.11. Certain Fees.
The Borrower agrees to pay to each Arranger (in its capacity as
Administrative Agent and/or as Lender), for its own account, the fees specified
in the Fee Letter with respect to the Term Loans and Exchange Notes, amounts for
its expenses incurred hereunder and all other amounts owing under this Agreement
and the other Loan Documents.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the Closing Date, the Borrower hereby
agrees with, and represents and warrants to, the Lenders that each of the
following representations and warranties is true and will be true after giving
pro forma effect to the making of the Loans hereunder (but not, unless otherwise
explicitly stated, the consummation of the Acquisitions):
Section 3.1. Acquisition Agreements.
(a) As of the Powertel Funding Date, the representations and
warranties of Powertel contained in the Powertel Acquisition Agreement are
hereby made by the Borrower and incorporated herein by reference for the benefit
of the Lenders (without giving effect to any waivers thereof or amendment
thereto subsequent to the date hereof) and are true and correct in all respects
except to the extent which, individually or in the aggregate, would not result
in a material adverse effect on the condition (financial or other), business,
prospects, properties or results of operations of the operations acquired
pursuant to the Powertel Acquisition.
(b) As of the Bell South Funding Date, the representations and
warranties of BellSouth Mobility contained in the Bell South Letter Agreement,
if any, and/or in the Bell South Lease, to the extent then executed and
delivered, are hereby made by the Borrower and incorporated herein by reference
for the benefit of the Lenders (without giving effect to any waivers thereof or
amendment thereto subsequent to the date hereof) and are true and correct in all
respects except to the extent which, individually or in the aggregate, would not
result in a material adverse effect on the condition (financial or other),
business, prospects, properties or results of operations of the assets acquired
pursuant to the Bell South Letter Agreement.
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(c) As of the date of this Agreement and as of each Funding Date, the
Formation Agreement is in full force and effect and, to the knowledge of the
Borrower, all of the conditions to the consummation of the BAM Joint Venture
contained in the Formation Agreement will be satisfied without waiver.
Section 3.2. Organization; Powers. The Borrower has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware with power and corporate authority to own its
properties and conduct its business as now conducted and as proposed to be
conducted, and has been duly qualified and is in good standing under the laws of
each other jurisdiction, or place where the nature of its properties or the
conduct of its business requires such qualification, except where the failure to
so register or qualify or to be in good standing would not have a Material
Adverse Effect; and each Subsidiary of the Borrower has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation.
Section 3.3. Due Authorization and Enforceability.
(a) Each of the Transaction Documents: (i) has been duly authorized,
executed and delivered by the Borrower and each of its Subsidiaries (to the
extent each is a party thereto) and (ii) assuming due authorization, execution
and delivery by the Lenders, constitutes a valid and binding obligation of
Borrower and each of its Subsidiaries (to the extent each is a party thereto)
enforceable against each such Person in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights from time to time in
effect and to general equity principles including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing, regardless of
whether in a proceeding at law or equity).
(b) The Loans, the Term Notes and the Exchange Notes have been duly
authorized by the Borrower. When the Term Notes and the Exchange Notes have
been executed and delivered pursuant to the terms of this Agreement or the
Exchange Note Indenture, as applicable, each of the Term Notes and, assuming due
authentication of the Exchange Notes by the Exchange Note Trustee, the Exchange
Notes will be valid and binding obligations of the Borrower, enforceable against
it in accordance with their terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights from time to time in effect and to general equity principles
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether in a proceeding at law or equity).
Section 3.4. No Conflicts; No Consents. The execution and delivery
of the Transaction Documents, the consummation of the transactions contemplated
hereby or thereby and compliance with the terms and provisions hereof or thereof
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, sale/leaseback agreement, loan agreement or other similar financing
agreement or instrument or other agreement or instrument to which the Borrower
or any of its Subsidiaries is a party or by which the Borrower or any of its
Subsidiaries is bound or to which any of the property or assets of the Borrower
or any of its Subsidiaries is subject, except such breaches, violations or
defaults that in the aggregate would not have a Material Adverse Effect, nor
will such action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Borrower, nor will such action result any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the Borrower
or any of its Subsidiaries or any of their properties, except such violations
that in the aggregate would not have a Material Adverse Effect; and no consent,
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approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the consummation by
the Borrower of the transactions contemplated by this Agreement, the Exchange
Note Indenture, the Escrow Agreement or the Registration Rights Agreement or the
issuance and delivery of the Exchange Notes by the Borrower, except for such
consents, approvals, authorizations, registrations or qualifications (A) as may
be required by securities or "blue sky" laws of any State of the United States
in connection with the Exchange Notes, (B) as contemplated by the Registration
Rights Agreement, (C) as may already have been obtained or made, (D) as may be
required pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of 1976
("HSR Act"), (E) as may be required in connection with the formation and
qualification of the BAM Joint Venture and its subsidiary joint ventures, (F) as
may be required in connection with the qualification of CCP Inc. in various
jurisdictions in order to consummate the Powertel Acquisition, (G) as may be
required in connection with the formation and qualification of subsidiaries to
consummate the Bell South Acquisition and (H) which the failure to obtain or
make would not, individually or in the aggregate, result in a Material Adverse
Effect.
Section 3.5. No Violations; Material Contracts. Neither the
Borrower nor any of its subsidiaries is in violation of its Certificate of
Incorporation or By-laws or in default in any material respect in the
performance or observance of any obligation, covenant or condition contained in
any material indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound, except for such defaults that, in the aggregate, would
not have a Material Adverse Effect.
Section 3.6. Capital Stock; Subsidiaries. The Borrower has an
authorized capitalization as set forth on its registration statement, dated
February 3, 1999, filed on Form S-4 under the Securities Act, as amended, and
all of the issued shares of capital stock of the Borrower have been duly and
validly authorized and issued and are fully paid and non-assessable; and all of
the issued shares of capital stock of each subsidiary of the Borrower (except
for Castle Transmission USA, LLC ("CT USA")) have been duly and validly
authorized and issued, are fully paid and non-assessable and (except for
directors' qualifying shares and except for the minority interest of CTSH owned
by TdF and its affiliates, are owned directly or indirectly by the Borrower,
free and clear of all Liens other than the Liens under the Senior Credit
Facility and under CTI's credit facility with Credit Suisse First Boston and
J.P. Morgan Securities Ltd.
Section 3.7. Liens. There are no Liens on any assets of the
Borrower or any of its Subsidiaries except Permitted Liens.
Section 3.8. Governmental Regulations. None of the Borrower or any
of its Subsidiaries is or will be subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Federal Power Act, the Interstate Commerce Act or to any other
statute, rule or regulation limiting its ability to incur Indebtedness for
borrowed money.
Section 3.9. [Reserved.]
Section 3.10. Financial Statements; No Undisclosed Liabilities.
(a) The consolidated balance sheet of the Borrower and its
Subsidiaries as of December 31, 1998 that is attached hereto as Schedule 3.10(a)
fairly presents the consolidated financial position of the Borrower and its
Subsidiaries as of such date, in accordance with GAAP consistently
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applied (except as otherwise specifically indicated therein). The consolidated
statements of income and cash flows of the Borrower and its Subsidiaries that
are attached hereto as Schedule 3.10(a) have been prepared in conformity with
GAAP applied on a consistent basis through all the periods involved (except as
otherwise specifically indicated therein) and fairly present the consolidated
results of operations of each of the Borrower and its Subsidiaries for the
periods indicated.
(b) The statement of net assets of the Bell Atlantic Mobile Tower
Operations as of September 30, 1998 that is attached hereto as Schedule 3.10(b)
fairly presents the net assets of the Bell Atlantic Mobile Tower Operations as
of such date, in accordance with GAAP consistently applied (except as otherwise
specifically indicated therein). The statements of revenues and direct expenses
of Bell Atlantic Mobile Tower Operations for the year ended December 31, 1997
and the nine months ended September 30, 1998 that are attached hereto as
Schedule 3.10(b) have been prepared in conformity with GAAP applied on a
consistent basis through all the periods involved (except as otherwise
specifically indicated therein) and fairly present the revenues and direct
expenses of the Bell Atlantic Mobile Tower Operations for the periods indicated.
(c) The consolidated balance sheet of the operations acquired pursuant
to the Powertel Acquisition as of December 31, 1998 that is attached hereto as
Schedule 3.10(c) fairly presents the net assets of the operations acquired
pursuant to the Powertel Acquisition as of such date, in accordance with GAAP
consistently applied (except as otherwise specifically indicated therein). The
statement of revenue and direct expenses for such operations for the year ended
December 31, 1998 that are attached hereto as Schedule 3.10(c) have been
prepared in conformity with GAAP applied on a consistent basis through all the
periods involved (except as otherwise specifically indicated therein) and fairly
present the consolidated results of operations of each of Powertel Inc. and its
Subsidiaries for the periods indicated.
(d) The unaudited statement of income of the assets acquired pursuant
to the Bell South Letter Agreement for the year ended December 31, 1998 that are
attached hereto as Schedule 3.10(d) have been prepared in conformity with GAAP
(except as to notes, year-end adjustments and other items indicated therein) and
fairly present the income relating to such assets for the indicated period.
(e) The pro forma consolidated statements of income included in
Schedule 3.10(e) fairly present the pro forma position, results of operations
and the other information purported to be shown therein at the respective dates
or for the respective periods therein specified, assuming the consummation of
the Acquisitions and the transactions contemplated in the Formation Agreement
and giving effect to the other assumptions indicated therein; and the pro forma
consolidated balance sheet of the Borrower included in Schedule 3.10(e) fairly
presents the consolidated financial condition of the Borrower and its
Subsidiaries on the Closing Date (after giving effect to all simultaneous
transactions to occur on such date and the other assumptions indicated therein).
(f) The historical and pro forma financial statements attached hereto
as Schedule 3.10(a), Schedule 3.10(b), Schedule 3.10(c) and Schedule 3.10(e)
comply as to form with the requirements applicable to such financial statements
in, and constitute all of the financial statements required by, Regulation S-X
of the Securities Act for a Form S-1 registration statement.
(g) Neither the Borrower nor any of its Subsidiaries (prior to giving
effect to the consummation of the Transactions) has any liability (direct or
contingent) except (i) those shown on the most recent audited balance sheets
described in Section 3.10(a), (ii) those incurred under the Transaction
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Documents and (iii) those incurred in the ordinary course of business since the
date of such audited balance sheets.
(h) For purposes of this Section 3.10, all financial statements
required pursuant to Section 5.5 of this Agreement, once approved by the
Lenders, shall be added to Schedule 3.10(a), Schedule 3.10(b), Schedule 3.10(c),
Schedule 3.10(d) or Schedule 3.10(e), as appropriate, and shall become subject
to the Borrower's representations contained in Sections 3.10(a) through 3.10(g)
above.
Section 3.11. Full Disclosure. No information, report, financial
statement or certificate delivered or to be delivered to the Lenders in
connection with the Transactions contains or will contain any untrue statement
of material fact or omitted or omits or will omit to state a material fact
necessary to make such statements not misleading in light of the circumstances
in which such statements were made; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection or pro forma financial information, the
Borrower represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule. The Borrower has disclosed to the
Lenders in all material respects the status of negotiations concerning each
acquisition (other than the Powertel Acquisition, the Bell South Lease and the
BAM Joint Venture) currently being actively considered by the Borrower or any of
its controlled Affiliates.
Section 3.12. Private Offering; Rule 144A Matters.
(a) Based in part on the accuracy of the representations and
warranties of, and compliance with the covenants and agreements by, the Lenders
in Section 6.1, the issuance of the instruments evidencing the Securities are
and will be exempt from the registration and prospectus delivery requirements of
the Securities Act. The Borrower has not issued or sold Securities to anyone
other than the Lenders. No securities of the same class as the Securities have
been issued or sold by the Borrower within the six-month period immediately
prior to the date hereof. The Borrower agrees that neither it, nor anyone
acting on its behalf, will (i) offer the Securities so as to subject the making,
issuance and/or sale of the Securities to the registration or prospectus
delivery requirements of the Securities Act or (ii) offer any securities that
are similar to the Securities for issuance or sale to, or solicit any offer to
acquire any of the same from, or otherwise approach or negotiate with respect to
the same with, anyone if the issuance or sale of the Securities and any such
securities would be integrated as a single offering for the purposes of the
Securities Act, including without limitation, Regulation D thereunder, in such a
manner as would require registration under the Securities Act thereof. Subject
to the terms of the Exchange Note Indenture and the Escrow Agreement, each of
the Exchange Notes will bear a legend setting forth the restrictions on the
transferability thereof imposed by the Securities Act for so long as such
restrictions apply.
(b) In the case of each offer, sale or issuance of the Securities no
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) was or will be used by the Borrower or
their representatives, including, but not limited to, advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
(c) The Securities will be eligible for resale pursuant to Rule 144A
under the Securities Act. When the Securities are issued and delivered pursuant
to the Transaction Documents, they will not be of the same class (within the
meaning of Rule 144A(d) (3) under the Securities Act) as
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any other security of the Borrower that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted in a
United States automated interdealer quotation system. Neither the issuance of
the Exchange Notes nor the execution, delivery and performance of the
Transaction Documents (other than the Registration Rights Agreement) will
require the qualification of an indenture under the Trust Indenture Act.
