<PAGE>
As filed with the Securities and Exchange Commission on April 1, 1998
Registration Statement No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PINNACLE HOLDINGS INC.
(Exact name of registrant as specified in its charter)
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Delaware 4899
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
65-0652634
(I.R.S. Employer
Identification Number)
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1549 Ringling Boulevard, 3rd Floor
Sarasota, Florida 34236
(941) 364-8886
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
Steven Day
Vice President, Chief Financial Officer and Secretary
Pinnacle Holdings, Inc.
1549 Ringling Boulevard, 3rd Floor
Sarasota, Florida 34236
(941) 364-8886
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Chester E. Bacheller, Esq.
Holland & Knight LLP
400 North Ashley Drive, Suite 2300
Tampa, Florida 33602
Phone: (813) 227-8500
Fax: (813) 229-0134
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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. [_]
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<CAPTION>
CALCULATION OF REGISTRATION FEE
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Amount Amount of
Title of Each Class of to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Security(1) Offering Price Fee(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10% Senior Discount Notes due
2008(1)....................... $325,000,000 $614.74 $200,400,911 $59,119
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(1) The "Amount to be Registered" with respect to the 10% Senior Discount Notes
due 2008 represents the aggregate principal amount at maturity of such
notes. The 10% Senior Discount Notes due 2008 were sold at a substantial
discount from their principal amount at maturity. The registration fee with
respect to the 10% Senior Discount Notes due 2008 was calculated based on
the approximate accreted value thereof as of April 1, 1998 determined
pursuant to the provisions of the indenture governing such notes.
(2) Calculated pursuant to Rule 457.
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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 Commission, acting pursuant to said Section 8(a),
may determine.
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+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ Information contained herein is subject to completion or amendment. A +
+ registration statement relating to these securities has been filed with +
+ the Securities and Exchange Commission. These securities may not be sold +
+ nor may offers to buy be accepted prior to the time the registration +
+ statement becomes effective. This prospectus shall not constitute an offer +
+ to sell or the solicitation of an offer to buy nor shall there be any sale +
+ of these securities in any State in which such offer, solicitation or sale +
+ would be unlawful prior to registration or qualification under the +
+ securities laws of any such State. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS Subject to Completion dated April , 1998
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$325,000,000
PINNACLE HOLDINGS INC.
Offer to Exchange its 10% Senior Discount Notes due 2008,
which have been registered under the Securities Act of 1933, as amended, for any
and
all of its outstanding 10% Senior Discount Notes due 2008
The Exchange Offer will expire at 5:00 p.m. New York City time
on _________________, 1998, unless extended
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Pinnacle Holdings Inc., a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal, to exchange (the
"Exchange Offer") up to $325,000,000 in aggregate principal amount of the
Company's new 10% Senior Discount Notes due 2008 (the "New Notes"), that have
been registered under the Securities Act of 1933, as amended (the "Securities
Act") for up to $325,000,000 in aggregate principal amount of the Company's
outstanding 10% Senior Discount Notes due 2008 (the "Original Notes"). The
Original Notes and the New Notes are sometimes referred to herein collectively
as the "Notes."
The terms of the New Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Original Notes for which they may be exchanged pursuant to this Exchange Offer,
except that the New Notes will be freely transferable by holders thereof (other
than as provided in the next paragraph) and issued free of any covenant
restricting transfer absent registration. The New Notes will evidence the same
debt as the Original Notes and contain terms which are substantially identical
to the terms of the Original Notes for which they are to be exchanged. For a
complete description of the terms of the New Notes, see "Description of the
Notes". There will be no cash proceeds to the Company from the Exchange Offer.
The Original Notes were sold on March 17, 1998, in a transaction not
registered under the Securities Act in reliance upon the exemption provided in
the Securities Act (the "Private Offering"). Accordingly, the Original Notes may
not be offered, resold or otherwise pledged, hypothecated or transferred in the
United States unless registered under the Securities Act or unless an applicable
exemption from the registration requirements of the Securities Act is available.
The New Notes are being offered to satisfy the obligations of the Company under
the Exchange and Registration Rights Agreement relating to the Original Notes.
See "The Exchange Offer - Purpose and Effect of the Exchange Offer." Every
holder receiving New Notes, other than a broker-dealer, will represent that they
are not engaging in or intending to engage in a distribution of such New Notes.
New Notes issued pursuant to the Exchange Offer in exchange for the Original
Notes may be offered for resale, resold or otherwise transferred by the holders
thereof (other than any holder which is an affiliate of the Company within the
meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. See "The Exchange
Offer - Purpose and Effect of the Exchange Offer" and "Plan of Distribution."
Broker-dealers may use this Prospectus, as amended or supplemented, in
connection with resales of the New Notes received in exchange for the Original
Notes where such Original Notes were acquired by such broker-dealer as a result
of market making activities or other such trading.
The Notes constitute securities for which there is no established trading
market. Any Original Notes not tendered and accepted in the Exchange Offer will
remain outstanding. The Company does not currently intend to list the New Notes
on any securities exchange. To the extent that any original Notes are tendered
and accepted in the Exchange Offer, a holder's ability to sell untendered
Original Notes could be adversely affected. No assurances can be given as to the
liquidity of the trading market for either the Original Notes or the New Notes.
The Exchange Offer is not conditioned on any minimum aggregate principal
amount of Original Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 P.M., New York time, on _________, 1998, unless extended (the
"Expiration Date"). The date of acceptance for exchange of the original Notes
will be the first business day following the Expiration Date. Original Notes
tendered pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Date, otherwise, such tenders are irrevocable. The Company will
pay all expenses incident to the Exchange Offer.
No interest will accrue or be payable on the New Notes prior to March 15,
2003. Thereafter, interest on the New Notes will accrue at a rate of 10% per
annum and will be payable in cash semi-annually in arrears on March 15 and
September 15 of each year, commencing September 15, 2003. If a Change of Control
(as defined under "Description of Notes - Change of Control") occurs there is no
assurance that the Company will have, or will have access to, sufficient funds
to enable it to repurchase the Notes. See "Description of Notes - Change of
Control."
Holders of Original Notes should carefully consider the matters set forth
under "Risk Factors" beginning on page 17.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration Statement on Form S-4 with respect to the New Notes
being offered hereby (including all exhibits and amendments thereto the
"Registration Statement"). This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement and
to the exhibits filed therewith. Statements made in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and where applicable reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement is qualified by such reference.
At any time prior to the second anniversary of the closing of the offering of
the Original Notes, if the Company is not subject to Section 13 or 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Company has agreed to (i) file with the Commission to the extent permitted, and
distribute to holders of the Notes, reports, information and documents specified
in Section 13 and 15(d) of the Exchange Act and (ii) make available, upon
request, to any holder of the Notes, the information required pursuant to Rule
144A(d)(4) under the Exchange Act. Any such request should be directed to the
Secretary of the Company at 1549 Ringling Boulevard, Third Floor, Sarasota, FL
34236.
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Market data used throughout this Prospectus was obtained from industry
publications. These publications generally state that the sources used to
acquire such data are believed to be reliable, but that the accuracy and
completeness of such data is not guaranteed. Although the Company believes the
data to be reliable,it has not independently verified such data and does not
assume the responsibility for the accuracy and completeness of such published
data.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise indicated
by the context, references in this Prospectus to the "Company" include Pinnacle
Holdings, Inc. and its direct and indirect wholly-owned subsidiaries.
Capitalized terms used without definition in the following summary are defined
elsewhere in this Prospectus.
The Company
The Company is the leading provider of wireless communications rental tower
space in the Southeastern United States. Since commencing operations less than
three years ago, as of March 4, 1998, the Company has completed 145 acquisitions
through which it has acquired 516 towers and has constructed an additional 38
towers in such high growth markets as Orlando, Atlanta, Birmingham and Tampa. As
a result, the Company believes it is well positioned to continue to capitalize
on the rapid consolidation of the highly fragmented tower rental industry. For
the year ended December 31, 1997, on a pro forma basis giving effect to the
Transactions (as defined herein), the Company would have had tower rental
revenue and Tower Level Cash Flow (as defined herein) of $25.0 million and $20.2
million, respectively, implying a Tower Level Cash Flow Margin (as defined
herein) of 80.8%.
The Company leases tower space to its customers and receives rental payments
under tower leases that generally range in duration from three to five years. In
addition, a majority of the Company's leases provide for scheduled minimum rent
increases of the greater of a specified percentage (which typically ranges from
3-5%) or the change for the relevant period in the Consumer Price Index ("CPI").
The Company experiences negligible customer churn. The Company has a diversified
base of over 675 customers, only one of which accounts for more than 5% of the
Company's total revenue. The Company's customers are a broad base of wireless
communication providers, operators of private networks and government agencies
that include Nextel, Sprint PCS, Motorola, PageNet, BellSouth Mobility, PrimeCo,
AT&T Wireless, Southern Communications Services, Inc. ("Southern
Communications"), Georgia Power, Alabama Power, U.S. Coast Guard, Internal
Revenue Service, Federal Bureau of Investigation and Bureau of Alcohol, Tobacco
& Firearms.
The Company's objective is to create substantial value from its position as
the leading rental tower owner in the Southeastern United States. In order to
achieve its objective, the Company has designed and implemented a three-tiered
growth strategy of (i) capitalizing on the operating leverage of its business by
aggressively marketing available rental space on its towers, (ii) rapidly
acquiring towers in key markets and (iii) implementing a selective tower
construction program. Pursuant to this strategy, the Company recently acquired
201 towers from Southern Communications (the "Southern Towers Acquisition"). The
Company paid $83.5 million for these towers plus fees and expenses, which
complement the Company's existing inventory and significantly accelerate its
progress in achieving its objective.
The Company has rapidly executed its strategy and today owns a significant
portfolio of high quality towers that generates increasing revenue and cash
flow. The Company believes that its portfolio of strategically located rental
towers exhibits the following economic characteristics: (i) high absolute and
incremental margins; (ii) stable and predictable cash flow; (iii) a diversified
customer base; (iv) high barriers to entry; (v) low customer churn; and (vi)
attractive underlying growth. The Company believes that this portfolio provides
the core asset base from which it will continue the ongoing strategy to acquire
and construct clusters of towers in attractive, high growth markets. Further,
the Company believes it has created a stable and long-term stream of tower
rental revenue that would continue to be generated even if the Company were to
discontinue pursuing its aggressive expansion strategy.
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The Company is designed to be an efficient consolidator and operator of
rental towers. The Company has created a highly focused, structured organization
in which significant resources are devoted to acquiring or constructing
strategically located sites supported by customer demand. In addition, the
Company has the capability to "instantly integrate" new towers and initiate
sales and marketing efforts immediately following the acquisition or
construction of new towers.
The success of the Company's focused efforts is illustrated by its financial
results. The Company believes that its "Annualized Run Rate Revenue", calculated
as of a given date by annualizing the monthly rental rates then in effect for
customer lease contracts in force as of such date, is a significant indicator of
its performance. As of March 4, 1998, the Company's Annualized Run Rate Revenue
was $23.9 million, without giving effect to adjustments totalling $1.8 million
in pro forma revenue from probable acquisitions. Based upon the Company's
current inventory of 554 towers as of March 4, 1998, the Company's average
Annualized Run Rate Revenue per tower was $43,073. The Company also believes
that "same tower" revenue growth (measured by comparing the Annualized Run Rate
Revenue of the Company's towers at the end of a period to the Annualized Run
Rate Revenue for the same towers at the end of a prior period) is an indication
of the quality of the Company's towers and its ability to generate incremental
revenue on such towers. The Company experienced aggregate "same tower" revenue
growth of 26.3% in 1997 over 1996.
Industry Background
Communications towers are primary infrastructure components for wireless
communications services such as cellular, paging, personal communications
services ("PCS"), Specialized Mobile Radio ("SMR"), wireless data transmission
and radio and television broadcasting. Wireless communications companies require
specialized wireless transmission networks in order to provide service to their
customers. Each of these networks is configured specifically to meet the
coverage requirements of the particular carrier and includes transmission
equipment such as antennae, transmitters and receivers placed at various
locations throughout the covered area. These locations, or communications sites,
are critical to the operation of wireless communications networks and consist of
towers, rooftops and other structures upon which such equipment is placed.
Wireless communications providers design their network and select their
communications sites in order to optimize available frequencies relative to
projected usage patterns, topography and service requirements.
The wireless communications industry is growing rapidly as (i) consumers
become increasingly aware of the uses and benefits of wireless communications
services, (ii) the costs of wireless communications services decline and (iii)
new wireless communications technologies continue to be developed. Changes in
U.S. federal regulatory policy have led to a significant increase in the number
of competitors in the wireless communications industry, most recently through
the auction of radio spectrum for PCS. The resulting competition, combined with
increasing reliance on wireless communications by consumers and businesses, has
increased demand for higher quality networks characterized by uninterrupted
service and improved coverage. As new carriers build out networks and existing
carriers upgrade and expand their networks to maintain competitiveness, the
demand for communications sites has increased dramatically.
During the mid-to-late 1980s, a number of independent tower owners began to
emerge, marking the beginning of the tower rental industry. These independent
tower owners focused on owning and managing towers with multiple customers by
adding customers to existing and reconstructed towers. The Company believes the
majority of these tower operators were individuals with a small number of local
rental towers offering very limited coverage areas. In the last three years,
several larger independent tower owners have emerged as demand for wireless
communications services continued to grow and as additional high frequency
licenses were awarded for new wireless communications services each requiring
networks with extensive tower infrastructure. In addition, as the demand for
towers has been increasing there has been a growing trend by
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municipalities to slow the proliferation of towers. These trends have
contributed to a growing need for towers that can accommodate co-location of
wireless communications providers. In this regard, an opportunity to acquire
towers and lease space to multiple wireless communications providers was
created.
Ownership of rental towers in many parts of the United States remains highly
fragmented. Only a few independent tower owners have accumulated a large number
of towers and the Company believes it is the only one to achieve a consolidated
position in the Southeastern United States. The pace of consolidation has begun
to accelerate as larger independent owners acquire small local owners in certain
regions. In individual markets that are consolidated, the consolidating owners
have created formidable competition for new potential rental tower owners.
Business and Growth Strategy
The Company's objective is to create substantial value from its position as
the leading rental tower owner in the Southeastern United States. In order to
achieve its objective, the Company has designed and implemented a three-tiered
growth strategy:
I. Marketing and Development Strategy
The Company seeks to capitalize on the operating leverage of its business by
increasing the utilization of rental space on its towers. The Company's
customers are generally responsible for the installation of their own equipment
and the incremental utility costs associated with that equipment. Furthermore,
there are no additional monitoring, maintenance or insurance costs to the
Company associated with additional customers. Accordingly, the Company believes
that when additional rental space is available on its towers, incremental
revenue can be achieved at low incremental costs, thereby yielding significant
incremental profit margin. The implementation of the Company's marketing and
development strategy includes the following:
. Offer Strategically Located Clusters of Towers. By owning and assembling
clusters of towers in strategically attractive regions, the Company believes it
is able to offer its customers the ability to rapidly fulfill their network
expansion plans. The Company believes that the ability to offer "one stop
shopping" services to customers on a local and regional basis provides the
Company a significant competitive advantage.
. Leverage Customer Relationships. The Company believes it has established
a reputation among its customers as a highly professional, responsive tower
space provider that routinely fulfills its commitments to its customers. This
has been achieved through ongoing investment in the development of multilevel
customer relationships. The Company believes that making customers' technical
and planning personnel aware of the quality of a particular site, the ease of
doing business with one lessor, the location of other Company-owned towers and
the Company's ability to construct new sites are important factors in generating
interest in the Company's towers.
. Track FCC Filings. All FCC licensees must file applications for site
locations. Utilizing its proprietary databases and publicly available
information, the Company tracks these filings closely to identify tower
acquisition and construction opportunities which, due to the site's appeal to a
broad base of customers, the Company believes will have significant and
predictable future revenue growth. Additionally, the Company closely monitors
FCC auctions in order to identify new market entrants.
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. Promote Quality and Security of Facilities. The wireless communications
equipment typically stored in a tower building is becoming increasingly
sophisticated and is critical to a wireless communications provider's ability to
generate revenue. Accordingly, the Company believes it is of vital importance to
its customers that their equipment be in a well-maintained and secure building.
The Company believes it has developed a reputation as a provider of high quality
and secure sites.
. Dedicate Resources to Customer Service The Company employs a group of
individuals who are entirely dedicated to assisting customers with site location
and installation logistics. Management of the Company's technical data through
effective information systems enables the customer service group to respond
quickly and accurately to customers' needs before, during and after the
installation of customers' equipment.
II. Acquisition Strategy
The Company's acquisition strategy is focused on (i) the rapid acquisition
of towers in key markets as a means to quickly gain critical mass, thereby
discouraging other tower consolidators from entering its markets and (ii) the
completion of follow-on acquisitions to assist in completing coverage of the
selected market. The Company utilizes the following primary criteria in
evaluating the attractiveness of a potential acquisition:
. Target Attractive Wireless Geographic Markets. Within its targeted
region, the Company targets population centers and transportation corridors
where there is evidence of high growth in wireless communications services. The
Southeastern United States is generally characterized by a number of attractive
demographic trends including relatively high population and economic growth
rates. Today, the Company has strong market positions in many population centers
such as Orlando, Atlanta, Birmingham, Tampa and New Orleans. Further, the
Company has established a strong market position along several key traffic
corridors within its operating region.
. Compatibility with Existing Tower Network. The Company's marketing
activities provide information as to how a potential acquisition may enhance its
existing tower network. In evaluating a potential acquisition, the Company
considers whether that acquisition will, when combined with existing tower
inventory, result in the Company owning a cluster of towers in a given area,
thereby providing the Company with a stronger market position.
. Disciplined Valuation Process. The Company seeks to acquire towers that
have existing cash flow and the potential for significant future cash flow
growth. For each potential acquisition, the Company reviews the current
population coverage of each proposed tower, the nature and quality of the
customer base, coverage of current and future major transportation corridors and
the location and desirability of competing towers. The Company also makes an
assessment of potential cash flow growth and estimates whether additional
capital expenditures will be required to add capacity to accommodate future
growth.
. The Southern Towers Acquisition. On March 4, 1998, the Company completed
the acquisition of 201 towers from Southern Communications, a subsidiary of
Southern Company, one of the largest utility holding companies in the United
States and a large Enhanced Specialized Mobile Radio ("ESMR") provider in the
United States with a network in the Southeast. The Company paid $83.5 million
plus fees and expenses for these towers, which are located in Georgia, Alabama,
Mississippi and Florida, substantially all of which were constructed within the
last four years. Prior to the acquisition, these towers were principally for the
exclusive use of Southern Communications and its affiliates. Only a limited
number of third party tenants have been given access to these towers. The towers
were generally constructed with capacity significantly exceeding Southern
Communications' specific capacity requirements. Accordingly, the Company
believes that there is substantial additional revenue potential on these towers.
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III. New Tower Construction Strategy
The Company's tower site construction is not speculative. Construction is
only initiated after at least one anchor customer is identified and after the
Company has determined, based on market research, that the capital outlay for
the construction project would not exceed a maximum multiple of estimated Tower
Level Cash Flow after a given period of time. The elements of the Company's
tower build program include the following:
. Disciplined Build Selection Criteria. Through its sales and marketing
efforts, the Company seeks to identify suitable tower construction sites based
on information obtained from wireless communications providers regarding their
network construction plans. The Company evaluates those plans and ensures that
an effective solution to meeting customer requirements is employed, whether the
result is selling space on an existing tower, acquiring an existing tower,
augmenting an existing tower or constructing a new tower.
. Rapid Construction/Build Implementation. After identifying an attractive
construction opportunity, the Company moves quickly to: (i) secure access to the
site by either purchasing or entering into a long-term lease for a parcel of
land; (ii) select the appropriate type of tower based on structural capacity
needs; (iii) initiate sales and marketing efforts to rent space on the tower;
and (iv) complete necessary steps to obtain zoning approvals and building
permits. The Company then oversees the construction of the tower by hired sub-
contractors.
. Effective Tower Design and Sourcing. New tower structures are available
from a variety of manufacturers. The number of customer attachments that can be
installed on any individual tower (the tower's capacity) varies dramatically
depending on a number of factors including the original engineering and design
of the tower, the geographic area in which the tower is erected and the specific
nature of the attachments which customers wish to install. These factors also
influence the amount of capital which must be invested to build such towers.
Company Strengths
The Company had a network of approximately 554 towers as of March 4, 1998,
geographically clustered in the Southeastern United States. With the Southern
Towers Acquisition, the Company believes that it has significantly accelerated
its progress in its objective to create substantial value from its position as
the leading rental tower owner in the Southeastern United States. In many areas
in which it operates, the Company provides "one stop shopping" by establishing a
critical mass of geographical clusters adequate to supply customer's site
requirements. The Company believes its portfolio of rental towers has the
following favorable economic characteristics:
. High Absolute and Incremental Margins. The Company's towers are fixed-
cost assets with minimal variable costs associated with revenue from leasing
available space to additional or existing customers, as each customer generally
assumes the costs of installation, utilities and equipment maintenance.
Accordingly, a rental tower owner can generate increasing operating margins when
new customers are added, resulting in high incremental free cash flow available
to service debt. For the year ended December 31, 1997, not giving effect to the
Transactions the Company's Tower Level Cash Flow Margin was 79.6%.
. Stable and Predictable Cash Flow. The Company believes that it benefits
from the long-term contract nature of its tower rental business and the
predictability and stability of monthly, prepaid and recurring revenue. The
Company generally leases space on its towers to wireless communications
providers under three-to five-year leases. In addition, a majority of the
Company's leases provide built-in annual rate increases of
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the greater of a specified percentage (which typically ranges from 3-5%) or the
change for the relevant period in the CPI. Furthermore, because a significant
proportion of tower rental revenue is received from customers that are
predominantly large companies and because towers provide a basic utility-like
service (which can be terminated by a tower owner if rent is not paid), the
Company generally experiences low levels of bad debt expense. In 1997, the
Company's bad debt expense as a percentage of revenue was 1.0%.
. Diversified Customer Base. There is broad representation of wireless
communications providers and underlying technologies reflected in the Company's
customer base. Accordingly, the Company believes that the stability and growth
of its revenue will reflect that of the wireless communications industry in
general, rather than any specific customer or segment within that industry. The
Company has a diversified base of over 675 customers, only one of which accounts
for more than 5% of the Company's total revenue.
. Barriers to Entry. Towers are subject to a variety of federal and local
regulations which make construction of towers difficult, expensive and time
consuming, especially in highly populated or high transmission areas. In
addition, in areas where the Company has established a critical mass of rental
tower inventory adequate to supply customers' site requirements, construction of
alternative towers will be less attractive to others due to the likelihood of
lower returns on those towers. Wireless communications providers seeking to
construct their own proprietary, limited use towers face continued opposition by
municipalities, which are reducing the opportunities for such new towers to be
built and supporting the trend toward co-location on rental towers.
. Low Customer Churn. The Company typically experiences low customer churn
as a result of the high relocation costs incurred by customers. When customers
enter into long-term contracts for tower space, those customers generally make
significant capital and network engineering commitments to the related site. The
Company believes that these levels of commitment made by its customers support
the long-term nature and predictability of the Company's revenue. Municipal
approvals are becoming increasingly difficult to obtain and may also affect the
carrier's decision to relocate. The costs associated with network
reconfiguration, obtaining FCC and municipal approval and the time required to
complete these activities may not be justified by any potential savings in
reduced tower operating expense. As a result, the Company experienced customer
churn of 0.8% in 1996 and 0.6% in 1997.
. Attractive Underlying Growth and Prospects. According to industry
publications, as of December 31, 1997, penetration for wireless services was
approximately 21.0% and is projected to grow to 53.0% by 2007. The Company's
rental towers are basic infrastructure components for all major wireless
communications services, including cellular, paging, two-way radio, broadcast
television, microwave, wireless data transmission and SMR customers. As a
result, the Company believes that its tower rental revenue will reflect the
growth of its customer base over the next several years.
Financing Plan
Since the Company's inception in May 1995, the Company's operations have
been financed primarily through borrowings under the Senior Credit Facility (as
defined herein) and equity and bridge financings provided by the Company's
primary stockholder, ABRY Broadcast Partners II, L.P. ("ABRY II").
In May 1995, the Company and ABRY II entered into a capital contribution
agreement whereby ABRY II committed to invest up to $20.0 million of equity in
the Company (as amended, the "Capital Contribution Agreement") and, at that
time, management invested $1.2 million in equity. In February 1996, the Capital
Contribution Agreement was amended to increase ABRY II's equity commitment to
$50.0 million to continue the Company's planned strategy of rapid growth. During
1997, management invested an additional $0.3
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million. As of March 4, 1998, $34.0 million of the ABRY II equity commitment has
been invested. Additionally, in February 1998, the Company borrowed $12.5
million from ABRY II (the "ABRY Bridge Loan") to partially fund the Southern
Towers Acquisition. A portion of the net proceeds from the Private Offering were
used to repay in full and retire the ABRY Bridge Loan.
In September 1995, Pinnacle Towers Inc. (the principal subsidiary and
operating company of the Issuer) entered into a credit agreement which provided
for $25.0 million of senior debt financing through a reducing revolving line of
credit and revolver/term loan (as amended, the "Senior Credit Facility"). In
September 1996, the Company and the lenders under the Senior Credit Facility
agreed to expand the commitment amount to $100.0 million. In connection with the
Southern Towers Acquisition, the Company and the lenders under the Senior Credit
Facility agreed to expand the commitment under the Senior Credit Facility to
$200.0 million initially, which will be amended to provide a $150.0 million
commitment upon the closing of the Offering. The commitment under the Senior
Credit Facility may be increased up to $250.0 million at the request of the
Company and at the option of the lenders. As of March 20, 1998, outstanding
borrowings and availability under the Senior Credit Facility were approximately
$14.2 million and $120.6 million, respectively, after giving effect to (i) the
repayment on such date of $158.6 million of outstanding borrowings with a
portion of the proceeds of the Private Offering, (ii) reduction of the Senior
Credit Facility to a commitment of $150.0 million and (iii) consideration of
$15.2 million of outstanding letters of credit that reduce availability under
the Senior Credit Facility.
In September 1997, the Company completed arrangements with Goldman Sachs
Credit Partners L.P. and NationsBridge, L.L.C. for a $20.0 million term loan
(the "Subordinated Term Loan"), the proceeds of which were used to repay in full
and retire a $12.3 million bridge loan and related accrued interest totalling
$0.5 million from ABRY II and repay certain amounts outstanding under the Senior
Credit Facility. The Subordinated Term Loan was repaid in full and retired with
the net proceeds of the Private Offering.
The Company expects to have significant capital requirements over the next
several years, particularly in relation to the acquisition and construction of
new towers. The Company intends to fund such future capital requirements through
availability under the Senior Credit Facility, the remaining equity commitment
under the Capital Contribution Agreement and other externally generated sources
of available funding.
The Company's headquarters are located at 1549 Ringling Boulevard, Third
Floor, Sarasota, Florida 34236, and its telephone number is (941) 364-8886.
The Exchange Offer
Resale................................ $325,000,000 in aggregate principal
amount of the Original Notes were
sold in the Private Offering by the
Company on March 17, 1998 to Goldman,
Sachs & Co. and NationsBanc
Montgomery Securities LLC (the
"Initial Purchasers"). The holders of
Original Notes and New Notes are
collectively referred to herein as
the "Holders." The Company is making
the Exchange Offer in reliance on the
position of the staff of the
Commission as set forth in certain
no-action letters addressed to other
parties in other transactions.
However, the Company has not sought
its own no-action letter, and there
can be no assurance that the
7
<PAGE>
staff of the Commission would make a
similar determination with respect to
the Exchange Offer as in such other
circumstances. Based on these
interpretations by the staff of the
Commission, the Company believes that
New Notes issued pursuant to this
Exchange Offer in exchange for
Original Notes may be offered for
resale, resold and otherwise
transferred by a holder thereof other
than (i) a broker-dealer who
purchased such Original Notes
directly from the Company to resell
pursuant to Rule 144A or any other
available exemption under the
Securities Act or (ii) a person that
is an "affiliate" (as defined in Rule
405 of the Securities Act) of the
Company without compliance with the
registration and prospectus delivery
provisions of the Securities Act,
provided that such New Notes are
acquired in the ordinary course of
such Holder's business and that such
Holder is not participating, and has
no arrangement or understanding with
any persons to participate, in the
distribution of such New Notes.
Holders of Original Notes accepting
the Exchange Offer will represent to
the Company 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 Notes 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 Notes 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 (other than an
"affiliate" of the Company) that
receives New Notes for its own
account pursuant to the Exchange
Offer must acknowledge that it
acquired the Original Notes as the
result of market-making activities or
other trading activities and will
deliver a prospectus in connection
with any resale of such New Notes.
The Letter of Transmittal states that
by so acknowledging and by delivering
a prospectus, a broker-dealer will
not be deemed to admit that it is
8
<PAGE>
an "underwriter" within the meaning
of the Securities Act. This
Prospectus, as it may be amended or
supplemented from time to time, may
be used by a broker-dealer in
connection with resales of New Notes
received in exchange for Original
Notes where such Original Notes were
acquired by such broker-dealer as a
result of market-making activities or
other trading activities. In
addition, pursuant to Section 4(3)
under the Securities Act, until
___________, ____, all dealers
effecting transactions in the New
Notes, whether or not participating
in the Exchange Offer, may be
required to deliver a Prospectus.
The Company has agreed that, for a
period of 180 days after the date of
this Prospectus, it will make this
Prospectus available to any
broker-dealer for use in connection
with any such resale. See "Plan of
Distribution." Any broker-dealer who
is an affiliate of the Company may
not rely on such no-action letters
and must comply with the registration
and prospectus delivery requirements
of the Securities Act in connection
with any secondary resale
transaction. See "The Exchange Offer
-- Purpose and Effect of the Exchange
Offer" and "Plan of Distribution."
The Exchange Offer.................... The Company is offering to exchange
pursuant to the Exchange Offer up to
$325,000,000 aggregate principal
amount of the New Notes for up to
$325,000,000 aggregate principal
amount of the Original Notes. The
terms of the New Notes are
substantially identical in all
respects (including principal amount,
interest rate and maturity) to the
terms of the Original Notes for which
they may be exchanged pursuant to the
Exchange Offer, except that the New
Notes are freely transferable by
Holders thereof (other than as
provided herein), and are not subject
to any covenant restricting transfer
absent registration under the
Securities Act. See "The Exchange
Offer -- Terms of the Exchange" and
"The Exchange Offer -- Procedures for
Tendering."
The Exchange Offer is not conditioned
upon any minimum aggregate principal
amount of Original Notes being
tendered for exchange.
Expiration Date....................... The Exchange Offer will expire at
5:00 p.m., New
9
<PAGE>
York City time on , 1998, unless
extended (the "Expiration Date").
Conditions of the Exchange Offer...... The Company's obligations to consummate
the Exchange Offer are subject to
certain conditions. See "The Exchange
Offer -- Conditions to the Exchange
Offer." The Company reserves the right
to terminate or amend the Exchange Offer
at any time prior to the Expiration Date
upon the occurrence of any such
conditions.
Withdrawal Rights..................... Tenders may be withdrawn at any time
prior to the Expiration Date; otherwise,
all tenders will be irrevocable.
Procedures for Tendering Notes........ See "The Exchange Offer -- Procedures
for Tendering."
Federal Income Tax Consequences....... The exchange of Original Notes for New
Notes should not be a taxable exchange
for federal income tax purposes. See
"Certain Federal Income Tax
Considerations."
Effect on Holders of the Original
Notes................................ As a result of the making of, and upon
acceptance for exchange of all validly
tendered Original Notes pursuant to the
terms of this Exchange Offer, the
Company will have fulfilled its
obligations contained in the
Registration Rights Agreement and,
accordingly, there will be no increase
in the interest rate on the Original
Notes pursuant to the applicable terms
of the Registration Rights Agreement due
to the Exchange Offer. Holders of the
Original Notes who do not tender their
Original Notes will be entitled to all
the rights and limitations applicable
thereto under the Indenture, dated as of
March 20, 1998, among the Company and
The Bank of New York, as trustee (the
"Trustee"), relating to the Original
Notes and the New Notes (the
"Indenture"), except for any rights
under the Indenture or the Registration
Rights Agreement, which by their terms,
terminate or cease to have further
effect as a result of the making of, and
the acceptance for exchange of all
validly tendered Original Notes pursuant
to, the Exchange Offer. All untendered
Original Notes will continue to be
subject to the restrictions on transfer
provided for in the Original Notes and
in the Indenture. To the extent that
Original Notes are tendered and accepted
in the Exchange Offer,
10
<PAGE>
the trading market for untendered
Original Notes could be adversely
affected.
Exchange Agent........................ The exchange agent with respect to the
Exchange Offer is The Bank of New York
(the "Exchange Agent"). The address and
telephone number of the Exchange Agent
are set forth in "The Exchange Offer --
Exchange Agent."
Use of Proceeds....................... There will be no cash proceeds to the
Company from the exchange pursuant to
the Exchange Offer.
11
<PAGE>
The New Notes
The Exchange Offer applies to the $325,000,000 aggregate principal amount at
maturity of the Original Notes outstanding as of the date hereof. The form and
the terms of the New Notes will be identical in all material respects to the
form and the terms of the Original Notes, except that the New Notes will have
been registered under the Securities Act and, therefore, will not contain
legends restricting the transfer thereof. The New Notes evidence the same debt
as the Original Notes exchanged for the New Notes and will be entitled to the
benefits of the same Indenture under which the Original Notes were issued. See
"Description of Notes." Certain capitalized terms listed below are defined
under the caption "Description of the Notes -- Certain Definitions."
Issuer.................. Pinnacle Holdings Inc., a Delaware corporation.
Securities Offered...... $325.0 million aggregate principal amount at
maturity of 10% Senior Discount Notes due 2008.
Maturity Date........... March 15, 2008.
Interest................ The New Notes will accrete (representing the
amortization of original issue discount) at a rate of
10% on a semi-annual bond-equivalent basis, to an
aggregate principal amount at maturity of
$325,000,000 by March 15, 2003. No interest will
accrue on the New Notes prior to March 15, 2003. The
New Notes will accrue cash interest at the rate of
10% per annum from March 15, 2003, payable semi-
annually in arrears on March 15 and September 15 of
each year, commencing September 15, 2003.