Section 3.13. Absence of Proceedings. Except with respect to the
matters disclosed in Schedule 3.13, there are no legal or governmental
proceedings pending to which the Borrower or any of its Subsidiaries is a party
or of which any property of the Borrower or any of its Subsidiaries is the
subject which, if determined adversely to the Borrower or any of its
Subsidiaries, would individually or in the aggregate have a Material Adverse
Effect; and, to the best of the Borrower's knowledge, no such proceedings are
threatened by governmental authorities or by others.
Section 3.14. Taxes. The Borrower and its Subsidiaries have duly
and timely filed all required material tax returns required to be filed through
the date hereof and paid prior to delinquency all material taxes, assessments,
and governmental levies due thereon except those not in the process of
enforcement and being contested in good faith and by appropriate proceedings.
Section 3.15. Financial Condition; Solvency.
(a) The Borrower is, and immediately after giving effect to the making
of the Loans will be, Solvent.
(b) The Borrower does not intend to incur debts beyond its ability to
pay such debts as they mature, taking into account the timing and amounts of
cash to be received by it and the timing and amounts of cash to be payable on or
in respect of its Indebtedness.
Section 3.16. Absence of Certain Changes. Since September 30, 1998,
there has not been any event or series of events, adverse condition or change in
or affecting the Borrower that, individually or in the aggregate, has had or
would have a Material Adverse Effect.
Section 3.17. Year 2000 Compliance The Borrower has reviewed its
operations and that of its subsidiaries and is in the process of reviewing any
third parties with which the Borrower or any of its subsidiaries has a material
relationship to evaluate the extent to which the business or operations of the
Borrower or any of its Subsidiaries will be affected by the Year 2000 Problem.
As a result of such review, the Borrower has no reason to believe, and does not
believe, that the Year 2000 Problem will have a Material Adverse Effect or
result in a Default. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission or
other utilization of data or in the operation of mechanical or electrical
systems of any kind will not, in the case of dates or time periods occurring
after December 31, 1999, function in any material respect at least as
effectively as in the case of dates or time periods occurring prior to January
1, 2000.
Section 3.18. Properties. The Borrower and its Subsidiaries have
good and indefeasible title to all real property and good and marketable title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as would not be reasonably expected,
in the aggregate, to result in a Material Adverse Effect; and any real property
and buildings held under lease by the Borrower and its Subsidiaries are held by
them under valid, subsisting
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and enforceable leases with such exceptions as would not be reasonably expected,
in the aggregate, to result in a Material Adverse Effect.
Section 3.19. Permits; Registration.
(a) The Borrower and each of the Significant Subsidiaries has such
permits, licenses, franchises, certificates of need and other approvals or
authorizations of any governmental or regulatory authority ("Permits"),
including, without limitation, any permits required by the Federal
Communications Commission ("FCC"), the Federal Aviation Administration or the
Office of Telecommunications, as are necessary under applicable law to own their
respective properties and to conduct their respective businesses, except to the
extent that the failure to have such Permits would not have a Material Adverse
Effect. The Borrower and the Significant Subsidiaries have fulfilled and
performed in all material respects, all their respective obligations with
respect to the Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such Permit,
except to the extent that any such revocation or termination would not have a
Material Adverse Effect. None of the Permits contains any restriction that has
not previously been satisfied and that is materially burdensome to the Borrower
or any of the Significant Subsidiaries
(b) For each existing tower of the Borrower not yet registered with
the FCC where registration will be required, the FCC's grant of an application
for registration of such tower will not have a significant environmental effect
as defined under Section 1.1307(a) of the FCC's rules.
Section 3.20. ERISA. The Borrower and each of the Significant
Subsidiaries are in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect
to any "pension plan" (as defined in ERISA) for which the Borrower would have
any liability; the Borrower has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Code;
and each "pension plan" for which the Borrower would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
Section 3.21. Environmental Matters. There has been no storage,
disposal, generation, manufacture, refinement, transportation, handling or
treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Borrower or any of its subsidiaries (or, to the knowledge of
the Borrower, any of their predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Borrower or any of its
subsidiaries in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have, or
could not be reasonably likely to have, singularly or in the aggregate, a
Material Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property in a manner reasonably likely
to affect such property of any toxic wastes, medical wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the Borrower or any
of its subsidiaries or with respect to which the Borrower or any of its
subsidiaries has knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate, a
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Material Adverse Effect; and the terms "hazardous wastes," "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
Section 3.22. Available Cash for the BAM Joint Venture. As of the
date of this Agreement and without giving effect to the funding of any Term
Loans hereunder, (i) each of CCAIC, CC Investment Corp. and CC Investment Corp.
II, is an Unrestricted Subsidiary of the Borrower, (ii) the Borrower has
contributed the BAM Funds to CC Investment Corp. and CC Investment Corp. II, and
(iii) CC Investment Corp. and CC Investment Corp. II collectively own all of the
common stock of CCAIC.
ARTICLE IV.
COVENANTS
So long as any Commitment shall remain outstanding or any Obligation
shall remain unpaid, the Borrower covenants and agrees with the Lenders as
follows:
Section 4.1. Use of Proceeds. The Borrower shall use the proceeds
of the Loans solely to finance the Acquisition Escrow Payments. In the event the
Borrower abandons the BAM Joint Venture or if the Formation Agreement expires or
is otherwise terminated prior to the funding of any Term Loans, then the
Borrower will apply the BAM Funds toward the Acquisition Escrow Payments in lieu
of the proceeds of the Term Loans. However, if a Joint Venture Termination
occurs after the funding of any Term Loans, then the Borrower will be required
to apply the BAM Funds to redeem the Term Loans and Other Term Loans pursuant to
Section 2.4(a).
Section 4.2. Notice of Default and Related Matters. The Borrower
shall furnish to the Administrative Agents (with copies for each Lender) written
notice, promptly upon becoming aware of the existence of:
(a) any condition or event that constitutes a Default or an Event of
Default, specifying the nature and period of existence thereof and the
action taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Entity, against or affecting the Borrower or any of its Subsidiaries or any
of their respective Affiliates that could reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect; and
(c) any development that, individually or in the aggregate, has
resulted in, or could reasonably be expected to have, a Material Adverse
Effect.
Section 4.3. Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Term Notes are outstanding, the Borrower
shall furnish to the Lenders (i) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Borrower were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries (showing in reasonable detail, in
the footnotes to the financial statements and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" (in each case
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to the extent not prohibited by the SEC's rules and regulations), (A) the
financial condition and results of operations of the Borrower and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Borrower and (B) the Tower Cash Flow for
the most recently completed fiscal quarter and the Adjusted Consolidated Cash
Flow for the most recently completed four-quarter period) and, with respect to
the annual information only, a report thereon by the Borrower's certified
independent accountants and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K if the Borrower were required to file such
reports, in each case within the time periods specified in the SEC's rules and
regulations. In addition, whether or not required by the rules and regulations
of the SEC, the Borrower shall file a copy of all such information and reports
with the SEC for public availability within the time periods specified in the
SEC's rules and regulations (unless the SEC will not accept such a filing) and
make such information available to securities analysts and prospective investors
upon request.
Section 4.4. Compliance Certificate.
(a) The Borrower shall deliver to the Administrative Agents, within 90
days after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Borrower and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Borrower has kept, observed,
performed and fulfilled its obligations under this Agreement, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Borrower has kept, observed, performed and fulfilled
each and every covenant contained in this Agreement and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Agreement (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Borrower is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Term Loans is prohibited or if such event has occurred,
a description of the event and what action the Borrower is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3 above shall be accompanied by a
written statement of the Borrower's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Borrower has violated
any provisions of Article IV hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) The Borrower shall, so long as any of the Term Notes are
outstanding, deliver to the Administrative Agents, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Borrower is
taking or proposes to take with respect thereto.
Section 4.5. Taxes. The Borrower shall pay, and shall cause each
of its Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is
not adverse in any material respect to the Lenders.
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Section 4.6. Stay, Extension and Usury Laws. The Borrower
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Agreement; and the Borrower (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Lenders, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
Section 4.7. Restricted Payments. The Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or distribution on
account of the Borrower's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Borrower or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Borrower's or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Borrower or to the Borrower or a Restricted
Subsidiary of the Borrower); (ii) purchase, redeem or otherwise acquire or
retire for value (including, without limitation, in connection with any merger
or consolidation involving the Borrower) any Equity Interests of the Borrower or
any direct or indirect parent of the Borrower (other than any such Equity
Interests owned by the Borrower or any Restricted Subsidiary of the Borrower);
(iii) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Term Notes, except a payment of interest or the payment of principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above, including those
occurring prior to the date hereof, being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default shall have occurred and be continuing or would occur as
a consequence thereof; and
(b) the Borrower would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Adjusted Cash Flow Ratio
test set forth in Section 4.9; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Borrower and its Restricted
Subsidiaries after November 25, 1997, (excluding Restricted Payments
permitted by clauses (ii), (iii) and (iv) of the next succeeding
paragraph), is less than the sum without duplication of (i) 50% of the
Consolidated Net Income of the Borrower for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after November 25, 1997 to the end of the Borrower's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Borrower since
November 25, 1997 as a contribution to its common equity capital or from
the issue or sale of Equity Interests of the Borrower (other than
Disqualified Stock and except to the extent such net cash proceeds are used
to incur new Indebtedness outstanding pursuant to clause (x) in Section
4.9) or from the issue or sale of Disqualified Stock or debt securities of
the Borrower that have been converted into such Equity Interests (other
than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Borrower and other
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than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after November 25, 1997 is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (iv) to the extent that any Unrestricted Subsidiary of the
Borrower is designated as a Restricted Subsidiary after November 25, 1997,
the lesser of (A) the fair market value of the Borrower's Investment in
such Subsidiary as of the date of such designation, or (B) the sum of (x)
the fair market value of the Borrower's Investment in such Subsidiary as of
the date on which such Subsidiary was originally designated as an
Unrestricted Subsidiary and (y) the amount of any Investments made in such
Subsidiary subsequent to such designation (and treated as a Restricted
Payment) by the Borrower or any Restricted Subsidiary; provided that (i) in
the event the Unrestricted Subsidiary designated as a Restricted Subsidiary
is CTSH, the references in clause (A) and (B) of this clause (iv) to fair
market value of the Borrower's Investment in such Subsidiary shall mean the
amount by which the fair market value of such Investment exceeds 34.3% of
the fair market value of CTSH as a whole and (ii) in the event the
Unrestricted Subsidiaries designated as Restricted Subsidiaries are CCAIC
and its Subsidiaries, the references in clauses (A) and (B) of this clause
(d) to fair market value of the Borrower's Investments in such Subsidiaries
shall mean the amount by which the fair market value of all such
Investments exceeds $250.0 million, plus (v) 50% of any dividends received
by the Borrower or a Restricted Subsidiary after November 25, 1997 from an
Unrestricted Subsidiary of the Borrower, to the extent that such dividends
were not otherwise included in Consolidated Net Income of the Borrower for
such period.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Agreement; (ii) the making of any Investment or the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated Indebtedness or
Equity Interests of the Borrower in exchange for, or out of the net cash
proceeds of the sale (other than to a Subsidiary of the Borrower) of, any Equity
Interests of the Borrower (other than any Disqualified Stock); provided that
such net cash proceeds are not used to incur new Indebtedness pursuant to clause
(x) in Section 4.9); and provided further that, in each such case, the amount of
any such net cash proceeds that are so utilized shall be excluded from clause
(c) (ii) of the preceding paragraph; (iii) the payment of any dividend by a
Restricted Subsidiary of the Borrower to the holders of its common Equity
Interests on a pro rata basis; or (iv) the defeasance, redemption, repurchase or
other acquisition of subordinated Indebtedness with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the businesses operated by the Borrower's
Restricted Subsidiaries as of November 25, 1997 be transferred to or held by an
Unrestricted Subsidiary. For purposes of making such determination, all
outstanding Investments by the Borrower and its Restricted Subsidiaries (except
to the extent repaid in cash) in the Subsidiary so designated shall be deemed to
be Restricted Payments at the time of such designation and shall reduce the
amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary if such designation would not cause a Default.
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The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Borrower or the
applicable Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any property, assets or Investments required
by this covenant shall be determined by the Board of Directors whose resolution
with respect thereto shall be delivered to the Trustee.
Section 4.8. Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Borrower or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Borrower or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Borrower
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Borrower or any of its Restricted Subsidiaries. However, the
foregoing restrictions shall not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness or Indebtedness under the Senior
Credit Facility, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof;
provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more restrictive,
taken as a whole, with respect to such dividend and other payment restrictions
than those contained in the applicable series of Existing Indebtedness or in the
Senior Credit Facility, (b) encumbrances and restrictions applicable to any
Unrestricted Subsidiary, as the same are in effect as of the date on which such
Subsidiary becomes a Restricted Subsidiary, and as the same may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced; provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings are no
more restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in the applicable series of
Indebtedness of such Subsidiary as in effect on the date on which such
Subsidiary becomes a Restricted Subsidiary, (c) this Agreement and the Term
Notes, (d) applicable law, (e) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Borrower or any of its Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Agreement to
be incurred, (f) by reason of customary non-assignment provisions in leases or
licenses entered into in the ordinary course of business, (g) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (h) the provisions of agreements governing Indebtedness incurred
pursuant to clause (iv) of the second paragraph of Section 4.9, (i) any
agreement for the sale of a Restricted Subsidiary that restricts that Restricted
Subsidiary pending its sale, (j) Permitted Refinancing Indebtedness, provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced, (k)
Liens permitted to be incurred pursuant to the provisions of Section 4.12 that
limit the right of the debtor to transfer the assets subject to such Liens, (l)
provisions with respect to the disposition or distribution of assets or property
in joint venture agreements and other similar agreements and (m) restrictions on
cash or other deposits or net worth imposed by customers under contracts entered
into in the ordinary course of business.