Effective Yield......... 10% per annum, computed on a semi-annual bond-
equivalent basis using a 360-day year comprised of 12
30-day months and calculated from March 17, 1998.
12
<PAGE>
Ranking................. The New Notes will be senior unsecured obligations of
the Issuer and will rank pari passu in right of
payment with all existing and future senior
obligations of the Issuer, including any Original
Notes that are not exchanged in the Exchange Offer.
The New Notes will be effectively subordinated to all
existing and future indebtedness of the Issuer's
subsidiaries. As of December 31, 1997, after giving
pro forma effect to the Transactions, the aggregate
amount of outstanding indebtedness and other
liabilities of the Issuer's subsidiaries would have
been $49.8 million, $44.4 million of which would have
been secured obligations. See "Management's
Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital
Resources" and "Description of Credit Facilities".
Optional Redemption..... Except as described below, the Notes are not
redeemable at the Issuer's option prior to March 15,
2003. The Notes will be redeemable, in whole or in
part, on or after March 15, 2003 at the redemption
prices set forth herein, plus accrued and unpaid
interest, including Liquidated Damages (as defined
herein), if any, to the date of redemption. In
addition, at any time on or prior to March 15, 2001,
the Issuer may, at its option, redeem up to 35% of
the Notes with the net cash proceeds from one or more
Public Equity Offerings at a redemption price equal
to 110% of the Accreted Value thereof plus accrued
and unpaid Liquidated Damages, if any, to the date of
redemption; provided, however, that, after giving
effect to any such redemption, at least 65% of the
aggregate principal amount of the Notes originally
issued on the Closing Date (as defined herein) remain
outstanding.
13
<PAGE>
Change of Control.... In the event of a Change of Control, the holders of the
Notes will have the right to require the Issuer to
purchase their Notes pursuant to an Offer to Purchase (as
defined herein) at a price equal to 101% of the stated
principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the
date of purchase or, if such Offer to Purchase is to be
consummated prior to March 15, 2003, 101% of the Accreted
Value thereof on the date of purchase plus accrued and
unpaid Liquidated Damages thereon, if any, to the date of
purchase. See "Risk Factors--Ability to Purchase Notes
Upon a Change of Control".
Covenants............ The Indenture contains certain covenants that, among
other things, limit the ability of the Issuer and its
subsidiaries to incur additional indebtedness, pay
dividends or make other distributions, repurchase equity
interests or subordinated indebtedness, create certain
liens, enter into certain transactions with affiliates,
sell assets of the Issuer and its subsidiaries, and enter
into certain mergers and consolidations.
Risk Factors
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating an investment in the Notes.
14
<PAGE>
Summary Historical and Unaudited Pro Forma Consolidated Financial Data
The following summary historical and unaudited pro forma consolidated
financial data has been derived from the Company's audited consolidated
financial statements and notes thereto, and the Unaudited Pro Forma Consolidated
Financial Statements appearing elsewhere in this Prospectus. The summary
financial information should be read in conjunction with the information
contained in the Company's consolidated audited financial statements and notes
thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Unaudited Pro Forma Consolidated Financial Statements"
and "Selected Historical and Unaudited Pro Forma Consolidated Financial Data"
included elsewhere herein.
The following unaudited pro forma consolidated financial data as of and for
the year ended December 31, 1997, has been prepared to reflect the financial
position and results of operations of the Company as if each of the following
had been completed on December 31, 1997 as it relates to balance sheet data and
as of January 1, 1997 as it relates to statement of operations data: (i) all
acquisitions completed during 1997; (ii) the Southern Towers Acquisition; (iii)
acquisitions of other rental towers by the Company completed from January 1,
1998 through March 4, 1998, in addition to the Southern Towers Acquisition; (iv)
other individually immaterial acquisitions of rental towers for which the
Company has entered into agreements or letters of intent to acquire as of March
4, 1998, the acquisitions of which the Company believes are probable; (v) the
financing of the acquisitions referred to in (i) through (iv) above; and (vi)
the issuance of the Original Notes and the application of the net proceeds
therefrom as described under "Use of Proceeds" (collectively, the
"Transactions").
<TABLE>
<CAPTION>
Period from
Inception
(May 3, 1995) Pro Forma
through Year Ended Year Ended as Adjusted
December 31, December 31, December 31, December 31,
1995 1996 1997 1997(a)
------------- ------------- ------------- ---------------
Statement of Operations Data:
<S> <C> <C> <C> <C>
Tower rental revenue................................... $ 733 $ 4,842 $12,881 $ 25,004
Tower operating expenses, excluding depreciation and 181 1,135 2,633 4,807
amortization.......................................... ----- ------- ------- --------
Gross profit, excluding depreciation and amortization.. 552 3,707 10,248 20,197
Other expenses:
General and administrative(b)........................ 306 923 1,385 1,385
Corporate development(b)............................. 369 1,440 3,772 3,772
Depreciation and amortization........................ 341 2,205 6,627 17,214
----- ------- ------- --------
Loss from operations................................... (464) (861) (1,536) (2,174)
Interest expense....................................... 181 1,155 6,925 24,787
----- ------- ------- --------
Net loss............................................... $(645) $(2,016) $(8,461) $(26,961)
===== ======= ======= ========
Other Operating Data:
Tower Level Cash Flow(c)............................... $ 552 $ 3,707 $10,248 $ 20,197
Tower Level Cash Flow Margin(d)........................ 75.3% 76.6% 79.6% 80.8%
Adjusted EBITDA(c)..................................... $ 246 $ 2,784 $ 8,863 $ 18,812
Adjusted EBITDA Margin(d).............................. 33.6% 57.5% 68.8% 75.2%
EBITDA(c).............................................. $(123) $ 1,344 $ 5,091 $ 15,040
EBITDA Margin(d)....................................... -- 27.8% 39.5% 60.2%
Ratio of earnings to fixed charges(e).................. -- -- -- --
Number of Towers:
Beginning of period.................................. 0 33 156 156
Towers acquired during the period.................... 29 119 134 420
Towers constructed during the period................. 4 4 22 22
End of period.................................. 33 156 312 598
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
December 31, 1997
------------------------
Pro Forma
as
Historical Adjusted(a)
---------- -----------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents........................... $ 1,694 $ 1,694
Tower assets, net................................... 127,946 250,411
Total assets........................................ 143,178 272,637
Total debt.......................................... 120,582 244,147
Redeemable Stock:
Class B common stock................................ 1,761 1,761
Class D common stock................................ -- --
Common stock.......................................... -- --
Additional paid-in capital............................ 25,876 33,038
Accumulated deficit................................... (11,123) (11,731)
-------- --------
Stockholders' equity.................................. 14,753 21,307
</TABLE>
- --------------------
(a) Reflects historical amounts adjusted for the effects of the Transactions
(including the acquisitions of 201 towers in the Southern Towers Acquisition
and 33 other towers acquired in 1998 as of March 4, 1998, and the probable
acquisition of 52 additional towers for which the Company has obtained
letters of intent as of March 4, 1998), as further described in "Unaudited
Pro Forma Consolidated Financial Statements."
(b) "General and administrative" expenses represent those costs directly related
to the day-to-day management and operation of towers owned by the Company.
"Corporate development" expenses represent costs incurred in connection with
acquisitions and development of new business initiatives, consisting
primarily of allocated compensation, benefits and overhead costs that are
not directly related to the administration or management of existing towers.
(c) "Tower Level Cash Flow" is defined as tower rental revenue minus tower
operating expenses, excluding depreciation and amortization. "Adjusted
EBITDA" represents loss from operations before depreciation, amortization
and corporate development expenses. "EBITDA" represents loss from operations
before depreciation and amortization. The Company has included Tower Level
Cash Flow, Adjusted EBITDA and EBITDA in Other Operating Data because the
Company believes such information may be useful to certain investors in
evaluating the Company's ability to service its debt. Tower Level Cash Flow,
Adjusted EBITDA and EBITDA should not be considered as an alternative to
Gross Profit, net loss or net cash provided by operating activities (or any
other measure of performance in accordance with generally accepted
accounting principles) as a measure of the Company's ability to meet its
cash needs.
(d) Represents Tower Level Cash Flow, Adjusted EBITDA and EBITDA each as a
percentage of tower rental revenue.
(e) As a result of the loss incurred in 1995, 1996 and 1997, the Company was
unable to fully cover the indicated fixed charges. Earnings did not cover
fixed charges by $645, $2,016, $8,461 and $26,961 in 1995, 1996, 1997 and
1997 Pro Forma as Adjusted.
16
<PAGE>
RISK FACTORS
An investment in the Notes offered hereby involves a high degree of risk. The
following factors, in addition to the other information contained in this
Prospectus, should be carefully considered in evaluating an investment in the
Notes offered hereby.
Substantial Indebtedness; Ability to Service Indebtedness
The Company has a significant amount of indebtedness. As of December 31,
1997, on a pro forma basis giving effect to the Transactions, the Company's
indebtedness would have been approximately $244.1 million, its stockholders'
equity would have been approximately $21.3 million and its ratio of debt to
equity (excluding redeemable stock) would have been 11.5 to 1.0. In addition,
after completion of the Private Offering and the application of net proceeds
therefrom as described under "Use of Proceeds," the Company had approximately
$120.6 million (after giving effect to $15.2 million of outstanding letters of
credit) of availability under the Senior Credit Facility, all of which the
Company is permitted to borrow under the Indenture. Further, subject to the
restrictions in the Senior Credit Facility and the Indenture, the Company may
incur additional indebtedness from time to time to finance acquisitions, capital
expenditures, working capital or for other purposes.
The level of the Company's indebtedness could have important consequences to
holders of the Notes, including, but not limited to, the following: (i) a
substantial portion of the Company's cash flow from operations must be dedicated
to the repayment of indebtedness and the payment of interest thereon and will
not be available for other purposes; (ii) the Company's future ability to obtain
additional debt financing for working capital, capital expenditures,
acquisitions or other purposes may be limited; and (iii) the Company's level of
indebtedness could limit its flexibility in reacting to changes in its industry
and general economic conditions and its ability to withstand a prolonged
downturn in the wireless communications or tower rental industries. Existing or
potential competitors of the Company may operate on a less leveraged basis and
have significantly greater operating and financing flexibility than the Company.
The Company's ability to service its debt obligations will depend upon its
future operating performance, which will be affected by prevailing economic
conditions in the wireless communications industry, and financial, business and
other factors, certain of which are beyond its control. If the Company is unable
to generate sufficient cash flow from operations to service its indebtedness, it
will be forced to adopt an alternative strategy that may include actions such as
reducing, delaying or eliminating acquisitions, tower construction and other
capital expenditures, selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There can be no assurance
that any of these alternative strategies could be effected on satisfactory
terms, if at all.
The Senior Credit Facility and the Indenture each contain certain restrictive
covenants. The Senior Credit Facility also requires the Company to maintain
specified financial ratios and satisfy certain financial condition tests. The
Company's ability to meet those financial ratios and tests can be affected by
events beyond its control, and there can be no assurance that the Company will
meet those tests. A breach of any of these covenants could result in a default
under the Senior Credit Facility and the Indenture. If an event of default
should occur under the Senior Credit Facility, the lenders thereunder can elect
to declare all amounts of principal outstanding under the Senior Credit
Facility, together with all accrued interests, to be immediately due and
payable. This could also result in the triggering of cross-default or cross-
acceleration provisions in other instruments (including the Indenture), thereby
permitting acceleration of the maturity of additional indebtedness (including
the Notes). If the Company were unable to repay amounts that become due under
the Senior Credit Facility, the lenders thereunder could proceed against the
collateral granted to them to secure that indebtedness. If the indebtedness
under the Senior Credit Facility were to be accelerated, there can be no
assurance that the assets of the Company would be sufficient to repay in full
such indebtedness and any other indebtedness of the Company, including the
Notes. Substantially all the assets of the Company are pledged as security under
the Senior Credit Facility. See "Description of Credit Facilities".
17
<PAGE>
Prior to March 15, 2003, the Issuer's interest expense on the Notes will be
comprised solely of the accretion of original issue discount. Thereafter, the
Notes will require annual cash interest payments of $32.5 million. In addition,
the Senior Credit Facility will require periodic interest payments on amounts
borrowed thereunder. The Company's ability to make scheduled payments of
principal of, or to pay interest on, its debt obligations, and its ability to
refinance any such debt obligations (including the Notes), will depend on its
future performance, which, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond its control. As discussed, the Company's business strategy contemplates
substantial capital expenditures in connection with execution of its business
plan. There can be no assurance that the Company will generate sufficient cash
flow from operations in the future, that anticipated revenue growth will be
realized or that future borrowings or equity contributions will be available in
an amount sufficient to service its indebtedness and make anticipated capital
expenditures. The Company anticipates that it may need to refinance all or a
portion of its indebtedness (including the Notes) on or prior to its scheduled
maturity. There can be no assurance that the Company will be able to effect any
required refinancing of its indebtedness (including the Notes) on commercially
reasonable terms or at all.
Holding Company Structure
The Issuer is primarily a holding company with no material business
operations, sources of income or assets of its own other than the shares of its
subsidiaries. The New Notes are obligations exclusively of the Issuer. Because
substantially all of the Issuer's operations are conducted through subsidiaries,
the Issuer's cash flow and, consequently, its ability to meet its debt service
obligations, including payment of principal, premium, if any, and interest on
the Notes, is dependent upon the cash flow of its subsidiaries and the payment
of funds by those subsidiaries to the Issuer in the form of loans, dividends,
fees or otherwise. The Issuer's subsidiaries are separate and distinct legal
entities and will have no obligation, contingent or otherwise, to pay any
amounts due pursuant to the Notes or to make any funds available therefor,
whether in the form of loans, dividends or otherwise. Under the terms of the
Senior Credit Facility, the ability of the Issuer's subsidiaries to make loans
or distributions to the Issuer is restricted. Renewals or replacements of the
Senior Credit Facility and other agreements to which the Company may become a
party may contain similar prohibitions. The Issuer will need sufficient funds
available to pay cash interest on the Notes beginning in 2003 and to repay the
Notes when required. The Issuer would be unable to fulfill such obligations
under the current terms of the Senior Credit Facility unless it obtained a
waiver or refinanced the indebtedness borrowed under the Senior Credit Facility
or the Notes. There can be no assurance that the Issuer would be able to obtain
such waiver or refinancing on terms favorable to it, if at all.
In addition, because the Issuer's subsidiaries will not guarantee the payment
of principal of or interest on the Notes, any right of the Issuer to receive
assets of any of its subsidiaries upon its liquidation or reorganization (and
the consequent right of the holders of the Notes to participate in the
distribution of proceeds from those assets) will be structurally subordinated to
the claims of such subsidiary's creditors (including tax authorities, trade
creditors and lenders to such subsidiary), except to the extent that the Issuer
is itself a creditor of such subsidiary, in which case the Issuer's claims would
still be subordinated to any security interest in the assets of such subsidiary
and indebtedness of such subsidiary senior to that held by the Issuer. Pinnacle
Towers Inc. (the principal subsidiary and operating company of the Issuer) is
the borrower under the Senior Credit Facility and is obligated to repay the
indebtedness under the Senior Credit Facility, which obligations are secured by
such subsidiary's assets, which represent substantially all of the assets of the
Company. In the event of a default on secured indebtedness (whether as a result
of the failure to comply with a payment or other covenant, a cross-default or
otherwise), the parties granted such security interests will have a prior
secured claim on the assets of such subsidiary. If such parties should attempt
to foreclose on their collateral, the Issuer's financial condition and the value
of the Notes could be materially adversely affected. As of December 31, 1997, on
a pro forma basis giving effect to the Transactions, the Issuer's subsidiaries
would have had approximately $49.8 million of indebtedness and other liabilities
outstanding (including trade payables and capital lease obligations) $44.4
million of which is secured and all of which would have been effectively senior
to the Notes. This amount includes substantially all of the Company's
indebtedness. The Indenture permits the Issuer's subsidiaries to incur
additional indebtedness under certain circumstances. See "Description of Notes".
18
<PAGE>
Dependence on the Wireless Communications Industry; Current Industry Conditions
Substantially all of the Company's revenue is derived from leases of tower
space, most of which are with wireless communications providers. Accordingly,
the future growth of the Company depends, to a considerable extent, upon the
continued growth and increased availability of cellular and other wireless
communications providers, including PCS. There can be no assurance that the
wireless communications industry will not experience severe and prolonged
downturns in the future or that the wireless communications industry will expand
as quickly as forecasted. The wireless communications industry, which includes
paging, cellular, PCS, fixed microwave, SMR, ESMR and other wireless
communications providers, has undergone significant growth in recent years and
remains highly competitive, with service providers in a variety of technologies
and two or more providers of the same service (up to 6 for PCS) within a
geographic market competing for subscribers. The amount of tower leasing
business from wireless communications providers is dependent on a number of
factors beyond the Company's control, including demand for wireless services,
the financial condition and access to capital of wireless communications
providers, the strategy of wireless communications providers with respect to
owning or leasing towers, government licensing of broadcast rights, changes in
telecommunications regulations and general economic conditions. The demand for
space on the Company's towers is primarily dependent on the demand for wireless
communications services. A slowdown in the growth of the wireless communications
industry in the United States would depress network expansion activities and
reduce the demand for the Company's rental towers. In addition, a downturn in a
particular wireless segment as a result of technological competition or other
factors beyond the control of the Company could adversely affect the demand for
rental towers. Also, advances in technology could reduce the need for tower-
based transmission and reception. Furthermore, wireless communications providers
may increase the number of towers owned versus the number rented. The occurrence
of any of these factors could have a material adverse effect on the Company's
financial condition and results of operations. This Prospectus contains a number
of estimates by industry experts regarding expected growth rates and penetration
for wireless communications technologies. There can be no assurance that these
estimates will prove to be accurate.
Dependence on Acquisitions; Integration of Acquisitions
The Company's business plan is materially dependent upon the acquisition of
suitable communications towers at prices the Company considers reasonable in
light of the additional revenue it believes it will be able to generate from
such towers when acquired. Since the Company's inception, however, the price of
acquisitions within the industry have generally increased over time.
Additionally, the Company competes with certain wireless communications
providers, site developers and other independent tower owners and operators for
acquisitions of towers and it is possible such competition may increase.
Increased competition may result in fewer acquisition opportunities for the
Company as well as higher acquisition prices. The Company's inability to grow by
acquisition or to accurately estimate the amount of revenue that will be
generated from such acquisitions may have a material adverse effect on the
Company. Although the Company believes that opportunities may exist for the
Company to grow through acquisitions, there can be no assurance that the Company
will be able to identify and consummate sufficient appropriate acquisitions on
terms acceptable to the Company. Certain provisions of the Senior Credit
Facility or the Indenture may limit the Company's ability to effect
acquisitions. See "Risk Factors--Substantial Indebtedness; Ability to Service
Indebtedness". Further, there can be no assurance that the Company will be able
to profitably manage and market the space on additional towers acquired or
successfully integrate acquired towers with the Company's operations and sales
and marketing efforts without substantial costs or delays. Acquisitions involve
a number of potential risks, including the potential loss of customers and
unanticipated events or liabilities, some or all of which could have a material
adverse effect on the Company's financial condition and results of operations.
Competition
The Company competes for customers with wireless communications providers and
utility companies that own and operate their own tower networks and lease tower
space to other carriers, site development companies which acquire space on
existing towers for wireless communications providers and manage new tower
construction, other
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independent tower companies and traditional local independent tower operators.
Wireless communications providers that own and operate their own tower networks
generally are substantially larger and have greater financial resources than the
Company. The Company believes that tower location and capacity, price, quality
of service, type 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. The Company believes that competition for
tower acquisitions will increase and that additional competitors will enter the
tower rental market, certain of which may have greater financial resources than
the Company.
Significant Future Capital Requirements
The Company's acquisition and construction activities will create substantial
ongoing capital requirements. During 1996, 1997 and 1998 to March 4, 1998, the
Company made capital investments aggregating approximately $42.2 million, $88.4
million and $107.0 million, respectively, in tower acquisitions, site upgrades
and new tower construction. The Company historically has financed its capital
expenditures through a combination of borrowings under bank credit facilities,
bridge financings, equity issuances, seller financing and cash flow from
operations. However, significant acquisition or tower construction opportunities
could create a need for additional debt or equity financing. In addition, if the
Company's revenue and cash flow are not as expected, or if the Company's
borrowing base is reduced as a result of operating performance, the Company may
have limited ability to access necessary capital under its existing credit
facilities or otherwise. There can be no assurance that sufficient debt or
equity financing or cash generated by operations will be available to meet these
requirements.
Risks Associated with Damage to Towers
The Company's towers are subject to risks from vandalism and risks associated
with natural disasters such as tornados, hurricanes and earthquakes. The Company
maintains certain insurance to cover the cost of replacing damaged towers and
general liability insurance to protect the Company in the event of an accident
involving a tower, but the Company does not maintain business interruption
insurance. Accordingly, damage to a group of the Company's towers could result
in a significant loss of revenue and could have a material adverse effect on the
Company's results of operations and financial condition. In addition, a tower
accident for which the Company is uninsured or underinsured could have a
material adverse effect on the Company's financial condition or results of
operations.
Perceived Health Risks Associated with Radio Frequency Emissions
The Company and the wireless communications providers that utilize the
Company's towers are subject to government requirements and other guidelines
relating to radio frequency ("RF") emissions. The potential connection between
RF emissions and certain negative health effects, including some forms of
cancer, has been the subject of substantial study by the scientific community in
recent years. To date, the results of these studies have been inconclusive.
Although the Company has not been subject to any claims relating to RF
emissions, there can be no assurance that it will not be subject to such claims
in the future, which could have a material adverse effect on the Company's
results of operations and financial condition. See "Business--Regulatory
Matters".
Regulatory Compliance and Approval
Both the Federal Communications Commission (the "FCC") and the Federal
Aviation Administration (the "FAA") regulate towers used for wireless
communications transmitters and receivers. Such regulations control siting,
lighting and marking of towers and may, depending on the characteristics of the
tower, require registration of tower facilities. Wireless communications
equipment operating on towers is separately regulated and independently licensed
by the FCC. Certain proposals to construct new towers or to modify existing
towers are reviewed by the FAA to ensure that the tower will not present a
hazard to aviation. Tower owners may have an obligation to paint towers or
install lighting to conform to FAA standards and to maintain such painting and
lighting. Tower owners may also bear the responsibility of notifying the FAA of
any tower lighting failures. Failure to
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comply with existing or future applicable requirements may lead to civil
penalties or other liabilities. Such factors could have a material adverse
effect on the Company's financial condition or results of operations.
Local regulations, including municipal or local ordinances, zoning
restrictions and restrictive covenants imposed by community developers, vary
greatly, but typically require tower owners to obtain approval from local
officials or community standards organizations prior to tower construction.
Local regulations can delay or prevent new tower construction or site upgrade
projects, thereby limiting the Company's ability to respond to customer demand.
In addition, such regulations increase costs associated with new tower
construction. There can be no assurance that existing regulatory policies will
not adversely affect the timing or cost of new tower construction or that
additional regulations will not be adopted that increase such delays or result
in additional costs to the Company. Such factors could have a material adverse
effect on the Company's future growth. The Company's customers may also become
subject to new regulations or regulatory policies that adversely affect the
demand for tower sites.
The Company's growth strategy will be affected by its ability to obtain the
permits, licenses and zoning relief necessary to build new towers. The tower
rental industry often encounters significant public resistance when attempting
to obtain the necessary permits, licenses and zoning relief for construction or
improvements of towers. There can be no assurance that the Company can obtain
the permits, licenses and zoning relief necessary to continue the expansion of
its tower rental business. The failure of the Company to obtain such permits,
licenses and zoning relief would have a material adverse effect on the Company's
business, financial condition and results of operations.
Customer Concentration
The Company has certain customers that account for a significant portion of
its revenue. Currently, the Company has only one customer that accounts for more
than 5.0% of its revenue, Southern Communications and its affiliates, which
account for approximately 21.0% of the Company's revenue. The loss of one or
more of these major customers, or a reduction in their utilization of the
Company's tower rental space, could have a material adverse effect on the
Company's business, results of operations and financial condition.
Dependence on Key Personnel
The Company's success depends to a significant degree upon the continued
contributions of key management, engineering, sales and marketing, customer
support and finance personnel, certain of whom may be difficult to replace. The
loss of the services of certain of these executives could have a material
adverse effect on the Company. There can be no assurance that the services of
such personnel will continue to be available to the Company. The Company does
not maintain key man life insurance policies on its executives that would
adequately compensate the Company for any loss of services of such executives.
See "Management--Employment Agreements" and "Certain Relationships and
Transactions".
Construction Activity
As of March 4, 1998, the Company had eight towers under construction and has
in excess of 100 additional tower projects in various stages of development. The
success of the Company's growth strategy is dependent in part on its ability to
construct new towers. Such construction can be delayed by factors beyond the
control of the Company, including zoning and local permitting requirements,
availability of erection equipment and skilled construction personnel and
weather conditions. Certain communities have placed restrictions on new tower
construction or have delayed granting permits required for construction. In
addition, as the pace of tower construction has increased in recent years,
manpower and equipment needed to erect towers have been in increasing demand.
The Company's expansion plans call for a significant increase in construction
activity. There can be no assurance that the Company will be able to overcome
the barriers to new construction or that the number of towers planned for
construction will be completed. The failure of the Company to complete the
necessary construction could have a material adverse effect on the Company's
business, financial condition and results of operations.
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Environmental Matters
The Company's operations are subject to federal, state and local
environmental laws and regulations regarding the use, storage, disposal,
emission, release and remediation of hazardous and nonhazardous substances,
materials or wastes ("Environmental Laws"). Under certain Environmental Laws,
the Company could be held strictly, jointly and severally liable for the
remediation of hazardous substance contamination at its facilities or at third-
party waste disposal sites and could also be held liable for any personal or
property damage related to such contamination. Although the Company believes
that it is in substantial compliance with all applicable Environmental Laws,
there can be no assurance that the costs of compliance with existing or future
Environmental Laws will not have a material adverse effect on the Company's
financial condition and results of operations. See "Business--Regulatory
Matters".
Controlling Stockholder
ABRY II holds approximately 81.3% of the units assigned to the Issuer's
outstanding voting stock as defined in the Stockholders' Agreement (as defined
herein), and controls four of seven seats on the board of directors. Therefore,
ABRY II has the power to control all matters submitted to stockholders of the
Issuer, to elect a majority of the directors of the Issuer and to exercise
control over the business, policies and affairs of the Issuer. The interests of
ABRY II, as an equity holder, may differ from the interests of the holders of
the Notes. See "Certain Relationships and Transactions".
Ability to Purchase Notes Upon a Change of Control
The source of funds for any repurchase required as a result of a Change of
Control will be the Company's available cash or cash generated from operating or
other sources, including borrowings, sales of assets, sales of equity or funds
provided by a new controlling entity. Further, a Change of Control may trigger
an event of default under the Senior Credit Facility, which would permit the
lenders thereto to accelerate the debt under the Senior Credit Facility.
However, there can be no assurance that sufficient funds will be available at
the time of any Change of Control to make any required repurchases of Notes
tendered and to repay debt under the Senior Credit Facility. Any future credit
agreements or other agreements relating to indebtedness to which the Company may
become a party may contain similar restrictions and provisions. See "Description
of Notes" and "Description of Credit Facilities".
Risks Associated with Fraudulent Conveyance Liability
If under relevant federal and state fraudulent conveyance statutes in a
bankruptcy, reorganization or rehabilitation case or similar proceeding or a
lawsuit by or on behalf of unpaid creditors of the Issuer, a court were to find
that, at the time the Notes were issued (i) the Issuer issued the Notes with the
intent of hindering, delaying or defrauding current or future creditors or (ii)
(A) the Issuer received less than reasonably equivalent value or fair
consideration for issuing the Notes and (B) the Issuer (1) was insolvent or was
rendered insolvent by reason of the transactions contemplated in connection with
the Private Offering, (2) was engaged, or about to engage, in a business or
transaction for which its assets constituted unreasonably small capital, (3)
intended to incur, or believed that it would incur, debts beyond its ability to
pay as such debts matured (as all of the foregoing terms are defined in or
interpreted under such fraudulent conveyance statutes) or (4) was a defendant in
an action for money damages, or had a judgment for money damages docketed
against it (if, in either case, after final judgment, the judgment is
unsatisfied), such court could avoid or subordinate the Notes to presently
existing and future indebtedness of the Issuer and take other action detrimental
to the holders of the Notes, including, under certain circumstances,
invalidating the Notes.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, the Issuer would be considered insolvent if, at
the time it incurs the indebtedness constituting the Notes, either (i) the fair
market value (or fair
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saleable value) of its assets is less than the amount required to pay its total
existing debts and liabilities (including the probable liability on contingent
liabilities) as they become absolute and mature or (ii) it is incurring debts
beyond its ability to pay as such debts mature.
The Issuer believes that at the time of its issuance of the Notes, the Issuer
(i) (A) was neither insolvent nor rendered insolvent thereby, (B) had sufficient
capital to operate its business effectively and (C) was incurring debts within
its ability to pay as the same mature or become due and (ii) had sufficient
resources to satisfy any probable money judgment against it in any pending
action. In reaching the foregoing conclusions, the Issuer has relied upon its
analysis of internal cash flow projections and estimated values of assets and
liabilities of the Issuer. There can be no assurance, however, that such
analysis will prove to be correct or that a court passing on such questions
would reach the same conclusions.
Absence of Public Market
The New Notes are a new issue of securities, have no established trading
market and may not be widely distributed. Although the New Notes are eligible
for trading in PORTAL by "qualified institutional buyers," as defined in Rule
144A under the Securities Act, there can be no assurance as to the liquidity of
any markets that may develop for the New Notes, the ability of Holders of the
New Notes to sell their New Notes or the price at which Holders would be able to
sell their New Notes. Future trading prices of the New Notes will depend on
many factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities. The Initial
Purchasers have advised the Company that they currently intend to make a market
in the New Notes. However, the Initial Purchasers are not obligated to do so
and any market making may be discontinued at any time without notice. The
Company does not intend to apply for listing of the New Notes offered hereby on
any securities exchange. If a market for the New Notes does develop, the price
of the New Notes may fluctuate and liquidity may be limited. If a market for
the New Notes does not develop, Holders may be unable to resell such securities
for an extended period of time, if at all. If the market were to exist, the New
Notes could trade at prices lower than the initial offering price of the
Original Notes depending on many factors, including those described above.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the New Notes will
not be subject to similar disruptions. Any such disruption may have an adverse
effect on Holders of the New Notes.
REIT Status
The Company has elected to be taxed as a Real Estate Investment Trust
("REIT") under Sections 856-860 of the Code. The Company believes that it has
been organized and operates in such a manner as to qualify for taxation as a
REIT, and it intends to continue to operate in such a manner. However,
prospective investors should be aware that the federal tax rules and regulations
relating to REITs are highly technical and complex, and that the Company's
qualification as a REIT during each taxable year (including prior years) will
depend upon its ability to meet these requirements, through actual annual
operating results, income distribution levels, stock ownership requirements and
tests relating to the Company's assets and sources of income. Therefore, no
assurance can be given that the Company has operated or will operate in a manner
so as to qualify or remain qualified as a REIT. The Company could be subject to
a variety of taxes and penalties if it engages in certain prohibited
transactions, fails to satisfy certain REIT distribution requirements or
recognizes gain on the sale or other disposition of certain types of property.
See "Business--REIT Status" for a more detailed discussion of the consequences
to the Company of a loss of or failure to maintain the REIT status of the
Company.
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Consequence of Failure to Exchange
Holders of Original Notes who do not exchange their Original Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes as set forth in the legend
thereon as a consequence of the offer or sale of the Original Notes pursuant to
an exemption from or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Original Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act or applicable state securities laws. The
Company does not currently anticipate that it will register the Original Notes
under the Securities Act. To the extent that the Original Notes are tendered
and accepted in connection with the Exchange Offer, any trading market for
remaining Original Notes could be adversely affected.
Issuance of the New Notes in exchange for the Original Notes pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
such Original Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the
Original Notes desiring to tender such Original Notes in exchange for New Notes
should allow sufficient time to ensure timely delivery. The Company is under no
duty to give notification of defects or irregularities with respect to tenders
of Original Notes for exchange. Original Notes that are not tendered or that
are tendered but not accepted by the Company for exchange, will, following
consummation of the Exchange Offer, continue to be subject to the existing
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.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Original Notes were sold by the Company on March 17, 1998 to the Initial
Purchasers who resold them to certain accredited institutions in the Private
Offering. In connection with the Private Offering, the Company entered into the
Registration Rights Agreement, which requires that within sixty (60) days
following the issuance of the Original Notes, the Company file with the
Commission a registration statement under the Securities Act with respect to an
issue of New Notes of the Company identical in all material respects to the
Original Notes, use its best efforts to cause such registration statement to
become effective under the Securities Act with 150 days following the issuance
of the Original Notes, and upon the effectiveness of that registration
statement, offer to the Holders of the Original Notes the opportunity to
exchange their Original Notes for a like principal amount of such New Notes,
which will be issued without a restrictive legend. The purpose of the Exchange
Offer is to fulfill the Company's obligations under the Registration Rights
Agreement. The Original Notes were initially represented by two global Notes in
registered form, in the principal amounts of $200,000,000 and $125,000,000
registered in the name of Cede & Co., a nominatee of The Depository Trust
Company, New York, New York ("DTC"), as depositary.
The Company is 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, the Company has not sought its 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, the Company believes that
the New Notes issued pursuant to this Exchange Offer in exchange for Original
Notes may be offered for resale, resold and otherwise transferred by a Holder
thereof other than (i) a broker-dealer who purchased such Original Notes
directly from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person that is an "affiliate" (as
defined in Rule 405 of the Securities Act) of the Company without compliance
with the registration
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and prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holder's business and that
such Holder is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of such New Notes. Holders of
Original Notes accepting the Exchange Offer will represent to the Company 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 Notes 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 Notes 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 Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Original Notes as a
result of market-making activities or other trading activities and will deliver
a prospectus in connection with any resale of such New Notes. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of New Notes received in exchange for Original
Notes where such Original Notes 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. The Company has 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 Notes.
The Exchange Offer is not being made to, nor will the Company accept tenders
for exchange from, Holders of Original Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
As described above, the Original Notes were sold to the Initial Purchasers
and resold by the Initial Purchasers to a small number of institutional
investors on March 17, 1998, and there is currently a limited trading market for
them. To the extent Original Notes are tendered and accepted in the Exchange
Offer, the principal amount of outstanding Original Notes will decrease.
Following the consummation of the Exchange Offer, Holders of Original Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market of the Original Notes could be adversely affected. See
"Risk Factors -- Consequence of Failure to Exchange."
Terms of the Exchange
Upon the terms and subject to the conditions set forth in this Prospectus and
in the Letter of Transmittal (which together constitute the "Exchange Offer"),
the Company will accept any and all Original Notes validly tendered, and not
theretofore withdrawn, prior to 5:00 p.m., New York City time, on the Expiration
Date. The Company will issue $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of outstanding Original Notes accepted in the
Exchange Offer, as promptly as practicable after the Expiration Date. Holders
may tender some or all of their Original Notes pursuant to the Exchange Offer,
provided, however, that Original Notes may be tendered only in integral
multiples of $1,000. The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Original Notes being tendered for exchange.
The form and terms of the New Notes are identical in all material respects to
the form and terms of the Original Notes except that the New Notes will have
been registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The New Notes will not represent additional
indebtedness of the Company and will be entitled to the benefits of the
Indenture, which is the same Indenture as the one under which the Original Notes
were issued.
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No interest will accrue or be payable on the New Notes prior to March 15,
2003. Thereafter, interest on the New Notes will accrue at a rate of 10% per
annum and will be payable in cash semi-annually in arrears on March 15 and
September 15 of each year, commencing September 15, 2003.
Holders of Original Notes do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange and exchanged Original Notes validly tendered for exchange
when, as and if the Company gives oral or written notice to the Exchange Agent
of acceptance of the tenders of such Original Notes for exchange. Exchange of
Original Notes accepted for exchange pursuant to the Exchange Offer will be made
by deposit of tendered Original Notes with the Exchange Agent, which will act as
agent for the tendering Holders for the purpose of receiving New Notes from the
Company and transmitting such New Notes to tendering Holders. In all cases, any
exchange of New Notes for Original Notes accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
certificates for such Original Notes (or of a confirmation of a book-entry
transfer of such Original Notes in the Exchange Agent's account at the Book-
Entry Transfer Facility (as defined in "- Procedures for Tendering" below)), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents. For a description of the procedures
for tendering Original Notes pursuant to the Exchange Offer, see "-- Procedures
for Tendering."
If any tendered Original Notes are not accepted for exchange because of an
invalid tender, or due to the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Notes will be
returned without expense to the tendering Holders thereof (or in the case of
Original Notes tendered by book-entry transfer, such Original Notes will be
credited to the account of such Holder maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Exchange Offer.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of a Letter of Transmittal (or facsimile
thereof), waive any right to receive notice of acceptance of their Original
Notes for exchange.
Holders who tender Original Notes in the Exchange Offer will not be required
to pay brokerage commission or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Original
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "-- Fees and Expenses."
This Prospectus, together with the Letter of Transmittal, is being sent to
registered Holders of Original Notes as of ___________, 1998.
Expiration Date; Extensions; Amendments; Termination
The Expiration Date shall be 5:00 p.m. New York City time on ___________,
1998, unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the Expiration Date shall be the latest date and time to which the
Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral (promptly confirmed in writing) or written notice
and will make a public announcement thereof, each prior to 9:00 a.m. New York
City time, on the next business day after the previously scheduled expiration
date of the Exchange Offer.
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The Company reserves the right, at any time and from time to time, in its
sole discretion (subject to its obligations under the Registration Rights
Agreement) (i) to delay accepting any Original Notes or to delay the issuance
and exchange of New Notes for Original Notes, (ii) to extend the Exchange Offer
or, if any of the conditions set forth below under "-- Conditions to the
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent, or (iii) to amend the terms of the Exchange Offer in any manner.
If the Company extends the period of time during which the Exchange Offer is
open, or if it is delayed in accepting for exchange of, or in issuing any
exchanging the New Notes for, any Original Notes, or is unable to accept for
exchange of, or issue New Notes for, any Original Notes pursuant to the Exchange
Offer for any reason, then, without prejudice to the Company's rights under the
Exchange Offer, the Exchange Agent may, on behalf of the Company, retain all
Original Notes tendered, and such Original Notes may not be withdrawn except as
otherwise provided below in "- Withdrawal of Tenders." The adoption by the
Company of the right to delay acceptance for exchange of, or the issuance and
the exchange of the New Notes, for any Original Notes is subject to applicable
law, including Rule 14e-1(c) under the Exchange Act, which requires that the
Company pay the consideration offered or return the Original Notes deposited by
or on behalf of the Holders thereof promptly after the termination or withdrawal
of the Exchange Offer.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by a public announcement thereof. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five to ten business day period. The term "business day"
shall mean any day other than Saturday, Sunday or a federal holiday and shall
consist of the time period from 12:01 a.m. through 12:00 midnight, New York City
time.
Without limiting the manner in which the Company may choose to make a public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall have no obligation to make public, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service. Any such announcement of an
extension of the Exchange Offer shall be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date of the Exchange Offer.
Procedures for Tendering
Only a Holder of Original Notes may tender such Original Notes in the
Exchange Offer. To tender in the Exchange offer, the 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
any other required documents, to the Exchange Agent so that delivery is received
prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered
effectively, the Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth below under "-- Exchange
Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. In
addition, either (i) the certificates for the tendered Original Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or such
Original Notes must be tendered pursuant to the procedures for book-entry
transfer described below and a confirmation of receipt of such tendered Original
Notes must be received by the Exchange Agent, in each case, prior to 5:00 p.m.,
New York City time, on the Expiration Date, or (ii) the tendering Holder must
comply with the guaranteed delivery procedures described below.
NO LETTERS OF TRANSMITTAL, CERTIFICATES REPRESENTING ORIGINAL NOTES OR ANY
OTHER REQUIRED DOCUMENTATION SHOULD BE SENT TO THE COMPANY. SUCH DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT.
27
<PAGE>
The tender by a Holder of Original Notes made pursuant to any method of
delivery set forth in the Letter of Transmittal will constitute a binding
agreement between such tendering Holder and the Company in accordance with the
terms and subject to the conditions of the Exchange Offer.
The method of delivery of Original Notes and the Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and risk
of the Holder. Instead of delivery by mail, it is recommended that Holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date.
Holders may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transaction for such Holders or for
assistance concerning the Exchange Offer.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivery such
owner's Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in such owner's name or obtain a properly
completed bond power from the registered Holder. The transfer of registered
ownership may take considerable time.
If the Letter of Transmittal is signed by a person other than the registered
Holder of any Original Notes (which term includes any participants in DTC whose
name appears on a security position listing as the owner of the Original Notes)
or if delivery of the Original Notes is to be made to a person other than the
registered Holder, such Original Notes must be endorsed or accompanied by a
properly completed bond power, in either case signed by such registered Holder
as such registered Holder's name appears on such Original Notes with the
signature on the Original Notes or the bond power guaranteed by an Eligible
Institution (as defined herein).
If the Letter of Transmittal or any Original Notes or bond powers are signed
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 the Company, must
submit with the Letter of Transmittal evidence satisfactory to the Company of
their authority to so act.
Signature on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution unless the Original Notes
tendered pursuant thereto are (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal, (ii) for the account of an Eligible
Institution, or (iii) for the account of DTC. See Instruction 4 in the Letter
of Transmittal. In the event that signature on a Letter of Transmittal or a
notice of withdrawal, as the case may be, is 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 (any of which is referred to herein as an "Eligible Institution").
The Exchange Agent will establish an account with respect to the Original
Notes at DTC (the "Book-Entry Transfer Facility") for the purpose of the
Exchange Offer promptly after the date of this Prospectus, and any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make delivery of the Original Notes by causing the Book-Entry Transfer
Facility to transfer such Original Notes into the Exchange Agent's Notes account
in accordance with the Book-Entry Transfer Facility's procedure for such
transfer. ALTHOUGH DELIVERY OF ORIGINAL NOTES MAY BE EFFECTED THROUGH BOOK-
ENTRY TRANSFER IN THE EXCHANGE AGENTS ACCOUNT AT THE BOOK-ENTRY TRANSFER
FACILITY, THE LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) WITH ALL REQUIRED
SIGNATURE GUARANTEES AND ANY OTHER REQUIRED DOCUMENTS MUST, IN ANY CASE, BE
TRANSMITTED TO AND RECEIVED AND CONFIRMED BY THE EXCHANGE AGENT AT ITS ADDRESS
SET FORTH BELOW PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE,
EXCEPT AS
28
<PAGE>
OTHERWISE PROVIDED BELOW UNDER THE CAPTION "-- GUARANTEED DELIVERY PROCEDURES."
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
All questions as to the validity, form (including time of receipt),
acceptance and withdrawal of tendered Original Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Original Notes
determined by the Company not to be validly tendered or any Original Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the absolute right to waive any defects,
irregularities or conditions of tender as to particular Original Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived by the Company in its full discretion,
any defects or irregularities in connection with tenders of Original Notes will
render such tenders invalid unless such defects or irregularities are cured
within such time as the Company shall determine. Although the Company intends
to notify Holders of defects or irregularities with respect to tenders of
Original Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Any Original
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived, as provided
for herein, 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, the Company reserves the right in its sole discretion to
purchase or make offers for any Original Notes that remain outstanding
subsequent to the Expiration Date, or, as set forth herein, to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Original
Notes in the open market, privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
Guaranteed Delivery Procedures
Holders who wish to tender their Original Notes and (i) whose Original Notes
are not immediately available, or (ii) who cannot deliver their Original Notes
(or complete the procedures for book-entry transfer), the Letter of Transmittal
or any other required documents to the Exchange Agent prior to the Expiration
Date, may nevertheless effect a tender of Original Notes if all of the following
conditions are met:
(a) the tender is made by or through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail, hand delivery or
overnight courier) setting forth the name and address of the Holder, any
certificate number(s) of such Original Notes and the principal amount of
Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof) together
with the certificate(s) representing the Original Notes (or a confirmation of
a book-entry transfer of such Original Notes in the Exchange Agent's account
at the Book-Entry Transfer Facility) and any other documents required by the
Letter of Transmittal will be deposited Exchange Agent's account at the Book-
Entry Transfer Facility 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(s) representing all tendered
Original Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Original Notes into the Exchange Agent's Notes account at
the Book-Entry Transfer Facility) and all other documents required by the
Letter Transmittal are received by the Exchange Agent with five New York
Stock Exchange trading days after the Expiration Date.
29
<PAGE>
A Notice of Guaranteed Delivery is being sent to Holders along with the
Prospectus and the Letter of Transmittal.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m. New York City time, on the Expiration
Date, as such term is defined above under the caption "- Expiration Date;
Extensions; Amendments; Termination." If the Company extends the period of time
during which the Exchange Offer is open, or if it is delayed in accepting for
exchange of, or in issuing and exchanging the New Notes for, any Original Notes
or are unable to accept for exchange of, or issue and exchange the New Notes
for, any Original Notes pursuant to the Exchange Offer for any reason, then
without prejudice to the Company's rights under the Exchange Offer, the Exchange
Agent may, on behalf of the Company, retain all Original notes tendered, and
such Original Notes may not be withdrawn except as otherwise provided herein,
subject to Rule 14e-1(c) under the Exchange Act, which provides that the person
making an issuer tender offer shall either pay the consideration offered or
return tendered securities, promptly after the termination or withdrawal of the
offer.
To withdraw a tender of Original Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its offices as 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 having deposited the Original Notes to be withdrawn (the
"Depositor"), (ii) specify the serial numbers on the particular certificates
evidencing the Original Notes to be withdrawn and the name of the registered
Holder thereof (if certificates have been delivered or otherwise identified to
the Exchange Agent) or the name and number of the account at DTC to be credited
with withdrawal of the Original Notes (if the Original Notes have been tendered
pursuant to the procedures for book-entry transfer), (iii) be signed by the
Holders in the same manner as the original signature on the Letter of
Transmittal by which Original Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the registrar (the "Registrar") with respect to the Original Notes register
the transfer of such Original Notes into the name of the person withdrawing the
tender and (iv) specify the name in which any such Original Notes 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 notices will
be determined by the Company in its sole discretion, which determination shall
be final and binding on all parties. Any Original Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no New Notes will be issued with respect thereto unless the Original Notes so
withdrawn are validly tendered. Properly withdrawn Original Notes may be
retendered by following one of the procedures described above under "--
Procedures for Tendering" at any time prior to the Expiration Date.
Conditions to the Exchange Offer
Notwithstanding any other term of the Exchange Offer and without prejudice to
the Company's other rights under the Exchange Offer, the Company shall not be
required to accept for exchange, or exchange New Notes for any Original Notes,
and may amend or terminate the Exchange Offer as provided herein before the
acceptance of such Original Notes, if, among other things:
(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
might materially impair the ability of the Company to proceed with the
Exchange Offer or materially impair the contemplated benefits of the Exchange
Offer to the Company, or any material adverse development has occurred in any
existing action or proceeding with respect to the Company or any of its
subsidiaries; or
(b) any change, or any development involving a prospective change, in the
business or financial affairs of the Company or any of its subsidiaries has
occurred which might materially impair the ability of the Company to proceed
with the Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company; or
30
<PAGE>
(c) any law, statute, rule or regulation is proposed, adopted or enacted,
which might materially impair the ability of the Company to proceed with the
Exchange Offer or materially impair the contemplated benefits of the Exchange
Offer to the Company; or
(d) the New Notes to be received by Holders of Original Notes in the
Exchange Offer, upon receipt, will not be transferable by such Holders (other
than as "affiliates" of the Company) without restriction under the Securities
Act and Exchange Act and without material restriction under the blue sky laws
of substantially all of the states of the United States (subject, in the case
of Restricted Holders, to any requirements that such persons comply with the
Prospectus Delivery Requirements).
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may, subject to its obligations under the
Registration Rights Agreement to use its best efforts to consummate the Exchange
Offer, (i) terminate the Exchange Offer and return all tendered Original Notes
to tendering Holders, (ii) extend the Exchange Offer and, subject to withdrawal
rights as set forth in "- Withdrawal of Tenders" above, retain all such Original
Notes until the expiration of the Exchange Offer as so executed, (iii) waive
such condition and, subject to any requirement to extend the period of time
during which the Exchange Offer is open, exchange all Original Notes validly
tendered for exchange by the Expiration Date and not withdrawn or (iv) delay
acceptance or exchange of, or delay the issuance and exchange of New Notes for,
any Original Notes until satisfaction or waiver of such conditions to the
Exchange Offer even though the Exchange Offer has expired. The Company's right
to delay acceptance for exchange of, or delay the issuance and exchange of New
Notes for, Original Notes tendered for exchange pursuant to the Exchange Offer
is subject to provisions of applicable law, including, to the extent applicable,
Rule 14e-1(c) promulgated under the Exchange Act, which requires that the
Company pay the consideration offered or return the Original Notes deposited by
or on behalf of Holders of Original Notes promptly after the termination or
withdrawal of the Exchange Offer. For a description of the Company's right to
extend the period of time during which the Exchange Offer is open and to amend,
delay or terminate the Exchange Offer, see "- Expiration Date; Extensions;
Amendments; Termination" above. If such waiver constitutes a material change to
the Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the waiver and the manner of disclosure
to the registered Holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Registered or Certified Mail
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Reorganization Section, Floor 21W
By Overnight Courier or By Hand
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Reorganization Section, Floor 21W
31
<PAGE>
By Facsimile
(212) 571-3083
Confirm by Telephone
(212) 815-6333
Fees and Expenses
The expense of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail, however, additional solicitation
may be made by telegraph, telephone or in person by officer and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager or other soliciting agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or other soliciting acceptance of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$__________. Such expenses include fees and expenses of the Exchange Agent,
Trustee, Paying Agent and Registrar, accounting and legal fees and printing
costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Original Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes, or Original Notes for principal amounts not tended or
acceptable for exchange, are to be delivered to, or are to be issued in the name
of, any person other than the registered Holders of the Original Notes tendered,
or if tendered Original Notes 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 Original Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
Accounting Treatment
The New Notes will be recorded at the same carrying value as the
Original Notes as reflected in the Company's accounting records on the date of
the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the term
of the New Notes.
32
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
as of December 31, 1997 and (ii) the pro forma capitalization of the Company
after giving effect to the Transactions as if they had been completed on
December 31, 1997. This table should be read in conjunction with the information
contained in the "Unaudited Pro Forma Consolidated Financial Statements" and the
Company's audited consolidated financial statements and notes thereto included
elsewhere herein.
As of December 31, 1997
--------------------------
Pro Forma
Actual as Adjusted
----------- -------------
(Unaudited)
Debt (including current maturities): (dollars in thousands)
Senior Credit Facility........................... $ 72,000 $ 15,774
Notes payable (1)................................ 28,582 28,582
Subordinated Term Loan........................... 20,000 --
Senior Discount Notes............................ -- 199,791
ABRY Bridge Loan (2)............................. -- --
-------- --------
Total debt.......................................... 120,582 244,147
Redeemable stock:
Class B common stock............................. 1,761 1,761
Class D common stock............................. -- --
-------- --------
1,761 1,761
-------- --------
Common stock........................................ -- --
Additional paid-in capital.......................... 25,876 33,038
Accumulated deficit................................. (11,123) (11,731)
-------- --------
Stockholders' equity................................ 14,753 21,307
-------- --------
Total capitalization................................ $137,096 $267,215
======== ========
(1) Notes payable consist of notes issued to tower sellers in the Company's
acquisition of towers. Interest rates range from 8.5% to 13.0% and the notes
mature at varying dates through December 2020.
(2) See description of ABRY Bridge Loan entered into in February 1998, as
described in "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources".
USE OF PROCEEDS
The Company will receive no proceeds from the exchange of New Notes for the
Original Notes. The net proceeds from the sale by the Company of the Original
Notes, after deducting discounts and estimated fees and expenses, were
approximately $192.8 million. Such net proceeds were or will be used: (i) to
repay approximately $158.6 million of outstanding borrowings under the Senior
Credit Facility, (ii) to repay in full and retire the $20.0 million of principal
and approximately $1.2 million of accrued interest outstanding under the
Subordinated Term Loan; (iii) to repay in full and retire the $12.5 million of
principal and approximately $0.1 million of accrued interest outstanding under
the ABRY Bridge Loan; and (iv) to pay approximately $0.4 million in the
aggregate to the holders of the Company's Class B common stock in settlement of
a distribution preference on such stock.
The Senior Credit Facility is a revolving line of credit for borrowings
initially, of up to $200.0 million. The Company may make borrowings and
repayments until March 31, 2000, at which time the facility will convert into a
term loan maturing on December 31, 2005. At the time of the consummation of the
Private Offering, loans under the Senior Credit Facility bore interest at a rate
per annum, at the borrower's request, equal to the agent bank's prime rate plus
a margin ranging from 0% to 1.75% or the 90-day London Interbank Offered Rate
("LIBOR") plus a margin ranging from 0% to 2.75%. Outstanding borrowings under
the Senior Credit Facility amounted to $72.0
33
<PAGE>
million at December 31, 1997. Advances under the Senior Credit Facility were
used to fund acquisitions and construction of towers and to partially fund the
Southern Towers Acquisition along with the ABRY Bridge Loan and equity
contributed by ABRY II. Effective prior to closing of the Private Offering, the
Senior Credit Facility was amended to reduce the commitment amount to $150.0
million and to change the maximum LIBOR margin to 2.875%. Upon the closing of
the Private Offering, outstanding borrowings and availability under the Senior
Credit Facility were approximately $14.2 million and $120.6 million,
respectively, after giving effect to (i) repayment of $158.6 million of
outstanding borrowings with a portion of the proceeds of the Private Offering,
(ii) reduction of the Senior Credit Facility to a commitment of $150.0 million
and (iii) consideration of $15.2 million of outstanding letters of credit which
reduce availability under the Senior Credit Facility.
The ABRY Bridge Loan bore interest at a rate of 9.0% per annum and matures on
February 11, 1999. The Subordinated Term Loan is a $20.0 million term loan
maturing on September 22, 2000. Interest under this agreement is at a rate
equivalent to LIBOR plus a margin. The applicable margin under the agreement was
6.0%. The Company utilized the proceeds of that loan to repay in full and
retire a $12.3 million bridge loan and related accrued interest of $0.5 million
from ABRY II and repay certain amounts outstanding under the Senior Credit
Facility. See "Description of Credit Facilities".
34
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial data as of and for
the year ended December 31, 1997, has been prepared to reflect the financial
position and results of operations of the Company as if the Transactions had
been completed on December 31, 1997 as it relates to balance sheet data and as
of January 1, 1997 as it relates to statement of operations data.
Each of the acquisitions have or are anticipated to be accounted for using
the purchase method of accounting. The total cost of acquisitions has or will be
allocated to the tangible or intangible assets acquired based on their
respective fair values. The allocation of the respective purchase prices
included in the pro forma financial information is preliminary. The Company does
not expect that the final allocation of the purchase price will be materially
different from the preliminary allocation.
The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable under the circumstances.
The unaudited pro forma consolidated financial information should be read in
conjunction with the Company's audited consolidated financial statements
included elsewhere in this Private Offering. The unaudited pro forma
consolidated statement of operations data are not necessarily indicative of the
results that would have occurred if the Transactions had occurred on the dates
indicated, nor are they indicative of the Company's future results of
operations. There can be no assurance whether or when any of the probable
acquisitions reflected in the unaudited pro forma consolidated financial data
will be consummated.
Unaudited Pro Forma Consolidated Balance Sheet
<TABLE>
<CAPTION>
Adjustments Adjustments
for Southern for other
Towers Acquisitions Adjustments
Pinnacle Acquisition completed for Probable
Holdings (a)(g) in 1998(a) Acquisitions(a)
------------ ------------ ----------- ---------------
(In thousands)
Assets
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents....................... $ 1,694 $ -- $ -- $ --
Accounts receivable............................. 1,578 -- -- --
Prepaid expenses and other current
assets........................................ 1,037 -- -- --
-------- -------- -------- --------
Total current assets..................... 4,309 -- -- --
Restricted cash................................. 60 -- -- --
Tower assets, net............................... 127,946 85,947 14,328 22,190
Fixed assets, net............................... 1,495 -- -- --
Land............................................ 6,851 -- -- --
Other assets.................................... 2,517 -- -- --
-------- -------- -------- --------
$ 43,178 $ 85,947 $ 14,328 $ 22,190
======== ======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable................................ $ 2,242 $ -- $ -- $ --
Accrued expenses................................ 3,095 -- -- --
Deferred revenue................................ 640 -- -- --
Current portion of long-term debt(d)............ 11,122 -- -- --
-------- -------- -------- --------
Total current liabilities......................... 17,099 -- -- --
Long-term debt(d)................................. 109,460 79,947 12,753 22,190
Other liabilities................................. 105 -- -- --
-------- -------- -------- --------
126,664 79,947 12,753 22,190
Redeemable Stock:
Class B common stock.............................. 1,761 -- -- --
Class D common stock.............................. -- -- -- --
-------- -------- -------- --------
1,761 -- -- --
-------- -------- -------- --------
Stockholders' Equity
Common stock...................................... -- -- -- --
Additional paid in capital........................ 25,876 6,000 1,575 --
Accumulated deficit............................... (11,123) -- -- --
-------- -------- -------- --------
Total stockholders' equity............... 14,753 6,000 1,575 --
-------- -------- -------- --------
$143,178 $ 85,947 $ 14,328 $ 22,190
======== ======== ======== ========
<CAPTION>
Pro Forma Adjustments Pro Forma
for for Issuance as
Acquisitions of Notes Adjusted
-------------- -------------- -----------
(In thousands)
Assets
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents............................. $ 1,694 $ 0 (b) $ 1,694
Accounts receivable................................... 1,578 -- 1,578
Prepaid expenses and other current
assets.............................................. 1,037 -- 1,037
-------- -------- --------
Total current assets........................... 4,309 -- 4,309
Restricted cash....................................... 60 -- 60
Tower assets, net..................................... 250,411 -- 250,411
Fixed assets, net..................................... 1,495 -- 1,495
Land.................................................. 6,851 -- 6,851
Other assets.......................................... 2,517 6,994 (c) 9,511
-------- -------- --------
$265,643 $ 6,994 $272,637
======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable...................................... $ 2,242 $ -- $ 2,242
Accrued expenses...................................... 3,095 (660) (b) 2,435
Deferred revenue...................................... 640 -- 640
Current portion of long-term debt(d).................. 11,122 -- 11,122
-------- -------- --------
Total current liabilities............................... 17,099 (660) 16,439
Long-term debt(d)....................................... 224,350 8,675 233,025
Other liabilities....................................... 105 -- 105
-------- -------- --------
241,554 8,015 249,569
Redeemable Stock:
Class B common stock.................................... 1,761 -- 1,761
Class D common stock.................................... -- -- --
-------- -------- --------
1,761 -- 1,761
-------- -------- --------
Stockholders' Equity
Common stock............................................ -- -- --
Additional paid in capital.............................. 33,451 (413) (e) 33,038
Accumulated deficit..................................... (11,123) (608) (b) (11,731)
-------- -------- --------
Total stockholders' equity..................... 22,328 (1,021) 21,307
-------- -------- --------
$265,643 $ 6,994 $272,637
======== ======== ========
</TABLE>
35
<PAGE>
Unaudited Pro Forma Consolidated Statement of Operations
<TABLE>
<CAPTION>
Adjustments
for Adjustments
Acquisitions Adjustments for other
completed for Southern Acquisitions Adjustments
Pinnacle during Towers completed for Probable
Holdings 1997(f) Acquisition(g) in 1998(h) Acquisitions(i)
---------- --------------- -------------- --------------- ---------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Tower rental revenue..................... $ 12,881 $ 2,789 $ 6,247 $ 1,279 $ 1,808
Tower operating expenses excluding
depreciation and amortization.......... 2,633 558 1,058 149 409
-------- -------- -------- -------- --------
Gross profit excluding depreciation and
amortization........................... 10,248 2,231 5,189 1,130 1,399
Other expenses:
General and administrative............... 1,385 -- -- -- --
Corporate development.................... 3,772 -- -- -- --
Depreciation and amortization............ 6,627 2,423 5,730 955 1,479
-------- -------- -------- -------- --------
11,784 2,423 5,730 955 1,479
Income (loss) from operations............ (1,536) (192) (541) 175 (80)
Interest expense......................... 6,925 3,089 6,795 1,218 1,886
-------- -------- -------- -------- --------
Net loss........................ $ (8,461) $ (3,281) $ (7,336) $ (1,043) $ (1,966)
======== ======== ======== ======== ========
<CAPTION>
Pro Forma Adjustments Pro Forma
for for Issuance as
Acquisitions of Notes Adjusted
-------------- -------------- -----------
(In thousands)
<S> <C> <C> <C>
Tower rental revenue..................... $ 25,004 $ -- $ 25,004
Tower operating expenses excluding
depreciation and amortization.......... 4,807 -- 4,807
-------- -------- --------
Gross profit excluding depreciation and
amortization........................... 20,197 -- 20,197
Other expenses:
General and administrative............... 1,385 1,385
Corporate development.................... 3,772 -- 3,772
Depreciation and amortization............ 17,214 -- 17,214
-------- -------- --------
22,371 -- 22,371
Income (loss) from operations............ (2,174) -- (2,174)
Interest expense......................... 19,913 4,874 (j) 24,787
-------- -------- --------
Net loss........................ $(22,087) $ (4,874) $(26,961)
======== ======== ========
</TABLE>
36
<PAGE>
Notes to Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands)
(a) Reflects the acquisition of tower assets from (i) the Southern Towers
Acquisition, completed in 1998 (see note g below), (ii) 10 acquisitions of an
aggregate of 33 other towers as of March 4, 1998, each of which acquisitions are
individually immaterial, (iii) 16 acquisitions pending as of March 4, 1998 for
an aggregate of 52 towers (for which the Company has obtained letters of intent
and are considered probable), each of which acquisitions are individually
immaterial and (iv) the incurrence of related debt and equity contributions made
to finance such acquisitions.
(b) Reflects the following adjustment to cash and cash equivalents:
Increase resulting from the receipt of proceeds from the
issuance and sale of the Notes........................... $ 199,791
Offering costs............................................. (6,994)
Repayment of Senior Credit Facility........................ (158,616)
Repayment of principal and interest on Subordinated Term
Loan ($20,000 principal, $1,160 interest)................ (21,160)
Repayment of principal and interest on ABRY Bridge Loan
($12,500 principal, $108 interest)....................... (12,608)
Settlement of Class B common stock distribution preference. (413)
---------
Net change in cash..................................... $ 0
=========
Note: Payment of $1,160 interest is reflected as a $660 reduction to accrued
expenses at December 31, 1997 and a $500 adjustment to accumulated
deficit.
(c) Reflects fees and expenses incurred in connection with the Private
Offering of the Notes.
(d) Reflects the following adjustments to debt:
<TABLE>
<CAPTION>
Adjustment December 31,
Adjustments for 1997
December 31, for Pro Forma for Issuance Pro Forma
1997 Acquisitions Acquisitions of Notes as Adjusted
------------ ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Senior Credit Facility.. $ 72,000 $102,390 $174,390 $(158,616) $ 15,774
Notes Payable........... 28,582 -- 28,582 -- 28,582
Subordinated Term Loan.. 20,000 -- 20,000 (20,000) --
Senior Discount Notes... -- -- -- 199,791 199,791
ABRY Bridge Loan........ -- 12,500 12,500 (12,500) --
-------- -------- -------- --------- --------
Total............. $120,582 $114,890 $235,472 $ 8,675 $244,147
======== ======== ======== ========= ========
</TABLE>
(e) Reflects a payment to the Company's Class B common stockholders in
settlement of a distribution preference on such stock.
(f) Reflects the historical, pre-acquisition results of operations (in
aggregate) for tower acquisitions for the period from January 1, 1997 through
their respective date of acquisition.
37
<PAGE>
<TABLE>
<CAPTION>
Other
Shore Tidewater Majestic Individually Pro Forma
for the period for the period for the period Immaterial Pro Forma Tower
ending 12/3/97 ending 7/31/97 ending 6/27/97 Acquisitions Adjustments Operations
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Tower rental revenues.......... $ 667 $ 368 $ 192 $ 1,562 $ -- $ 2,789
Tower operating expenses,
excluding depreciation and
amortization................ 146 57 19 336 -- 558
-------------- -------------- -------------- -------------- -------------- -------------
Gross profit excluding
depreciation and
amortization................ 521 311 173 1,226 -- 2,231
General and administrative..... 235 30 28 -- (293) --
Depreciation and amortization.. 97 26 24 2,276 -- 2,423
-------------- -------------- -------------- -------------- -------------- -------------
Income/(loss) from operations.. 189 255 121 (1,050) 293 (192)
Interest expense............... 198 14 6 2,871 -- 3,089
Income tax expense (benefit)... (22) -- 10 -- 12 --
-------------- -------------- -------------- -------------- -------------- -------------
Net income (loss).............. $ 13 $ 241 $ 105 $ (3,921) $ 281 $ (3,281)
============== ============== ============== ============== ============= =============
</TABLE>
(g) Reflects the historical operating results of Southern Towers plus the pro
forma effect of tower rental revenue, related operating expenses and tower
depreciation related to the lease of certain tower facilities by Southern
Communications and its affiliates (as set forth in the underlying purchase
agreement), assuming the transaction was completed as of December 31, 1997, as
it relates to balance sheet data and as of January 1, 1997 as it relates to
statement of operations data.
<TABLE>
<CAPTION>
Southern
As of Pro Forma
12/31/97 Adjustments Southern
---------- ------------- -----------
<S> <C> <C> <C>
Accounts receivable..................................................... $ 39 $ (39) (1) $ --
Prepaids and other current assets....................................... 118 (118) (1) --
Tower investments, net.................................................. 36,317 49,630 (2) 85,947
--------- --------- ---------
Total assets......................................................... $ 36,474 $ 49,473 $ 85,947
========= ========= =========
Accounts payable and other current liabilities......................... $ 78 $ (78) (1) $ --
Due to parent........................................................... 40,930 (40,930) (1) --
Debt.................................................................... -- 79,947 (2) 79,947
Common stock............................................................ -- -- --
Additional paid in capital.............................................. -- 6,000 (2) 6,000
Accumulated deficit..................................................... (4,534) 4,534 (1) --
--------- --------- ---------
Total liabilities and accumulated deficit........................... $ 36,474 $ 49,473 $ 85,947
========= ========= =========
<CAPTION>
Southern
for the period Pro Forma
ending 12/31/97 Adjustments(3) Southern
----------------- ---------------- -----------
<S> <C> <C> <C>
Tower rental revenues.................................................. $ 1,017 $ 5,230 $ 6,247
Tower operating expenses, excluding depreciation and amortization...... 877 181 1,058
--------- --------- ---------
Gross profit excluding depreciation and amortization................... 140 5,049 5,189
General and administration............................................. 90 (90) --
Depreciation and amortization.......................................... 1,947 3,783 5,730
--------- --------- ---------
Income/(loss) from operations.......................................... (1,897) 1,356 (541)
Interest expense....................................................... -- 6,795 6,795
--------- --------- ---------
Net loss............................................................... $ (1,897) $ (5,439) $ (7,336)
========= ========= =========
</TABLE>
38
<PAGE>
(1) Reflects elimination of assets and liabilities and accumulated deficit which
were not acquired.
(2) Reflects preliminary application of purchase accounting and the
corresponding estimated fair value adjustment to acquired towers and the
related financing.
(3) Reflects increased revenue for lease agreements with Southern Communications
and its affiliates (as set forth in the underlying purchase agreement),
related increases to operating costs and depreciation, increased interest
expense associated with debt used to fund the acquisition and elimination of
general and administrative costs related to staff and other costs which were
not assumed in the transaction.
(h) Reflects the aggregate adjustment to results of operations for 10
separate acquisitions of an aggregate of 33 towers completed from January 1,
1998 through March 4, 1998, other than the Southern Towers Acquisition, each of
which acquisitions were individually immaterial, assuming such transactions were
completed as of January 1, 1997.