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Section 4.9. Incurrence of Indebtedness and Issuance of Preferred
Stock. The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Borrower shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Borrower may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock and the Borrower's
Restricted Subsidiaries may incur Eligible Indebtedness if, in each case, (i) no
Default shall have occurred and be continuing or would occur as a consequence
thereof and (ii) the Borrower's Debt to Adjusted Consolidated Cash Flow Ratio at
the time of incurrence of such Indebtedness or the issuance of such Disqualified
Stock, after giving pro forma effect to such incurrence or issuance as of such
date and to the use of proceeds therefrom as if the same had occurred at the
beginning of the most recently ended four full fiscal quarter period of the
Borrower for which internal financial statements are available, would have been
no greater than 6.5 to 1.
The provisions of the first paragraph of this covenant shall not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt") if no Default shall have occurred and be continuing or would
occur as a consequence thereof:
(i) the incurrence by the Borrower or any of its Restricted
Subsidiaries of Indebtedness (including Indebtedness under Credit
Facilities) in an aggregate principal amount (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Borrower and its Restricted Subsidiaries thereunder) at any one time
outstanding not to exceed the greater of (x) $100.0 million less the
aggregate amount of all Net Proceeds of Assets Sales applied to repay
Indebtedness under a Credit Facility since November 25, 1997 and (y) 70% of
the Eligible Receivables that are outstanding as of such date of
incurrence;
(ii) the incurrence by the Borrower and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Borrower of Indebtedness represented by
the Senior Discount Notes;
(iv) the incurrence by the Borrower or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Borrower or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other indebtedness incurred pursuant to
this clause (iv), not to exceed $5.0 million at any time outstanding;
(V) the incurrence by the Borrower or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace,
defease or refund indebtedness (other than intercompany Indebtedness) that
was permitted by this Agreement to be incurred under the first paragraph of
this Section 4.9 or clauses (ii) or (iii) or this clause (v) of this
paragraph;
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(vi) the incurrence by the Borrower or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Borrower and any of its
Restricted Subsidiaries; provided, however, that (i) if the Borrower is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Term Notes and (ii) (a) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by a
Person other than the Borrower or a Restricted Subsidiary and (b) any sale
or other transfer of any such Indebtedness to a Person that is not either
the Borrower or a Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Borrower or such
Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Borrower or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Section 4.9 to be
outstanding or currency exchange risk;
(viii) the guarantee by the Borrower or any of its Restricted
Subsidiaries of Indebtedness of the Borrower or a Restricted Subsidiary of
the Borrower that was permitted to be incurred by another provision of this
Section 4.9;
(ix) the incurrence by the Borrower or any of its Restricted
Subsidiaries of Acquired Debt in connection with the acquisition of assets
or a new Subsidiary and the incurrence by the Borrower's Restricted
Subsidiaries of Indebtedness as a result of the designation of an
Unrestricted Subsidiary as a Restricted Subsidiary; provided that, in the
case of any such incurrence of Acquired Debt, such Acquired Debt was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Borrower or one of its Restricted
Subsidiaries and was not incurred in connection with, or in contemplation
of, such acquisition by the Borrower or one of its Restricted Subsidiaries;
and provided further that, in the case of any incurrence pursuant to this
clause (ix), the Borrower would have been permitted to incur at least $1.00
of additional Indebtedness (other than Permitted Debt) immediately after
such incurrence pursuant to the Debt to Adjusted Consolidated Cash Flow
Ratio test set forth in the first paragraph of this Section 4.9, calculated
as if such incurrence had occurred as of the actual date of incurrence and
the related acquisition or designation (as applicable) had occurred at the
beginning of the most recently ended four full fiscal quarter period of the
Borrower for which internal financial statements are available;
(x) the incurrence by the Borrower of Indebtedness not to exceed, at
any one time outstanding, 2.0 times the aggregate net cash proceeds from
the issuance and sale, other than to a Subsidiary, of Equity Interests
(other than Disqualified Stock) of the Borrower since November 25, 1997
(less that amount of such proceeds used to make Restricted Payments as
provided in clause (c)(ii) of the first paragraph or clause (ii) of the
second paragraph of the covenant described in Section 4.7); provided that
such Indebtedness does not mature prior to the stated Maturity of the Notes
and the Weighted Average Life to Maturity of such Indebtedness is longer
than that of the Term Notes; and
(xi) the incurrence by the Borrower or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, not to exceed
$5.0 million.
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The Borrower shall not (i) incur any Indebtedness that is
contractually subordinated in right of payment to any other Indebtedness of the
Borrower unless such Indebtedness is also contractually subordinated in right of
payment to the Term Notes and the Securities on substantially identical terms;
provided, however, that no Indebtedness of the Borrower shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Borrower solely by virtue of being unsecured and (ii) the Borrower shall not
permit any of its Unrestricted Subsidiaries to incur any Indebtedness other than
Non-Recourse Debt.
For purposes of determining compliance with this Section 4.9, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.9, the
Borrower shall, in its sole discretion, classify (or later reclassify in whole
or in part) such item of Indebtedness in any manner that complies with this
Section 4.9. Accrual of interest, accretion or amortization of original issue
discount and the payment of interest in the form of additional Indebtedness
shall not be deemed to be an incurrence of Indebtedness for purposes of this
Section 4.9. For avoidance of doubt in determining compliance with this Section
4.9, any Indebtedness incurred since November 25, 1997 (including the
Indebtedness represented by the Term Loans) shall be deemed not to constitute
"Existing Indebtedness" and shall instead be classified to comply with the
criteria of one or more categories of Permitted Debt described in clauses (i)
through (xi) above.
Section 4.10. Asset Sales. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless
(i) the Borrower (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) except in the case of
a Tower Asset Exchange, at least 75% of the consideration therefor received by
the Borrower or such Restricted Subsidiary is in the form of cash or Cash
Equivalents; provided that the amount of (x) any liabilities (as shown on the
Borrower's or such Restricted Subsidiary's most recent balance sheet), of the
Borrower or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Term Notes or any
guarantee thereof) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases the Borrower or such
Restricted Subsidiary from further liability and (y) any securities, notes or
other obligations received by the Borrower or any such Restricted Subsidiary
from such transferee that are converted by the Borrower or such Restricted
Subsidiary into cash within 20 days of the applicable Asset Sale (to the extent
of the cash received), shall be deemed to be cash for purposes of this
provision.
Section 4.11. Transactions with Affiliates. The Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Borrower or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Borrower or
such Restricted Subsidiary with an unrelated Person and (ii) the Borrower
delivers to the Trustee (a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and
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(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing. Notwithstanding the foregoing, the following items
shall not be deemed to be Affiliate Transactions: (i) any employment
arrangements with any executive officer of the Borrower or a Restricted
Subsidiary that is entered into by the Borrower or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with compensation
arrangements of similarly situated executive officers at comparable companies
engaged in Permitted Businesses, (ii) transactions between or among the Borrower
and/or its Restricted Subsidiaries, (iii) payment of directors fees in an
aggregate annual amount not to exceed $25,000 per Person, (iv) Restricted
Payments that are permitted by the provisions of Section 4.7, (v) the issuance
or sale of Equity Interests (other than Disqualified Stock) of the Borrower, and
(vi) transactions pursuant to the provisions of the Governance, Agreement, the
Rights Agreement, the Stockholders' Agreement, the CTSH Shareholders' Agreement,
the CTI Services Agreement, the CTI Operating Agreement and the Crown Transition
Agreements as the same are in effect on the date hereof.
Section 4.12. Liens. The Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien securing Indebtedness or trade payables on
any asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
Section 4.13. Business Activities. The Borrower shall not, and
shall not permit any Subsidiary to, engage in any business other than Permitted
Business, except to such extent as would not be material to the Borrower and its
Subsidiaries taken as a whole.
Section 4.14. Corporate Existence. Subject to Section 4.19 hereof,
the Borrower shall do or cause to be done all things necessary to preserve and
keep in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Restricted Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Borrower or any such Restricted Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Borrower
and its Subsidiaries; provided, however, that the Borrower shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Restricted Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Borrower and its Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Lenders.
Section 4.15. Offer to Prepay Upon a Change of Control.
(a) Upon the occurrence of a Change of Control, each Lender will have
the right to require the Borrower to prepay all or any part of the principal
amount of such Lender's Loans pursuant to the offer described below (the "Change
of Control Offer") at a prepayment price in cash equal to 100% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of prepayment (the "Change of Control Payment"). Within 30 days
following any Change of Control, the Borrower will mail a notice to each Lender
describing the transaction or transactions that constituted the Change of
Control and offer to repay the Loans on the date specified in such notice, which
date shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures set forth below.
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(b) Notice of a Change of Control Offer shall be mailed by the
Borrower to the Lenders at their addresses set forth in the Loan Register. The
Change of Control Offer shall remain open from the time of mailing until the
Change of Control Payment Date. The notice shall be accompanied by a copy of
the most recent reports furnished pursuant to Section 4.4(b)(i) and (ii). The
notice shall contain all instructions and materials necessary to enable such
Lenders to elect to be prepaid pursuant to the Change of Control Offer. Lenders
electing to have a Loan repaid will be required to surrender the applicable Term
Note, with an appropriate form duly completed, to the Borrower at the address
specified in the notice at least three Business Days prior to the repayment
date.
(c) The Borrower shall not be required to prepay Loans pursuant to
this Section if a third party makes an offer to prepay applicable Loans in the
manner, at the times and otherwise in compliance with the requirements set forth
in this covenant applicable to an offer to prepay Loans made by the Borrower and
purchases all Term Notes validly tendered and not withdrawn under such offer.
(d) On the Change of Control Payment Date, the Borrower shall (i)
repay all Loans or portions thereof of each Lender that properly elected
repayment thereof pursuant to the Change of Control Offer and were received by
the Borrower for cancellation, (ii) pay the Change of Control Payment for each
such Loan (or portion thereof) elected to be repaid and (iii) deliver to each
such Lender a new Term Note equal in principal amount (excluding premiums, if
any) to the unpurchased portion of the corresponding Term Note surrendered, if
any. The Borrower will notify the remaining Lenders of the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
Section 4.16. Limitation on Sale and Leaseback Transactions.
The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Borrower or any of its Restricted Subsidiaries may enter into a sale and
leaseback transaction if (i) the Borrower or such Restricted Subsidiary, as
applicable, could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Debt to Adjusted Consolidated Cash Flow Ratio test set forth in the first
paragraph of Section 4.9 and (b) incurred a Lien to secure such Indebtedness
pursuant to Section 4.12, (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by Section 4.10, and the Borrower
applies the proceeds of such transaction in compliance with, Section 2.4.
Section 4.17. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries. The Borrower (i) shall not and shall not permit any
Restricted Subsidiary of the Borrower to, transfer, convey, sell, lease or
otherwise dispose of any Equity Interests in any Restricted Subsidiary of the
Borrower to any Person (other than the Borrower or a Wholly Owned Restricted
Subsidiary of the Borrower) and (ii) shall not permit any Restricted Subsidiary
of the Borrower to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Borrower or a Wholly Owned Restricted Subsidiary of the
Borrower, unless, in each such case: (a) as a result of such transfer,
conveyance, sale, lease or other disposition or issuance such Restricted
Subsidiary no longer constitutes a Subsidiary and (b) the cash Net Proceeds from
such transfer, conveyance, sale, lease or other disposition or issuance are
applied in accordance with Section 2.4.
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Section 4.18. Limitation on Issuances of Guarantees of Indebtedness.
The Borrower shall not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Borrower unless such Subsidiary simultaneously executes and
delivers a supplement to this Agreement providing for the Guarantee of the
payment of the Term Notes by such Subsidiary, which Guarantee shall be senior to
or pari passu with such Subsidiary's Guarantee of or pledge to secure such other
Indebtedness. Notwithstanding the foregoing, any such Guarantee by a Subsidiary
of the Term Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any Person other than a Subsidiary of the Borrower, of all of the Borrower's
stock in, or all or substantially all the assets of, such Subsidiary, which
sale, exchange or transfer is made in compliance with the applicable provisions
of this Agreement.
Section 4.19. Merger; Sale of All or Substantially All Assets.
(a) The Borrower shall not consolidate or merge with or into (whether
or not the Borrower is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Borrower is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Borrower) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia, (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Borrower) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Borrower under the Term
Notes and this Agreement pursuant to a supplemental agreement in a form
reasonably satisfactory to the Administrative Agents, (iii) immediately after
such transaction, no Default exists and (iv) except in the case of a merger of
the Borrower with or into a Wholly Owned Restricted Subsidiary of the Borrower
and except in the case of a merger entered into solely for the purpose of
reincorporating the Borrower in another jurisdiction, the Borrower or the entity
or Person formed by or surviving any such consolidation or merger (if other than
the Borrower), or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made shall, at the time of such transaction
and after giving pro forma effect thereto as if such transaction had occurred at
the beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Debt to Adjusted
Consolidated Cash Flow Ratio test set forth in the first paragraph of Section
4.9.