(i) Reflects the adjustment to results of operations in connection with 16
separate acquisitions pending as of March 4, 1998 of an aggregate of 52 towers,
for which the Company has obtained letters of intent and considers probable,
each of which acquisitions are individually immaterial, assuming such
transactions were completed as of January 1, 1997.
(j) Reflects net increase in interest expense as a result of the
issuance of the debt in connection with the Private Offering, at an interest
rate that reflects a 1.5% incremental increase, interest expense on incremental
borrowings of $8,675 and amortization of debt issuance costs of $6,994.
39
<PAGE>
SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following selected historical and unaudited pro forma consolidated
financial data has been derived from the Company's audited consolidated
financial statements and notes thereto and the Unaudited Pro Forma Consolidated
Financial Statements, appearing elsewhere in this Private Offering. The selected
financial information should be read in conjunction with the information
contained in the Company's consolidated audited financial statements and notes
thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operation," and "Unaudited Pro Forma Consolidated Financial
Statements" included elsewhere herein.
The following unaudited pro forma consolidated financial data as of and for
the year ended December 31, 1997, has been prepared to reflect the financial
position and results of operations of the Company as if the Transactions had
been completed on December 31, 1997 as it relates to balance sheet data and as
of January 1, 1997 as it relates to statement of operations data:
<TABLE>
<CAPTION>
Period from
Inception
(May 3, 1995) Pro Forma
through Year Ended Year Ended as Adjusted
December 31, December 31, December 31, December 31,
1995 1996 1997 1997(a)
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Tower rental revenue................................... $ 733 $ 4,842 $12,881 $ 25,004
Tower operating expenses, excluding depreciation and 181 1,135 2,633 4,807
amortization.......................................... ----- ------- ------- --------
Gross profit, excluding depreciation and amortization.. 552 3,707 10,248 20,197
Other expenses:
General and administrative(b)........................ 306 923 1,385 1,385
Corporate development(b)............................. 369 1,440 3,772 3,772
Depreciation and amortization........................ 341 2,205 6,627 17,214
----- ------- ------- --------
Loss from operations................................... (464) (861) (1,536) (2,174)
Interest expense....................................... 181 1,155 6,925 24,787
----- ------- ------- --------
Net loss............................................... $(645) $(2,016) $(8,461) $(26,961)
===== ======= ======= ========
Other Operating Data:
Tower Level Cash Flow(c)............................... $ 552 $ 3,707 $10,248 $ 20,197
Tower Level Cash Flow Margin(d)........................ 75.3% 76.6% 79.6% 80.8%
Adjusted EBITDA(c)..................................... $ 246 $ 2,784 $ 8,863 $ 18,812
Adjusted EBITDA Margin(d).............................. 33.6% 57.5% 68.8% 75.2%
EBITDA(c).............................................. $(123) $ 1,344 $ 5,091 $ 15,040
EBITDA Margin(d)....................................... -- 27.8% 39.5% 60.2%
Ratio of earnings to fixed charges(e).................. -- -- -- --
Number of Towers:
Beginning of period.................................. 0 33 156 156
Towers acquired during the period.................... 29 119 134 420
Towers constructed during the period................. 4 4 22 22
End of period.................................. 33 156 312 598
</TABLE>
Pro Forma
as
Historical Adjusted(a)
----------- ------------
Balance Sheet Data:
Cash and cash equivalents.. $ 1,694 $ 1,694
Tower assets, net.......... 127,946 250,411
Total assets............... 143,178 272,637
Total debt................. 120,582 244,147
Redeemable Stock:
Class B common stock....... 1,761 1,761
Class D common stock....... -- --
Common stock................. -- --
Additional paid-in capital... 25,876 33,038
Accumulated deficit.......... (11,123) (11,731)
-------- --------
Stockholders' equity......... 14,753 21,307
40
<PAGE>
Notes to Selected Historical and Unaudited Pro Forma Consolidated Financial
Statements
(a) Reflects historical amounts adjusted for the effects of the Transactions
(including the acquisitions of 33 other towers as of March 4, 1998 and the
probable acquisition as of March 4, 1998 of 52 additional towers for which the
Company has obtained letters of intent), as further described in "Unaudited Pro
Forma Consolidated Financial Statements".
(b) "General and administrative" expenses represent those costs directly
related to the day-to-day management and operation of towers owned by the
Company. "Corporate development" expenses represent costs incurred in connection
with acquisitions and development of new business initiatives, consisting
primarily of allocated compensation, benefits and overhead costs that are not
directly related to the administration or management of existing towers.
(c) "Tower Level Cash Flow" is defined as tower rental revenue minus tower
operating expenses, excluding depreciation and amortization. "Adjusted EBITDA"
represents loss from operations before depreciation, amortization and corporate
development expenses. "EBITDA" represents loss from operations before
depreciation and amortization. The Company has included Tower Level Cash Flow,
Adjusted EBITDA and EBITDA in Other Operating Data because the Company believes
such information may be useful to certain investors in evaluating the Company's
ability to service its debt. Tower Level Cash Flow, Adjusted EBITDA and EBITDA
should not be considered as an alternative to Gross Profit, net loss or net cash
provided by operating activities (or any other measure of performance in
accordance with generally accepted accounting principles) as a measure of the
Company's ability to meet its cash needs.
(d) Represents Tower Level Cash Flow, Adjusted EBITDA and EBITDA each as a
percentage of tower rental revenue.
(e) As a result of the loss incurred in 1995, 1996 and 1997, the
Company was unable to fully cover the indicated fixed charges. Earnings did not
cover fixed charges by $645, $2,016, $8,461 and $26,961 in 1995, 1996, 1997 and
1997 Pro Forma as Adjusted.
41
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company as of and for the period from inception (May 3, 1995)
through December 31, 1995, for each of the two years ended December 31, 1996 and
1997. The discussion should be read in conjunction with the Financial Statements
of the Company and the notes thereto included in this Private Offering. The
statements in this discussion regarding the wireless communications industry,
the Company's expectations regarding its future performance and other non-
historical statements in this discussion are forward-looking statements. These
forward-looking statements include numerous risks and uncertainties, as
described in "Risk Factors."
Overview
The Company acquires and constructs rental towers and leases space on these
towers to a broad base of wireless communications providers, operators of
private networks, government agencies and other customers. The Company's
objective is to acquire or construct clusters of rental towers in areas where
there is significant existing and expected continued growth in the demand for
rental towers by wireless communications providers. The Company seeks to obtain
a significant ownership position of tower assets in such areas and as a result,
it is able to offer "one-stop shopping" to wireless communications providers who
are deploying or expanding wireless communications networks.
Since commencing operations in May 1995, the Company has completed
acquisitions and builds as follows:
Periods Ending
------------------------------------
12/31/95 12/31/96 12/31/97 3/4/98 Total
-------- -------- -------- ------ -----
Number of acquisition transactions. 13 49 72 11 145
Number of towers acquired.......... 29 119 134 234 516
Number of towers built............. 4 4 22 8 38
-------- -------- -------- ------ ---
Number of towers acquired or built
during the period................. 33 123 156 242 554
Additionally, as of March 4, 1998, the Company had a contract or letter of
intent with respect to 16 proposed acquisitions consisting of 52 towers and has
identified numerous additional acquisition candidates and had eight towers under
construction and in excess of 100 additional tower projects in various stages of
development.
The Company's Annualized Run Rate Revenue is calculated as of a given date by
annualizing the monthly rental rates then in effect for customer lease contracts
in force as of such date. The Company believes that growth in its Annualized Run
Rate Revenue is a meaningful indicator of its performance. As of March 4, 1998,
the Company's Annualized Run Rate Revenue was $23.9 million, without giving
effect to adjustments totalling $1.8 million in pro forma revenue from probable
acquisitions. At March 4, 1998, the Company's inventory of 554 towers had an
average Annualized Run Rate Revenue per tower of $43,073. The Company also
believes that "same tower" revenue growth on towers (measured by comparing the
Annualized Run Rate Revenue of the Company's towers at the end of a period to
the Annualized Run Rate Revenue for the same towers at the end of a prior
period), is an indication of the quality of the Company's towers and its ability
to generate incremental revenue on such towers. The Company experienced
aggregate "same tower" revenue growth on towers of 26.3% in 1997 over 1996.
The Company's growth since its inception has primarily been based upon the
acquisition of rental towers as well as the subsequent improvement of the
financial performance of the towers. The pace and magnitude of the Company's
previous acquisitions may hinder meaningful period-to-period comparisons of
results.
42
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, the percentage
relationship of each statement of operations item to total tower rental revenue.
The results of operations are not necessarily indicative of results for any
future period. The following data should be read in conjunction with the
Financial Statements and notes thereto included elsewhere in this Private
Offering.
Period Ending December 31,
--------------------------------
1995 1996 1997
---------- --------- ---------
Statement of Operations Data:
Tower rental revenue..................... 100.0% 100.0% 100.0%
Tower operating expenses, excluding
depreciation and 24.7% 23.4% 20.4%
amortization..........................
Gross profit.......................... 75.3% 76.6% 79.6%
Expenses:
General and administrative............... 41.7% 19.1% 10.8%
Corporate development.................... 50.3% 29.7% 29.3%
Depreciation and amortization............ 46.5% 45.5% 51.4%
Loss from operations........................ (63.2%) (17.7%) (11.9%)
Interest expense............................ 24.7% 23.9% 53.8%
Net loss.................................... (87.9%) (41.6%) (65.7%)
1997 Compared to 1996
Tower rental revenue increased 166.0% to $12.9 million in 1997 from $4.8
million in 1996. This increase is attributable to the acquisition and
construction of 156 towers during 1997 and a result of expanded marketing
efforts to increase the number of customers per tower, as well as regular,
contractual price escalations for existing customers.
Tower operating expenses, excluding depreciation and amortization, which
consist primarily of costs relating to the ongoing maintenance of properties
such as air conditioning and grounds maintenance, ground lease expense,
utilities, property taxes and other direct costs of tower operation, increased
132.0% to $2.6 million in 1997 from $1.1 million in 1996. This increase reflects
the addition of 156 towers during the year. Tower operating expenses, excluding
depreciation and amortization, decreased as a percentage of tower rental revenue
from 23.4% in 1996 to 20.4% in 1997, reflecting operating efficiencies gained on
existing towers as well as on new towers acquired or constructed.
General and administrative expenses, which are expenses associated with
supporting the Company's day-to-day management of its existing properties and
primarily consist of employee compensation and related benefits costs,
advertising, professional and consulting fees, office rent and related expenses
and travel costs, increased 50.1% to $1.4 million in 1997 from $0.9 million in
1996. General and administrative costs decreased as a percentage of tower rental
revenue from 19.1% in 1996 as compared to 10.8% in 1997 because of lower
overhead costs as a percentage of tower rental revenue.
Corporate development expenses, which represent costs incurred in connection
with acquisitions and construction of new towers, increased 161.9% to $3.8
million in 1997 from $1.4 million in 1996. The increase in corporate development
expenses reflects the higher costs associated with the Company's expansion of
its acquisition and construction strategies. Corporate development expenses
remained relatively constant as a percentage of tower rental revenue at 29.3% in
1997 compared to 29.7% in 1996.
43
<PAGE>
Interest expense increased 499.6% to $6.9 million in 1997 from $1.2 million
in 1996. The increase in interest expense was attributable to increased
borrowing associated with the Company's acquisitions during the period.
1996 Compared to 1995
The Company commenced operations on May 3, 1995. The results described herein
reflect the effect of a full year of operations in 1996 as compared to
approximately eight months of activity for the period from inception (May 3,
1995) through December 31, 1995.
Tower rental revenue increased 560.6% to $4.8 million in 1996 from $0.7
million in 1995. This increase is attributable to the acquisition and
construction of 123 towers during 1996 and a result of expanded marketing
efforts to increase the number of customers per tower, as well as regular,
contractual price escalations for existing customers.
Tower operating expenses, excluding depreciation and amortization, increased
527.1% to $1.1 million in 1996 from $0.2 million in 1995. This increase is
primarily attributable to the effect of a full year of operations in 1996 versus
eight months in 1995 and the acquisition and construction of 123 towers. Tower
operating expenses, excluding depreciation and amortization, decreased as a
percentage of tower rental revenue from 24.7% in 1995 to 23.4% in 1996. The
decrease as a percentage of tower rental revenue was due primarily to operating
efficiencies resulting from a significantly increased number of towers.
General and administrative expenses increased 201.6% to $0.9 million in 1996
from $0.3 million in 1995. This increase is attributable to the addition of
support personnel related to the Company's acquisition and construction efforts
during the period. General and administrative costs decreased as a percentage of
tower rental revenue from 41.7% in 1995 to 19.1% in 1996. The decrease as a
percentage of tower rental revenue was due to lower overhead costs as a
percentage of tower rental revenue.
Corporate development expenses increased 290.2% to $1.4 million in 1996 from
$0.4 million in 1995. The increase in corporate development expenses reflects
the higher costs associated with the Company's expansion of its acquisition and
construction strategies. Corporate development expenses decreased as a
percentage of tower rental revenue from 50.3% in 1995 to 29.7% in 1996.
Interest expense increased 538.1% to $1.2 million in 1996 from $0.2 million
in 1995. This increase was attributable to increased borrowing associated with
the Company's acquisitions during the period.
Liquidity and Capital Resources
On a pro forma basis, as of December 31, 1997, after giving effect to the
Transactions, the Company would have had consolidated cash and cash equivalents
of $1.7 million, consolidated long-term debt of $244.1 million and consolidated
stockholders' equity of $21.3 million.
The Company has historically funded its operations, acquisitions and
construction of towers with proceeds from equity contributions, bank borrowings
and cash flow from operations. The Company had a working capital deficit of
$12.8 million and $1.5 million as of December 31, 1997 and 1996, respectively.
Excluding the current portion of long-term debt, current liabilities exceeded
current assets by $1.7 million and $0.8 million as of December 31, 1997 and
1996, respectively. The Company's ratio of total debt to stockholders' equity
(excluding redeemable stock) was 8.17 to 1 at December 31, 1997 and 1.37 to 1 as
of December 31, 1996.
For the year ended December 31, 1997, capital expenditures were $88.4
million. Since then, as of March 4, 1998, the Company has made additional
capital expenditures of approximately $107.0 million.
44
<PAGE>
At December 31, 1997, $72.0 million of borrowings were outstanding under the
Senior Credit Facility. Additionally, the Company had outstanding letters of
credit issued by a bank totalling $25.0 million, which secured certain notes to
sellers. During January 1998, an additional $10.0 million was committed under
the Senior Credit Facility. Advances under the Senior Credit Facility are
limited to a borrowing base, which is based on the Company's Annualized EBITDA
(as defined in the Senior Credit Facility). At December 31, 1997, advances under
the Senior Credit Facility subject to the base rate (as defined in the Senior
Credit Facility) bore interest, payable in quarterly installments, at the base
rate plus a margin ranging from 0% to 1.375%, and advances subject to LIBOR bore
interest, payable in installments at periods no greater than three months, at
LIBOR plus a margin, ranging from 0% to 2.375%.
On March 4, 1998, the Company amended the Senior Credit Facility to provide
for borrowings of up to $200.0 million. As a result of such amendment, advances
under the Senior Credit Facility bore interest at the Company's option at either
LIBOR plus a margin of up to 2.75% or the base rate, plus a margin of up to
1.75%. Upon the closing of the Private Offering, the Senior Credit Facility was
amended to reduce the commitment amount to $150.0 million and to change the
maximum LIBOR margin to 2.875%. Upon the closing of the Private Offering,
outstanding borrowings and availability under the Senior Credit Facility were
approximately $14.2 million and $120.6 million, respectively, after giving
effect to (i) repayment of $158.6 million of outstanding borrowings with a
portion of the proceeds of the Private Offering, (ii) a reduction of the Senior
Credit Facility to a commitment of $150.0 million and (iii) consideration of
$15.2 million of outstanding letters of credit which reduce availability under
the Senior Credit Facility. As of March 4, 1998, the Company anticipated
borrowing $22.2 million to fund the acquisitions that the Company currently
believes are probable to occur.
In September 1997, the Company entered into the $20.0 million Subordinated
Term Loan. Interest under this agreement was at a rate equivalent to LIBOR plus
a margin (as defined in the agreement). The applicable margin under the
agreement was 6.0%. The Company utilized the proceeds of this loan to repay
bridge loans which were outstanding from its principle investor and to fund
ongoing tower acquisitions. The Subordinated Term Loan was repaid in full and
retired with proceeds from the Private Offering.
In February 1998, the Company entered into the ABRY Bridge Loan with ABRY II
whereby the Company borrowed $12.5 million. Amounts outstanding under the ABRY
Bridge Loan bore interest at the rate of 9.0% per annum. Interest and principal
under the ABRY Bridge Loan were payable within one year from the date of the
related borrowing. The ABRY Bridge Loan was repaid in full and retired with
proceeds from the Private Offering.
The Company has entered into the Capital Contribution Agreement with ABRY II,
pursuant to which ABRY II has agreed to make equity contributions to the
Company, up to an aggregate capital contribution of $50.0 million, in an amount
equal to (i) 100% of the Company's general and administrative expenses and
corporate development, and (ii) the amount necessary to cure any payment or
financial covenant default under the Senior Credit Facility. As of March 4,
1998, ABRY II had contributed $34.0 million of the aggregate $50.0 million
capital contribution commitment. Additionally, ABRY II is the guarantor of a
note of the Company payable to a former tower owner in an amount totaling $3.9
million.
The Company uses seller financing in some of its tower acquisitions. The
Company had outstanding notes that it issued to sellers bearing interest at 8.5%
to 13.0% per annum in the aggregate amount of $28.6 million at December 31,
1997. Of this amount, approximately $10.4 million was repaid through borrowings
under the Senior Credit Facility in January 1998.
The Company used the net proceeds from the Private Offering to repay a
portion of its outstanding borrowings under the Senior Credit Facility, to repay
in full and retire the Subordinated Term Loan and the ABRY Bridge Loan and to
make a payment to the holders of its Class B common stock in settlement of a
distribution preference on such stock. See "Use of Proceeds".
45
<PAGE>
As of March 4, 1998, the Company and its subsidiaries expected to use the
$78.0 million of availability under the Senior Credit Facility to fund the
execution of the Company's business plan following the Private Offering. The
Company's plan anticipates substantial capital expenditures in connection with
the ongoing acquisition and construction of towers. In the event that the
Company needs additional debt or equity financing in the future, there can be no
assurance that such financing will be commercially available or permitted by the
terms of the Company's existing indebtedness. To the extent that the Company is
unable to finance future capital expenditures, it will be unable to achieve its
current business strategy.
Prior to March 15, 2003, the Issuer's interest expense on the Notes will be
comprised solely of the accretion of original issue discount. Thereafter, the
Notes will require annual cash interest payments of $32.5 million. In addition,
the Senior Credit Facility will require periodic interest and principal payments
on amounts borrowed thereunder. The Company's ability to make scheduled payments
of principal of, or to pay interest on, its debt obligations, and its ability to
refinance any such debt obligations (including the Notes), will depend on its
future performance, which, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond its control. As discussed above, the Company's business strategy
contemplates substantial capital expenditures in connection with the execution
of its business plan. There can be no assurance that the Company will generate
sufficient cash flow from future operations, that anticipated revenue growth
will be realized or that future borrowings or equity contributions will be
available in an amount sufficient to service the Company's indebtedness and make
anticipated capital expenditures. The Company anticipates that it may need to
refinance all or a portion of its indebtedness (including the Notes) on or prior
to its scheduled maturity. There can be no assurance that the Company will be
able to effect any required refinancing of its indebtedness (including the
Notes) on commercially reasonable terms or at all. See "Risk Factors--
Substantial Indebtedness; Ability to Service Indebtedness".
Inflation
Because of the relatively low levels of inflation experienced in 1995, 1996
and 1997, inflation did not have a significant effect on the Company's results
in such years.
Year 2000
The Company is aware of the issues associated with the Year 2000 as it
relates to information systems. The Year 2000 is not expected to have a material
impact on the Company's current information systems because its software is
either already Year 2000 compliant or required changes are not expected to be
material. Based on the nature of the Company's business, the Company anticipates
it is not likely to experience material business interruption due to the impact
of Year 2000 compliance on its customers and vendors. As a result, the Company
does not anticipate that incremental expenditures to address Year 2000
compliance will be material to the Company's liquidity, financial position or
results of operations over the next few years.
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BUSINESS
Company Background
As a result of rapid developments in the wireless communications industry,
the Company's founders recognized the opportunity to consolidate strategically
located wireless communications towers and enhance rental revenue on those
towers. The Company's founders developed their strategy of acquiring clusters of
towers that would provide strong positions in selected, high growth markets in
the Southeastern United States. To date, the Company has acquired 516 towers in
145 separate acquisitions and has built an additional 38 towers in 13 states. As
a result of these efforts, the Company believes it has established itself as the
leading rental tower owner in the Southeastern United States. For the year ended
December 31, 1997, on a pro forma basis giving effect to the Transactions, the
Company would have had tower rental revenue and Tower Level Cash Flow of $25.0
million and $20.2 million, respectively, implying a Tower Level Cash Flow Margin
of 80.8%.
The Company's objective is to create substantial value from its position as
the leading rental tower owner in the Southeastern United States. In order to
achieve its objective, the Company has designed and implemented a three-tiered
growth strategy of (i) capitalizing on the operating leverage of its business by
aggressively marketing available rental space on its towers, (ii) rapidly
acquiring towers in key markets and (iii) implementing a selective tower
construction program.
The Company has rapidly executed its strategy and today owns a significant
portfolio of high quality towers that generates increasing revenue and cash
flow. The Company believes that its portfolio of strategically located rental
towers exhibits the following economic characteristics: (i) high absolute and
incremental margins; (ii) stable and predictable cash flow; (iii) a diversified
customer base; (iv) high barriers to entry; (v) low customer churn; and (vi)
attractive underlying growth. The Company anticipates that this portfolio
provides the core asset base from which it will continue the ongoing strategy to
acquire and construct clusters of towers in attractive, high growth markets.
Further, the Company believes it has created a stable and long-term stream of
tower rental revenue that would continue to be generated even if the Company
were to discontinue pursuing its aggressive expansion strategy.
The Company is designed to be an efficient consolidator and operator of
rental towers. The Company has created a highly focused, structured organization
in which significant resources are devoted to acquiring or constructing
strategically located sites supported by customer demand. In addition, the
Company has the capability to "instantly integrate" new towers and initiate
sales and marketing efforts immediately following the acquisition or
construction of new towers.
The success of the Company's focused efforts is illustrated by its financial
results. The Company believes that its "Annualized Run Rate Revenue", calculated
as of a given date by annualizing the monthly rental rates then in effect for
customer lease contracts in force as of such date, is a significant indicator of
its performance. As of March 4, 1998, the Company's Annualized Run Rate Revenue
was $23.9 million, without giving effect to adjustments totaling $1.8 million in
pro forma revenue from probable acquisitions, and, based upon the Company's
current inventory of 554 towers, average Annualized Run Rate Revenue per tower
of $43,073. The Company also believes that "same tower" revenue growth (measured
by comparing the Annualized Run Rate Revenue of the Company's towers at the end
of a period to the Annualized Run Rate Revenue for the same towers at the end of
a prior period), is an indication of the quality of the Company's towers and its
ability to generate incremental revenue on such towers. The Company experienced
aggregate "same tower" revenue growth of 26.3% in 1997 over 1996.
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Industry Background
Communications towers are primary infrastructure components for wireless
communications services such as cellular, paging, PCS, SMR, wireless data
transmission and radio and television broadcasting. Wireless communications
companies require specialized wireless transmission networks in order to provide
service to their customers. Each of these networks is configured specifically to
meet the coverage requirements of the particular carrier and includes
transmission equipment such as antennae, transmitters and receivers placed at
various locations throughout the covered area. These locations, or
communications sites, are critical to the operation of wireless communications
networks and consist of towers, rooftops and other structures upon which such
equipment is placed. Wireless communications providers design their network and
select their communications sites in order to optimize available frequencies
relative to their projected usage patterns, topography and service requirements.
The Wireless Communications Industry
The wireless communications industry is growing rapidly as (i) consumers
become increasingly aware of the uses and benefits of wireless communications
services, (ii) the costs of wireless communications services decline and (iii)
new wireless communications technologies continue to be developed. Changes in
U.S. federal regulatory policy have led to a significant increase in the number
of competitors in the wireless communications industry, most recently through
the auction of radio spectrum for PCS. This competition, combined with an
increasing reliance on wireless communications services by consumers and
businesses, has increased demand for higher quality networks characterized by
uninterrupted service and improved coverage. As new carriers build out their
networks and existing carriers upgrade and expand their networks to maintain
their competitiveness, the demand for communications sites has increased
dramatically.
The wireless communications industry is comprised of the following segments:
. Cellular--Currently each market in the United States has two cellular
operators. Cellular networks consist of numerous geographic "cells" in
which frequencies are reused every few miles. Each cell includes a
communications site which includes transmission equipment generally
residing on a wireless communications tower. According to industry
publications, as of June 30, 1997 there were 48.7 million wireless
telephone subscribers in the United States, representing a 27.5% growth
rate over the prior 12 months, and an overall penetration of approximately
18.0%. In addition, as the cellular market migrates from an analog based
transmission technology to a digital based transmission technology, demand
is expected to increase as prices decline. In order to increase network
capacity and improve service quality, cellular carriers are re-engineering
their networks to have smaller and more numerous cells. While historically
cellular operators have generally built their own towers, the growing
demand for tower space and restrictions on new tower construction are
making rental towers an increasingly important component of their
transmission networks.
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The following illustrates the growth in the United States' wireless
communications industry from 1987 to 1996.
[BAR CHART APPEARS HERE]
U.S. Wireless Market
Total Subscribers (in millions)
Source: CTIA.
Reflects Cellular, ESMR, and PCS Subscribers
. PCS--PCS is an emerging wireless communications technology competing
with cellular that offers a digital signal that is clearer and offers
greater privacy than typical analog cellular systems. Up to six PCS
licenses have been issued by the FCC in each market (versus two for
cellular). PCS system construction began in 1995, and due to their
small cell size, PCS companies are expected to be substantial users of
tower space. According to industry publications, there were
approximately 2.2 million PCS subscribers in the United States as of
December 31, 1997. The Personal Communications Industry Association
("PCIA") estimates that on December 31, 1997 there were approximately
45,000 antennae sites (cellular and PCS) in the United States. PCIA
estimates that this number will increase by approximately 100,000
additional antennae sites over the next 10 years. While some of these
sites may use existing towers, it is expected that a large number of
new towers will be required for the deployment of PCS networks. As an
example, PrimeCo, Aerial and Sprint PCS are currently building out PCS
systems in the Company's target region and are co-locating their
equipment on many of the Company's rental towers, as opposed to
constructing their own towers.
. Paging--Paging has also enjoyed dramatic growth over the last ten
years. According to industry publications, there were 49.8 million
pagers at the end of 1997, representing an average annual growth rate
of 26.8% since 1992. This growth was spurred by declining prices, wider
coverage and increasing expansion into the consumer market. While
network construction by the paging industry appears to be reaching a
certain level of maturity, the increased number of subscribers is
expected to require utilization of additional channels and related
transmitter equipment. Utilization of these additional channels will
result in additional revenue on rental towers. Paging companies have
historically relied heavily on rental towers and are expected to
continue to do so.
. SMR / ESMR--SMR companies provide two-way radio communications for
primarily commercial purposes, especially fleet vehicles. Two-way
private business radio is used primarily for businesses engaged in
dispatching personnel or equipment to work sites and includes
construction
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and trucking companies, courier services, hospitals and taxicabs. Each
service provider holds an FCC radio license that allows it to transmit
over a particular frequency, and most lease space on a local tower for
transmission purposes. As a result of advances in digital technology,
some wireless communications providers have begun to design or modify
networks that utilize SMR frequencies by deploying advanced digital
technologies called ESMR. ESMR increases the capacity of radio networks
allowing more efficient use of allocated frequencies. These
efficiencies and improvements allow ESMR to provide wireless telephone
service that can compete more effectively with cellular and PCS. As
more commercial users are attracted to such enhanced services, the
demand for tower space to support such usage also continues to
increase. Nextel and Southern Communications are the leading ESMR
providers in the United States and are significant customers of the
Company.
. Government Agencies--Federal, state and local government agencies
are major users of wireless communications services and typically
operate their own dedicated frequencies. These government agencies, in
certain circumstances, often find it easier to lease rather than own
tower space. As new technologies are developed in law enforcement,
emergency and other government services, various municipalities and
government agencies are becoming more significant users of wireless
communications services. Examples of government customers of tower
space include the Federal Bureau of Investigation, U.S. Coast Guard,
U.S. Secret Service and various municipal agencies.
. Broadcast and Wireless Cable--Broadcasters transmit AM/FM radio
signals and VHF and UHF television signals in order to obtain the
broadest, clearest coverage available. A broadcast station's coverage
is one of the primary factors that influences the station's ability to
attract advertising revenue. Once a tower location is chosen,
broadcasters rarely change sites due to complex regulatory
requirements, high switching costs and business disruption. The U.S.
broadcasting industry is generally mature with respect to demand for
transmission tower capacity. However, a significant increase in demand
for tower capacity may occur when digital spectrum is used to deliver
high definition television ("HDTV") or digital multi-casting, i.e.,
multiple "normal" definition television channels. In addition, wireless
cable television is being developed and positioned as a potentially
more accessible alternative to traditional cable television. Wireless
cable operates by receiving programming from a satellite which is
retransmitted from an antenna on a tower to a receiving antenna on a
subscriber's residence. Several wireless cable companies are now in the
process of constructing their systems in the Company's region.
. Emerging Technologies and Availability of FCC Spectrum--Several new
entrants in the wireless communications industry are emerging as new
technology becomes available and additional radio spectrum is
authorized for use by the FCC. For example, Local Multipoint
Distribution Service ("LMDS"), has diverse applications including
wireless video, telephone, paging and wireless local loop. Wireless
local loop ("WLL") systems are seen as an alternative to traditional
copper and fiber-optic based services with the potential to be
implemented more quickly and at lower costs than fixed wireline
services. WLL systems provide non-mobile telecommunications services to
users by transmitting voice messages over radio waves from the public
switched network to the location of the fixed telephone. The
installation of WLL systems minimizes the need to obtain right-of-ways
and excavate existing roads and infrastructure in order to install or
upgrade a local telephone system serving non-mobile telephones. Also,
wireless data transmission is widely viewed as being in its infancy as
the development of Personal Digital Assistants and a variety of
applications are being developed. In addition to private networks,
several companies are building national wireless data transmission
networks including Motorola's EMBARC system, Nationwide Wireless
Network (an affiliate of MTEL), RAM Mobile Data (10% owned by
BellSouth), and Racotek's and Geotek's SMR based data networks.
Automatic Vehicle Monitoring/Location and Monitoring Services
("AVM/LMS") systems generally require a minimum of three towers to band
a coverage
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area. The Company believes that AVM/LMS service providers will use the
band to provide fleet tracking, rail and container transportation
monitoring, security and access control, etc. Other new developments
including the auction of 220 and 450 Megahertz spectrum are expected to
increase available radio spectrum for commercial applications.
These recent developments in the wireless communications industry indicate
continuing opportunities for the tower rental industry. Industry analysts
project rapid and continued growth in the major wireless communications industry
segments and these projections all share a common outcome: more equipment needs
to be installed on a limited supply of towers.
The Tower Rental Industry
A typical tower consists of a compound enclosing the tower and an equipment
shelter which houses a variety of transmitting, receiving and switching
equipment. There are three types of towers: (i) guyed; (ii) self-supporting
lattice; and (iii) self-supporting monopole. Guyed towers gain their support
capacity from a series of cables attaching separate levels of the tower to
anchor foundations in the ground. A lattice model is usually tapered from the
bottom up and can have three or four legs. A monopole is a tubular structure
that typically accommodates fewer customers and may be used as a single purpose
tower or in locations where there are space constraints or a need to address
aesthetic concerns. Self-supporting towers typically range in height from 50-200
feet for monopoles and up to 1,000 feet for lattices, while guyed towers can
reach a height of up to 2,000 feet. Different wireless communications
technologies require that equipment be located at various heights to optimize
signal propagation. The Company's current tower inventory is comprised of 465
guyed, 64 self-supporting lattices and nine monopoles.
Wireless communications equipment can also be placed on building rooftops.
Traditionally, rooftop sites have been common in urban downtown areas where tall
buildings are available and multiple communications sites are required because
of high wireless traffic density. Today, rooftop sites are used less for certain
types of customers as current technology requirements cause an increasing number
of providers to place antennae lower on buildings.
The value of a rental tower is principally determined by the desirability of
its location to customers and the amount of customer equipment installations
that it can support. Several customers may share one tower through "vertical
separation" with each type of customer on a different level. While many existing
towers were not originally built with the capacity to support multiple
customers, these towers can often be upgraded to support additional equipment.
Emergence of the Tower Rental Industry. Historically, wireless
communications providers and broadcasters built, owned and operated their own
towers, which were typically constructed and designed for their exclusive use.
As recent technologies emerged, the original equipment on many of these towers
became obsolete, resulting in these towers becoming available for other uses,
and in some cases, for acquisition . For example, fiber optic cables have
largely replaced transmission traffic traditionally carried by wireless
microwave networks. The paging and SMR industries were traditionally owned by
local or regional companies which constructed their own networks and
transmission towers. As these industries consolidated over the past ten years,
the acquiring companies typically purchased the radio licenses and subscriber
leases and entered into lease agreements with the original tower owner. Wireless
communications providers today are generally more focused on developing their
subscriber base and relatively less focused on building and owning tower
networks. An opportunity to acquire towers arose as a result of these
developments.
During the mid-to-late 1980s, a number of independent tower owners began to
emerge, marking the beginning of the tower rental industry. These independent
tower owners focused on owning and managing towers which could serve multiple
customers. The Company believes the majority of these tower operators were
individuals with a small number of local rental towers offering very limited
coverage areas. In the last three years, several larger
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independent tower owners have emerged as demand for wireless communications
services continued to grow and as additional high frequency licenses were
awarded for new wireless communications services (including PCS, narrowband
paging and LMDS) each requiring networks with extensive tower infrastructure. As
the demand for towers has been increasing, there has been a growing trend by
municipalities to slow the proliferation of towers. These trends have
contributed to a growing need for towers that can accommodate co-location of
wireless communications providers. In this regard, an opportunity to acquire
towers and lease space to multiple wireless communications providers was
created.
Ownership of rental towers in many parts of the United States remains highly
fragmented. Only a few independent tower owners have accumulated a large number
of towers and the Company believes it is the only one to achieve a consolidated
position in the Southeastern United States. The pace of consolidation has begun
to accelerate as larger independent owners acquire small local owners in certain
regions. In individual markets that are consolidated, the consolidating owners
have created formidable competition for new potential rental tower owners.
The Pinnacle Approach to the Tower Rental Industry
The Company is the leading provider of wireless communications rental tower
space in the Southeastern United States. Since commencing operations less than
three years ago, as of March 4, 1998, the Company has completed 145 acquisitions
through which it has acquired 516 towers within the Southeastern United States
and has constructed an additional 38 towers in such high growth markets as
Orlando, Atlanta, Birmingham and Tampa and believes it is well positioned to
continue to capitalize on the rapid consolidation of the highly fragmented tower
rental industry.
The Company leases tower space to its customers and receives rental payments
under tower leases that generally range in duration from three to five years. In
addition, a majority of the Company's leases provide for scheduled minimum rent
increases of the greater of a specified percentage (which typically ranges from
3-5%) or the change for the relevant period in the CPI. The Company experiences
negligible customer churn. The Company has a diversified base of over 675
customers, only one of which accounts for more than 5% of the Company's total
revenue. The Company's customers are a broad base of wireless communications
providers, operators of private networks and government agencies that include
Nextel, Sprint PCS, Motorola, PageNet, BellSouth Mobility, PrimeCo, AT&T
Wireless, Southern Communications, Georgia Power, Alabama Power, U.S. Coast
Guard, Internal Revenue Service, Federal Bureau of Investigation and Bureau of
Alcohol, Tobacco & Firearms.
The Company has rapidly executed its strategy and today owns a significant
portfolio of high quality towers that generates increasing revenue and cash
flow. The Company believes that its portfolio of strategically located rental
towers exhibits the following economic characteristics: (i) high absolute and
incremental margins; (ii) stable and predictable cash flow; (iii) a diversified
customer base; (iv) high barriers to entry; (v) low customer churn; and (vi)
attractive underlying growth. The Company anticipates that this portfolio
provides the core asset base from which it will continue the ongoing strategy to
acquire and construct clusters of towers in attractive, high growth markets.
Further, the Company believes it has created a stable and long-term stream of
tower rental revenue that would continue to be generated even if the Company
were to discontinue pursuing its aggressive expansion strategy.
The Company has established a strong market position throughout the
Southeastern United States and continues to execute its strategy through both
the acquisition and construction of rental towers. Upon completing an
acquisition or construction of a new tower, the Company attempts to enhance its
financial performance through the application of aggressive marketing techniques
and, in the case of acquisitions, through improved operational and engineering
management. All of the Company's functional business areas participate in the
assessment of all potential acquisition and construction projects and are
organized with a goal of rapidly and effectively integrating additional towers
into the Company's operations.
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Unlike several industry competitors, the Company has not focused on the
rooftop ownership or management businesses as it believes these businesses do
not generate the same levels of cash-flow margin which the Company currently
experiences through the rental of tower space. However, the Company does own
selected rooftops in West Palm Beach, Florida and New Orleans, Louisiana that
have cash-flow margins similar to those of its rental towers. The Company also
manages a selected number of rooftops located in high profile areas where tower
construction and rooftop ownership have proven difficult, including the Empire
State Building, The Boca Raton Hotel and Resort and several sites within Disney
World in Florida.
The Company has established a leading position within the tower rental
industry in the Southeastern United States. The Southeastern United States is
generally characterized by a number of attractive demographic trends including
relatively high population and economic growth rates. For example, according to
the U.S. Census Bureau, during the three years ending July 1, 1997 the
population growth rate in Florida was 5.0%, nearly double that of the overall
rate of 2.8% for the United States. Moreover, according to the U.S. Census
Bureau, 4 of the top 10 fastest growing cities in the United States are located
in the 12 state region targeted by the Company. As a result of this rapid
population growth, a large and affluent population base and high levels of
business and leisure travel, the Company believes that towers located in major
population centers and along major transportation corridors in the Southeastern
United States are and will continue to be highly pursued by wireless
communications providers and therefore have greater future revenue potential. In
addition, the Company believes that new tower construction in these areas is
more likely to face local zoning restrictions because of the aforementioned
characteristics of the region.
Business and Growth Strategy
The Company's objective is to create substantial value from its position as
the leading rental tower owner in the Southeastern United States. In order to
achieve its objective, the Company has designed and implemented a three-tiered
growth strategy of (i) capitalizing on the operating leverage of its business by
aggressively marketing available rental space on its towers, (ii) rapidly
acquiring towers in key markets and (iii) implementing a selective tower
construction program.
I. Marketing and Development Strategy
The Company seeks to capitalize on the operating leverage of its business by
increasing the utilization of rental space on its towers. The Company's
customers are generally responsible for the installation of their own equipment
and the incremental utility costs associated with that equipment. Furthermore,
there are no additional monitoring, maintenance or insurance costs to the
Company associated with additional customers. Accordingly, the Company believes
that when additional rental space is available on its towers, incremental
revenue can be achieved at low incremental costs, thereby yielding significant
incremental profit margin.
The implementation of the Company's marketing and development strategy
includes the following:
. Offer Strategically Located Clusters of Towers. By owning and
assembling clusters of towers in strategically attractive regions, the
Company believes it is able to offer its customers the ability to
rapidly fulfill their network expansion plans. The Company believes
that the ability to offer "one stop shopping" services to customers on
a local and regional basis provides the Company a significant
competitive advantage.
. Leverage Customer Relationships. The Company believes it has
established a reputation among its customers as a highly professional,
responsive tower space provider that routinely fulfills its commitments
to its customers. This has been achieved through ongoing investment in
the development of multilevel customer relationships. The Company
believes that making customers'
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technical and planning personnel aware of the quality of a particular
site, the ease of doing business with one lessor, the location of other
Company-owned towers and the Company's ability to construct new sites
are important factors in generating interest in the Company's towers.
. Track FCC Filings. All FCC licensees must file applications for
site locations. Utilizing its proprietary databases and publicly
available information, the Company tracks these filings closely to
identify tower acquisition and construction opportunities which, due to
the site's appeal to a broad base of customers, the Company believes
will have significant and predictable future revenue growth.
Additionally, the Company closely monitors FCC auctions in order to
identify new market entrants.
. Promote Quality and Security of Facilities. The wireless
communications equipment typically stored in a tower building is
becoming increasingly sophisticated and is critical to a wireless
communications provider's ability to generate revenue. Accordingly, the
Company believes it is of vital importance to its customers that their
equipment be in a well-maintained and secure building. The Company
believes it has developed a reputation as a provider of high quality
and secure sites.
. Dedicate Resources to Customer Service. The Company employs a
group of individuals who are entirely dedicated to assisting customers
with site location and installation logistics. Management of the
Company's technical data through effective information systems enables
the customer service group to respond quickly and accurately to
customers' needs before, during and after the installation of
customers' equipment.
II. Acquisition Strategy
The Company's acquisition strategy is focused on (i) the rapid acquisition of
towers in key markets as a means to quickly gain critical mass, thereby
discouraging other tower consolidators from entering its markets and (ii) the
completion of follow-on acquisitions combined with the selective construction of
new tower sites to complete coverage of the selected market. In executing its
acquisition strategy, the Company generally targets strategically located
individual towers or small groups of towers. Since commencing operations in
1995, the Company had completed the acquisition of 516 towers in 145 separate
transactions. As of March 4, 1998, the Company had a contract or a letter of
intent with respect to 16 proposed acquisitions consisting of 52 towers and
through March 4, 1998, had identified and initiated discussions concerning
numerous additional acquisition opportunities.
The Company conducts extensive due diligence prior to consummating an
acquisition, leveraging what the Company believes to be its competitive
advantage in terms of its experience in, and knowledge of, the tower rental
industry. Of the Company's 71 total employees, 23.0% are dedicated to completing
acquisitions. The Company utilizes nine full-time tower buyers, who spend
substantially all of their time in the field identifying, evaluating and
generating acquisition opportunities for the Company. The Company uses a
standardized process that it has developed to ensure that acquisitions are
evaluated, documented and rapidly processed. In order to execute and ensure the
integrity and quality of this process, the Company utilizes outside independent
professionals to verify certain accounting, legal and engineering data. The
Company believes that this approach has proven effective in permitting the
Company to more accurately predict the performance of acquired assets and reduce
the risks associated with the Company's acquisitions. The Company utilizes the
following primary criteria in evaluating the attractiveness of a potential
acquisition:
. Target Attractive Wireless Geographic Markets. Within its targeted
region, the Company targets population centers and transportation
corridors where there is evidence of high growth in wireless
communications services. The Southeastern United States is generally
characterized by a
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number of attractive demographic trends including relatively high
population and economic growth rates. Today, the Company has strong
market positions in many population centers such as Orlando, Atlanta,
Birmingham, Tampa and New Orleans. Further, the Company has established
a strong market position along the following transportation corridors:
I-10 from Baton Rouge, Louisiana to Jacksonville, Florida
I-4 from Daytona Beach, Florida to Tampa, Florida
I-85 from Atlanta, Georgia to Montgomery, Alabama
I-75 from Atlanta, Georgia to Naples, Florida
I-65 from Birmingham, Alabama to Mobile, Alabama
I-16 from Atlanta, Georgia to Savannah, Georgia
I-59 from Birmingham, Alabama to New Orleans, Louisiana
. Compatibility with Existing Tower Network. The Company's marketing
activities provide information as to how a potential acquisition may
enhance its existing tower network. The Company considers many factors
when evaluating a potential acquisition. For example, the Company
considers whether an acquisition will, when combined with existing
tower inventory, result in the Company owning a cluster of towers in a
given area, thereby providing the Company with a stronger market
position. The Company also considers whether the towers in a particular
acquisition meet demand for enhanced coverage which has been previously
identified by customers. In some instances, the Company may acquire, as
part of a group of towers being purchased, an individual tower which
falls outside of normal acquisition parameters. Such acquisitions occur
only when the Company has determined that the overall transaction is
attractive.
. Disciplined Valuation Process. The Company seeks to acquire towers
that have existing cash flow and the potential for significant future
cash flow growth. The price paid for a particular tower depends on many
factors including the quality of existing cash flow, location, land
values, customer quality and excess tower capacity. For each potential
acquisition, the Company reviews the current population coverage of
each proposed tower, the nature and quality of the customer base,
coverage of current and future major transportation corridors and the
location and desirability of competing towers. The Company also makes
an assessment of potential cash flow growth and estimates whether
additional capital expenditures will be required to add capacity to
accommodate future growth.
The Southern Towers Acquisition. In March 1998, the Company completed the
acquisition of 201 towers from Southern Communications, a subsidiary of Southern
Company, one of the largest utility holding companies in the United States and a
large ESMR provider in the United States with a network in the Southeast. The
Company paid $83.5 million plus fees and expenses for these towers, which are
located in Georgia, Alabama, Mississippi and Florida, substantially all of which
were constructed within the last four years. Prior to the acquisition, these
towers were principally for the exclusive use of Southern Communications and its
affiliates. Only a limited number of third party tenants have been given access
to these towers. The towers were generally constructed with capacity
significantly exceeding Southern Communications' specific capacity requirements.
Accordingly, the Company believes that there is substantial additional revenue
potential on these towers.
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The Company believes that the Southern Towers Acquisition has significantly
accelerated its progress in achieving its goal to become the leading provider of
rental tower space in the Southeast United States. The locations of the Southern
towers are complementary to the Company's previously existing inventory of
towers and result in a level of geographic coverage which the Company believes
is far more comprehensive than that offered by any of its competitors. In
particular, the Southern Towers Acquisition provides the Company with a strong
market position in Atlanta, one of the fastest growing wireless communications
markets in the Southeast. The characteristics of the Southern towers
(predominately single tenant with significant remaining capacity) is consistent
with the Company's strategy to acquire towers with the potential for substantial
future growth.
In connection with the Southern Towers Acquisition, the Company and
Southern Communications have entered into leases whereby Southern Communications
or an affiliate is a customer on each of the 201 towers acquired. Under the
lease agreements, Southern Communications and its affiliates will pay annual
initial aggregate rents of $5.5 million. The leases have initial terms of ten
years with five optional renewal periods of five years each exercisable at the
customer's option on the same terms as the original leases. The Company is
currently in discussions with several large customers with respect to rental
space on these towers. Southern Communications has also indicated a desire to
lease space on these towers in addition to the space covered by the leases
referred to above. The Company has also entered into an option agreement with
Southern Communications whereby the Company may supply, acquire or construct an
additional 80 sites, the locations of which have been identified by Southern
Communications, for rental by Southern Communications or its affiliates. Any of
these additional sites would be rented under the same terms as the original
leases of the 201 towers described above.
III. New Tower Construction Strategy
The Company's tower site construction is not speculative. Construction is
only initiated after at least one anchor customer is identified and after the
Company has determined, based on market research, that the capital outlay for
the construction project would not exceed a maximum multiple of estimated Tower
Level Cash Flow after a given period of time. As such, the Company's capital
investments are tailored to provide for anticipated demand with a goal of
ensuring the appropriate financial return on each tower constructed through its
build program.
The elements of the Company's tower build program include the following:
. Disciplined Build Selection Criteria. Through its sales and
marketing efforts, the Company seeks to identify suitable tower
construction sites based on information obtained from wireless
communications providers regarding their network construction plans.
The Company evaluates those plans and ensures that an effective
solution to meeting customer requirements is employed, whether the
result is selling space on an existing tower, acquiring an existing
tower, augmenting an existing tower or constructing a new tower. Once
such opportunities are identified, the Company acts quickly to select
only those opportunities which are financially attractive.
. Rapid Construction/Build Implementation. After identifying an
attractive construction opportunity, the Company moves quickly to:
(i) secure access to the site by either purchasing or entering into a
long-term lease for a parcel of land; (ii) select the appropriate
type of tower based on structural capacity needs; (iii) initiate
sales and marketing efforts to rent space on the tower; and (iv)
complete necessary steps to obtain zoning approvals and building
permits. The Company then oversees the construction of the tower by
hired sub-contractors.
. Effective Tower Design and Sourcing. New tower structures are
available from a variety of manufacturers. The number of customer
attachments that can be installed on any individual tower (the
tower's capacity) varies dramatically depending on a number of
factors including the original engineering and design of the tower,
the geographic area in which the tower is erected and the
56
<PAGE>
specific nature of the attachments (coaxial lines, mounting devices
and antennas) which customers wish to install. These factors also
influence the amount of capital which must be invested to build such
towers, which in the case of a 500-foot guyed tower could range from
$35,000 to $1,000,000. Tower rental rates are a function of demand,
the amount and type of equipment to be installed and the degree of
local competition.
While construction of new towers does not provide immediate cash flow like
that of existing towers, the Company believes that due to the generally lower
capital requirements for constructed towers versus acquired towers, new tower
construction generates a higher return than acquisitions once the new towers are
fully leased. Approximately eight new towers are currently under construction by
the Company and there is in excess of 100 additional tower projects in various
stages of development.
Company Operations
Through its centralized management structure, the Company is designed to be
an efficient consolidator and operator of rental towers. This is reflected in
the methods and processes that the Company employs in managing its day-to-day
operations, including the rapid integration of acquisition, tower construction
and sales and marketing data into the Company's proprietary management
information systems. This approach ensures that tower management is coordinated
across the Company's functional areas and that such information is accurate,
timely and easily available. The Company has invested heavily in its information
systems and believes that its investments in these areas will accommodate
significant additional growth.
The Company has two levels of non-tower operating expenses: corporate
development expenses and general and administrative expenses. Corporate
development expenses are associated with the Company's acquisition and
construction strategies. General and administrative expenses are associated with
supporting the Company's day-to-day management of its existing properties. If
the Company were to curtail its acquisition and construction activities, the
related corporate development costs could be avoided.
The key components of the Company's operations include (i) effective
integration of tower assets into the Company's existing portfolio, (ii) ongoing
monitoring of the Company's portfolio of tower assets and (iii) customer sales
and support.
Integration. The pace and level of activity which characterize the
Company's acquisition, construction and marketing strategies create certain
operational challenges including the efficient integration of the due diligence
data and other accounting, legal, regulatory, real estate, engineering and lease
information. In response to these challenges, two years ago the Company
committed substantial resources to the development of its proprietary management
information systems to accommodate the Company's overall acquisition,
construction and marketing strategies. As a result, the Company has developed
the capability to "instantly integrate" new acquisitions and tower construction
activity and initiate sales and marketing efforts immediately upon closing or
completion. This capability applies to an acquisition of a single tower as well
as the Southern Towers Acquisition, which added 201 towers to the Company's
portfolio of assets.
Ongoing Monitoring. The Company's operations personnel perform routine,
ongoing monitoring to ensure the maintenance of accurate data with regard to the
Company's tower inventory. Such inventory management includes radio frequency
audits and regulatory compliance. The Company seeks to maintain accurate
information with regard to customers' equipment that is installed on its towers.
The Company believes that this area is overlooked by many rental tower owners,
resulting in erroneous information about the availability of tower space and
certain existing customers using more capacity than is reflected in their lease.
To minimize such errors, the Company conducts radio frequency audits and matches
each customer's equipment (which includes base stations, frequencies, coaxial
lines and antennas) to those allowed under the customer's lease. Discrepancies
are identified
57
<PAGE>
and customers are informed of required modifications to the lease terms in order
to provide for additional rent. In addition, the Company utilizes this
information to facilitate future capacity calculations and predict where and
when capital expenditures may be required to provide additional space to new
customers. Regulatory compliance and respect for the needs of the communities in
which the Company operates are essential to the Company as well as to its
customers. Operations personnel ensure that all sites are in compliance with all
FAA and FCC regulations and other local requirements. Regulatory data is
integrated into the Company's management information systems and is provided to
current and potential customers as part of equipment installation support
efforts.
Customer Sales and Support. The Company's customer sales support group is
dedicated to responding to the needs of current and potential customers. Support
is offered to customers in connection with assessing a selected tower's
capacity, determining the potential for radio frequency interference from new
equipment and providing required documentation as to ownership and other
property issues. This service function seeks to facilitate the customer's
decision to initiate installation on the Company's tower and, the Company
believes, has enhanced the Company's reputation as a full-service and responsive
provider of rental tower space.
Economics of Pinnacle's Business
Today, the Company owns a portfolio of tower assets that it believes has
the following favorable economic characteristics:
. High Absolute and Incremental Margins. The Company's towers are
fixed-cost assets with minimal variable costs associated with revenue
from leasing available space to additional or existing customers, as
each customer generally assumes the costs of installation, utilities
and equipment maintenance. Accordingly, a rental tower owner can
generate increasing operating margins when new customers are added,
resulting in high incremental free cash flow available to service debt.
For the year ended December 31, 1997, the Company's Tower Level Cash
Flow Margin was 79.6%.
. Stable and Predictable Cash Flow. The Company believes that it
benefits from the long-term contract nature of its tower rental
business and the predictability and stability of monthly, prepaid and
recurring revenue. The Company generally leases space on its towers to
wireless communications providers under three to five-year leases. In
addition, a majority of the Company's leases provide built-in annual
rate increases of the greater of a specified percentage, (which
typically ranges from 3-5%), or the change for the relevant period in
the CPI. Furthermore, because a significant proportion of tower rental
revenue is received from customers that are predominantly large
companies and because towers provide a basic utility-like service
(which can be terminated by a tower owner if rent is not paid), the
Company generally experiences low levels of bad debt expense. In 1997,
the Company's bad debt expense as a percentage of revenue was 1.0%.
. Diversified Customer Base. There is broad representation of wireless
communications providers and underlying technologies reflected in the
Company's customer base. Accordingly, the Company believes that the
stability and growth of its revenue will reflect that of the wireless
communications industry in general, rather than any specific customer
or segment within that industry. The Company has a diversified base of
over 675 customers, only one of which accounts for more than 5% of the
Company's total revenue.
. Barriers to Entry. Towers are subject to a variety of federal and
local regulations which make construction of towers difficult,
expensive and time consuming, especially in highly populated or high
transmission areas. In addition, in areas where the Company has
established a critical mass of rental tower inventory adequate to
supply customers' site requirements, construction of alternative towers
will be less attractive to others due to the likelihood of lower
returns on those towers.
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<PAGE>
Wireless communications providers seeking to construct their own
proprietary, limited use towers face continued opposition by
municipalities, which are reducing the opportunities for such new
towers to be built and supporting the trend toward co-location on
rental towers.
. Low Customer Churn. The Company typically experiences low customer
churn as a result of the high relocation costs incurred by customers.
When customers enter into long-term contracts for tower space, those
customers generally make significant capital and network engineering
commitments to the related site. The Company believes that these levels
of commitment made by its customers support the long-term nature and
predictability of the Company's revenue. Municipal approvals are
becoming increasingly difficult to obtain and may also affect the
carrier's decision to relocate. The costs associated with network
reconfiguration, obtaining FCC and municipal approval and the time
required to complete these activities may not be justified by any
potential savings in reduced tower operating expense. As a result, the
Company experienced customer churn of 0.8% in 1996 and 0.6% in 1997.
. Attractive Underlying Growth and Prospects. According to industry
publications, the paging industry has experienced annual average growth
rates of approximately 26.8% over the past few years and, the cellular
industry had a growth rate of 27.5% from June 30,1996 to June 30, 1997.
According to industry publications, as of December 31, 1997,
penetration for wireless services was approximately 21.0% and is
projected to grow to 53.0% by 2007. The Company's rental towers are
basic infrastructure components for all major wireless communications
services, including cellular, paging, two-way radio, broadcast
television, microwave, wireless data transmission and SMR customers. As
a result, the Company believes that its tower rental revenue will
reflect the growth of its customer base over the next several years.
Customers
As of March 4, 1998, the Company had over 2,400 separate tower space
leases. The Company has a diversified base of over 675 customers, only one of
which accounts for more than 5% of the Company's total revenue.
The Company has a diverse mix of customers representing the various
technologies and segments of the wireless communications industry. As a result,
the Company believes it is not dependent on any one segment of the wireless
communications industry for future revenue growth. The following is a summary of
the Company's Annualized Run Rate Revenue by customer type and approximate
percentage of revenue derived therefrom as of March 4, 1998:
Percentage
Customer Type of Revenue
------------- ----------
SMR............................................. 31%
Paging.......................................... 24%
Land Mobile..................................... 20%
PCS............................................. 10%
Government...................................... 6%
Cellular........................................ 5%
Broadcasting.................................... 3%
Data............................................ 1%
---
Total....................................... 100%
===
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The following is a summary of the Company's towers by state, as of March 4,
1998:
Number
State of Towers
----- ---------
Florida 153
Georgia 131
Alabama 94
Louisiana 64
Mississippi 36
South Carolina 18
Texas 15
Maryland 12
Virginia 12
Tennessee 7
North Carolina 6
Arkansas 5
New York 1
-----
Total 554
=====
The Company believes it has effectively executed its strategy to accumulate
clusters of towers in designated market areas especially with respect to certain
urban areas within its targeted region. For example, as of March 4, 1998, the
Company had 43 towers in the Orlando, Florida market, 42 towers in the Atlanta,
Georgia market, 34 towers in the Birmingham, Alabama market, 26 towers in the
Tampa/Sarasota, Florida market and 26 towers in the New Orleans, Louisiana
market.
Properties
The Company both owns and leases the real property upon which its towers
are located. As of March 4, 1998, the Company owned 397 towers on parcels of
real estate that are leased and 141 towers on parcels of real estate that are
owned.
Additionally, the Company leases its corporate headquarters in Sarasota,
Florida. The aggregate square footage of office space under this lease is
10,505. The lease term ends on September 30, 2000, and rent paid by the Company
for its headquarters was approximately $159,200 in 1997. The Company believes
that its facilities are adequate for its short-term needs and does not expect
difficulty replacing such facilities or locating additional facilities, if
needed.
Competition
The markets in which the Company operates are highly competitive. The
Company competes with wireless communications providers who own and operate
their own tower networks, site development companies which acquire space on
existing towers, rooftops and other sites, other independent tower companies and
traditional local independent tower operators. Wireless communications providers
who own and operate their own tower networks generally are larger and have
greater financial resources than the Company. The Company believes that tower
location and capacity, price, quality of service and density within a geographic
market historically have been and will continue to be the most significant
competitive factors affecting tower rental companies. The Company believes that
competition for tower acquisitions will increase and that additional competitors
will enter the tower rental market, some of which may have greater financial
resources than the Company.
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Regulatory Matters
Federal Regulations. Both the FCC and FAA promulgate regulations relative
to towers used for wireless communications. Such regulations primarily relate to
the siting, lighting and marking of towers. Most proposed antenna structures
that are higher than 200 feet above ground level or that may interfere with the
flight path of a nearby airport must be studied by the FAA and registered with
the FCC. Upon notification to the FAA of a potential new tower or a proposed
change in the height or location of certain existing towers, the FAA assigns a
number to and conducts an aeronautical study. Upon the finding that a proposed
tower, new or modified, does not constitute a hazard to air navigation, the FAA
will require certain painting and lighting requirements to be met to maximize
the visibility of the tower. All towers subject to the FAA notification process
must be registered by the tower owner with the FCC. At FCC registration, the FCC
generally requires the painting and lighting requirements of the FAA to be met.
Tower owners may also bear the responsibility of notifying the FAA of any tower
lighting outage. The FCC enforces the tower painting and lighting requirements.
Failure to comply with applicable requirements may lead to civil liabilities.
Wireless communications devices operating on towers are separately regulated by
the FCC and independently licensed based upon the particular frequency used.
The Telecommunications Act of 1996 (the "Telecom Act") amended the
Communications Act of 1934 to prevent the FCC preemption of local and state land
use decisions and preserves the authority of state and local governments over
zoning and land use matters concerning the construction, modification and
placement of towers, except in limited circumstances. The Telecom Act prohibits
any action that would (i) discriminate between different wireless communications
providers or (ii) ban altogether the construction, modification or placement of
radio communications towers. The Telecom Act requires the federal government to
establish procedures to make available on a fair, reasonable and
nondiscriminatory basis property rights-of-way and easements under federal
control for the placement of new telecommunications services. This may require
that federal agencies and departments work directly with licensees to make
federal property available for tower facilities.
All towers must comply with the National Environmental Policy Act of 1969
as well as other federal environmental statutes. The FCC's environmental rules
place responsibility on each applicant to investigate any potential
environmental effect of tower placement and operations and to disclose any
significant effects on the environment in an environmental assessment prior to
constructing a tower. In the event the FCC determines the proposed tower would
have significant environmental impact based on the standards the FCC has
developed, the FCC would be required to prepare an environmental impact
statement. This process could significantly delay the licensing of a particular
tower site.
Local Regulations. Local regulations include city, county 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 prior to tower construction.
Environmental Regulation. In addition to the FCC's environmental
regulations, the Company is subject to various other federal, state and local
health, safety and environmental laws and regulations. The Company believes that
it is in material compliance with existing applicable health, safety and
environmental laws and regulations and has all necessary permits and licenses.
Employees
As of December, 1997, the Company had approximately 65 full-time employees,
of which 47 work in the Company's Sarasota, Florida headquarters office. None of
the Company's employees are unionized, and the Company considers its
relationship with its employees to be good.
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REIT Status
The Company has elected to be treated as a REIT. A REIT is generally not
subject to federal corporate income taxes on that portion of its ordinary income
or capital gain for a taxable year that is distributed to stockholders within
such year. To qualify and remain qualified as a REIT, the Company is required
for each taxable year to satisfy certain requirements pertaining to
organization, sources of income, distributions and asset ownership. Among the
numerous requirements which must be satisfied with respect to each taxable year
in order to qualify and remain qualified as such, a REIT generally must
(i) distribute to stockholders 95% of its taxable income computed without regard
to net capital gains and deductions for distributions to stockholders,
(ii) maintain at least 75% of the value of the Company's total assets in real
estate assets (generally real property and interests therein), cash, cash items
and government securities, (iii) derive at least 75% of its gross income from
investments in real property or mortgages on real property and (iv) derive at
least 95% of its gross income from real property investments described in
(iii) and from dividends, interest and gain from the sale or disposition of
stock and securities and certain other types of gross income. Income tax
regulations provide that the term "real property" for the foregoing requirements
means land or improvements thereon, such as buildings or other inherently
permanent structures thereon, including items which are structural components of
such buildings or structures. The IRS has ruled in a revenue ruling that
transmitting and receiving communications towers built upon pilings or
foundations similar to those of the Company as well as ancillary buildings,
heating and air conditioning systems and fencing constitutes inherently
permanent structures and are therefore real estate assets.
The Company could be subject to a variety of taxes and penalties if at any
time the Company engages in certain prohibited transactions, fails to satisfy
certain REIT distribution requirements or recognizes gain on the sale or
disposition of certain types of property. In addition, if the IRS determines
that the Company has failed to satisfy any of the requirements to maintain its
qualification as a REIT for any taxable year, and cannot utilize any of the
relief provisions which may be applicable, then the Company will be subject to
corporate level income tax at regular corporate rates on its net income
unreduced by distributions to stockholders, together with interest and
penalties. However, because the Company has not reported any net taxable income
(determined before the deduction for dividends paid) in its corporate income tax
returns following its filing of an election to be taxed as a REIT, unless its
reported net taxable loss is adjusted, the risk that any corporate income tax
liability would result from a retroactive determination by the IRS that the
Company has, to date, failed to satisfy all of the requirements for REIT
qualification during any such year would be minimal. However, with respect to
any year in which the Company recognizes positive net taxable income, the loss
of REIT status or a determination that the Company did not qualify as a REIT may
have a material adverse affect on the Company's financial condition or results
from operations. In such circumstances, the Issuer may have made the
distributions to its stockholders required for REIT status described above in an
attempt to qualify for REIT status but would not be entitled to receive such
distributions back from the stockholders or a tax deduction for such
distributions.
In February 1998, President Clinton proposed the enactment of tax
legislation. Included in the President's proposal were certain provisions to
change the income tax treatment of REITs. One such provision would impose an
additional requirement for REIT qualification that no person can own either
(i) more than 50% of the total combined voting power of all classes of voting
stock of a REIT or (ii) more than 50% of the total value of shares of all
classes of stock of a REIT. As set forth under the caption "Principal
Stockholders", over 80% of the stock of the Issuer is owned by ABRY II. However,
as presently proposed, such additional requirements for REIT qualification would
be effective only for entities electing REIT status for taxable years beginning
on or after the date of first committee action, thereby effectively
grandfathering the Issuer from such provision. There can be no assurance that
any future tax legislation will contain such a grandfathering provision or will
not adversely affect the continued qualification of the Company as a REIT.
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<PAGE>
Legal Proceedings
The Company is from time to time involved in ordinary litigation incidental
to the conduct of its business. The Company believes that none of its pending
litigation will have a material adverse effect on the Company's business,
financial condition or results of operations.
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MANAGEMENT
Executive Officers, Directors and Key Employees
Set forth below is certain information concerning the Company's directors,
executive officers and key employees.
Name Age Position
- ---- --- --------
Robert Wolsey.......... 47 Director, President and Chief Executive Officer
and Chief Operating Officer
James Dell'Apa......... 40 Director, Executive Vice President
Steven Day............. 45 Director, Vice President, Secretary and Chief
Financial Officer
David Zahn............. 33 Vice President of Operations
Ben Gaboury............ 46 Vice President of Sales and Marketing
Martin Alvarez......... 43 Chief Information Officer
Andrew Banks........... 43 Director
Peni Garber............ 35 Director
Peggy Koenig........... 41 Director
Royce Yudkoff.......... 42 Director
Robert Wolsey is primarily responsible for the overall direction of the
Company's acquisitions and operations and has substantial experience in
consolidating fragmented industries. From 1990 to 1994, Mr. Wolsey, as Chief
Executive Officer of Pittencrieff Communications, Inc. (PCI), a regional
consolidator of SMR operators, spearheaded the acquisition of 28 SMR businesses
and related assets (including over 100 towers) for a purchase price of over
$30 million. During Mr. Wolsey's tenure at PCI, revenue increased from $100,000
to over $28 million. In June 1993, PCI completed its initial public offering in
an offering that raised over $74 million. At the time of Mr. Wolsey's departure
from PCI in April 1994, it had a market capitalization in excess of $200
million. From 1983 to 1989, Mr. Wolsey, as President of Pittencrieff PLC and a
predecessor company, negotiated and acquired over $30 million in oil and gas
assets in 16 separate transactions. He has a Bachelor of Science (Honors) degree
in Color Physics from the University of Manchester.
James Dell'Apa is principally responsible for managing the initiation and
negotiation of acquisitions. Mr. Dell'Apa has brokered SMR, tower, paging, and
two-way businesses since 1991 and has had various levels of involvement with
over 250 transactions with a combined valuation of over $650 million. Before his
acquisitions work, he was a technical consultant in Washington, D.C. responsible
for planning large-scale military networks for government consulting firms under
the employment of Booz Allen & Hamilton and Advanced Technology (later Planning
Research Corporation and Black and Decker). Mr. Dell'Apa also worked for
Georgetown University's International Law Institute developing long-term,
intensive training programs on Negotiation and Policy for Developing
Telecommunications Infrastructure for senior level government ministers. He has
a law degree from American University in Washington, D.C., a technical Masters
degree in Telecommunications from the University of Colorado (Boulder), and a
liberal arts/bachelors degree from the University of Northern Colorado.
64
<PAGE>
Steven Day is primarily responsible for the Company's financial, legal and
administrative affairs and for the integration of acquired properties. Mr. Day
was a partner in the accounting firm of Price Waterhouse LLP until joining the
Company in February 1997. Since 1986, he has been involved with high-growth
companies principally in technology-based industries and, for the last several
years, worked with large venture capital and leveraged buyout firms in his role
in the Price Waterhouse Mergers and Acquisitions Group. Mr. Day has substantial
experience in dealing with companies which have filed initial public offerings
and public debt related registration statements. Mr. Day earned a Masters of
Business Administration at Loyola University of Chicago and a Bachelor of Arts
degree at the University of West Florida.