(b) Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Borrower in accordance with Section 4.19(a) hereof, the
successor corporation formed by such consolidation or into or with which the
Borrower is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Agreement referring to
the "Borrower" shall refer instead to the successor corporation and not to the
Borrower), and may exercise every right and power of the Borrower under this
Agreement with the same effect as if such successor Person had been named as the
Borrower herein, provided, however, that and the predecessor Borrower shall not
be relieved from the obligation to pay the principal of and interest on the Term
Notes except in the case of a sale of all of the Borrower's assets that meets
the requirements of Section 4.19(a) hereof.
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Section 4.20. Inspection Rights.
The Borrower shall, and shall cause each of its Subsidiaries to,
permit the Lenders or any of their respective representatives to visit and
inspect any of its properties, to examine and make abstracts from any of its
books and records and to discuss its businesses, finances and accounts with its
executive officers and, subject to the right of the Borrower's representatives
to participate in any such discussion, with their independent public
accountants, all upon reasonable notice and at such reasonable times and as
often as may reasonably be desired.
Section 4.21. Special Rights.
(a) For so long as any Loans or Exchange Notes are held by West
Street, the Borrower shall, and shall cause each of its Subsidiaries to,
promptly provide West Street with such information concerning the businesses,
properties or financial condition of the Credit Parties and such Subsidiaries as
West Street may from time to time request. In that connection, the Borrower
shall, and shall cause each of its Subsidiaries to:
(i) keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation
to its business and activities; and
(ii) permit West Street or any of its representatives to consult with
the Borrower and its Subsidiaries with respect to their businesses and make
proposals with respect to such businesses and meet with the respective
executive officers and directors of the Borrower and its Subsidiaries with
respect to such proposals.
(b) For so long as any Loans or Exchange Notes are held by West
Street, the Borrower shall, and shall cause each of its Subsidiaries to, upon
prior reasonable request, invite West Street or any of its representatives to
attend each regular, special or other meeting of its Board of Directors in a
nonvoting observer capacity and in this respect shall, upon prior reasonable
request, give West Street or such representative copies of all notices, minutes,
consents and other materials that it provides to its directors. West Street or
such representative may participate in any and all discussions of matters
brought to the Board of Directors. The Borrower shall and shall cause each of
its Subsidiaries to allow West Street or any such representative of West Street
to attend such meetings by means of conference call or other communications
equipment utilized by any other person participating in such meetings.
Notwithstanding the foregoing, the Borrower reserves the right to exclude West
Street and its representatives from access to any material or meeting or portion
thereof if the Borrower believes upon advice of counsel that such exclusion is
reasonably necessary to preserve the attorney-client privilege, to protect
highly confidential proprietary information or for other similar valid business
reasons.
(c) In addition to the provisions of Section 12.3, (i) any amendment
to the provisions of this Section 4.21 shall require the consent of West Street
at any time that West Street holds Loans and/or Notes and (ii) for so long as
West Street holds Loans and/or Notes having an aggregate principal amount equal
to at least 25% of the aggregate principal amount of Term Loans originally
funded by West Street under this Agreement, any amendment to the provisions of
Section 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19 and
4.20 shall require the consent of West Street at any time that West Street holds
any Loans or Exchange Notes.
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ARTICLE V.
CONDITIONS
The obligation of each of the Lenders to make Term Loans is subject to
(i) the representations and warranties of the Borrower in Article III being
true, correct and complete in all respects on and as of the Closing Date to the
same extent as though made on and as of the Closing Date, (ii) on or prior to
the Closing Date, the Borrower having performed and complied with all covenants
and conditions to be performed and observed by it on or prior to the Closing
Date and (iii) the prior or concurrent satisfaction of each of the conditions
set forth below; provided, however, that notwithstanding such conditions, no
Lender may default in its obligations to make Term Loans hereunder solely
because of (a) the failure by another Lender to deem a condition satisfied, or
(b) the failure by another Lender to make Term Loans hereunder:
Section 5.1. Corporate and Other Proceedings. On or before the
Closing Date, all corporate and other proceedings taken or to be taken in
connection with the Transactions and all documents incidental thereto not
previously found acceptable by the Administrative Agents shall be reasonably
satisfactory in form and substance to the Administrative Agents, and the
Administrative Agents shall have received on behalf of the Lenders the following
items, each of which shall be in form and substance satisfactory to the
Administrative Agents and, unless otherwise noted, dated the Closing Date:
(a) a certified copy of the Borrower's charters, together with a
certificate of status, compliance, good standing or like certificate with
respect to the Borrower issued by the appropriate government officials of the
jurisdiction of its formation and of each jurisdiction in which the Borrower
owns any material assets or carries on any material business, each to be dated a
recent date prior to the Closing Date;
(b) a copy of the Borrower's bylaws, in each case certified as of the
Closing Date by its Secretary or one of its Assistant Secretaries;
(c) resolutions of the Borrower's Boards of Directors approving and
authorizing the execution, delivery and performance of this Agreement, each of
the other Transaction Documents and any other documents, instruments and
certificates required to be executed by the Borrower in connection herewith or
therewith and approving and authorizing the execution, delivery and payment of
the Term Notes and the Exchange Notes and the consummation of the Transactions,
each certified as of the Closing Date by its Secretary or one of its Assistant
Secretaries as being in full force and effect without modification or amendment;
(d) signature and incumbency certificates of the Borrower's Officers
executing this Agreement and the Term Notes and any other documents executed in
connection therewith;
(e) executed copies of this Agreement and the Term Notes, drawn to the
order of the Lenders;
(f) an Officers' Certificate from the Borrower in form and substance
satisfactory to the Administrative Agents to the effect that (i) the
representations and warranties of the Borrower in Article III are true, correct
and complete in all respects on and as of the Closing Date to the same extent as
though made on and as of that date, (ii) on or prior to the Closing Date, the
Borrower has performed and complied with all covenants and conditions hereunder
to be performed and observed by it on or prior
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to the Closing Date and (iii) all conditions to the consummation of the relevant
Transactions have been satisfied on the terms set forth in the documentation
relating thereto and have not been waived or amended without the prior written
consent of the Administrative Agents;
(g) true and correct copies of the final form of each of: (i) the
Powertel Acquisition Agreement, which shall be reasonably satisfactory in form
and substance to each of the Lenders and which shall provide for an aggregate
consideration payable by the Borrower of $275 million, of which only $50 million
is required to be paid in escrow on the Powertel Funding Date and (ii) the draft
Bell South Lease, which shall be reasonably satisfactory in form and substance
to each of the Lenders and which shall provide for an aggregate cash
consideration payable by the Borrower of $430 million, of which only $50 million
is required to be paid in escrow on the Bell South Funding Date; and
(h) true and correct copies of each of the other Transaction
Documents, each of which shall be reasonably satisfactory in form and substance
to each of the Lenders.
Section 5.3. [Reserved.]
Section 5.3. Absence of Certain Changes.
There shall not have occurred or become known to the Lenders any event
or events, adverse condition or change in or affecting the Borrower subsequent
to September 30, 1998 that, individually or in the aggregate, (i) could have a
Material Adverse Effect, (ii) has, or may be reasonably expected to have, any
materially adverse effect upon the validity or enforceability of this Agreement
or any of the Transaction Documents or (iii) materially impairs the ability of
the Borrower to consummate the Loan or to perform its Obligations under the
Transaction Documents. For purposes of this Section 5.3, "Material Adverse
Effect" shall mean the result of one or more events, changes or effects which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on (i) the business, results of operations, property,
condition (financial or otherwise), management or prospects of the Borrower and
its subsidiaries, taken as a whole.
Section 5.4. Market Disruption. There shall not have occurred any
disruption or adverse change, as determined by the Arrangers in their sole
discretion, in the financial or capital markets generally, or in the markets for
term loan syndication, high yield debt or equity securities in particular or
affecting the syndication or funding of term loans (or the refinancing thereof)
that the Arrangers shall reasonably determine makes it impracticable to
consummate the syndication of the Term Loans or the Proposed Offerings.
Section 5.5. Financial Statements. Each of the Lenders shall have
received audited financial statements for the one-, two-, or three-year period,
as applicable, immediately preceding the Closing Date and any appropriate
unaudited financial statements for any interim period or periods of the
Borrower, the Powertel Towers and the Bell South Towers and all other recent or
probable acquisitions (including pro forma financial statements), to the extent
such financial statements are required by, and all meeting the requirements of,
Regulation S-X for Form S-1 registration statements (including, without
limitations, the availability of audited financial statements for the Powertel
Towers) and all such financial statements shall be reasonably satisfactory in
form and substance to each of the Lenders. Once approved by the Lenders, all
such financial statements shall be added to Schedule 3.10(a), Schedule 3.10(b),
Schedule 3.10(c), Schedule 3.10(d) or Schedule 3.10(e), as appropriate, and
shall become subject to the Borrower's representations in Section 3.10.
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Section 5.6. Litigation, etc. There shall not exist any action,
suit, investigation, litigation or proceeding pending or threatened in any court
or before any arbitrator or governmental authority that, in the opinion of the
Lenders, affects the Powertel Acquisition, the Bell South Lease, the financing
thereof or any of the other transactions contemplated hereby, or that could have
a Material Adverse Effect on the Borrower, the Powertel Acquisition, the Bell
South Lease, the financing thereof or any of the transactions contemplated
hereby.
Section 5.7. Payment of Fees and Expenses. All fees and expenses
due to the Lenders, Goldman Sachs Credit Partners L.P., Goldman, Sachs & Co.,
Salomon Brothers Holding Company Inc., Salomon Smith Barney Inc., Credit Suisse
First Boston, Credit Suisse First Boston Corporation or the Administrative
Agents on or before the Closing Date in connection with the Term Loans, pursuant
to the Commitment Letter, the Fee Letter, the Engagement Letter or otherwise,
shall have been paid in full.
Section 5.8. Escrow Agreement. The Borrower and the Escrow Agent
shall have entered into the Escrow Agreement and a fully executed copy of the
Escrow Agreement shall have been delivered to each of the Lenders.
Section 5.9. Exchange Notes. The Borrower and the Exchange Note
Trustee shall have entered into the Exchange Note Indenture and a fully executed
copy of the Exchange Note Indenture shall have been delivered to each of the
Lenders. At least $100 million in aggregate principal amount of Exchange Notes
shall have been issued by the Borrower into escrow and delivered to the Escrow
Agent as contemplated by the Escrow Agreement.
Section 5.10. Registration Rights Agreement. The Borrower and the
Arrangers shall have entered into the Registration Rights Agreement and a fully
executed copy of the Registration Rights Agreement shall have been delivered to
each of the Lenders.
Section 5.11. Delivery of Opinions. The Arrangers shall have
received originally executed copies of one or more favorable written opinions of
(i) Cravath, Swaine & Moore, counsel for the Borrower, in the form of Exhibit F-
1 hereto and addressed to the Lenders, (ii) Norton Rose, in the form of Exhibit
F-2 hereto and addressed to the Lenders, (ii) General Counsel of the Borrower,
in the form of Exhibit F-3 hereto and addressed to the Lenders and (iv) such
other opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Arrangers shall have reasonably
requested.
Section 5.12. Solvency. The Arrangers shall have received
originally executed copies of a certificate of the Chief Financial Officer of
the Borrower, in form and substance satisfactory to the Administrative Agents,
with appropriate opining that, after giving effect to the making of the Loans,
the Borrower and its Subsidiaries will be Solvent, and the Arrangers shall have
received such other reasonable and appropriate factual information and expert
advice supporting the conclusions reached in such opinion as the Arrangers may
reasonably request, all in form and substance satisfactory to the Arrangers.
Section 5.13. No Breach; No Default. The Borrower shall not be in
breach or violation of any of its obligations under the Engagement Letter or the
Fee Letter and each of the Engagement Letter and the Fee Letter shall be in full
force and effect. In addition, No event shall have occurred and be continuing or
would result from the consummation of the Transactions that would constitute an
Event of Default.
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Section 5.14. Special Conditions.
(a) The Powertel Term Loan will be subject to the condition that the
Powertel Acquisition Agreement shall have been (i) fully executed and delivered
in form and substance reasonably satisfactory in all respects to the Lenders and
(ii) the representations and warranties contained therein shall be true and
correct in all material respects.
(b) The Bell South Term Loan shall also be subject to the condition
that the Bell South Lease shall have been (i) fully executed and delivered in
form and substance reasonably satisfactory in all respects to the Lenders and
(ii) the representations and warranties contained therein shall be true and
correct in all material respects.
ARTICLE VI.
TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH LOANS AND THE SECURITIES;
REPRESENTATIONS OF LENDERS; PARTICIPATIONS
Section 6.1. Transfer of the Loans, the instruments evidencing the
Loans and the Securities. Each Lender acknowledges that none of the Loans,
the instruments evidencing such Loans and the Securities have been registered
under the Securities Act and represents and agrees that it is acquiring the
Loans, the instruments evidencing such Loans and the Securities for its own
account and that it will not, directly or indirectly, transfer, sell, assign,
pledge or otherwise dispose of its Loans, the instruments evidencing such Loans
or the Securities (or any interest therein) unless such transfer, sale,
assignment, pledge or other disposition is made (i) pursuant to an effective
registration statement under the Securities Act or (ii) pursuant to an available
exemption from registration under, or in a transaction that is not subject to,
the Securities Act. Each Lender represents, warrants, covenants and agrees to
and with the Borrower that it is either (i) a qualified institutional buyer
within the meaning of Rule 144A under the Securities Act acting for its own
account or the account of one or more other qualified institutional buyers, and
is aware that the Borrower may rely upon the exemption from the provisions of
Section 5 of the Securities Act provided by Rule 144A thereunder or (ii) an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act. Each of the Lenders acknowledges that the
instruments evidencing the Securities will bear a legend restricting the
transfer thereof in accordance with the Securities Act.