Ben Gaboury is primarily responsible for the sales and marketing operations
of the Company. Mr. Gaboury was employed for 17 years with Motorola Inc. in
various sales and sales management positions. Before joining the Company in
October 1996, Mr. Gaboury was responsible for planning the strategy that
Motorola employed in connection with the build out of its SMR network in New
York and the New England area. He then executed the plan to market SMR services
as well as related rental towers. Mr. Gaboury holds a Masters Degree from Jersey
City State College and a Bachelors Degree from Fairleigh Dickinson University.
David Zahn is primarily responsible for the ongoing maintenance of the
Company's existing tower inventory, new site construction, capacity augmentation
and new customer's equipment integration. He joined Pinnacle in September 1996.
From 1987 to 1996, Mr. Zahn worked for 360 Communications (formerly Sprint
Cellular and Centel Cellular) where he held a variety of positions ranging from
Project Manager, Transmission Engineer, Radio Frequency Engineering Supervisor
and Traffic Engineering Manager. His most recent management position was
Director of Engineering where he was responsible for a $50 million capital
program related to the construction of cellular transmission towers and the
associated communications network. Mr. Zahn earned his degrees in Bachelor of
Science in Electrical Engineering Technology and an Associate in Applied
Electronic Communications Engineering Technology from the Milwaukee School of
Engineering.
Martin Alvarez is primarily responsible for the Company's Information
Technology and Services. Prior to joining the Company in June 1997, Mr. Alvarez
was a Senior Manager in the Management Consulting Services division of Price
Waterhouse LLP. Mr. Alvarez has been involved with the growth and management of
Information Technology and Services at Pinnacle since April of 1996. His
experience includes work for a variety of industries that include
telecommunications, entertainment, manufacturing, utilities, among other
industries. Mr. Alvarez' experience includes management of various technology
areas, systems development and implementation, systems programming,
effectiveness evaluation and strategic planning. Mr. Alvarez earned his degree
in Bachelor of Science in Engineering Science, Computer Science Option from the
University of South Florida.
Andrew Banks is Chairman of ABRY Holdings Inc. Previously, Mr. Banks was
affiliated with Bain & Company, an international management consulting firm. At
Bain, where he was a partner from 1986 until 1988, he shared significant
responsibility for the firm's media practice. Mr. Banks is presently a director
of various companies, including DirecTel and Cat, Ltd. Mr. Banks is a graduate
of the Harvard Law School, a Rhodes Scholar holding a Master's degree from
Oxford University and a graduate of the University of Florida.
Peni Garber is a principal at ABRY Partners, Inc. ("ABRY"). She joined ABRY
in 1990 from Price Waterhouse LLP where she served as Senior Accountant in the
Audit Division from 1985 to 1990. Ms. Garber is presently a director of Nexstar
Broadcasting Group, L.P. and Sullivan Broadcasting Company, Inc. Ms. Garber
graduated summa cum laude from Bryant College.
Peggy Koenig is a partner in ABRY. She joined ABRY in 1993. From 1988 to
1992, Ms. Koenig was a Vice President, partner and member of the Board of
Directors of Sillerman Communications Management Corporation, a merchant bank,
which made investments principally in the radio industry. Ms. Koenig was the
Director of Finance from 1986 to 1988 for Magera Management, an independent
motion picture financing company. She is presently a director of Sullivan
Broadcasting Company, Inc., Connoisseur Communications Partners, L.P. and
Weather
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Services Corporation. She received her MBA from the Wharton Business School and
received an undergraduate degree from Cornell University.
Royce Yudkoff is President and Managing Partner of ABRY. Previously,
Mr. Yudkoff was affiliated with Bain & Company, an international management
consulting firm. At Bain, where he was a partner from 1985 through 1988, he
shared significant responsibility for the firm's media practice. Mr. Yudkoff is
presently a director of various companies including Sullivan Broadcasting
Company, Inc., Nexstar Broadcasting Group, L.P. and Metrocall. He graduated as a
Baker Scholar from the Harvard Business School and is an honors graduate of
Dartmouth College.
Board Committees
The Company's Board of Directors has appointed an Audit Committee, a
Compensation Committee and an Executive Committee. The members of the Audit
Committee are Mr. Day, Ms. Garber and Ms. Koenig. The members of the
Compensation Committee are Mr. Yudkoff, Ms. Koenig and Mr. Day. The members of
the Executive Committee are Mr. Wolsey, Ms. Koenig and Mr. Yudkoff.
Compensation of Directors
All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. No director
receives separate compensation for services rendered as a director.
Compensation of Executive Officers
The following table sets forth information concerning the compensation for
each of the last three years for the Chief Executive Officer and the four other
most highly compensated executive officers of the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation
--------------------------------- -------------------------------------
Awards Payouts
-------------------------- ---------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
sation Awards Options Payouts sation
Name and Principal Position(a) Year Salary ($) Bonus ($) ($) ($) (#) ($) ($)
- ------------------------------ ---- ---------- --------- ---------- ----------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert Wolsey................... 1997 $156,000 $70,000 6,500(b) -- -- -- --
Chief Executive Officer 1996 129,698 30,000 -- -- -- -- --
and President 1995 50,000 -- -- $10,000 -- -- --
James Dell'Apa.................. 1997 156,248 -- -- -- -- -- --
Vice President and 1996 128,125 30,000 -- -- -- -- --
Chief Operating Officer 1995 50,000 -- -- 10,000 -- -- --
Steven Day...................... 1997 131,250 -- -- 12,000 -- -- --
Vice President and 1996 -- -- -- -- -- -- --
Chief Financial Officer 1995 -- -- -- -- -- -- --
Ben Gaboury..................... 1997 126,094 -- -- -- -- -- --
Vice President 1996 31,789 -- -- 1,200 -- -- --
Sales and Marketing 1995 -- -- -- -- -- -- --
David Zahn...................... 1997 126,260 -- -- -- -- -- --
Vice President Operations 1996 36,102 -- -- 1,200 -- -- --
1995 -- -- - -- -- -- --
</TABLE>
(a) See also, "Employment Agreements".
(b) Amount of reimbursement for payment of income taxes.
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<PAGE>
Employment Agreements
The Company has entered into employment agreements (the "Employment
Agreements") with each of Messrs. Wolsey, Dell'Apa and Day (the "Principal
Employees"). The terms of the Employment Agreements are substantially similar.
The Employment Agreements provide that each of the Principal Employees will be
employed by the Company until his resignation, death or disability or other
incapacity, or until terminated by the Company. Under the Employment Agreements,
each of the Principal Employees will receive, among other things, (i) an annual
base salary and (ii) other benefits as described in the Employment Agreements
(including all employee benefit plans and arrangements that are generally
available to other employees). Each of the Employment Agreements includes
noncompetition and nonsolicitation provisions restricting the respective
employees' ability to engage in activities competitive with the Company for a
period of two years following termination of employment. In the event of the
termination of an executive, the agreements provide for severance benefits
including salary and health plan benefits for periods ranging from six to 18
months.
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PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 4, 1998, information as to the
Company's stock beneficially owned by (i) each director of the Company,
(ii) each executive officer named in the Summary Compensation Table, (iii) all
directors and executive officers of the Company as a group, and (iv) any person
who is known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's common stock. In addition to the common
stock, the Company's capital includes 10,000 shares of preferred stock. No
shares of the Company's preferred stock are issued or outstanding.
Shares Beneficially Owned
<TABLE>
<CAPTION>
Percentage
Economic Percentage
Ownership of Voting
Name of Stockholders, Directors Class A Common Class B Common Class D Common Class E Common of all Power of all
- ------------------------------- ---------------- ---------------- ---------------- ---------------- Common Common
and Executive Officers(a) Shares(b) % Shares(b) % Shares(b) % Shares(b) % Stock Stock
- ------------------------- ----------- --- ----------- --- ----------- --- ----------- --- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABRY Broadcast Partners II,
L.P.(c)........................ 200,000 98.8 -- -- -- -- 140,260 98.2 81.3 81.3
Robert Wolsey(d)................. -- -- 10,000 83.3 11,000 27.5 -- -- 6.4 6.4
James Dell'Apa................... -- -- 1,500 12.5 10,000 25.0 2,500 1.8 4.6 4.6
Steven Day(e).................... -- -- 500 4.2 10,000 25.0 -- -- 3.8 3.8
Ben Gaboury...................... -- -- -- -- 1,000 2.5 -- -- * *
David Zahn....................... -- -- -- -- 1,000 2.5 -- -- * *
Andrew Banks..................... 25 * -- -- -- -- -- -- * *
Peni Garber...................... 25 * -- -- -- -- -- -- * *
Peggy Koenig..................... 50 * -- -- -- -- -- -- * *
Royce Yudkoff(f)................. 200,050 98.8 -- -- -- -- 140,260 98.2 81.3 81.3
All directors and executive
officers as group.............. 200,150 98.8 12,000 100 33,000 82.5 142,760 100 96.1 96.1
</TABLE>
* Indicates less than 1 percent.
(a) The address of all persons in this table is c/o Pinnacle Towers Inc., 1549
Ringling Blvd., Sarasota, Florida 34236.
(b) As used in this table, "beneficial ownership" means sole or shared power to
vote or direct the voting of a security, or the sole or shared investment
power with respect to a security (i.e., the power to dispose, or direct the
disposition, of a security). A person is deemed as of any date to have
"beneficial ownership" of any security that such person has a right to
acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person named above, any
security that such person has the right to acquire within 60 days of the
date of calculation is deemed to be outstanding, but is not deemed to be
outstanding for purposes of computing the percentage ownership of any other
person.
(c) ABRY Holdings, Inc., the general partner of ABRY Capital, which is the
general partner of ABRY II, is wholly-owned by Mr. Yudkoff.
(d) Mr. Wolsey is deemed the beneficial owner of his Class B common stock and
his Class D common stock through his control of Pantera, Inc. and Pantera
Partnership Ltd.
(e) Mr. Day is deemed the beneficial owner of his Class D common stock through
his control of South Creek, Inc. and South Creek Partnership Ltd.
(f) Mr. Yudkoff is deemed the beneficial owner of the Class A common stock and
Class E common stock held by ABRY II. See note (c) above.
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
Subscription and Stockholders Agreement
The principal stockholders of the Issuer (ABRY II, and Messrs. Wolsey,
Dell'Apa and Day) are parties to the Subscription and Stockholders Agreement,
dated April 17, 1995, as amended May 3, 1995 and September 22, 1997, (the
"Stockholders' Agreement"). The Stockholders' Agreement gives such stockholders
the preemptive right, with some exceptions, to acquire their pro rata share of
future issuances of capital stock of the Issuer. The following issuances are
exempt from this preemptive right: (a) to any employee of the Issuer; (b) in
connection with an acquisition or merger; (c) pursuant to a public offering;
(d) upon the exercise, conversion, or exchange of any option or convertible
security; (e) of up to a total of 200,000 Class A common stock to ABRY II at a
price of $100 per share; (f) as a part of any recapitalization or
reorganization; (g) upon the conversion of Class D common stock into Class C
common stock; and (h) as a distribution to stockholders in the form of
securities of the Issuer.
Parties to the Stockholders' Agreement have certain rights and obligations
in connection with a sale by ABRY II of shares in the Issuer, a sale of the
Issuer and a reorganization or recapitalization of the Issuer in anticipation of
a sale of the Issuer or a public offering. In the case of a sale by ABRY II of
shares in the Issuer, stockholders party to the Stockholders' Agreement will
have the right to participate pro rata in such a sale. In the case of a sale of
the Issuer approved by its stockholders or a reorganization or recapitalization
in anticipation of a sale or a public offering, stockholders party to the
Stockholders' Agreement will have the obligation to participate in such
transaction.
The Stockholders' Agreement also governs the vesting of the Class D common
stock issued to certain executives and employees of the Issuer and provides for
certain put and call rights, among the Issuer and its current stockholders with
respect to the Class B common stock and Class D common stock upon the
termination of employment or death of Messrs. Wolsey, Dell'Apa, or Day.
Capital Contribution Agreement
The Issuer has entered into the Capital Contribution Agreement with ABRY
II, pursuant to which ABRY II has agreed to make equity contributions to the
Issuer, up to an aggregate capital contribution of $50.0 million, in an amount
equal to (i) 100.0% of the Issuer's general and administrative expenses and
corporate development expenses and (ii) the amount necessary to cure any payment
or financial covenant default under the Senior Credit Facility. As of March 4,
1998, ABRY II has contributed $34.0 million of the aggregate $50.0 million
capital contribution commitment. Additionally, ABRY II is the guarantor of a
note of the Issuer payable to a former tower owner in an amount totaling
approximately $3.9 million.
Pinnacle Towers II Inc.
In November 1997, certain of the stockholders of the Issuer formed a new
company, Pinnacle Towers II Inc. ("PTI II"). PTI II is an affiliate of the
Issuer as PTI II is an entity under common control with the Issuer, as ABRY II
and certain executives of the Issuer control a majority of PTI II stock. PTI II
was formed for the purpose of pursuing certain opportunities, such as potential
joint ventures and other businesses related to the tower rental industry. PTI II
has a $5.0 million credit facility with a bank.
In November 1997, the Issuer sold, for cash, certain of its towers and
projects-in-progress to PTI II. In this transaction, the Issuer sold 12 towers
and 34 projects which were in process. The purchase price was $2.2 million. In
connection with this sale, the Issuer entered into a management agreement with
PTI II, whereby the Issuer provides management services with regard to the PTI
II towers and projects. The term of the management agreement is one year and is
renewable annually upon notice by PTI II to the Issuer, on terms to be
determined upon renewal. Under the agreement, charges for services performed are
billed at the Issuer's cost, plus an agreed
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upon margin, as defined in the agreement. As of December 31, 1997, charges for
services under the agreement were insignificant.
Management Indebtedness
At December 31, 1997, the Company had loans receivable from Mr. Dell'Apa, a
named executive officer, and a former executive officer and stockholder, Michael
Craig, in the amounts of $94,000 and $100,000, respectively. The loan to
Mr. Dell'Apa is secured by a mortgage on certain real property and by a pledge
of all of Mr. Dell'Apa's Class D common stock of the Company. The $100,000 loan
to Mr. Craig was paid in full in February 1998. Such loans bear interest payable
quarterly at a rate equal to the Company's bank rate less 600 basis points.
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DESCRIPTION OF CREDIT FACILITIES
Senior Credit Facility
In September 1995, Pinnacle Towers Inc. (the principal subsidiary and
operating company of the Issuer) entered into the Senior Credit Facility which
provided for $25.0 million of senior debt financing through reducing revolving
line of credit and revolver/term loan. In September 1996, the Company and its
lenders agreed to expand the commitment amount to $100.0 million. In connection
with the Southern Towers Acquisition, the Company and its lenders agreed to
expand the commitment under the Senior Credit Facility to $200.0 million
initially, which was amended to provide a $150.0 million commitment upon the
closing of the Private Offering. The commitment under the Senior Credit Facility
may be increased up to $250.0 million at the request of the Company and at the
option of the lenders. Advances under the Senior Credit Facility are available
to fund acquisitions and construction of towers and for general corporate
purposes. Upon the closing of the Private Offering, outstanding borrowings and
availability under the Senior Credit Facility were approximately $14.2 million
and $120.6 million, respectively, after giving effect to (i) repayment of $158.6
million of outstanding borrowings with a portion of the proceeds of the Private
Offering, (ii) reduction of the Senior Credit Facility to a commitment of $150.0
million and (iii) consideration of $15.2 million of outstanding letters of
credit which reduce availability under the Senior Credit Facility.
Immediately prior to the closing of the Private Offering, advances under the
Senior Credit Facility accrued interest at the Company's option at either LIBOR
plus a margin of up to 2.75% or the base rate, plus a margin of up to 1.75%. In
addition, the Company was required to pay commitment fees based on the unused
portion of the commitments and customary facility fees on the total amount of
the commitments. Upon closing of the Private Offering, the Senior Credit
Facility was amended to reduce the commitment amount to $150.0 million and to
change the maximum LIBOR margin to 2.875%. The Issuer has guaranteed the Senior
Credit Facility.
The Senior Credit Facility is secured by a lien on substantially all of the
Company's assets and a pledge of substantially all of the Company's capital
stock. The credit agreement contains customary covenants such as limitations on
the Company's ability to incur indebtedness, to incur liens or encumbrances on
assets, to make certain investments, to make distributions to stockholders, or
prepay subordinated debt. Under the credit agreement, the Company may not permit
the Leverage Ratio to exceed certain amounts, as defined in the Senior Credit
Facility.
ABRY Bridge Loan
In February 1998, the Company entered into the ABRY Bridge Loan, whereby the
Company borrowed $12.5 million to partially finance the Southern Towers
Acquisition. Amounts outstanding under the ABRY Bridge Loan bore interest at the
rate of 9.0% per annum. Interest and principal under the ABRY Bridge Loan are
payable within one year from the date of the related borrowing. A portion of the
proceeds from the Private Offering were used to repay in full and retire the
ABRY Bridge Loan.
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DESCRIPTION OF NEW NOTES
General
The New Notes are to be issued under an Indenture, dated as of March 20, 1998
(the "Indenture"), between the Issuer and The Bank of New York, as trustee (the
"Trustee"). The Original Notes were also issued under the Indenture in a private
transaction that was not subject to the registration requirements of the
Securities Act. The statements under this caption relating to the Notes and the
Indenture are summaries and do not purport to be complete, and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions of certain terms therein. The Indenture is
by its terms subject to and governed by the Trust Indenture Act of 1939, as
amended. Unless otherwise indicated, references under this caption to sections,
"(S)" or articles are references to the Indenture. Where reference is made to
particular provisions of the Indenture or to defined terms not otherwise defined
herein, such provisions or defined terms are incorporated herein by reference.
Copies of the Indenture and the Exchange and Registration Rights Agreement
referred to below (see "--Registration Covenant; Exchange Offer" below) are
filed as exhibits to the Registration Statement filed with the Commission of
which this Prospectus is a part.
The New Notes will be senior unsecured obligations of the Issuer, will rank
pari passu in right of payment with all existing and future senior unsecured
indebtedness of the Issuer (including any Original Notes that remain outstanding
after the Exchange Offer) and senior in right of payment to all existing and
future subordinated debt of the Issuer.
The operations of the Issuer are conducted primarily through its
subsidiaries. As such, the Issuer is primarily dependent upon the cash flows of
its subsidiaries to meet its obligations, including its obligations under the
New Notes. As a result, the New Notes are effectively subordinated to all
indebtedness and other liabilities (including trade payables and lease
obligations) of the Issuer's subsidiaries. Any right of the Issuer to receive
assets of any of its subsidiaries upon the latter's liquidation or
reorganization (and the consequent right of the Holders of the New Notes to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors (including trade creditors), except to the extent
that the Issuer is itself recognized as a creditor of such Subsidiary, in which
case the claims of the Issuer would still be subordinate to any security in the
assets of such Subsidiary and any indebtedness of such Subsidiary senior to that
held by the Issuer.
As of the date of the Indenture, all of the Issuer's Subsidiaries will be
Restricted Subsidiaries. However, under certain circumstances, the Issuer will
be able to designate current or future Subsidiaries as Unrestricted
Subsidiaries, which will not be subject to many of the restrictive covenants set
forth in the Indenture.
Principal, Interest and Maturity
The Notes mature on March 15, 2008. The Notes are not limited in principal
amount. $325 million aggregate principal amount of Notes were initially issued
on the Closing Date. Thereafter, from time to time, the Issuer may issue
additional Notes subject (other than with respect to the issuance of the New
Notes) to compliance with the provisions of the Indenture described under "--
Covenants--Limitation on Consolidated Debt". The Notes are issued in
denominations of $1,000 and integral multiples thereof. The Original Notes were
offered at a discount from their principal amount at maturity with the initial
Accreted Value per $1,000 in principal amount of Notes equal to $614.74
(representing the original price at which the Notes are being offered). The
Notes accrete (representing the amortization of original issue discount) on a
semi-annual bond equivalent basis using a 360-day year comprised of twelve 30-
day months such that the Accreted Value shall be equal to the full principal
amount at maturity of the Notes on March 15, 2003 (the "Full Accretion Date").
No interest (other than Liquidated Damages, if any) is payable in cash on the
Notes prior to the Full Accretion Date. Beginning on the Full Accretion Date the
Notes will accrue interest at the rate of 10% per annum, which will be payable
in cash semi-annually in arrears on March 15 and September 15 of each year,
commencing September 15, 2003, to the Person in whose name the Note (or any
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predecessor Note) is registered at the close of business on the immediately
preceding March 1 or September 1, as the case may be. The Notes bear interest on
overdue principal and premium, if any, and, to the extent permitted by law,
overdue interest at the rate of 11 1/2% per annum. Interest on the Notes is
computed on the basis of a 360-day year comprised of twelve 30-day months.
((S)(S) 301, 307 and 310)
Principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes is payable, and the Notes may be presented for registration of transfer
and exchange, at the office or agency of the Issuer maintained for that purpose
in the Borough of Manhattan, The City of New York, provided that at the option
of the Issuer, payment of interest on the Notes may be made by check mailed to
the address of the Person entitled thereto as it appears in the Note Register.
Until otherwise designated by the Issuer, such office or agency will be the
corporate trust office of the Trustee, as Paying Agent and Registrar. ((S)(S)
301, 305 and 1002)
No service charge will be made for any registration of transfer or exchange
of Notes, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. ((S) 305)
Form, Denomination, Book-Entry Procedures and Transfer
The New Notes will be represented by one or more Notes in registered, global
form without interest coupons (collectively, the "Global Notes"). The Global
Notes will be deposited upon issuance with the Trustee 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 Notes 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 Notes may not be exchanged for
Notes in certificated form except in the limited circumstances described below.
In addition, the transfer of beneficial interests in the Global Notes 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 Trustee will act as Paying Agent and Registrar. The Notes may
be presented for registration of transfer and exchange at the offices of the
Registrar.
Depository Procedures
DTC has advised the Issuer that 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 interest and transfer of ownership
interest of each actual purchaser of each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Issuer that pursuant to procedures established by
it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Notes and (ii) ownership of such interests in the Global
Notes 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 interests in the Global Notes).
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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 interests in a Global Note 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 beneficial interests in a Global Note 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. For certain other restrictions on the
transferability of the Notes, see "-Exchange of Book-Entry Notes for
Certificated Notes".
Except as described below, owners of interests in the Global Notes will not
have Notes registered in their names, will not receive physical delivery of
Notes in certificated form and will not be considered the registered owners or
Holders thereof under the Indenture for any purpose.
Payments in respect of the principal of (and premium, if any) and interest on
a Global Note registered in the name of DTC or its nominee will be payable by
the Trustee to DTC or its nominee in its capacity as the registered Holder under
the Indenture. Under the terms of the Indenture, the Issuer and the Trustee
will treat the persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, none of the Issuer,
the Trustee nor any agent of the Issuer or the Trustee has or will have any
responsibility or liability for (i) 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 interests in the Global Notes, 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 Notes, or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants.
DTC has advised the Issuer that its current practice, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global Notes as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of Notes
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 Trustee or the Issuer. None of the Issuer or
the Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Notes, and the Issuer and the Trustee
may conclusively rely on and will be protected in relying on instructions from
DTC or its nominee as the registered owner of the Notes for all purposes.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, will be settled in same-day funds.
DTC has advised the Issuer that it will take any action permitted to be taken
by a Holder of Notes only at the direction of one or more Participants to whose
account with DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of the Notes as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default (as defined below) under the Notes, DTC reserves the
right to exchange the Global Notes for legended Notes in certificated form, and
to distribute such Notes to its Participants.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that the Issuer believes to be reliable, but the
Issuer takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Notes among participants in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Issuer nor the Trustee
will have any responsibility
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for the performance by DTC or its participants or indirect participants of its
obligations under the rules and procedures governing its operations.
Exchange of Book-Entry Notes for Certificated Notes
A Global Note is exchangeable for definitive Notes in registered certificated
form if (i) DTC (x) notifies the Issuer that it is unwilling or unable to
continue as depository for such Global Note and the Issuer thereupon fails to
appoint a successor depository or (y) has ceased to be a clearing agency
registered under the Exchange Act, (ii) the Issuer, at its option, notifies the
Trustee in writing that it elects to cause the issuance of the Notes in
certificated form or (iii) there shall have occurred and be continuing a Default
or an Event of Default with respect to the Notes. In addition, beneficial
interests in a Global Note may be exchanged for certificated Notes upon request
but only upon prior written notice given to the Trustee by or on behalf of DTC
in accordance with the Indenture. In all cases, certificated Notes delivered in
exchange for any Global Note or beneficial interests therein will be registered
in the names, and issued in any approved denominations, requested by or on
behalf of the depository (in accordance with its customary procedures).
Optional Redemption
Except as described below, the Notes are not redeemable at the Issuer's
option prior to March 15, 2003.
The Notes are subject to redemption, at the option of the Issuer, in whole or
in part, at any time on or after March 15, 2003 and prior to maturity, upon not
less than 30 nor more than 60 days' notice mailed to each Holder of Notes to be
redeemed at such Holder's address appearing in the Note Register, in amounts of
$1,000 or an integral multiple of $1,000, at the following Redemption Prices
(expressed as percentages of the principal amount) plus accrued interest to but
excluding the Redemption Date (subject to the right of Holders of record on the
immediately preceding Record Date to receive interest due on an Interest Payment
Date that is on or prior to the Redemption Date), if redeemed during the 12-
month period beginning March 15 of the years indicated below:
Redemption
Year Price
---- -----
2003 105.000%
2004 103.333%
2005 101.667%
2006 and thereafter 100.000%
The Notes are subject to redemption prior to March 15, 2003 only in the event
that on or before March 15, 2001 the Issuer receives net proceeds from the sale
of its Common Stock in one or more Public Equity Offerings, in which case the
Issuer may, at its option, use all or a portion of any such net proceeds to
redeem Notes in a principal amount of at least $5 million and up to an aggregate
amount equal to 35% of the Notes at a redemption price equal to 110% of the
Accreted Value of the Notes to but excluding the Redemption Date plus accrued
and unpaid Liquidated Damages thereon, if any, to the Redemption Date, provided,
however, that Notes in an amount equal to at least 65% of the principal amount
of the Notes originally issued on the Closing Date remain outstanding after such
redemption (excluding any Notes held by the Issuer or any of its subsidiaries).
Any such redemption must occur on a Redemption Date within 60 days of any such
sale and upon not less than 30 nor more than 60 days' notice mailed to each
Holder of Notes to be redeemed at such Holder's address appearing in the Note
Register, in face amounts of $1,000 or an integral multiple of $1,000.
If less than all the Notes are to be redeemed, selection of Notes for
redemption will be made by the Trustee, in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis, by lot or in
such manner as it shall deem fair and appropriate, the particular Notes to be
redeemed or any portion thereof that is an integral multiple of $1,000.
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Notices of redemption may not be conditional. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Notes or portions of them called
for redemption and, unless the Issuer defaults in the payment of the redemption
price, Notes or portions of them called for redemption will no longer be deemed
outstanding. ((S)(S) 203, 1101, 1104, 1105 and 1107).
Mandatory Redemption
The Issuer is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Issuer to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the Offer to
Purchase described below 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, to the date of purchase or, if such Offer to
Purchase is to be consummated prior to the Full Accretion Date, 101% of the
Accreted Value thereof on the date of purchase plus accrued and unpaid
Liquidated Damages thereon, if any, to the date of purchase. Within thirty days
following any Change of Control, the Issuer will mail an Offer to Purchase to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to purchase Notes on the date specified in such
Offer to Purchase, which date shall be no earlier than 20 business days and no
later than 60 days from the date such Offer to Purchase is mailed. The Issuer
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of the Notes pursuant
to the Offer to Purchase.
The Senior Credit Facility restricts the Issuer's ability to prepay debt,
including the Notes, and also provides that certain change of control events
with respect to the Issuer would constitute a default thereunder. Any future
credit agreements or other agreements to which the Issuer becomes a party may
contain similar restrictions and provisions. In the event a Change of Control
occurs at a time when the Issuer is prohibited from purchasing the Notes, the
Issuer could seek the consent of its lenders to the purchase of Notes or could
attempt to refinance the borrowings that contain such prohibition. If the Issuer
does not obtain such a consent or repay such borrowings, the Issuer will remain
prohibited from purchasing Notes. In such case, the Issuer's failure to purchase
tendered Notes would constitute an Event of Default under the Indenture, which
would, in turn, constitute a default under the Senior Credit Facility or such
other future agreements. See "Risk Factors--Ability to Purchase Notes Upon a
Change of Control".
The Change of Control provisions described above are applicable whether or
not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Issuer
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The Issuer is not required to make an Offer to Purchase upon a Change of
Control if a third party makes the Offer to Purchase in the manner, at the times
and otherwise in compliance with the requirements set forth in the Indenture
applicable to the Offer to Purchase made by the Issuer and purchases all Notes
validly tendered and not withdrawn under such Offer to Purchase.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the
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assets of the Issuer and its Subsidiaries, taken as a whole, to any Person or
group of related Persons, as defined in Section 13(d) of the Exchange Act (a
"Group"), other than to Permitted Holders; (ii) the approval by the holders of
Capital Stock of the Issuer of any plan or proposal for the liquidation or
dissolution of the Issuer (whether or not otherwise in compliance with the
provisions of the applicable Indenture); (iii) any Person or Group (other than
Permitted Holders) shall become the owner, directly or indirectly, beneficially
or of record, of shares representing more than 50% of the aggregate ordinary
voting power represented by the issued and outstanding Voting Stock of the
Issuer or any successor to all or substantially all of its assets; or (iv) the
first day on which a majority of the members of the Board of Directors of the
Issuer are not Continuing Directors.
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 Issuer and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all", there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of Notes to require the Issuer to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Issuer and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Issuer who (i) was a member of such Board of
Directors on the date of the original issuance of the Notes or (ii) was
nominated for election or elected to such Board of Directors by any of the
Permitted Holders or with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.
"Permitted Holders" means as of the date of determination (i) Andrew Banks,
Royce Yudkoff or Robert Wolsey and any of their respective spouses, estates,
lineal descendants (including adoptive children), heirs, executors, personal
representatives, administrators and trusts for any of their benefit and (ii) any
other Person, the majority of whose Voting Stock is directly or indirectly owned
by any Person described in clause (i) above .
Asset Dispositions
The Indenture provides that the Issuer will not, and will not permit any
Restricted Subsidiary to, consummate an Asset Disposition unless (i) the Issuer
or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Disposition at least equal to the fair
market value of the assets sold or otherwise disposed of (as evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee), (ii) except in the case of a Tower Asset Exchange, at
least 75% of the consideration received by the Issuer or the Restricted
Subsidiary, as the case may be, from such Asset Disposition shall be cash or
Cash Equivalents; provided that the amount of (a) any liabilities (as shown on
the Issuer's or such Restricted Subsidiary's most recent balance sheet) of the
Issuer or any such Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the Notes) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Issuer
or such Restricted Subsidiary from further liability, (b) any securities, notes
or other obligations received by the Issuer or any such Restricted Subsidiary
from such transferee that are converted by the Issuer or such Restricted
Subsidiary into cash (to the extent of the cash received) within 20 days of the
applicable Asset Disposition and (c) any liabilities (as shown on the Issuer's
or such Restricted Subsidiary's most recent balance sheet) of a Restricted
Subsidiary all of the Capital Stock of which is disposed of in such Asset
Disposition, which liabilities have ceased to be liabilities of the Issuer or
any Restricted Subsidiary as a result of such Asset Disposition, shall be
considered cash for purposes of such provision, and (iii) after the consummation
of such Asset Disposition, the Issuer shall apply, or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Disposition
within 365 days of receipt thereof, less any amounts invested in assets related
to, or the majority voting Capital Stock of entities operating in, the same line
of business as the Issuer or a business reasonably ancillary thereto, to
permanently repay Debt under the Senior Credit Facility or any renewal,
extension, refinancing or refunding thereof to the extent that any such
instrument would require or, at the Issuer's option, permit such application or
prohibit the Offer to Purchase referred to below and, in the case of any
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Debt under any revolving credit facility, effect a commitment reduction under
such revolving credit facility. Pending the final application of any such Net
Cash Proceeds, the Issuer or such Restricted Subsidiary may temporarily reduce
indebtedness under a revolving credit facility, if any, or otherwise invest such
Net Cash Proceeds in Cash Equivalents. Any Net Cash Proceeds from Asset
Dispositions that are not applied or invested as provided will be deemed to
constitute "Excess Proceeds," which shall be applied by the Issuer or such
Restricted Subsidiary to make an Offer to Purchase that amount of Notes equal to
the amount of Excess Proceeds at a price equal to 100% of the principal amount
of the Notes (or, if such Offer to Purchase is to be consummated prior to the
Full Accretion Date, 100% of the Accreted Value of Notes) to be purchased, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase and, to the extent required by the terms thereof, any other Debt of
the Issuer that is pari passu with the Notes or Debt of a Restricted Subsidiary
at a price no greater than 100% of the principal amount thereof plus accrued
interest to the date of purchase or, if such Debt was issued at a discount, 100%
of the accreted value thereof to the date of purchase on a pro rata basis with
the Notes; provided, however, that if at any time any non-cash consideration
received by the Issuer or any Restricted Subsidiary, as the case may be in
connection with any Asset Disposition is converted into or sold or otherwise
disposed of for cash (other than interest received with respect to any such non-
cash consideration), then such conversion or disposition shall be deemed to
constitute an Asset Disposition hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this covenant. Each Offer to Purchase shall
be mailed within 390 days following the Asset Disposition that required such
Offer to Purchase. Following the completion of an Offer to Purchase, to the
extent there are any remaining Excess Proceeds the Issuer may use such Excess
Proceeds to any use which is not otherwise prohibited by the Indenture.
Notwithstanding the foregoing, if the Excess Proceeds resulting from an Asset
Disposition are less than $10.0 million, the application of such Excess Proceeds
to an Offer to Purchase may be deferred until such time as the sum of such
Excess Proceeds plus the aggregate amount of all Excess Proceeds arising
subsequent to such Asset Disposition from all subsequent Asset Dispositions by
the Issuer and its Restricted Subsidiaries aggregates at least $10.0 million, at
which time the Issuer or such Restricted Subsidiary shall apply all Excess
Proceeds that have been so deferred to make an Offer to Purchase as provided
above.
The Issuer will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the purchase of Notes
pursuant to such Offer to Purchase.