Subject to the provisions of the previous paragraph, the Borrower
agrees that, with the consent of the Administrative Agents, each Lender will be
free to sell or transfer all or any part of the Loans, the instruments
evidencing the Loans or the Securities (including, without limitation,
participation interest in the Loans) to any third party and to pledge any or all
of the Securities to any commercial bank or other institutional lender.
Section 6.2. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of its
rights and obligations hereunder and under the Loan Documents. Such assignment
shall be made pursuant to an Assignment and Acceptance substantially in the form
of Exhibit A or in such other form as may be agreed to by the parties thereto.
The consent of the Borrower and the Administrative Agents shall be required
prior to an assignment becoming effective with respect to a Purchaser which is
not a Lender, an Affiliate of a Lender (including West Street, in the case of
Goldman Sachs Credit Partners L.P.) or a Federal Reserve Bank; provided,
however, that if an Event of Default has occurred and is continuing, the consent
of the Borrower shall not be required. Such consent shall not be unreasonably
withheld or delayed.
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Section 6.3. Permitted Participants; Effect. (a) Upon notice
thereof to the Borrower, any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in any Loan owing to
such Lender, any Term Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under the Loan Documents; provided that such
Lender retain all voting rights with respect to such participating interests on
all matters other than such matters that require the consent of each Lender
under this Agreement. In the event of any such sale by a Lender of participating
interests to a Participant, such Lender's obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the owner of its Loans and the holder of any Term Note issued to it in evidence
thereof for all purposes under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Administrative Agents
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents.
(b) Each Lender shall retain the sole right to approve, without the
consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or waiver
with respect to any Loan or Commitment in which such Participant has an interest
which forgives principal, interest or fees or reduces the interest rate or fees
payable with respect to any such Loan or Commitment, extends the Maturity Date,
postpones any date fixed for any regularly scheduled payment of principal of, or
interest or fees on, any such Loan or Commitment or releases any guarantor of
any such Loan or releases all or substantially all of the collateral, if any,
securing any such Loan.
(c) The Borrower agrees that each Participant shall be deemed to have
the right of setoff provided in Section 2.10 in respect of its participating
interest in amounts owing under the Loan Documents to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
the Loan Documents, provided that each Lender shall retain the right of setoff
provided in Section 2.10 with respect to the amount of participating interests
sold to each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section 2.10,
agrees to share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with Section
2.10 as if each Participant were a Lender.
Section 6.4. Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries; provided, however, that any records, documents, properties or
information that are designated by the Borrower as confidential at the time of
delivery of such records, documents, properties or information shall be kept
confidential by each Lender and each Transferee, unless (i) such records,
documents, properties or information are in the public domain or otherwise
publicly available (other than as a result of a breach of this Section 6.4),
(ii) disclosure of such records, documents, properties or information is
required by court or administrative order or (iii) disclosure of such records,
documents, properties or information, in the written opinion of counsel to such
Lender or Transferee, is otherwise required by law (including, without
limitation, pursuant to the requirements of the Securities Act).
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Section 6.5. Tax Treatment. If any interest in any Loan Document
is transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.9.
Section 6.6. Replacement Securities Upon Transfer or Exchange. Upon
surrender of any Securities by any Lender in connection with any permitted
transfer or exchange, the Borrower will execute and deliver in exchange therefor
a new Security or Securities of the same aggregate tenor and principal amount,
payable to the order of such Persons and in such denominations as such Lender
may request. The Borrower may require (i) satisfactory indemnification or (ii)
payment by such Lender of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer.
Section 6.7. Register. The Administrative Agents on behalf of the
Borrower shall maintain a register of the principal amount of the Loans held by
each Lender and any interest due and payable with respect thereto. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agents and the Lenders shall treat each Person
whose name is recorded in the register as the owner of a Loan, a Term Note or
Exchange Note hereunder as the owner thereof for all purposes of this Agreement.
The Administrative Agents will allow any Lender to inspect and copy such
register at each Administrative Agent's principal place of business during
normal business hours.
ARTICLE VII.
EVENTS OF DEFAULT
Section 7.1. Events of Default. The occurrence of any one or more
of the following events shall constitute an "Event of Default":
(a) the Borrower defaults in the payment when due of interest on the
Term Loans and such default continues for a period of 10 (or, from and after the
Anniversary Date, 30) days;
(b) the Borrower defaults in the payment when due of principal of or
premium, if any, on the Term Loans when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) any representation or warranty made or deemed made by the Borrower
or any of its Subsidiaries herein or that is contained in any certificate,
document or financial or other statement furnished by any of them to the Lenders
at any time under or in connection with any Transaction Document shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made;
(d) the Borrower fails to comply with any of the provisions of Section
2.4, 4.15 or 4.19 hereof;
(e) the Borrower fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Term Loans
for 30 days after notice to the Borrower by the Trustee or the Holders of at
least 25% in aggregate principal amount of the Term Loans then outstanding
voting as a single class;
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(f) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Borrower or any of its Significant
Subsidiaries (or the payment of which is guaranteed by the Borrower or any of
its Significant Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture, which default (a) is
caused by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of such Indebtedness, under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates $5
million or more;
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Borrower or
any of its Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary and such judgment or
judgments remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $5.0 million;
(h) the Borrower or any of its Restricted Subsidiaries pursuant to or
within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Borrower or any Restricted Subsidiary
in an involuntary case;
(ii) appoints a Custodian of the Borrower or any Restricted Subsidiary
or for all or substantially all of the property of the Borrower or any
Restricted Subsidiary; or
(iii) orders the liquidation of the Borrower or any Restricted
Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
Section 7.2. Acceleration. If any Event of Default (other than an
Event of Default specified in Section 7.1(h) or 7.1(i) with respect to the
Borrower, any Significant Subsidiary or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary) occurs and is continuing,
the Lenders holding at least 25% in aggregate principal amount of the then
outstanding Loans may, by written notice to the Borrower, declare the unpaid
principal of and any accrued and
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unpaid interest and fees on all of the Loans to be immediately due and payable.
Upon such declaration, all Obligations in respect of the Loans shall become
immediately due and payable immediately. Notwithstanding the foregoing, if an
Event of Default specified in Section 7.1(h) or 7.1(i) with respect to the
Borrower, any Significant Subsidiary or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary occurs, all Obligations in
respect of the Loans shall ipso facto become and be immediately due and payable
without any declaration, notice or other act on the part of any Lender. The
Majority Lenders by written notice to the Borrower may on behalf of all Lenders
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
Section 7.3. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Lenders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent or subsequent assertion or employment of any
other appropriate right or remedy.
Section 7.4. Delay or Omission Not Waiver. No delay or omission by
any Lender to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article VII or by law to the Lenders may be exercised from time to time, and as
often as may be deemed expedient, by the Lenders.
Section 7.5. Waiver of Past Defaults. Subject to Section 12.3, the
Majority Lenders by written notice to the Borrower may (i) rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal or interest that has become due solely because of the acceleration)
have been cured or waived and (ii) waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium, if any, or interest on, the Term
Loans (including in connection with an offer to purchase). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Agreement; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 7.6. Rights of Lenders To Receive Payment. Notwithstanding
anything to the contrary contained in this Agreement, the right of any Lender to
receive payment of principal of, premium, if any, and interest on the Loans and
Term Notes held by such Lender, on or after the respective due dates expressed
in this Agreement or the Term Notes, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Lender.
ARTICLE VIII.
PERMANENT SECURITIES
Section 8.1. Permanent Securities. The Borrower shall comply with
its agreements in this Agreement, the Fee Letter and the Engagement Letter with
respect to the proposed issuance and sale of the Permanent Securities in the
Proposed Offerings and the repayment of the Loans with all or a portion of the
net proceeds therefrom.
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ARTICLE IX.
TERMINATION
Section 9.1. Termination.
(a) the Powertel Commitments hereunder shall terminate on the earlier
of (A) the date on which the Borrower informs the Lenders that it has decided
not to proceed with the Powertel Acquisition, (B) the date on which the Powertel
Acquisition Agreement is terminated in accordance with its terms or (C) the date
that is ninety days following the date of the Commitment Letter;
(b) the Bell South Commitments hereunder shall terminate in the
earlier of (A) the date on which the Borrower informs the Lenders that it has
decided not to proceed with the lease or sublease of communications towers
currently owned or leased by BellSouth Mobility, (B) the date on which the Bell
South Letter Agreement and the Bell South Lease, if applicable, are terminated
(other than as a result of the entry into the related definitive documentation)
in accordance with their terms or (C) the date that is ninety days following the
date of the Commitment Letter.
Section 9.2. Survival of Certain Provisions. If this Agreement is
terminated pursuant to this Article IX, such termination shall be without
liability of any party to any other party, except that, whether or not the
transactions contemplated by this Agreement are consummated, (i) the Obligations
of the Borrower to reimburse the Lenders for all of their out-of-pocket expenses
pursuant to Section 12.1 and the Engagement Letter and (ii) the indemnity
provisions contained in Article X shall, in each case, remain operative and in
full force and effect.
ARTICLE X.
INDEMNITY
Section 10.1. Indemnification. In the event that any of the
Lenders or the Administrative Agents (each, an "Indemnified Party") becomes
involved in any capacity in any action, proceeding or investigation brought by
or against any Person, including stockholders of the Borrower, in connection
with or as a result of either this arrangement or any matter referred to in this
Agreement, the Borrower periodically will reimburse such Indemnified Party for
its legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith. The Borrower also will indemnify
and hold each Indemnified Party harmless against any and all losses, claims,
damages or liabilities to any such Person in connection with or as a result of
either this arrangement or any matter referred to in this Agreement, except to
the extent that any such loss, claim, damage or liability results from the gross
negligence or bad faith of such Indemnified Party in performing the services
that are the subject of this Agreement. If for any reason the foregoing
indemnification is unavailable to any Indemnified Party or insufficient to hold
it harmless, then the Borrower shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative economic interests of
the Borrower and its stockholders on the one hand and such Indemnified Party on
the other hand in the matters contemplated by this Agreement as well as the
relative fault of the Borrower, on the one hand, and such Indemnified Party, on
the other hand, with respect to such loss, claim, damage or liability and any
other relevant equitable considerations. The reimbursement, indemnity and
contribution obligations of the Borrower under this Section 10.1 shall be in
addition to any liability which the Borrower may otherwise have, shall extend
upon the same terms and conditions to any affiliate of any Indemnified Party and
the partners, directors, agents, employees and controlling persons (if any), as
the case may be, of such Indemnified Party and any such affiliate, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
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personal representatives of the Borrower, such Indemnified Party, any such
affiliate and any such Person. Any right to trial by jury with respect to any
action or proceeding arising in connection with or as a result of either this
arrangement or any matter referred to in the Letters is hereby waived by the
parties hereto. The provisions of this Section 10.1 shall survive any
termination or completion of the arrangement provided by this Agreement.
Section 10.2. Counsel. Promptly after receipt by an Indemnified
Party of notice of the commencement of any proceedings, such Indemnified Party
will, if a claim in respect thereof is to be made against the Borrower, notify
the Borrower in writing of the commencement thereof; provided that (i) the
omission so to notify the Borrower will not relieve it from any liability that
it may have hereunder except to the extent it has been materially prejudiced by
such failure and (ii) the omission so as to notify the Borrower will not relieve
it from any liability that it may have to an Indemnified Party otherwise than on
account of the indemnity provided for hereunder. In case any such proceedings
are brought against any Indemnified Party and it notifies the Borrower of the
commencement thereof, the Borrower will be entitled to participate therein, and,
to the extent that it may elect by written notice delivered to such Indemnified
Party, to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party; provided that, if the defendants in any such proceedings
include both such Indemnified Party and the Borrower and such Indemnified Party
shall have concluded that there may be legal defenses available to it which are
different from or additional to those available to the Borrower, such
Indemnified Party shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such proceedings
on behalf of such Indemnified Party. Upon receipt of notice from the Borrower to
such Indemnified Party of its election so to assume the defense of such
proceedings and approval by such Indemnified Party of counsel, the Borrower
shall not be liable to such Indemnified Party for expenses incurred by such
Indemnified Party in connection with the defense thereof (other than reasonable
costs of investigation) unless (i) such Indemnified Party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the Borrower shall not be liable for the reasonable expenses of
more than one separate counsel (plus not more than one separate local counsel in
any jurisdiction), approved by the Administrative Agents, representing the
Indemnified Parties who are parties to such proceedings), (ii) the Borrower
shall not have employed counsel reasonably satisfactory to such Indemnified
Party to represent such Indemnified Party within a reasonable time after notice
of commencement of the proceedings, (iii) the Borrower shall have authorized in
writing the employment of counsel for such Indemnified Party or (iv) the use of
counsel chosen by the Borrower to represent such Indemnified Party would present
such counsel with a conflict of interest, and except that, if clause (i) or
(iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
Section 10.3. Settlement of Claims. The Borrower agrees that,
neither it nor any of its Subsidiaries will settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
in respect of which indemnification or contribution could be sought under
Section 10.1 (whether or not any Indemnified Party is an actual or potential
party to such claim, action or proceeding) without the prior written consent of
the Indemnified Parties, unless such settlement, compromise or consent includes
an unconditional release of each Indemnified Party from all liability arising
out of such claim, action or proceeding, which consent shall not be unreasonably
withheld.
Section 10.4. Appearance Expenses. If an Indemnified Party is
requested or required to appear as a witness in any action brought by or on
behalf of or against the Borrower or any Affiliate
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thereof in which such Indemnified Party is not named as a defendant, the
Borrower agrees to reimburse such Indemnified Party for all reasonable expenses
incurred by it in connection with such Indemnified Party's appearing and
preparing to appear as such a witness, including, without limitation, the
reasonable fees and disbursements of its legal counsel.
Section 10.5. Indemnity for Taxes, Reserves and Expenses.
If, after the date hereof, the adoption of any law or guideline or any
amendment or change in the administration, interpretation or application of any
existing or future law or guideline by any Governmental Entity charged with the
administration, interpretation or application thereof, or the compliance with
any request or directive of any Governmental Entity (whether or not having the
force of law):
(a) subjects any Affected Party to any tax of any kind with respect to
this Agreement or the Term Notes or changes the basis of taxation of
payments of amounts due hereunder or thereunder or with respect to this
Agreement or any of the other Loan Documents, (including, without
limitation, any sales, gross receipts, general corporate, personal
property, privilege or license taxes, and including claims, losses and
liabilities arising from any failure to pay or delay in paying any such tax
(unless such failure or delay results solely from such Affected Party's
negligence or willful misconduct), but excluding (i) Taxes and Other Taxes
covered by Section 2.9 and (ii) any taxes, levies, imposts, deductions,
charges or withholding specifically excluded under Section 2.9(a) (it being
understood that, notwithstanding the foregoing, if any payment obligation
results from the application of this Section 10.5(a), then the provisions
of Section 2.9(f) or 2.9(i) would apply to such extent);
(b) imposes, modifies or deems applicable any reserve (including,
without limitation, any reserve imposed by the Board), special deposit or
similar requirement against assets of the Borrower held by, credit to the
Borrower extended by, deposits of the Borrower with or for the account of,
or other acquisition of funds of the Borrower by, any Affected Party;
(c) shall change the amount of capital maintained or requested or
directed to be maintained by an Affected Party; or
(d) imposes upon an Affected Party any other condition or expense
(including, without limitation, (i) loss of margin and (ii) attorneys' fees
and expenses incurred by officers or employees of an Affected Party (or any
successor thereto) and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Agreement or any of
the other Loan Documents or the purchase, maintenance or funding of the
Loans by an Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital of, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, any of the other Loan Documents, the obligations hereunder or
thereunder or the funding of the Loans hereunder, the Affected Party may notify
the Borrower of the amount of such increase, reduction, or imposition, and the
Borrower hereby agrees to pay to the Affected Party the amount the Affected
Party deems necessary to compensate the Affected Party for such increase,
reduction or imposition which determination shall be conclusive. Such amounts
shall be due and payable by the Borrower 15 days after such notice is given.
Section 10.6. Survival of Indemnification. The provisions
contained in this Article X shall remain in full force and effect whether or not
any of the transactions contemplated hereby are
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consummated and notwithstanding the termination of this Agreement or the payment
in full of all Obligations hereunder.
Section 10.7. Liability Not Exclusive; Payments. The agreements of
each Person in this Article X shall be in addition to any liability that each
may otherwise have. All amounts due under this Article X shall be payable as
incurred upon written demand therefor.
ARTICLE XI.
THE ADMINISTRATIVE AGENTS; THE ARRANGERS
Section 11.1. Appointment. Each Lender hereby irrevocably
designates and appoints each Administrative Agent to act as an agent of such
Lender under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes each Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agents by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agents shall have no duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender or other Administrative Agents, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agents.
Section 11.2. Delegation of Duties. The Administrative Agents may
execute any of their duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agents shall not be responsible for the negligence or misconduct of any agents
or attorneys in-fact selected by them with reasonable care.
Section 11.3. Exculpatory Provisions. Neither any of the
Administrative Agents nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except for its own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by the Borrower or any of its Subsidiaries or any officer thereof contained in
this Agreement or any other Loan Document or in any certificate, report,
statement, opinion or other document referred to or provided for in, or received
by the Administrative Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower or any of its Subsidiaries to perform its
obligations hereunder or thereunder. The Administrative Agents shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower or any of its Subsidiaries.
Section 11.4. Reliance by the Administrative Agents. The
Administrative Agents shall be entitled to rely, and shall be fully protected in
relying, upon any Term Note, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without
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limitation, counsel to the Borrower or any of its Subsidiaries), independent
accountants and other experts selected by the Administrative Agents. The
Administrative Agents may deem and treat the payee of the Term Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agents. The
Administrative Agents shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless they shall
first receive such advice or concurrence of the Majority Lenders as they deem
appropriate or they shall first be indemnified to their satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative
Agents shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
Section 11.5. Notice of Default. The Administrative Agents shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Administrative Agents have received notice
from a Lender, the Borrower or any of its Subsidiaries referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that any of the Administrative
Agents receives such a notice, the Administrative Agents shall give prompt
notice thereof to the Lenders. The Administrative Agents shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Majority Lenders; provided that unless and until the Administrative
Agents shall have received such directions, the Administrative Agents may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
Section 11.6. Non-Reliance on the Administrative Agents and Other
Lenders. Each Lender expressly acknowledges that none of the Administrative
Agents nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrative Agents hereafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agents
to any Lender. Each Lender represents to the Administrative Agents that it has,
independently and without reliance upon the Administrative Agents or any other
Lenders, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender confirms
that it is a qualified institutional buyer within the meaning of Rule 144A under
the Securities Act. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agents or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Administrative Agents hereunder, the Administrative Agents shall have no any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial or other
condition, prospects or credit worthiness of the Borrower or any of its
Subsidiaries which may come into the possession of the
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Administrative Agents or any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
Section 11.7. Indemnification. The Lenders agree to indemnify each
of the Administrative Agents in its capacity as such (to the extent not
reimbursed by the Borrower or any of its Subsidiaries and without limiting the
obligation of the Borrower and any of its Subsidiaries to do so), ratably
according to their respective Commitments in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time (include,
without limitation, at any time following the payment of the Loans) be imposed
on, incurred by or asserted against any of the Administrative Agents in any way
relating to or arising out of, the Commitments, this Agreement, any other Loan
Document or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agents under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the gross negligence or
willful misconduct of an Administrative Agent. The agreements in this subsection
shall survive the payment of the Loans and all other Obligations payable
hereunder.
Section 11.8. Administrative Agents, in their Individual Capacities.
Each Administrative Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower as though
such Administrative Agent were not acting in such capacities hereunder and under
the other Loan Documents. With respect to the Loans made or renewed by it and
the Term Note issued to it such Administrative Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Administrative Agent, and the
terms "Lender" and "Lenders" shall include each Administrative Agent in its
individual capacity.
Section 11.9. Successor Administrative Agents. Each Administrative
Agent may resign as Administrative Agent upon 30 days' notice to the Lenders. If
all Administrative Agents shall resign as Administrative Agent under this
Agreement and the other Loan Documents then the Majority Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
(provided that it shall have been approved by the Borrower), shall succeed to
the rights, powers and duties of the Administrative Agents, hereunder. Effective
upon such appointment and approval, the term "Administrative Agents" shall mean
and include such successor agent, and the former Administrative Agents' rights,
powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agents any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent the provisions of
this Article XI shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
Section 11.10. Successor Administrative Agent. Except as expressly
set forth herein, the Arrangers, in their capacity as such, shall have no duties
or responsibilities, and shall incur no liabilities, under this Agreement or the
other Loan Documents.
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ARTICLE XII.
MISCELLANEOUS
Section 12.1. Expenses; Documentary Taxes. The Borrower agrees to
pay (a) all reasonable out-of-pocket expenses incurred by the Lenders
(including, without limitation, expenses incurred in connection with due
diligence by the Lenders) associated with the preparation, execution and
delivery, administration, waiver, enforcement or modification and enforcement of
the documentation contemplated hereby and (b) the reasonable fees and
disbursements of Latham & Watkins, legal counsel to the Lenders, in connection
with the transactions contemplated herein, including in each case those incurred
prior to the date hereof. The Borrower hereby agrees to indemnify the Lenders
against any transfer taxes, documentary taxes, assessments or charges made by
any Governmental Entity by reason of the execution and delivery, or the terms,
of this Agreement or any of the other Loan Documents.
Section 12.2. Notices. All notices and other communications
pertaining to this Agreement or any Term Note shall be in writing and shall be
delivered (a) in Person (with receipt acknowledged), (b) by facsimile (confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth), (c) by
registered or certified mail, return receipt requested, postage prepaid, or (d)
by overnight courier, addressed as follows:
(i) If to the Arrangers and/or Administrative Agents, to them
at:
Goldman Sachs Credit Partners L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: John Makrinos
Facsimile No.: (212) 357-4597
Salomon Brothers Holding Company Inc.
c/o Salomon Smith Barney
333 West 34th Street, 4th Floor
New York, NY 10001
Attention: Michael Braithwaite
Facsimile No.: (212) 615-7715
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010
Attention: Todd Morgan
Facsimile No.: (212) 325-8314
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attention: Kirk A. Davenport
Facsimile No.: (212) 751-4864
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(ii) If to any Lender, to it at its address set forth on the
signature pages hereto:
(iii) If to the Borrower, to it at:
Crown Castle International Corp.
510 Bering Drive
Suite 500
Houston, Texas 77057
Attention: Charles C. Green, III
Facsimile No.: (713) 570-3150
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 8th Avenue
New York, New York 10019
Attention: Stephen L. Burns
Facsimile No.: (212) 474-3700
or to such other Person or address as shall be furnished in writing delivered to
the other parties in compliance with this Section 12.2.
Section 12.3. Consent to Amendments and Waivers.
(a) Except as provided in Section 4.21 and 12.3(b), this Agreement and
the Term Notes may be amended or supplemented with the consent of the Borrower
and the Majority Lenders and any existing default or compliance with any
provision of this Agreement or the Term Notes may be waived with the consent of
the Majority Lenders. Term Notes held by the Borrower or any of its Affiliates
will not be deemed to be outstanding for purposes of this Section 12.3.
(b) Notwithstanding the provisions of Section 12.3(a) and in addition
to the provisions of Section 4.21, without the consent of each Lender affected
thereby, an amendment or waiver may not: (i) reduce the principal amount of any
Loan, (ii) change the fixed maturity of any Loan, (iii) reduce the rate of or
change the time for payment of interest on any Loan, (iv) waive a Default or
Event of Default in the payment of principal of, or premium, fees or interest,
if any, on the Loans or any other amounts payable under any of the Loan
Documents, (v) make any Loan payable in money other than that stated in the
applicable Loan, (vi) make any change in the provisions of this Agreement
relating to the rights of Lenders to receive (A) prepayments on, or (B) payments
of principal of, premium, if any, or fees or interest on, the Loans, (vii) make
any change to the provisions of Article VII that would adversely affect the
rights of any Lender or (viii) make any change in the foregoing amendment and
waiver provisions.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender for
or as an inducement to any consent, waiver or amendment permitted by Section
12.3(a) unless such consideration is offered to be paid and is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or amendment.
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Section 12.4. Parties. This Agreement shall inure to the benefit
of and be binding upon the Borrower, the Affected Parties and each of their
respective successors and assigns. Except as expressly in this Agreement,
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other Person any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. Except
as expressly provided in this Agreement, this Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Affected Parties and their respective successors and assigns, and for the
benefit of no other Person.
Section 12.5. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS AGREEMENT AND THE TERM NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE BORROWER AND EACH
OF THE LENDERS HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN NEW YORK CITY (EACH, A "NEW YORK COURT") FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THE TERM NOTES, THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY. THE BORROWER AND EACH OF THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE BORROWER AND EACH OF THE LENDERS IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE TERM NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12.6. Replacement Notes. If any Term Note becomes
mutilated and is surrendered by the applicable Lender to the Borrower, or if any
Lender claims that any of its Term Notes has been lost, destroyed or wrongfully
taken, the Borrower shall execute and deliver to such Lender a replacement Term
Note, upon the delivery by such Lender of an indemnity to the Borrower
reasonably satisfactory to its counsel to save it and any agent of it harmless
in respect of such loss, destruction or wrongful taking with respect to such
Term Note.
Section 12.7. Appointment of Agent For Service.
The Borrower designates and appoints _______ and such other Persons as
may irrevocably agree in writing to serve as their respective agent to receive
on their behalf service of all process in any proceedings in any New York Court,
such service being hereby acknowledged by the Borrower to be effective and
binding in every respect. If any agent appointed by a the Borrower refuses to
receive and forward such service, that the Borrower hereby agrees that service
upon it by mail shall constitute sufficient service.
Section 12.8. Marshalling; Recapture. None of the Administrative
Agents nor any Lender shall be under any obligation to marshall any assets in
favor of the Borrower or any other party or against or in payment of any or all
of the Obligations. To the extent any Lender receives any payment by or on
behalf of the Borrower, which payment or any part thereof is subsequently
invalidated, declared to
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be fraudulent or preferential, set aside or required to be repaid to the
Borrower or its estate, trustee, receiver, custodian or any other party under
any Bankruptcy Law, state or federal law, common law or equitable cause, then,
to the extent of such payment or repayment, the obligation or part thereof which
has been paid, reduced or satisfied by the amount so repaid shall be reinstated
by the amount so repaid and shall be included within the liabilities of Borrower
to such Lender as of the date such initial payment, reduction or satisfaction
occurred.