Registration Covenant; Exchange Offer
Holders of the New Notes are not entitled to any registration rights with
respect to the New Notes. The Issuer and the Initial Purchasers entered into
the Registration Rights Agreement pursuant to which the Issuer agreed, for the
benefit of the Holders of the Original Notes, to file with the Commission the
Exchange Offer Registration Statement on the appropriate form under the
Securities Act with respect to the New Notes. The registration statement of
which this Prospectus is a part, constitutes the Exchange Offer Registration
Statement. Upon the effectiveness of the Exchange Offer Registration Statement,
the Issuer will offer to the Holders of Transfer Restricted Securities the
opportunity to exchange their Transfer Restricted Securities for New Notes. The
Registration Rights Agreement provides that if (i) the Issuer is 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
the Issuer 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 Notes 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 Notes
acquired directly from the Issuer or an affiliate of the Issuer, the Issuer will
file with the Commission a Shelf Registration Statement to cover resales of the
Notes by the Holders thereof who satisfy certain conditions relating to the
provisions of information in connection with the Shelf Registration Statement.
The Issuer has agreed that it
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will use all commercially reasonable efforts to cause any Shelf Registration
Statement to be declared effective as promptly as possible by the Commission.
For purposes of the foregoing, "Transfer Restricted Securities" means each
Original Note until (i) the date on which such Original Note has been exchanged
by a person other than a broker-dealer for a New Note in the Exchange Offer,
(ii) following the exchange by a broker-dealer in the Exchange Offer of an
Original Note for a New Note, the date on which such New Note 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 Note 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 Original Note is
distributed to the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement provides that (i) the Issuer will file an
Exchange Offer Registration Statement with the Commission on or prior to 60 days
after the Closing Date, (ii) the Issuer will use all commercially available
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 Commission policy,
the Issuer will commence the Exchange Offer and use its 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 Notes in
exchange for Original Notes tendered prior thereto in the Exchange Offer and
(iv) if obligated to file the Shelf Registration Statement, the Issuer will use
its 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) the Issuer fails 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) the
Issuer fails 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 the Issuer will pay liquidated damages ("Liquidated Damages") to each
Holder of Notes, 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 principal amount of Notes held by such Holder. The amount of the
Liquidated Damages will increase by a additional $.05 per week per $1,000
principal amount of Notes 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 principal
amount of Notes. All accrued Liquidated Damages will be paid by the Issuer on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check 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.
Holders of Original Notes are required to make certain representations to the
Issuer (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and are required to deliver certain
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights in order to have their Original Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Liquidated Damages set forth above.
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Covenants
The Indenture contains, among others, the following covenants:
Limitation on Consolidated Debt
The Issuer may not, and may not permit any Restricted Subsidiary of the
Issuer to Incur any Debt unless the ratio of (a) the aggregate consolidated
principal amount of Debt of the Issuer and its Restricted Subsidiaries
outstanding as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the Incurrence of such Debt and any other Debt
Incurred since such balance sheet date that remains outstanding and the receipt
and application of the proceeds thereof, less the principal amount of any Debt
that was outstanding as of such balance sheet date that no longer remains
outstanding, to (b) Adjusted Consolidated Cash Flow, determined on a pro forma
basis as if any such Debt had been incurred and the proceeds thereof had been
applied at the beginning of the relevant fiscal quarter, would be less than or
equal to 7.0 to 1.
Notwithstanding the foregoing limitation, the following Debt may be Incurred:
(i) Permitted Senior Bank Debt;
(ii) Debt owed by the Issuer to any Wholly Owned Restricted Subsidiary of
the Issuer for which fair value has been received or Debt owed by a
Restricted Subsidiary of the Issuer to the Issuer or a Wholly Owned
Restricted Subsidiary of the Issuer; provided, however, that (a) any such
Debt owing by the Issuer to a Wholly Owned Restricted Subsidiary shall be
Subordinated Debt evidenced by an intercompany promissory note and (b) upon
either (1) the transfer or other disposition by such Wholly Owned Restricted
Subsidiary or the Issuer of any Debt so permitted to a Person other than the
Issuer or another Wholly Owned Restricted Subsidiary of the Issuer or (2) the
issuance (other than directors' qualifying shares), sale, lease, transfer or
other disposition of shares of Capital Stock (including by consolidation or
merger) of such Wholly Owned Restricted Subsidiary to a Person other than the
Issuer or another such Wholly Owned Restricted Subsidiary, the provisions of
this clause (ii) shall no longer be applicable to such Debt and such Debt
shall be deemed to have been Incurred at the time of such transfer or other
disposition;
(iii) Debt consisting of Permitted Interest Rate or Currency Protection
Agreements;
(iv) Debt which is exchanged for or the proceeds of which are used to
refinance or refund, or any extension or renewal of (each of the foregoing, a
"refinancing"), (a) the Notes, (b) Debt incurred pursuant to clause (v) of
this paragraph or (c) Debt that is not described in any other clause hereof
that is outstanding at the date of original issuance of the Notes after
giving effect to the application of the proceeds thereof (as described in a
schedule to the Indenture), in each case in an aggregate principal amount not
to exceed the principal amount of the Debt so refinanced plus the amount of
any premium required to be paid in connection with such refinancing pursuant
to the terms of the Debt so refinanced or the amount of any premium
reasonably determined by the Issuer as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase,
plus the expenses of the Issuer or the Restricted Subsidiary, as the case may
be, Incurred in connection with such refinancing; provided, however, that (A)
Debt the proceeds of which are used to refinance the Notes or Debt which is
pari passu with or subordinate in right of payment to the Notes shall only be
permitted if (x) in the case of any refinancing of the Notes or Debt which is
pari passu to the Notes, the refinancing Debt is Incurred by the Issuer and
made pari passu to the Notes or subordinated to the Notes, and (y) in the
case of any refinancing of Debt which is subordinated to the Notes, the
refinancing Debt is Incurred by the Issuer and constitutes Subordinated Debt;
(B) the refinancing Debt by its terms, or by the terms of any agreement or
instrument pursuant to which such Debt is issued, (1) does not provide for
payments of principal of such Debt at the stated maturity thereof or by way
of a sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof (including any redemption,
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defeasance, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon any event of default thereunder or a
redemption or retirement permitted in clause (2) below), in each case prior
to the stated maturity of the Debt being refinanced and (2) does not permit
redemption or other retirement (including pursuant to an offer to purchase)
of such debt at the option of the holder thereof prior to the final stated
maturity of the Debt being refinanced, other than a redemption or other
retirement at the option of the holder of such Debt (including pursuant to an
offer to purchase) which is conditioned upon provisions substantially similar
to those described under "Repurchase at Option of Holders"; (C) in the case
of any refinancing of Debt Incurred by the Issuer, the refinancing Debt may
be Incurred only by the Issuer, and in the case of any refinancing of Debt
Incurred by a Restricted Subsidiary, the refinancing Debt may be Incurred
only by such Restricted Subsidiary or the Issuer; and (D) in the case of any
refinancing of Preferred Stock of a Restricted Subsidiary, such Preferred
Stock may be refinanced only with Preferred Stock of such Restricted
Subsidiary or the Issuer;
(v) Acquisition Debt;
(vi) ABRY Subordinated Debt;
(vii) the New Notes issued in the Exchange Offer;
(viii) Subordinated Debt of the Issuer owed to any of its shareholders not
to exceed in principal face amount in the aggregate for any taxable year the
amount necessary to enable Pinnacle Towers to obtain the maximum possible
deduction for dividends paid, as defined in Section 561 of the Code and
further described in Section 857 of the Internal Revenue Code for such year,
taking into account the sum of all distributions previously made to
shareholders of the Issuer permitted by the provisions described in clause
(iii) of the second paragraph under "Limitation on Restricted Payments" for
such fiscal year, provided that, any determination under Section 857 of the
Internal Revenue Code shall take into consideration for such purpose the
necessity of increasing the aggregate amounts distributed to reflect the fact
that distributions in payment of any preferred return on any class of stock
will be treated as being made partly from earnings and partly from capital.
((S) 1008)
Limitation on Subordinated Debt of Restricted Subsidiaries
The Issuer may not permit any Restricted Subsidiary to Incur any Debt that is
subordinated in right of payment to any other Debt of such Restricted
Subsidiary, other than Debt that is owed to the Issuer or any other Restricted
Subsidiary.
Limitation on Guarantees of Issuer Debt by Restricted Subsidiaries
The Issuer may not permit any Restricted Subsidiary, directly or indirectly,
to Guarantee, assume or in any other manner become liable for the payment of any
Debt of the Issuer unless: (i) (A) such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture providing for a Guarantee of
payment of the Notes by such Restricted Subsidiary; and (B) with respect to any
Guarantee of Debt of the Issuer that is subordinate in right of payment to the
Notes, such Guarantee shall be subordinated to such Restricted Subsidiary's
Guarantee with respect to the Notes at least to the same extent as such Debt is
subordinated to the Notes, and (ii) such Restricted Subsidiary waives, and will
not in any manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other rights against
the Issuer or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Guarantee until the Notes have been paid in
full. ((S) 1010)
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Limitation on Restricted Payments
The Issuer (i) may not, and may not permit any Restricted Subsidiary of the
Issuer to, directly or indirectly, declare or pay any dividend or make any
distribution (including any payment in connection with any merger or
consolidation derived from assets of the Issuer or any Restricted Subsidiary) in
respect of its Capital Stock or to the holders thereof, excluding (a) any
dividends or distributions by the Issuer payable solely in shares of its Capital
Stock (other than Redeemable Stock) or in options, warrants or other rights to
acquire its Capital Stock (other than Redeemable Stock), and (b) in the case of
a Restricted Subsidiary, dividends or distributions payable to the Issuer or a
Wholly Owned Restricted Subsidiary or pro rata dividends or distributions, (ii)
may not, and may not permit any Restricted Subsidiary to, purchase, redeem, or
otherwise acquire or retire for value (a) any Capital Stock of the Issuer or any
Related Person of the Issuer or (b) any options, warrants or other rights to
acquire shares of Capital Stock of the Issuer or any Related Person of the
Issuer or any securities convertible or exchangeable into shares of Capital
Stock of the Issuer or any Related Person of the Issuer, excluding any purchase
from the Issuer by a Wholly Owned Restricted Subsidiary of any Capital Stock of
the Issuer or options, warrants or other rights to acquire shares of Capital
Stock of the Issuer or any securities convertible or exchangeable into shares of
Capital Stock of the Issuer, (iii) may not make, or permit any Restricted
Subsidiary to make, any Investment in any Unrestricted Subsidiary or any
Affiliate or any Person that would become an Affiliate after giving effect
thereto or any Related Person, other than an Investment in the Issuer or a
Restricted Subsidiary or a Person that will become or be merged with or into or
consolidated with a Restricted Subsidiary as a result of such Investment and
which is not subject to any restriction that would prevent such Restricted
Subsidiary from repaying such Investment and (iv) may not, and may not permit
any Restricted Subsidiary to, redeem, repurchase, defease or otherwise acquire
or retire for value prior to any scheduled maturity, repayment or sinking fund
payment Debt of the Issuer (other than ABRY Subordinated Debt) which is pari
passu with or subordinate in right of payment to the Notes (each of clauses (i)
through (iv) being a "Restricted Payment") if:
(1) an Event of Default, or an event that with the passing of time or the
giving of notice, or both, would constitute an Event of Default, shall have
occurred and is continuing or would result from such Restricted Payment, or
(2) after giving pro forma effect to such Restricted Payment as if such
Restricted Payment had been made at the beginning of the applicable fiscal-
quarter period, the Issuer could not Incur at least $1.00 of additional Debt
pursuant to the terms of the Indenture described in the first paragraph of
"Limitation on Consolidated Debt" above, or
(3) upon giving effect to such Restricted Payment, the aggregate of all
Restricted Payments from the date of original issuance of the Notes exceeds
the sum of: (a) cumulative Consolidated Cash Flow since the date of original
issuance of the Notes through the last day of the last full fiscal quarter
ending immediately preceding the date of such Restricted Payment for which
quarterly or annual financial statements are available; minus (b) 1.75 times
cumulative Consolidated Interest Expense of the Issuer since the date of
original issuance of the Notes through the last day of the last full fiscal
quarter ending immediately preceding the date of such Restricted Payment for
which quarterly or annual financial statements are available; plus (c) $10
million.
Prior to the making of any Restricted Payment, the Issuer shall deliver to the
Trustee an Officers' Certificate setting forth the computations by which the
determinations required by clauses (2) and (3) above were made and stating that
no Event of Default, or event that with the passing of time or the giving of
notice, or both, would constitute an Event of Default, has occurred and is
continuing or will result from such Restricted Payment.
Notwithstanding the foregoing, so long as no Event of Default, or event that
with the passing of time or the giving of notice, or both, would constitute an
Event of Default, shall have occurred and is continuing or would result
therefrom:
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(i) the Issuer may make Restricted Payments in an aggregate amount up to
the amount of the net proceeds received by the Issuer after the date of
original issuance of the Notes, including the fair market value of property
other than cash (determined in good faith by the Board of Directors as
evidenced by a resolution of the Board of Directors filed with the Trustee),
from contributions of capital or the issuance and sale (other than to a
Subsidiary or from or to an employee stock ownership plan financed by loans
from the Issuer or a Subsidiary of the Issuer) of Capital Stock (other than
Redeemable Stock) of the Issuer, options, warrants or other rights to acquire
Capital Stock (other than Redeemable Stock) of the Issuer and Debt of the
Issuer that has been converted into or exchanged for Capital Stock (other
than Redeemable Stock and other than by or from a Subsidiary) of the Issuer
after the date of original issuance of the Notes;
(ii) the Issuer and any Restricted Subsidiary of the Issuer may pay any
dividend on Capital Stock of any class within 60 days after the declaration
thereof if, on the date when the dividend was declared, the Issuer or such
Restricted Subsidiary could have paid such dividend in accordance with the
foregoing provisions;
(iii)(a) the Issuer may use cash distributions received from Pinnacle
Towers to make distributions to shareholders of the Issuer, each such
distribution in an aggregate amount per taxable year equal to (1) the amount
of gross income actually includible by the shareholders of the Issuer on
their tax returns with respect to such taxable year solely as a result of the
operations of the Issuer and its Subsidiaries, multiplied by (2) the sum of
the highest marginal federal and highest marginal state income tax rates
applicable to one or more of the shareholders of the Issuer; and (b) Pinnacle
Towers may make one or more distributions with respect to any taxable year,
which distribution may consist of subordinated debt of Pinnacle Towers, and,
to the extent such distribution is made by Pinnacle Towers, the Issuer may
make one or more distributions to its shareholders consisting of Subordinated
Debt of the Issuer, each such distribution constituting Subordinated Debt not
to exceed in the aggregate an amount necessary to enable the Issuer to obtain
the maximum possible deduction for dividends paid, as defined in Section 561
of the Internal Revenue Code and further described in Section 857 of the
Internal Revenue Code, for such year, taking into account the sum of all
distributions previously paid to shareholders of the Issuer in accordance
with the terms of clause (a) of this clause (iii), provided that, in
connection with any such distribution, the Issuer shall take into
consideration for such purpose the necessity of increasing the aggregate
amounts distributed to reflect the fact that distributions in payment of any
preferred return on any class of stock will be treated as being made partly
from earnings and profits and partly from capital;
(iv) the Issuer may repurchase Capital Stock of the Issuer owned by any
deceased shareholder of the Issuer (a) to the extent that the Issuer or any
Restricted Subsidiary was the beneficiary of a key-man life insurance policy
on such shareholder and (b) in an amount not to exceed the net proceeds
received by the Issuer or such Restricted Subsidiary from such key-man life
insurance;
(v) the Issuer may repurchase Capital Stock of the Issuer owned by either
any deceased shareholder of the Issuer or former employee of the Issuer,
provided that the aggregate amount of such repurchases in any twelve-month
period may not exceed $1 million; and
(vi) the Issuer may refinance any Debt otherwise permitted by clause (iv)
of the second paragraph under "Limitation on Consolidated Debt" above.
Any payment made pursuant to clause (ii) of this paragraph shall be a Restricted
Payment for purposes of calculating aggregate Restricted Payments pursuant to
the requirements of clause (3) of the preceding paragraph and any payment made
pursuant to clauses (i), (iii), (iv), (v) and (vi) of this paragraph shall not
be a Restricted Payment for purposes of calculating aggregate Restricted
Payments pursuant to the requirements of clause (3) of the preceding paragraph.
((S) 1011)
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Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Issuer may not, and may not permit any Restricted Subsidiary 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 (i)
to pay dividends (in cash or otherwise) or make any other distributions in
respect of its Capital Stock owned by the Issuer or any other Restricted
Subsidiary or pay any Debt or other obligation owed to the Issuer or any other
Restricted Subsidiary; (ii) to make loans or advances to the Issuer or any other
Restricted Subsidiary; or (iii) to transfer any of its property or assets to the
Issuer or any other Restricted Subsidiary. Notwithstanding the foregoing, the
Issuer may, and may permit any Restricted Subsidiary to, suffer to exist any
such encumbrance or restriction:
(a) pursuant to any agreement in effect on the date of original issuance
of the Notes (including the Senior Credit Facility and the agreements
executed in connection therewith) as described in a schedule to the
Indenture;
(b) pursuant to an agreement relating to any Debt Incurred by a Person
(other than a Restricted Subsidiary existing on the date of original issuance
of the Notes or any Restricted Subsidiary carrying on any of the businesses
of any such Restricted Subsidiary) prior to the date on which such Person
became a Restricted Subsidiary and outstanding on such date and not Incurred
in anticipation of becoming a Restricted Subsidiary, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person so acquired;
(c) pursuant to an agreement effecting a renewal, extension, refunding or
refinancing of Debt Incurred pursuant to an agreement referred to in clause
(a) or (b) above, provided, however, that the provisions contained in such
renewal, extension, refunding or refinancing agreement relating to such
encumbrance or restriction are no more restrictive in any material respect
than the provisions contained in the agreement the subject thereof, as
determined in good faith by the Board of Directors and evidenced by a
resolution of the Board of Directors filed with the Trustee;
(d) in the case of clause (iii) above, restrictions contained in any
security agreement (including a capital lease) securing Debt of a Restricted
Subsidiary otherwise permitted under the Indenture, but only to the extent
such restrictions restrict the transfer of the property subject to such
security agreement;
(e) in the case of clause (iii) above, customary nonassignment provisions
entered into in the ordinary course of business in leases and other contracts
to the extent such provisions restrict the transfer or subletting of any such
lease or the assignment of rights under any such contract;
(f) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of
such Restricted Subsidiary, provided that consummation of such transaction
would not result in an Event of Default or an event that, with the passing of
time or the giving of notice or both, would constitute an Event of Default,
that such restriction terminates if such transaction is closed or abandoned
and that the closing or abandonment of such transaction occurs within one
year of the date such agreement was entered into; or
(g) such encumbrance or restriction is the result of applicable corporate
law or regulation relating to the payment of dividends or distributions. ((S)
1012)
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Limitation on Liens
The Issuer may not, and may not permit any Restricted Subsidiary to, Incur or
suffer to exist any Lien on or with respect to any property or assets now owned
or hereafter acquired to secure any Debt without making, or causing such
Restricted Subsidiary to make, effective provision for securing the Notes (x)
equally and ratably with such Debt as to such property for so long as such Debt
will be so secured or (y) in the event such Debt is Debt of the Issuer which is
subordinate in right of payment to the Notes, prior to such Debt as to such
property for so long as such Debt will be so secured.
The foregoing restrictions shall not apply to:
(i) Liens in existence on the date of original issuance of the Notes
(other than Liens described in clause (iv) below), as described in a schedule
to the Indenture;
(ii) Liens securing only the Notes;
(iii) Liens in favor of the Issuer;
(iv) Liens to secure Debt under the Credit Agreement and any extension,
renewal, refinancing or refunding thereof (or successive extensions,
renewals, refinancings or refundings) so long as the Incurrence of such Debt
is permitted under the Indenture;
(v) Liens on real or personal property of the Issuer or a Restricted
Subsidiary as described in the definition of "Purchase Money Secured Debt" to
secure Purchase Money Secured Debt;
(vi) Liens on property existing immediately prior to the time of
acquisition thereof (and not Incurred in anticipation of the financing of
such acquisition);
(vii) Liens on property of a Person (a) existing at the time such Person
becomes a Restricted Subsidiary and not incurred in anticipation of becoming
a Restricted Subsidiary or (b) existing immediately prior to the time such
Person is merged or consolidated with or into the Issuer or any Restricted
Subsidiary and not incurred in anticipation of such merger or consolidation;
(viii) any interest in or title of a lessor to any property subject to a
Capital Lease Obligation which is permitted under the Indenture; or
(ix) Liens to secure Debt Incurred to extend, renew, refinance or refund
(or successive extensions, renewals, refinancings or refundings), in whole or
in part, Debt secured by any Lien referred to in the foregoing clauses (i),
(ii), (v), (vi) and (vii) so long as such Lien does not extend to any other
property and the principal amount of Debt so secured is not increased except
as otherwise permitted under clause (iv) of "Limitation on Consolidated
Debt." ((S) 1013)
Limitation on Ownership of Capital Stock of Restricted Subsidiaries
The Issuer may not, and may not permit any Restricted Subsidiary to, issue,
transfer, convey, lease or otherwise dispose of any shares of Capital Stock of a
Restricted Subsidiary or securities convertible or exchangeable into, or
options, warrants, rights or any other interest with respect to, Capital Stock
of a Restricted Subsidiary to any person other than the Issuer or a Wholly Owned
Restricted Subsidiary except in a transaction consisting of a sale of all of the
Capital Stock of such Restricted Subsidiary owned by the Issuer and any
Restricted Subsidiary and that complies with the provisions described under "--
Limitation on Asset Dispositions" above to the extent such provisions apply.
((S) 1014)
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Transactions with Affiliates and Related Persons
The Issuer may not, and may not permit any Restricted Subsidiary to, enter
into any transaction (or series of related transactions) not in the ordinary
course of business with an Affiliate or Related Person of the Issuer (other than
the Issuer or a Wholly Owned Restricted Subsidiary) involving aggregate
consideration in excess of $1.0 million, including any Investment, either
directly or indirectly, unless such transaction is on terms no less favorable to
the Issuer or such Restricted Subsidiary than those that could be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate or
Related Person and is in the best interests of the Issuer or such Restricted
Subsidiary. For any transaction (or series of related transactions) that
involves less than or equal to $10 million, the Chief Executive Officer or Chief
Operating Officer of the Issuer shall determine that the transaction satisfies
the above criteria and shall evidence such a determination by an Officer's
certificate filed with the Trustee. For any transaction that involves in excess
of $10 million, a majority of the disinterested members of the Board of
Directors shall determine that the transaction satisfies the above criteria and
shall evidence such a determination by a Board Resolution filed with the
Trustee. ((S) 1017)
Provision of Financial Information
Whether or not the Issuer is required to be subject to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, or any successor provision thereto, from
and after the earlier of (a) the effectiveness of either the Exchange Offer
Registration Statement or the Shelf Registration Statement or (b) the date that
is 150 days after the Closing Date the Issuer shall file with the Commission the
annual reports, quarterly reports and other documents which the Issuer would
have been required to file with the Commission pursuant to such Section 13(a) or
15(d) or any successor provision thereto if the Issuer were so required, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Issuer would have been required so to
file such documents if the Issuer were so required. The Issuer shall also in any
event (a) within 15 days of each Required Filing Date (i) transmit by mail to
all Holders, as their names and addresses appear in the Security Register,
without cost to such Holders, and (ii) file with the Trustee, copies of the
annual reports, quarterly reports and other documents which the Issuer files
with the Commission pursuant to such Section 13(a) or 15(d) or any successor
provision thereto or would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provisions thereto if
the Issuer were required to be subject to such Sections and (b) if filing such
documents by the Issuer with the Commission is not permitted under the
Securities Exchange Act of 1934, promptly upon written request supply copies of
such documents to any prospective Holder. ((S) 1018)
Unrestricted Subsidiaries
The Issuer may designate any Subsidiary of the Issuer to be an "Unrestricted
Subsidiary" as provided below in which event such Subsidiary and each other
Person that is then or thereafter becomes a Subsidiary of such Subsidiary will
be deemed to be an Unrestricted Subsidiary. "Unrestricted Subsidiary" means (1)
any Subsidiary designated as such by the Board of Directors as set forth below
where (a) neither the Issuer nor any of its other Subsidiaries (other than
another Unrestricted Subsidiary) (i) provides credit support for, or Guarantee
of, any Debt of such Subsidiary or any Subsidiary of such Subsidiary (including
any undertaking, agreement or instrument evidencing such Debt) or (ii) is
directly or indirectly liable for any Debt of such Subsidiary or any Subsidiary
of such Subsidiary, and (b) no default with respect to any Debt of such
Subsidiary or any Subsidiary of such Subsidiary (including any right which the
holders thereof may have to take enforcement action against such Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any other Debt
of the Issuer and its Subsidiaries (other than another Unrestricted Subsidiary)
to declare a default on such other Debt or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity and (2) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, any other
Subsidiary of the Issuer which is not a Subsidiary of the Subsidiary to be so
designated or otherwise an Unrestricted Subsidiary, provided that either
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(x) the Subsidiary to be so designated has total assets of $1,000 or less or (y)
immediately after giving effect to such designation, the Issuer could Incur at
least $1.00 of additional Debt pursuant to the first paragraph under "--
Limitation on Debt" and provided, further, that the Issuer could make a
Restricted Payment in an amount equal to the greater of the fair market value
and book value of such Subsidiary pursuant to "Limitation on Restricted
Payments" and such amount is thereafter treated as a Restricted Payment for the
purpose of calculating the aggregate amount available for Restricted Payments
thereunder. ((S) 101)
Mergers, Consolidations and Certain Sales of Assets
The Issuer may not, in a single transaction or a series of related
transactions, (i) consolidate or merge with or into any other Person or permit
any other Person to consolidate or merge with or into the Issuer or (ii)
directly or indirectly, transfer, sell, lease or otherwise dispose of all or
substantially all of its assets, unless:
(1) in a transaction in which the Issuer does not survive or in which the
Issuer sells, leases or otherwise disposes of all or substantially all of its
assets, the successor entity to the Issuer is organized under the laws of the
United States of America, any State thereof or the District of Columbia, and
shall expressly assume, by a supplemental indenture executed and delivered to
the Trustee in form satisfactory to the Trustee, all of the Issuer's
obligations under the Indenture;
(2) immediately before and after giving effect to such transaction and
treating any Debt which becomes an obligation of the Issuer or a Restricted
Subsidiary as a result of such transaction as having been Incurred by the
Issuer or such Restricted Subsidiary at the time of the transaction, no Event
of Default or event that with the passing of time or the giving of notice, or
both, would constitute an Event of Default shall have occurred and be
continuing;
(3) except in the case of any such consolidation or merger of the Issuer
with or into, or any such transfer, sale, lease or other disposition of
assets to, a Wholly Owned Restricted Subsidiary, immediately after giving
effect to such transaction, the Consolidated Net Worth of the Issuer (or
other successor entity to the Issuer) is equal to or greater than that of the
Issuer immediately prior to the transaction;
(4) except in the case of any such consolidation or merger of the Issuer
with or into, or any such transfer, sale, lease or other disposition of
assets to, a Wholly Owned Restricted Subsidiary, immediately after giving
effect to such transaction and treating any Debt which becomes an obligation
of the Issuer or a Restricted Subsidiary as a result of such transaction as
having been Incurred by the Issuer or such Restricted Subsidiary at the time
of the transaction, the Issuer (including any successor entity to the Issuer)
could Incur at least $1.00 of additional Debt pursuant to the provisions of
the Indenture described in the first paragraph under "Limitation on Debt"
above;
(5) if, as a result of any such transaction, property or assets of the
Issuer would become subject to a Lien prohibited by the provisions of the
Indenture described under "Limitation on Liens above, the Issuer or the
successor entity to the Issuer shall have secured the Notes as required by
said covenant; and
(6) certain other conditions are met. ((S) 801)
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. ((S) 101)
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"ABRY Subordinated Debt" means Debt of the Issuer in principal amount not to
exceed $15 million in the aggregate at any time outstanding (a) that is owed to
ABRY II, ABRY, any other investment fund controlled by ABRY, Robert Wolsey, or
any Person the majority of whose Voting Stock is directly or indirectly owned by
Robert Wolsey and (b) as to which the payment of principal of (and premium, if
any) and interest and other payment obligations in respect of such Debt shall be
subordinate to the prior payment in full of the Notes to at least the following
extent: (i) no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Debt may be permitted for so long as any
default in the payment of principal (or premium, if any) or interest on the
Notes exists; (ii) in the event that any other default that with the passing of
time or the giving of notice, or both, would constitute an event of default
exists with respect to the Notes, upon notice by 25% or more in principal amount
of the Notes to the Trustee, the Trustee shall have the right to give notice to
the Issuer and the holders of such Debt (or trustees or agents therefor) of a
payment blockage, and thereafter no payments of principal of (or premium, if
any) or interest on or otherwise due in respect of such Debt may be made for a
period of 179 days from the date of such notice.
"Accreted Value" means, as of any date prior to March 15, 2003, an amount per
$1,000 principal amount at maturity of Notes that is equal to the sum of (a) the
initial offering price ($614.74 per $1,000 principal amount at maturity of
Notes) of such Notes and (b) the portion of the excess of the principal amount
of such Notes over such initial offering price which shall have been amortized
through such date, such amount to be so amortized on a daily basis and
compounded semi-annually on each March 15 and September 15 at the rate of 10%
per annum from the date of original issue of the Notes through the date of
determination computed on the basis of a 360-day year of twelve 30-day months,
and as of any date on or after March 15, 2003, the principal amount of each
Note.
"Acquisition Debt" means with respect to any specified Person, Debt that is
Incurred in connection with an acquisition of assets consisting of (i) Debt
Incurred for the purpose of financing all or part of the cost of an acquisition
by such Person or any of its Restricted Subsidiaries of assets (including
Capital Stock of a Person that will become a Restricted Subsidiary of such
Person or be merged or consolidated with or into such Person or a Restricted
Subsidiary of such Person) in an amount not to exceed 100% of the purchase price
of such acquisition, (ii) Debt of any other Person existing at the time such
other Person merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Debt Incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, or (iii) Debt secured by a Lien encumbering
any assets acquired by such specified Person, provided in each case (i), (ii)
and (iii) that after giving pro forma effect to the Incurrence of such Debt the
ratio of (a) the aggregate consolidated principal amount of Debt of the Issuer
and its Restricted Subsidiaries outstanding as of the most recent available
quarterly or annual balance sheet, after giving pro forma effect to the
Incurrence of such Debt and any other Debt Incurred since such balance sheet
date that remains outstanding and the receipt and application of the proceeds
thereof, to (b) Adjusted Consolidated Cash Flow (after giving effect to such
acquisition) is not greater than such actual ratio prior to the Incurrence of
such Debt.
"Adjusted Consolidated Cash Flow" means the Consolidated Cash Flow for the
most recent fiscal quarter for which financial statements are available,
determined (i) after giving effect on a pro forma basis to (a) any Asset
Disposition or acquisition of assets (including acquisitions of other Persons by
merger, consolidation or purchase of Capital Stock) by the Issuer or any
Restricted Subsidiaries during or after such quarter as if such Asset
Disposition or acquisition had taken place on the first day of such quarter, (b)
any new lease or Site Management Contract entered into by the Issuer or any
Restricted Subsidiary in the ordinary course of business with respect to Tower
Assets during or after such quarter as if such new lease or Site Management
Contract had been signed on the first day of such quarter and the rent required
by the terms of such lease or Site Management Contract for such quarter had been
received by the Issuer or a Restricted Subsidiary during such quarter, (c) the
loss after the first day of such quarter of any lease or Site Management
Contract of the Issuer or a Restricted Subsidiary with respect to any Tower
Assets that was in effect on the first day of such quarter as if such lease or
Site Management Contract had not been in effect during such quarter and no rent
under such lease had been received during such quarter, and (d) any rent
increases received by the Issuer or any Restricted Subsidiary during or after
such quarter related to
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leases or Site Management Contracts on Tower Assets as if such increased rental
rate had been in effect on the first day of such quarter and the Issuer had
received such increased amount of rent during such quarter, and (ii) as adjusted
to add back Corporate Development Expenses which had been deducted from
consolidated revenues in determining Consolidated Net Income for such quarter,
multiplied by four.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance, sale, lease
or other disposition by such Person or any of its Restricted Subsidiaries
(including a consolidation or merger or other sale of any such Restricted
Subsidiary with, into or to another Person in a transaction in which such
Restricted Subsidiary ceases to be a Restricted Subsidiary, but excluding a
disposition by a Restricted Subsidiary of such Person to such Person or a Wholly
Owned Restricted Subsidiary of such Person or by such Person to a Wholly Owned
Restricted Subsidiary of such Person) of (i) shares of Capital Stock (other than
directors' qualifying shares) or other ownership interests of a Restricted
Subsidiary of such Person, (ii) substantially all of the assets of such Person
or any of its Restricted Subsidiaries representing a division or line of
business or (iii) other assets or rights of such Person or any of its Restricted
Subsidiaries outside of the ordinary course of business, provided in each case
that the aggregate consideration for such transfer, conveyance, sale, lease or
other disposition is equal to $1 million or more.
"Capital Lease Obligation" of any Person means the obligation to pay rent or
other payment amounts under a lease of (or other Debt arrangements conveying the
right to use) real or personal property of such Person which is required to be
classified and accounted for as a capital lease or a liability on the face of a
balance sheet of such Person in accordance with generally accepted accounting
principles. The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty. The principal amount of such obligation shall be the capitalized amount
thereof that would appear on the face of a balance sheet of such Person in
accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Cash Equivalents" means (i) 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 six months from the
date of acquisition, (ii) certificates of deposit with maturities of not more
than 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 domestic commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better, (iii) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (i) and (ii) above entered into with any
financial institution meeting the qualifications specified in clause (ii) above,
(iv) 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 (v) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (i)-(iv) of this definition.