Section 12.9. Limitation of Liability. No claim may be made by
the Borrower or any other Person against any Administrative Agent or any Lender
or the Affiliates, directors, officers, employees, attorneys or agents of any of
them for any special, indirect, consequential or punitive damages in respect of
any claim for breach of contract or any theory of liability arising out of or
related to the transactions contemplated by this Agreement or the other Loan
Documents, or any act, omission or event occurring in connection therewith; and
the Borrower hereby waives, releases and agrees not to sue and shall cause each
of its respective Subsidiaries to waive, release or agree not to sue (if
required), upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section 12.10. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or Event of Default if such action
is taken or condition exists.
Section 12.11. Currency Indemnity. The Borrower acknowledges and
agrees that this is a credit transaction where specification of dollars is of
the essence and dollars shall be the currency of account and payment in all
events. If, pursuant to a judgment or for any other reason, payment shall be
made in another currency and such payment, after prompt conversion to dollars
and transfer to New York City in accordance with normal banking procedures,
falls short of the sum due the Lenders in dollars, the Borrower shall pay the
Lender such shortfall and the Lenders shall have a separate cause of action for
such amount.
Section 12.12. Waiver of Immunity. To the extent that the Borrower
has or hereafter may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction in which the
Borrower owns or leases property or assets or (ii) the United States, the
State of New York or any political subdivision thereof; or
(b) from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property and assets, this
Agreement, any Loan Document or actions to enforce judgments in respect of
any thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced document.
Section 12.13. Freedom of Choice. The submission to the
jurisdiction of the courts referred to in this Article XII shall not (and shall
not be construed so as to) limit the right of any Lender to take proceedings
against the Borrower in the courts of any country in which the Borrower has
assets or
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in any other court of competent jurisdiction nor shall the taking of proceedings
in any one or more jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted by
applicable law.
Section 12.14. Successors and Assigns. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants and
agreements of the Borrower in this Agreement shall bind their respective
successors and assigns. The Borrower may not assign or transfer any of its
rights or obligations hereunder (by operation of law or otherwise) without the
prior written consent of the Majority Lenders. Any assignment by any Lender must
be made in compliance with Article VI hereof.
Section 12.15. Merger. This Agreement constitutes the entire
contract among the parties relating to the subject matter hereof and supersedes
any and all previous agreements among the parties relating to the subject matter
hereof, except for those provisions in the Fee Letter and the Engagement Letter
that are in addition to the provisions contained herein.
Section 12.16. Severability Clause. In case any provision in this
Agreement or any Term Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
provision shall be ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
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Section 12.17. Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in Officers' Certificates
submitted pursuant hereto, shall remain operative and in full force and effect
until all Obligations under all of the Loan Documents have been repaid in full,
regardless of any investigation made by or on behalf of the Lenders or any
controlling Person of the Lenders, or by or on behalf of the Borrower or any
controlling Person of the Borrower, and shall survive delivery of the Term
Notes.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
Crown Castle International Corp.
By: /s/ Charles C. Green, III
-------------------------------------
Name: Charles C. Green, III
Title: Executive Vice President and
Chief Financial Officer
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Goldman Sachs Credit Partners L.P. Powertel Commitment: $16,666,666.67
Bell South Commitment: 16,666,666.67
--------------
Total Commitment: $33,333,333.34
By: Goldman, Sachs & Co.,
the General Partner
By: /s/ Stephen B. King
----------------------------------
Name: Stephen B. King
Title:
Wire Transfer Instructions:
Name of Bank: Chase Manhattan Bank, N.A.
Address: One New York Plaza
New York, NY 10081
ABA#: 021000021
For the account of: Goldman, Sachs & Co.
Account No.: 930-1-011483
For further credit to Goldman Sachs Credit Partners L.P.
Reference: Crown Castle International Corp. Term Loans
Attention: Allen Rodriguez
Telephone:
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Salomon Brothers Holding Company Inc. Powertel Commitment: $16,666,666.67
Bell South Commitment: 16,666,666.66
--------------
Total Commitment: $33,333,333.33
By: /s/ Steven M. Jones
------------------------------------
Name: Steven M. Jones
Title: Managing Director
Wire Transfer Instructions
Name of Bank: First National Bank of Chicago
Address: Chicago, IL
ABA# 071-000-013
For the account of Salomon Brothers Inc
Account No.: 5143322
For further credit to Salomon Brothers Holding Company Inc
Reference: CROWN CASTLE, Bankloan Dept.
Attention: Frank Albanese
--------------
Telephone:
----------------
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Credit Suisse First Boston Powertel Commitment: $16,666,666.66
Bell South Commitment: 16,666,666.67
--------------
Total Commitment: $33,333,333.33
By: /s/ Marisa J. Harney
-------------------------
Name: Marisa J. Harney
Title: Director
By: /s/ Judith E. Smith
-------------------------
Name: Judith E. Smith
Title: Director
Wire Transfer Instructions
Name of Bank: The Bank of New York
Address: One Wall Street,
New York, NY 10005
ABA#: 021 000 018
For the account of CSFB NY Loan Clearing
Account No.: 890-0329-262
For further credit to Credit Suisse First Boston
Reference: CROWN CASTLE INTERNATIONAL CORP.
Attention: Nirmala Durgana
Telephone: 212-322-1429
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Exhibit A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Term Loan Agreement, dated as of March 15,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), by and among Crown Castle International Corp., a
Delaware corporation (the "Borrower"), and Goldman Sachs Credit Partners L.P.,
Salomon Brothers Holding Company Inc. and Credit Suisse First Boston (Goldman
Sachs Credit Partners L.P., Salomon Brothers Holding Company Inc. and Credit
Suisse First Boston are herein called the "Lenders"), as Arrangers for the
Lenders (Salomon Brothers Holding Company Inc. and Credit Suisse First Boston in
such capacity, the "Administrative Agents"). Unless otherwise defined herein,
terms defined in the Term Loan Agreement and used herein shall have the meanings
given to them in the Term Loan Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and the
Assignee identified on Schedule I hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the percentage interest described in Schedule
1 hereto (the "Assigned Interest") in and to the Assignor's rights and
obligations under the Term Loan Agreement (the "Assigned Facilities"), in a
principal amount for the Assigned Facilities as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Term Loan Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Term Loan Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim: (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Term Loan Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Term Notes
held by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agents, upon request by the Assignee, exchange the attached Term
Notes for a new Term Note or Term Notes payable to the Assignee and (ii) if the
Assignor has retained any interest in the Assigned Facility, requests that the
Administrative Agents exchange the attached Term Notes for a new Term Note or
Term Notes payable to the Assignor, in each case in amounts which reflect the
assignment being made hereby (and after giving effect to any other assignments
which are effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Term Loan Agreement, and all schedules and exhibits
thereto together with copies of the financial information delivered pursuant to
subsection 3.10 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (c) agrees that it will, independently and
without reliance upon the Assignor, the Administrative Agents or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Term Loan
<PAGE>
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agents to take such action as agent on its behalf and to exercise
such powers and discretion under the Term Loan Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agents by the terms thereof,
together with such powers as are incidental thereto; (e) agrees that it will be
bound by the provisions of the Term Loan Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Term
Loan Agreement are required to be performed by it as a Lender; and (f) agrees
that it shall have no recourse against the Assignor with respect to any matters
relating to the Term Loan Agreement, the other Loan Documents or any others
instrument or documents furnished pursuant hereto or thereto.
4. The Assignor hereby assigns to Assignee all of its rights and
obligations under the Fee Letter with respect to the Assigned Interest.
5. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agents for acceptance by them and recording by
the Administrative Agents pursuant to Section 6.7 of the Term Loan Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agents, be earlier than five Business Days after the date
of such acceptance and recording by the Administrative Agents).
6. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agents shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agents for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. From and after the Effective Date, (a) the Assignee shall be a
party to the Term Loan Agreement and the Fee Letter and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Term Loan Agreement and the Fee Letter.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.
<PAGE>
Schedule 1
to Assignment and Acceptance
Name of Assignor: ____________________________
Name of Assignee: ____________________________
Effective Date of Assignment: ________________
Principal Commitment
Credit Facility Assigned Amount Assigned Commitment Percentage Assigned/1/
$________________ _____ . _________%
1. Calculate the Commitment Percentage that is assigned to at least 9 decimal
places and show as a percentage of the aggregate commitments of all Lenders
<PAGE>
[Name of Assignee] [Name of Assignor]
By: ______________________________________ By:________________________________
Name Name:
Title: Title:
Accepted:
Salomon Brothers Holding Company Inc.
By:_____________________
Name:
Title:
Credit Suisse First Boston
By:_____________________
Name:
Title:
By:_____________________
Name:
Title:
as Administrative Agents
<PAGE>
Exhibit B
No. I-__ New York, New York
$______________ ______________, _____
SENIOR TERM NOTE
FOR VALUE RECEIVED, the undersigned, Crown Castle International Corp.
(the "Borrower"), promises to pay to the order of
_______________________________, or its registered assigns (the "Holder"), the
principal amount of __________________ Dollars ($_______), and to pay interest
from the date hereof on the unpaid principal amount hereof from time to time
outstanding, at the rates per annum and on the dates specified in that certain
Term Loan Agreement, dated as of March 15, 1999, among the Borrower, Goldman
Sachs Credit Partners L.P., Salomon Brothers Holding Company Inc. and Credit
Suisse First Boston (as amended, restated and/or otherwise modified from time to
time, the "Term Loan Agreement"). Terms used herein and not otherwise defined
have the meanings assigned to them in the Term Loan Agreement.
The unpaid principal balance of this Term Note, together with all
accrued and unpaid interest thereon, shall become due and payable on the
Maturity Date.
The Borrower promises to pay interest on demand, to the extent
permitted by law, on any overdue principal and interest from their due dates at
the rate per annum as specified in Section 2.3(d) of the Term Loan Agreement.
All payments of the principal of and premium and interest on this Term
Note shall be made in money of the United States of America that at the time of
payment is legal tender for the payment of public and private debts, by transfer
of immediately available funds into a bank account designated by the Holder in
writing to the Borrower; provided, however, that notwithstanding anything
contained in the Term Loan Agreement or any of the Term Notes to the contrary,
in no event shall the interest rate hereon for any period of computation exceed
a rate per annum equal to the lesser of 16% and the maximum interest rate
permitted by applicable law.
The Borrower agrees to pay, upon demand, all reasonable out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of legal counsel to the Holder) associated with the waiver, enforcement or
modification of the Term Loan Agreement or this Term Note.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the Holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Term Note is one of the Term Notes referred to in the Term Loan
Agreement, which Agreement, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment in full of the principal hereof prior to
maturity and for the amendment or waiver of certain provisions of the Term Loan
Agreement, all upon the terms and conditions therein specified. In the event of
any conflict between the provisions of this Term Note and the Term Loan
Agreement, the provisions of the Term Loan Agreement shall govern.
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER SECTION 1273 OF THE
INTERNAL REVENUE CODE. YOU MAY CONTACT WESLEY CUNNINGHAM, VICE PRESIDENT,
CORPORATE CONTROLLER AND CHIEF ACCOUNTING OFFICER OF CROWN CASTLE INTERNATIONAL
CORP., 510 BERING DRIVE, SUITE 500, HOUSTON, TEXAS, 77057, TELEPHONE NUMBER:
(713) 570-3000, FACSIMILE NUMBER: (713) 570-3100 WHO WILL
<PAGE>
PROVIDE YOU WITH ANY REQUIRED INFORMATION REGARDING THE ORIGINAL ISSUE DISCOUNT.
THIS TERM NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be
signed in its corporate name by its duly authorized officer and to be dated as
of the day and year first above written.
CROWN CASTLE INTERNATIONAL CORP.
By: ________________________________
Name:
Title:
2
<PAGE>
[Back of Term Note]
OPTION OF HOLDER TO ELECT PREPAYMENT UPON CHANGE OF CONTROL
If you want to elect to have this Term Note prepaid by the Borrower
pursuant to Section 4.15 of the Term Loan Agreement check the box below.
[ ] Please prepay the entire amount of this Term Note
If you want to elect to have only part of this Term Note prepaid by
the Borrower pursuant to Section 4.15 of the Term Loan Agreement, state the
amount you elect to have purchased: $_____________.
Date: ________________________
Your Signature:
_________________________________________________
(Sign exactly as your name appears on the face of this
Note)
Tax Identification No. _______________________
Signature Guarantee:
____________________________
<PAGE>
Exhibit F-1
FORM OF OPINION OF CRAVATH, SWAINE & MOORE
1. Based solely on certificates from the Secretary of State of the State of
Delaware, each of the Borrower, CCI, CC Investment, CC Investment II and CCAIC
is a corporation validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its businesses in which it is now engaged and
as are expressly contemplated by the Loan Documents and the Acquisition
Agreements.
2. Based solely on certificates from the Secretary of State of the applicable
jurisdiction, each of the Borrower, CCI, CC Investment, CC Investment II and
CCAIC is duly registered and qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction listed in the officer's
certificate of the Borrower attached as Schedule A hereto.
3. The Borrower has all requisite power and authority to enter into each of
the Loan Documents and the Acquisition Agreements to which it is a party and to
perform its obligations thereunder.
4. Each of the Loan Documents to which the Borrower is a party has been duly
authorized, executed and delivered by the Borrower, and constitutes a legal,
valid and binding obligation, agreement or instrument, as the case may be, of
the Borrower, enforceable against the Borrower in accordance with its respective
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether considered in a proceeding in equity or at law).
5. The Term Loan Agreement has been duly authorized, executed and delivered by
the Borrower, and constitutes a legal, valid and binding agreement of the
Borrower, enforceable against the Borrower in accordance with its terms (subject
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether
considered in a proceeding in equity or at law).
6. The Term Notes have been duly authorized, executed and delivered by the
Borrower, and constitute legal, valid and binding obligations of the Borrower
entitled to the benefits of the Term Loan Agreement and enforceable against the
Borrower in accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether considered in a proceeding in
equity or at law).
7. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Borrower and, assuming due authorization, execution and
delivery by the other parties thereto, constitutes a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law).
8. The Escrow Agreement has been duly authorized, executed and delivered by
the Borrower and, assuming due authorization, execution and delivery by the
other parties thereto, constitutes a legal, valid and binding agreement of the
Borrower, enforceable against the Borrower in
<PAGE>
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether considered in a proceeding in
equity or at law).
9. The Exchange Note Indenture has been duly authorized, executed and
delivered by the Borrower and, assuming due authorization, execution and
delivery by the Exchange Note Trustee, constitutes a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law).
10. The Exchange Notes have been duly authorized, executed and delivered by the
Borrower and, assuming due authentication in accordance with the terms of the
Exchange Indenture by the Exchange Trustee, upon delivery to the holders of Term
Loans in exchange for Term Notes, will have been validly issued and delivered
and will constitute legal, valid and binding obligations of the Borrower
entitled to the benefits of the Exchange Indenture and enforceable against the
Borrower in accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether considered in a proceeding in
equity or at law).
11. No registration of the Term Loans, the Term Notes or the Exchange Notes
under the Securities Act of 1933, as amended, is required for the funding of the
Term Loans and the issuance of the Term Notes and the Exchange Notes, in each
case, in the manner contemplated by the Term Loan Agreement and the Escrow
Agreement, as applicable. We express no opinion, however, as to when or under
what circumstances the Term Loans, the Term Notes or the Exchange Notes
subsequently may be resold. No qualification of the Exchange Note Indenture
under the Trust Indenture Act of 1939, as amended, is required prior to the
effectiveness of the Shelf Registration Statement (as such term is defined in
the Registration Rights Agreement).
12. Each of the Acquisition Agreements has been duly authorized by the Board of
Directors of each of the parties thereto (and by any required shareholder
action), has been duly executed and delivered by the other parties thereto, and
constitutes a legal, valid and binding obligation, agreement or instrument, as
the case may be, of the parties thereto, enforceable against the parties
thereto in accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether considered in a proceeding in
equity or at law). [Prior to the closing of any Acquisition, this opinion may
be rendered with respect to the Borrower only. To the extent that any
Acquisition has closed and the Borrower has received an opinion of counsel from
the other parties thereto, Borrower's counsel shall render this opinion
including the opinion with respect to such other parities based upon such other
opinion of counsel.]
13. No authorization, approval or other action by, and no notice to, consent
of, order of, or filing with, any United States Federal, new York or, to the
extent required under the General Corporation Law of the State of Delaware,
Delaware governmental authority or regulatory body is required for the
consummation of the transactions contemplated by the Loan Documents, except such
as have been obtained or made on or prior to the date hereof, such as may be
required in connection with
2
<PAGE>
the registration under the Act of the Exchange Notes in accordance with the
Registration Rights Agreement and such as to which the failure to be obtained or
made would not, individually or in the aggregate, have a Material Adverse
Effect.
14. Neither the execution or delivery of, nor performance by the Borrower of
its obligations under, the Transaction Documents (as defined in the Term Loan
Agreement) (i) will conflict with, result in a breach of, or constitute a
default under the Restated Certificate of Incorporation or By-laws of the
Borrower, (ii) will conflict with, result in a breach of, or constitute a
default under the terms of any agreement or instrument listed on the officer's
certificate of the Company attached as Schedule A hereto (the "Material
Agreements"), or (iii) will contravene any law, rule or regulation of the United
States or the State of New York or the General Corporation Law of the State of
Delaware, or, to our knowledge, any order or decree of any court or government
agency or instrumentality or will result in the creation or imposition of any
Lien upon any property or assets of the Borrower, CCI, CC Investments, CC
Investments II or CCAIC pursuant to the terms of any Material Agreement, except
in the case of clauses (ii) and (iii), such breaches, conflicts or defaults
that, individually or in the aggregate, would not have a Material Adverse
Effect. In connection with the foregoing, we point out that certain of the
Material Agreements are or may be governed by laws other than the laws of the
State of New York. For purposes of the opinion expressed in this paragraph,
however, we have assumed that all such agreements are governed by and would be
interpreted in accordance with the laws of the State of New York.
15. The Borrower is not and, upon the issuance of the Term Notes and the
Exchange Notes and the application of the net proceeds to the Borrower of such
issuance, will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
The foregoing opinions are qualified as follows:
(i) We express no opinion with respect to the enforcement of any
provision of any agreement providing for indemnification or contribution to
the extent contrary to or inconsistent with public policy.
(ii) With respect to our opinion in paragraphs (13) and (14), in
determining whether any of the matters referred to would have a Material
Adverse Effect, we have relied on statements from officers and directors of
the Borrower as to the anticipated consequences of those matters and have
not independently attempted to verify such consequences.
We are admitted to the practice of law in the State of New York, and
we express no opinion as to any matters governed by any law other than the law
of the State of New York, the General Corporation Law of the State of Delaware
and the Federal law of the United States of America.
3
<PAGE>
Exhibit F-2
FORM OF OPINION OF NORTON ROSE
1. CTI was duly incorporated on 9 May 1996 under the Companies Act 1985 as a
private limited company. CTSH was duly incorporated on 27 August 1996 as a
private limited company. A certificate of good standing in respect of each of
the Companies issued by the Companies Registration Office on ________________,
is attached.
2. by a Certificate of Incorporation on Change of Name issued on 21 March 1997
CTI changed its name to Castle Transmission International Ltd. By a Certificate
of Incorporation on Change of Name issue don 25 February 1997, CTSH changed its
name to Castle Transmission Services (Holdings) Ltd.; and
3. CTI is empowered by its Memorandum of Association to conduct its business
as described in the Offering Memorandum.
<PAGE>
Exhibit F-3
FORM OF OPINION OF GENERAL COUNSEL
1. Except as set forth on Schedule 3.13 to the Term Loan Agreement, to my
actual knowledge, there are no legal or governmental proceedings pending or
threatened against the Borrower or any of its subsidiaries, or to which any of
their respective properties is subject, that are reasonably likely to have a
Material Adverse Effect or to materially affect the consummation of the
transactions contemplated in the Transaction Documents
2. To my actual knowledge, neither the Borrower nor any Subsidiary (i) is in
default (which default has not been waived) under any agreement, document or
instrument to which it is a party or by which it or any of its assets is bound
or (ii) is in violation of any law, rule, regulation, judgment, writ,
determination, order, decree or arbitral award to which the Borrower or any
Subsidiary is a party or by which the Borrower or any Subsidiary or any of their
respective properties is bound, which default or violation, as the case may be,
would constitute a Default or Event of Default under the Term Loan Agreement or
otherwise could reasonably be likely to have a Material Adverse Effect.
<PAGE>
Schedule 3.10(a)
Consolidated Balance Sheet and
Consolidated Statements of Income and Cash Flows
of the Borrower
[Attached]
<PAGE>
Schedule 3.10(b)
Statement of Net Assets and Statements of Revenues and Direct Expenses
of the Bell Atlantic Mobile Tower Operations
[Attached]
<PAGE>
Schedule 3.10(c)
Consolidated Balance Sheet and Statement of Revenues and Direct Expenses
of the operations acquired pursuant to the Powertel Acquisition
[Attached]
<PAGE>
Schedule 3.10(d)
Unaudited Statement of Income of the assets
acquired pursuant to the Bell South Letter Agreement
[Attached]
<PAGE>
Schedule 3.10(e)
Pro Forma Consolidated Balance Sheet and
Consolidated Statements of Income and Cash Flows
of the Borrower
[Attached]
<PAGE>
Schedule 3.13
Absence of Proceedings
Such proceedings as may be required:
1. pursuant to the HSR Act;
2. in connection with the formation and qualification of the BAM Joint
Venture and its subsidiary joint ventures;
3. in connection with the qualification of CCP Inc. in various
jurisdictions in order to consummate the Powertel Acquisition; and
4. in connection with the formation and qualification of subsidiaries
to consummate the Bell South Acquisition.
<PAGE>
EXHIBIT 11
CROWN CASTLE INTERNATIONAL CORP.
COMPUTATION OF NET LOSS
PER COMMON SHARE
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------------------- -----------
YEARS ENDED
DECEMBER 31, YEAR ENDED
------------------------------------- DECEMBER 31,
1995 1996 1997 1998 1998
-------- ------ --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net loss.............................. $ (21) $ (957) $(11,942) $(37,775) $(103,294)
Dividends on preferred stock.......... -- -- (2,199) (5,411) (26,745)
------ ----- -------- -------- ---------
Net loss applicable to
common stock for basic
and diluted
computations......................... $ (21) $ (957) $(14,141) $(43,186) $(130,039)
====== ===== ======== ======== =========
Weighted-average number
of common shares
outstanding during the
period for basic and
diluted computations
(in thousands)....................... 3,316 3,503 6,238 42,518
====== ===== ======== ======== =========
Loss per common share--
basic and diluted.................... $(0.01) $(0.27) $ (2.27) 1.02 $
====== ===== ======== ======== =========
</TABLE>
<PAGE>
EXHIBIT 12
CROWN CASTLE INTERNATIONAL CORP.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------
YEARS ENDED
DECEMBER 31,
-------------------------------------
1995 1996 1997 1998
-------- ------ --------- --------
<S> <C> <C> <C> <C>
Computation of Earnings:
Income (loss) before income taxes and
minority interests................................................ $ (21) $ (947) $(11,893) $(35,747)
Add:
Fixed charges (as computed below)................................ 1,214 1,912 9,825 32,296
Equity in losses (earnings) of unconsolidated affiliate......... -- -- (1,138) (2,055)
------- ------- ------- --------
$ 1,193 $ 965 $ (930) $ (5,506)
======= ======= ======== ========
Computation of Fixed Earnings:
Interest expense.................................................. $ 1,101 $ 1,748 $ 7,095 $ 11,179
Amortization of deferred financing costs and discount on long-
term debt........................................................ 36 55 2,159 17,910
Interest component of operating lease expense...................... 77 109 571 3,207
------- ------- ------- --------
$ 1,214 $ 1,912 $ 9,825 $ 32,296
======= ======= ======= ========
Ratio of Earnings to Fixed Charges................................. -- -- -- --
======= ======= ======= ========
Fixed charge Coverage Deficiency................................... $ 21 $ 947 $10,755 37,802
======= ======= ======= ========
<CAPTION>
PRO FORMA
------------
YEAR ENDED
DECEMBER 31,
1998
------------
<S>................................................................ <C>
Computation of Earnings:
Income (loss) before income taxes and
minority interests................................................ $ (104,227)
Add:
Fixed charges (as computed below)................................ 101,484
Equity in losses (earnings) of unconsolidated affiliate......... --
-----------
$ (2,743)
===========
Computation of Fixed Earnings:
Interest expense.................................................. 40,360
Amortization of deferred financing costs and discount on long-
term debt........................................................ 48,699
Interest component of operating lease expense...................... 12,425
-----------
$ 101,484
===========
Ratio of Earnings to Fixed Charges................................. --
===========
Fixed charge Coverage Deficiency................................... $ 104,227
===========
</TABLE>
<PAGE>
EXHIBIT 21
CROWN CASTLE INTERNATIONAL CORP. SUBSIDIARIES*
Crown Communication Inc., a Delaware corporation (d/b/a Crown Communications,
CrownCom)
Castle Transmission Services (Holdings) Ltd, an England and Wales company
(unrestricted)
Crown Castle do Brasil Ltda, a Brazilian limited liability company
Crown Castle Investment Corp., a Delaware corporation (unrestricted)
Crown Castle Investment Corp. II, a Delaware corporation (unrestricted)
Crown Castle Australia Limited, an Australian limited liability company
*direct subsidiaries of CCIC, does not include second tier subs of the
above-listed corporations
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
company's consolidated balance sheet and consolidated statement of operations
and is qualified in its entirety by reference to such consolidated financial
statements together with the related footnotes thereto.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 296,450
<SECURITIES> 0
<RECEIVABLES> 33,665
<ALLOWANCES> 1,535
<INVENTORY> 6,599
<CURRENT-ASSETS> 342,116
<PP&E> 615,374
<DEPRECIATION> 22,780
<TOTAL-ASSETS> 1,523,230
<CURRENT-LIABILITIES> 92,887
<BONDS> 429,710
201,063
0
<COMMON> 944
<OTHER-SE> 736,618
<TOTAL-LIABILITY-AND-EQUITY> 1,523,230
<SALES> 0
<TOTAL-REVENUES> 113,078
<CGS> 0
<TOTAL-COSTS> 47,818
<OTHER-EXPENSES> 78,193
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,089
<INCOME-PRETAX> (35,747)
<INCOME-TAX> 374
<INCOME-CONTINUING> (37,775)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,775)
<EPS-PRIMARY> (1.02)
<EPS-DILUTED> (1.02)
</TABLE>