"Common Stock" of any Person means Capital Stock of such Person that does not
rank prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
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"Consolidated Cash Flow" for any period means the Consolidated Net Income for
such period increased by the sum of (i) Consolidated Interest Expense for such
period, plus (ii) Consolidated Income Tax Expense for such period, plus (iii)
the consolidated depreciation and amortization expense included in the income
statement of the Issuer and its Restricted Subsidiaries for such period, plus
(iv) other non-cash charges of such Person for such period deducted from
consolidated revenues in determining Consolidated Net Income for such period,
minus (v) other non-cash items of the Issuer and its Restricted Subsidiaries for
such period increasing consolidated revenues in determining Consolidated Net
Income for such period.
"Consolidated Income Tax Expense" for any period means the consolidated
provision for income taxes of the Issuer and its Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with generally
accepted accounting principles.
"Consolidated Interest Expense" means for any period the consolidated
interest expense included in a consolidated income statement (without deduction
of interest income) of the Issuer and its Restricted Subsidiaries for such
period calculated on a consolidated basis in accordance with generally accepted
accounting principles, including without limitation or duplication (or, to the
extent not so included, with the addition of), (i) the amortization of Debt
discounts; (ii) any payments or fees with respect to letters of credit, bankers'
acceptances or similar facilities; (iii) fees (net of any amounts received) with
respect to interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements; (iv) Preferred Stock dividends of the Issuer and
its Restricted Subsidiaries (other than with respect to Redeemable Stock)
declared and paid or payable, other than dividends paid in Capital Stock that is
not Redeemable Stock; (v) accrued Redeemable Stock dividends of the Issuer and
its Restricted Subsidiaries, whether or not declared or paid; (vi) interest on
Debt guaranteed by the Issuer and its Restricted Subsidiaries; and (vii) the
portion of any rental obligation allocable to interest expense.
"Consolidated Net Income" for any period means the consolidated net income
(or loss) of the Issuer and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Issuer or a Restricted
Subsidiary of the Issuer in a pooling-of-interests transaction for any period
prior to the date of such transaction, (b) the net income (or loss) of any
Person that is not a Restricted Subsidiary of the Issuer except to the extent of
the amount of dividends or other distributions actually paid to the Issuer or a
Restricted Subsidiary of the Issuer by such Person during such period, (c) gains
or losses on Asset Dispositions by the Issuer or its Restricted Subsidiaries,
(d) all extraordinary gains and extraordinary losses, (e) the cumulative effect
of changes in accounting principles and (f) the tax effect of any of the items
described in clauses (a) through (e) above.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
generally accepted accounting principles, less amounts attributable to
Redeemable Stock of such Person; provided that, with respect to the Issuer,
adjustments following the date of the Indenture to the accounting books and
records of the Issuer in accordance with Accounting Principles Board Opinions
Nos. 16 and 17 (or successor opinions thereto), or otherwise resulting from the
acquisition of control of the Issuer by another Person shall not be given
effect.
"Corporate Development Expenses" means non-tower-level costs incurred in
connection with acquisitions and development of Tower Assets.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations Incurred in connection with the acquisition
of property, assets or businesses, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of
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property or services (including securities repurchase agreements but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business which are not overdue or which are being contested in good faith), (v)
every Capital Lease Obligation of such Person, (vi) all Receivables Sales of
such Person, together with any obligation of such Person to pay any discount,
interest, fees, indemnities, penalties, recourse, expenses or other amounts in
connection therewith, (vii) all Redeemable Stock issued by such Person, (viii)
if such Person is a Restricted Subsidiary, all Preferred Stock issued by such
Person, (ix) every obligation under Interest Rate or Currency Protection
Agreements of such Person and (x) every obligation of the type referred to in
clauses (i) through (x) of another Person and all dividends of another Person
the payment of which, in either case, such Person has Guaranteed or is
responsible or liable, directly or indirectly, as obligor, Guarantor or
otherwise. The "amount" or "principal amount" of Debt at any time of
determination as used herein represented by (a) any contingent Debt, shall be
the maximum principal amount hereof, (b) any Debt issued at a price that is less
than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (c) any Receivables Sale, shall be the amount, if any, in
connection with such Receivables Sale for which there is recourse to the seller
or any of its Subsidiaries, (d) any Redeemable Stock, shall be the maximum fixed
redemption or repurchase price in respect thereof, and (e) any Preferred Stock,
shall be the maximum voluntary or involuntary liquidation preference plus
accrued and unpaid dividends in respect thereof, in each case as of such time of
determination.
"generally accepted accounting principles" means generally accepted
accounting principles in the United States which are in effect on the date of
original issuance of the Notes.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect of guaranteeing, any
Debt of any other Person (the "primary obligor") in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such Person,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Debt, (ii) to purchase property, securities
or services for the purpose of assuring the holder of such Debt of the payment
of such Debt, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed", "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guaranty by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business.
"Incur" means, with respect to any Debt or other obligation of any Person, to
create, issue, incur (by conversion, exchange or otherwise), assume, Guarantee
or otherwise become liable in respect of such Debt or other obligation including
by acquisition of Restricted Subsidiaries or the recording, as required pursuant
to generally accepted accounting principles or otherwise, of any such Debt or
other obligation on the balance sheet of such Person (and "Incurrence",
"Incurred", "Incurrable" and "Incurring" shall have meanings correlative to the
foregoing); provided, however, that a change in generally accepted accounting
principles that results in an obligation of such Person that exists at such time
becoming Debt shall not be deemed an Incurrence of such Debt.
"Interest Rate or Currency Protection Agreement" of any Person means any
forward contract, futures contract, swap, option or other financial agreement or
arrangement (including, without limitation, caps, floors, collars and similar
agreements) relating to, or the value of which is dependent upon, interest rates
or currency exchange rates or indices.
"Internal Revenue Code" means the Internal Revenue Code of 1986.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other property to others or payments for property or services for the account
or use of others, or otherwise) to, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Debt issued by, any
other Person, including any payment on a Guarantee of any
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obligation of such other Person, but shall not include trade accounts receivable
in the ordinary course of business on credit terms made generally available to
the customers of such Person.
"Lien" means, with respect to any property or assets, any mortgage or deed of
trust, pledge, hypothecation, assignment, Receivables Sale, deposit arrangement,
security interest, lien, charge, easement (other than any easement not
materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Net Cash Proceeds" from any Asset Disposition by any Person means cash or
Cash Equivalents received (including by way of sale or discounting of a note,
instalment receivable or other receivable, but excluding any other consideration
received in the form of assumption by the acquiror of Debt or other obligations
relating to such properties or assets) therefrom by such Person, net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
Incurred and all federal, state, foreign and local taxes required to be accrued
as a liability as a consequence of such Asset Disposition, (ii) all payments
made by such Person or its Restricted Subsidiaries on any Debt which is secured
by such assets in accordance with the terms of any Lien upon or with respect to
such assets or which must by the terms of such Lien, or in order to obtain a
necessary consent to such Asset Disposition or by applicable law, be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and other
payments made to minority interest holders in Restricted Subsidiaries of such
Person or joint ventures as a result of such Asset Disposition and (iv)
appropriate amounts to be provided by such Person or any Restricted Subsidiary
thereof, as the case may be, as a reserve in accordance with generally accepted
accounting principles against any liabilities associated with such assets and
retained by such Person or any Restricted Subsidiary thereof, as the case may
be, after such Asset Disposition, including, without limitation, liabilities
under any indemnification obligations and severance and other employee
termination costs associated with such Asset Disposition, in each case as
determined by the Board of Directors, in its reasonable good faith judgment
evidenced by a resolution of the Board of Directors filed with the Trustee;
provided, however, that any reduction in such reserve within twelve months
following the consummation of such Asset Disposition will be treated for all
purposes of the Indenture and the Notes as a new Asset Disposition at the time
of such reduction with Net Cash Proceeds equal to the amount of such reduction.
"Offer to Purchase" means a written offer (the "Offer") sent by the Issuer by
first class mail, postage prepaid, to each Holder at his address appearing in
the Note Register on the date of the Offer offering to purchase up to the
principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Offer Expiration Date") of the Offer to Purchase which shall be, subject
to any contrary requirements of applicable law, not less than 20 business days
or more than 60 days after the date of such Offer and a settlement date (the
"Purchase Date") for purchase of Notes within five Business Days after the Offer
Expiration Date. The Issuer shall notify the Trustee at least 15 Business Days
(or such shorter period as is acceptable to the Trustee) prior to the mailing of
the Offer of the Issuer's obligation to make an Offer to Purchase, and the Offer
shall be mailed by the Issuer or, at the Issuer's request, by the Trustee in the
name and at the expense of the Issuer. The Offer shall contain information
concerning the business of the Issuer and its Restricted Subsidiaries which the
Issuer in good faith believes will enable such Holders to make an informed
decision with respect to the Offer to Purchase (which at a minimum will include
(i) the most recent annual and quarterly financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the documents required to be filed with the Trustee pursuant to the
Indenture (which requirements may be satisfied by delivery of such documents
together with the Offer), (ii) a description of material developments in the
Issuer's business subsequent to the date of the latest of such financial
statements referred to in clause (i) (including a description of the events
requiring the Issuer to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and
the events requiring the Issuer to make the Offer to Purchase and (iv) any other
information required by applicable law to be included therein. The Offer shall
contain all instructions and
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materials necessary to enable such Holders to tender Notes pursuant to the Offer
to Purchase. The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase
is being made;
(2) the Offer Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Notes offered to be
purchased by the Issuer pursuant to the Offer to Purchase (including, if less
than 100%, the manner by which such has been determined pursuant to the
Section hereof requiring the Offer to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Issuer for each $1,000 aggregate
principal amount of Notes accepted for payment (as specified pursuant to the
Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Notes registered
in the name of such Holder and that any portion of a Note tendered must be
tendered in an integral multiple of $1,000 principal amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased
by the Issuer pursuant to the Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender a Note pursuant to the Offer to
Purchase will be required to surrender such Note at the place or places
specified in the Offer prior to the close of business on the Offer Expiration
Date (such Note being, if the Issuer or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of Notes
tendered if the Issuer (or their Paying Agent) receives, not later than the
close of business on the Offer Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder tendered, the certificate number of the Note
the Holder tendered and a statement that such Holder is withdrawing all or a
portion of his tender;
(11) that (a) if Notes in an aggregate principal amount less than or equal
to the Purchase Amount are duly tendered and not withdrawn pursuant to the
Offer to Purchase, the Issuer shall purchase all such Notes and (b) if Notes
in an aggregate principal amount in excess of the Purchase Amount are
tendered and not withdrawn pursuant to the Offer to Purchase, the Issuer
shall purchase Notes having an aggregate principal amount equal to the
Purchase Amount on a pro rata basis (with such adjustments as may be deemed
appropriate so that only Notes in denominations of $1,000 or integral
multiples thereof shall be purchased); and
(12) that in the case of any Holder whose Note is purchased only in part,
the Issuer shall execute, and the Trustee shall authenticate and deliver to
the Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unpurchased portion of the
Note so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
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"Permitted Holder" means as of the date of determination (i) Andrew Banks,
Royce Yudkoff or Robert Wolsey and any of their respective spouses, estates,
lineal descendants (including adoptive children), heirs, executors, personal
representatives, administrators and trusts for any of their benefit and (ii) any
other Person, the majority of whose Voting Stock is directly or indirectly owned
by any Person described in clause (1) above.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Permitted Senior Bank Debt" means Debt under the Senior Credit Facility and
any extension, renewal, refinancing or refunding thereof in an aggregate amount
not to exceed at any one time outstanding the sum of $250 million less the
aggregate amount of any such Debt that is repaid pursuant to the provisions of
clause (iii) of the provisions of the Indenture described under the caption
"Asset Dispositions".
"Pinnacle Towers" means Pinnacle Towers Inc., a Delaware corporation.
"Preferred Stock" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Public Equity Offering" means an underwritten primary public offering of
Common Stock of the Issuer pursuant to an effective registration statement under
the Securities Act of 1933, as amended.
"Purchase Money Secured Debt" of any Person means Debt of such Person secured
by a Lien on real or personal property of such Person which Debt (a) constitutes
all or a part of the purchase price or construction cost of such property or (b)
is Incurred prior to, at the time of or within 180 days after the acquisition or
substantial completion of such property for the purpose of financing all or any
part of the purchase price or construction cost thereof; provided, however, that
(w) the Debt so incurred does not exceed 100% of the purchase price or
construction cost of such property, (x) such Lien does not extend to or cover
any property other than such item of property and any improvements on such item,
(y) the purchase price or construction cost for such property is or should be
included in "addition to property, plant and equipment" in accordance with
generally accepted accounting principles and (z) the purchase or construction of
such property is not part of any acquisition of a Person or business unit or
line of business.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money.
"Receivables Sale" of any Person means any sale of Receivables of such Person
(pursuant to a purchase facility or otherwise), other than in connection with a
disposition of the business operations of such Person relating thereto or a
disposition of defaulted Receivables for purpose of collection and not as a
financing arrangement.
"Redeemable Stock" of any Person means any Capital Stock of such Person that
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable) or otherwise (including upon the occurrence of an
event other than a Change of Control or substantially similar event) matures or
is required to be redeemed (pursuant to any sinking fund obligation or
otherwise, but other than as a result of the death or disability of the holder
thereof or the termination of the employment with the Company of the holder
thereof) or is convertible into or exchangeable for Debt or is redeemable at the
option of the holder thereof, in whole or in part, at any time prior to the
final Stated Maturity of the Notes; provided, however, that any Capital Stock
which would not constitute
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Redeemable Stock but for provisions thereof giving holders thereof the right to
require the Issuer or a Restricted Subsidiary to repurchase or redeem such
Capital Stock upon the occurrence of an Asset Disposition occurring prior to the
final maturity of the Notes shall not constitute Redeemable Stock if such
provisions applicable to such Capital Stock are no more favorable to the holders
of such stock than the provisions applicable to the Notes contained in the
covenant described under "Asset Dispositions" and such provisions applicable to
such Capital Stock specifically provide that the Issuer and its Restricted
Subsidiaries will not repurchase or redeem any such stock pursuant to such
provisions prior to the repurchase of such Notes as are required to be
repurchased pursuant to the covenant described under "Asset Dispositions."
"Related Person" of any Person means any other Person directly or indirectly
owning (a) 5% or more of the outstanding Common Stock of such Person (or, in the
case of a Person that is not a corporation, 5% or more of the equity interest in
such Person) or (b) 5% or more of the combined voting power of the Voting Stock
of such Person.
"Restricted Subsidiary" means any Subsidiary of the Issuer, whether existing
on or after the date of the Indenture, unless such Subsidiary is an Unrestricted
Subsidiary.
"Site Management Contract" means any agreement pursuant to which the Issuer
or any of its Restricted Subsidiaries has the right to substantially control
Tower Assets and the revenues derived from the rental or use thereof.
"Subordinated Debt" means Debt of the Issuer as to which the payment of
principal of (and premium, if any) and interest and other payment obligations in
respect of such Debt shall be subordinate to the prior payment in full of the
Notes to at least the following extent: (i) no payments of principal of (or
premium, if any) or interest on or otherwise due in respect of such Debt may be
permitted for so long as any default in the payment of principal (or premium, if
any) or interest on the Notes exists; (ii) in the event that any other default
that with the passing of time or the giving of notice, or both, would constitute
an event of default exists with respect to the Notes, upon notice by 25% or more
in principal amount of the Notes to the Trustee, the Trustee shall have the
right to give notice to the Issuer and the holders of such Debt (or trustees or
agents therefor) of a payment blockage, and thereafter no payments of principal
of (or premium, if any) or interest on or otherwise due in respect of such Debt
may be made for a period of 179 days from the date of such notice; and (iii)
such Debt may not (x) provide for payments of principal of such Debt at the
stated maturity thereof or by way of a sinking fund applicable thereto or by way
of any mandatory redemption, defeasance, retirement or repurchase thereof by the
Issuer (including any redemption, retirement or repurchase which is contingent
upon events or circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each case
prior to the final Stated Maturity of the Notes or (y) permit redemption or
other retirement (including pursuant to an offer to purchase made by the Issuer)
of such other Debt at the option of the holder thereof prior to the final Stated
Maturity of the Notes, other than a redemption or other retirement at the option
of the holder of such Debt (including pursuant to an offer to purchase made by
the Issuer) which is conditioned upon a change of control of the Issuer pursuant
to provisions substantially similar to those described under "Change of Control"
(and which shall provide that such Debt will not be repurchased pursuant to such
provisions prior to the Issuer's repurchase of the Notes required to be
repurchased by the Issuer pursuant to the provisions described under "Change of
Control"); provided, however, that any Debt which would constitute Subordinated
Debt but for provisions thereof giving holders thereof the right to require the
Issuer or a Restricted Subsidiary to repurchase or redeem such Subordinated Debt
upon the occurrence of an Asset Disposition occurring prior to the final
maturity of the Notes shall constitute Subordinated Debt if such provisions
applicable to such Subordinated Debt are no more favorable to the holders of
such Debt than the provisions applicable to the Notes contained in the covenant
described under "Asset Dispositions" and such provisions applicable to such Debt
specifically provide that the Issuer and its Restricted Subsidiaries will not
repurchase or redeem any such Debt pursuant to such provisions prior to the
repurchase of such Notes as are required to be repurchased pursuant to the
covenant described under "Asset Dispositions."
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"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Restricted Subsidiaries thereof,
or (ii) any other Person (other than a corporation) in which such Person, or one
or more other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Tower Asset Exchange" means any transaction in which the Issuer or a
Restricted Subsidiary 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 Issuer and its
Restricted Subsidiaries in such exchange is at least equal to the fair market
value of the assets disposed in such exchange.
"Tower Assets" means (i) wireless transmission towers and related assets that
are located on the site of a transmission tower and rooftop and other wireless
transmission sites and related assets located at such site and (ii) Site
Management Contracts.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"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 or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
Events of Default
The following will be Events of Default under the Indenture:
(a) failure to pay principal of (or premium, if any, on) any Note when
due;
(b) failure to pay any interest on any Note when due, continued for 30
days;
(c) default in the payment of principal and interest on Notes required to
be purchased pursuant to an Offer to Purchase as described under "Change of
Control" and "Asset Dispositions" when due and payable;
(d) failure to perform or comply with the provisions described under
"Merger, Consolidation and Certain Sales of Assets";
(e) failure to perform any other covenant or agreement of the Issuer under
the Indenture or the Notes continued for 60 days after written notice to
Holding by the Trustee or Holders of at least 25% in aggregate principal
amount of Outstanding Notes;
(f) default under the terms of any instrument evidencing or securing Debt
for money borrowed by the Issuer or any Restricted Subsidiary having an
outstanding principal amount of $5 million individually or in the aggregate
which default results in the acceleration of the payment of all or any
portion of such indebtedness or constitutes the failure to pay all or any
portion of such indebtedness when due;
(g) the rendering of a final judgment or judgments (not subject to appeal)
against the Issuer or any Subsidiary in an amount in excess of $5 million
which remains undischarged or unstayed for a period of 60 days after the date
on which the right to appeal has expired; and
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(h) certain events of bankruptcy, insolvency or reorganization affecting
the Issuer or any Subsidiary. ((S) 501)
Subject to the provisions of the Indenture relating to the duties of the Trustee
in case an Event of Default (as defined) shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. ((S) 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Notes will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee. ((S) 512)
If an Event of Default (other than an Event of Default described in Clause
(h) above) shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Notes may
accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal, have been cured or
waived as provided in the Indenture. If an Event of Default specified in Clause
(h) above occurs, the Outstanding Notes will ipso facto become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. ((S) 502) For information as to waiver of defaults, see
"Modification and Waiver".
Notwithstanding the foregoing, upon an acceleration of the Notes or an Event
of Default specified in Clause (h) above, in each case prior to the Full
Accretion Date, the holders of Notes will be entitled to receive only a default
amount equal to the Accreted Value of the Notes, which until the Full Accretion
Date will be less than the face amount of such Notes.
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default (as defined) and unless also the Holders of at least 25% in aggregate
principal amount of the Outstanding Notes shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. ((S) 507) However, such limitations do not apply to a suit instituted by a
Holder of a Note for enforcement of payment of the principal of and premium, if
any, or interest on such Note on or after the respective due dates expressed in
such Note. ((S) 508)
The Issuer will be required to furnish to the Trustee quarterly a statement
as to the performance by the Issuer of certain of its obligations under the
Indenture and as to any default in such performance. ((S) 1018)
Satisfaction and Discharge of the Indenture
The Indenture will cease to be of further effect as to all outstanding Notes
(except as to (i) rights of registration of transfer and exchange and the
Issuer's right of optional redemption, (ii) substitution of apparently
mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Holders to
receive payment of principal and interest on the Notes, (iv) rights, obligations
and immunities of the Trustee under the Indenture and (v) rights of the Holders
of the Notes as beneficiaries of the Indenture with respect to any property
deposited with the Trustee payable to all or any of them), if (x) the Issuer
will have paid or caused to be paid the principal of and interest on the Notes
as and when the same will have become due and payable or (y) all outstanding
Notes (except lost, stolen or destroyed Notes which have been replaced or paid)
have been delivered to the Trustee for cancellation. (Article Four)
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Defeasance
The Indenture will provide that, at the option of the Issuer, (a) if
applicable, the Issuer will be discharged from any and all obligations in
respect of the Outstanding Notes or (b) if applicable, the Issuer may omit to
comply with certain restrictive covenants, that such omission shall not be
deemed to be an Event of Default under the Indenture and the Notes, in either
case (a) or (b) upon irrevocable deposit with the Trustee, in trust, of money
and/or U.S. government obligations which will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent
certified public accountants to pay the principal of and premium, if any, and
each installment of interest, if any, on the Outstanding Notes. With respect to
clause (B), the obligations under the Indenture other than with respect to such
covenants and the Events of Default other than the Events of Default relating to
such covenants above shall remain in full force and effect. Such trust may only
be established if, among other things:
(i) with respect to clause (a), the Issuer has received from, or there has
been published by, the Internal Revenue Service a ruling or there has been a
change in law, which in the Opinion of Counsel provides that Holders of the
Notes will not recognize gain or loss for U.S. federal income tax purposes as
a result of such deposit, defeasance and discharge and will be subject to
U.S. federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred; or, with respect to clause (b), the Issuer has
delivered to the Trustee an Opinion of Counsel to the effect that the Holders
of the Notes will not recognize gain or loss for U.S. federal income tax
purposes as a result of such deposit and defeasance and will be subject to
U.S. federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit and defeasance had not
occurred;
(ii) such deposit, defeasance and discharge will not result in a breach or
violation of, or constitute a default under, any agreement or instrument to
which the Issuer or any Restricted Subsidiary is a party or by which the
Issuer and any Restricted Subsidiary is bound;
(iii) no Event of Default or event that with the passing of time or the
giving of notice, or both, shall constitute an Event of Default shall have
occurred and be continuing;
(iv) the Issuer has delivered to the Trustee an Opinion of Counsel to the
effect that such deposit shall not cause the Trustee or the trust so created
to be subject to the Investment Issuer Act of 1940; and
(v) certain other customary conditions precedent are satisfied. (Article
Thirteen)
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Issuer and
the Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Outstanding Notes; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Note
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, (b) reduce the principal amount of, (or
the premium) or interest on, any Note, (c) change the place or currency of
payment of principal of (or premium), or interest on, any Note, (d) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Note, (e) reduce the above-stated percentage of Outstanding Notes necessary
to modify or amend the Indenture, (f) reduce the percentage of aggregate
principal amount of Outstanding Notes necessary for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults, (g)
modify any provisions of the Indenture relating to the modification and
amendment of the Indenture or the waiver of past defaults or covenants, except
as otherwise specified, or (h) following the mailing of any Offer to Purchase,
modify any Offer to Purchase for the Notes required under the "Limitation on
Asset Dispositions" and the "Change of Control" covenants contained in the
Indenture in a manner materially adverse to the Holders thereof. ((S) 902)
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Notwithstanding the foregoing, without the consent of any Holder, the Issuer
and the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency provided that such action does not adversely
affect the interests of the Holders of the Notes in any material respect, to
provide for the assumption of the Issuer's obligations to Holders of Notes in
the case of a merger or consolidation, to secure the Notes, to add to the
covenants of the Issuer for the benefits of the Holders or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
The Holders of a majority in aggregate principal amount of the Outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Issuer
with certain restrictive provisions of the Indenture. ((S) 1019) Subject to
certain rights of the Trustee, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the Outstanding Notes, on behalf of
all Holders of Notes, may waive any past default under the Indenture, except a
default in the payment of principal, premium or interest or a default arising
from failure to purchase any Note tendered pursuant to an Offer to Purchase.
((S) 513)
Governing Law
The Indenture and the Notes are governed by the laws of the State of New
York.
The Trustee
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs. ((S)(S) 601
and 605)
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Issuer, to obtain payment of claims in certain cases or
to realize on certain property received by it in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in other transactions
with the Issuer or any Affiliate, provided, however, that if it acquires any
conflicting interest (as defined in the Indenture or in the Trust Indenture
Act), it must eliminate such conflict or resign. ((S) 608)
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes certain of the material U.S.
federal income tax considerations of the Exchange Offer to Holders of the
Original Notes. This discussion is a summary for general information only and
does not consider all aspects of U.S. federal income tax that may be relevant to
a Holder of the Original Notes in light of such Holder's particular
circumstances. This discussion also does not address the U.S. federal income
tax consequences to Holders subject to special treatment under the U.S. federal
income tax laws, such as dealers in securities or foreign currency, tax-exempt
entities, financial institutions, foreign persons, insurance companies, persons
that hold the Notes as part of a "straddle," a "hedge" against currency risk or
a "conversion transaction," persons that have a "functional currency" other than
the U.S. dollar and investors in pass-through entities. In addition, this
discussion does not describe any tax consequences arising out of the tax laws of
any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing and proposed regulations
thereunder, Internal Revenue Service ("IRS") rulings and pronouncement and
judicial decisions now in effect, all of which are subject to change (possibly
on a retroactive basis). The Company has not and will not seek any rulings or
opinions from the IRS or counsel with respect to the matters discussed below.
There can be no assurance that the IRS will not take positions concerning the
tax consequences of the Exchange Offer which are different from those discussed
herein.
HOLDERS OF ORIGINAL NOTES SHOULD CONSULT THEIR OWN ADVISORS CONCERNING THE
APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION, TO THE EXCHANGE OFFER IN LIGHT OF THEIR
PARTICULAR SITUATIONS.
The exchange of the Original Notes for New Notes pursuant to the Exchange
Offer should not constitute a taxable exchange. As a result, (i) a holder
should not recognize taxable gain or loss as a result of exchanging Original
Notes for New Notes pursuant to the Exchange Offer; (ii) the holding period of
the New Notes should include the holding period of the Original Notes exchanged
therefor; and (iii) the adjusted tax basis of the New Notes should be the same
as the adjusted tax basis of the Original Notes exchanged therefor immediately
before the exchange.
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PLAN OF DISTRIBUTION
Each broker-dealer that received New Notes for its own account pursuant to
the Exchange Offer ("Restricted Holder") must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a Restricted
Holder in connection with resales of New Notes received in exchange for Original
Notes where such Original Notes were acquired as a result of market-making
activities or other trading activities. For a period of 180 days after the
Expiration Date, the Company will use reasonable efforts to make this Prospectus
available to any Restricted Holder for use in connection with any such resale,
provided that such Restricted Holder indicates in the Letter of Transmittal that
is a broker-dealer. In addition, until ___________, 1998, all Restricted
Holders effecting transactions in the New Notes may be required to deliver a
Prospectus.
The Company will not receive any proceeds from any sale of Original Notes by
Restricted Holders. Original Notes received by Restricted Holders 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 Notes or a combination of such methods
of resale, at market prices prevailing at the time of resale, or at prices
related to such prevailing market prices on negotiated prices. Any such resale
may be made directly to purchasers or to or through Restricted Holders who may
receive compensation in the form of commissions or concessions from any such
Restricted Holder and/or the purchasers of any New Notes. Any Restricted Holder
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any person that participates in the distribution of such
New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such Restricted Holders may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a Restricted Holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any Restricted Holder that requires such documents in the
Letter of Transmittal.
By acceptance of this Exchange Offer, each Restricted Holder that receives
New Notes pursuant to the Exchange Offer agrees that, upon receipt of notice
from the Company of the happening of any event which makes any statement in the
Prospectus untrue in any material respect or which requires the making of any
changes in the Prospectus in order to make the statements therein not misleading
(which notice the Company agrees to deliver promptly to such Restricted Holder),
such Restricted Holder will suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Restricted Holder. If the Company gives any such notice to suspend the use of
the Prospectus, it shall extend the 180-day period referred to above by the
number of days during the period from and including the date of the giving of
such notice up to and including when Restricted Holders shall have received
copies of the supplemental or amended Prospectus necessary to permit resales of
New Notes.
LEGAL OPINIONS
Certain legal matters with respect to the issuance of New Notes will be
passed upon for the Company by its counsel, Holland & Knight LLP.
101
<PAGE>
EXPERTS
The financial statements included in this Prospectus for Pinnacle Holdings
Inc. as of December 31, 1997 and 1996 and for the years then ended and for the
period from inception through December 31, 1995, Shore Communications as of
December 3, 1997 and for the period from January 1, 1997 through December 3,
1997, Tidewater Communications as of July 31, 1997 and for the period from
January 1, 1997 through July 31, 1997 and Majestic Communications as of June 27,
1997 and for the period from January 1, 1997 through June 27, 1997 included in
this Prospectus, have been so included in reliance on the reports of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The financial statements of the Tower Operations of Southern
Communications Services, Inc., as of December 31, 1996 and 1997 and for each of
the two years then ended, included in this Prospectus, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
102
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PINNACLE HOLDINGS INC.
Report of Independent Certified Public Accountants........................ F-2
Consolidated Balance Sheets as of December 31, 1997 and 1996.............. F-3
Consolidated Statements of Operations for the period from inception
through
December 31, 1995 and for each of the two years ended December 31, 1997.. F-4
Consolidated Statements of Changes in Stockholders' Equity for the period
from inception through December 31, 1995 and for each of the two years
ended December 31, 1997.................................................. F-5
Consolidated Statements of Cash Flows for the period from inception
through December 31, 1995 and for each of the two years ended December
31, 1997................................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
SOUTHERN COMMUNICATIONS SERVICES, INC. TOWER OPERATIONS
Report of Independent Certified Public Accountants........................ F-18
Balance Sheets as of December 31, 1997 and 1996........................... F-19
Statements of Operations.................................................. F-20
Statements of Changes in Accumulated Deficit.............................. F-21
Statements of Cash Flows.................................................. F-22
Notes to Financial Statements............................................. F-23
SHORE COMMUNICATIONS
Report of Independent Certified Public Accountants........................ F-26
Combined Balance Sheet as of December 3, 1997............................. F-27
Combined Statement of Operations and Retained Earnings for the period from
January 1, 1997 through December 3, 1997................................. F-28
Combined Statement of Cash Flows for the period from January 1, 1997
through
December 3, 1997......................................................... F-29
Notes to Combined Financial Statements.................................... F-30
TIDEWATER COMMUNICATIONS
Report of Independent Certified Public Accountants........................ F-35
Combined Balance Sheet as of July 31, 1997................................ F-36
Combined Statement of Operations and Retained Earnings for the period from
January 1, 1997 through July 31, 1997.................................... F-37
Combined Statement of Cash Flows for the period from January 1, 1997
through
July 31, 1997............................................................ F-38
Notes to Combined Financial Statements.................................... F-39
MAJESTIC COMMUNICATIONS
Report of Independent Certified Public Accountants........................ F-43
Combined Balance Sheet as of June 27, 1997................................ F-44
Combined Statement of Operations and Retained Earnings for the period from
January 1, 1997 through June 27, 1997.................................... F-45
Combined Statement of Cash Flows for the period from January 1, 1997
through
June 27, 1997............................................................ F-46
Notes to Combined Financial Statements.................................... F-47
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Pinnacle Holdings Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in stockholders' equity, and
of cash flows present fairly, in all material respects, the financial position
of Pinnacle Holdings Inc. and its subsidiaries (the "Company") at December 31,
1997 and 1996, and the results of their operations and their cash flows for
each of the two years in the period ended December 31, 1997, and for the
period from inception (May 3, 1995) through December 31, 1995, in conformity
with generally accepted accounting principles. 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 of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Tampa, Florida
March 4, 1998
F-2
<PAGE>
PINNACLE HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 47,419 $ 1,693,923
Accounts receivable, less allowance for doubtful
accounts
of $45,000 and $70,000, respectively............. 483,883 1,577,575
Prepaid expenses and other current assets......... 291,148 1,037,447
----------- ------------
Total current assets............................ 822,450 4,308,945
Restricted cash..................................... 34,072 59,822
Tower assets, net of accumulated depreciation of
$2,229,274
and $8,278,524, respectively....................... 48,327,035 127,946,070
Fixed assets, net................................... 757,595 1,495,121
Land................................................ 4,112,000 6,850,951
Other assets........................................ 1,512,485 2,516,994
----------- ------------
$55,565,637 $143,177,903
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 807,092 $ 2,242,397
Accrued expenses.................................. 723,444 3,095,049
Deferred revenue.................................. 132,423 639,460
Current portion of long-term debt................. 636,214 11,122,077
----------- ------------
Total current liabilities....................... 2,299,173 17,098,983
Long-term debt...................................... 29,785,966 109,459,790
Other liabilities................................... 60,759 105,012
----------- ------------
32,145,898 126,663,785
----------- ------------
Commitments and contingencies (Note 7)
Redeemable stock:
Class B common stock.............................. 1,200,000 1,761,000
Class D common stock.............................. 38 39
----------- ------------
1,200,038 1,761,039
----------- ------------
Stockholders' equity:
Common stock...................................... 254 270
Additional paid-in capital........................ 24,881,219 25,875,752
Accumulated deficit............................... (2,661,772) (11,122,943)
----------- ------------
22,219,701 14,753,079
----------- ------------
$55,565,637 $143,177,903
=========== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
F-3
<PAGE>
PINNACLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(MAY 3, 1995)
THROUGH YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1997
------------- ------------ ------------
<S> <C> <C> <C>
Tower rental revenue................. $ 733,003 $ 4,841,752 $12,880,631
Tower operating expenses, excluding
depreciation
and amortization.................... 180,919 1,135,023 2,632,274
---------- ----------- -----------
Gross margin....................... 552,084 3,706,729 10,248,357
Other expenses:
General and administrative......... 306,180 923,168 1,385,382
Corporate development.............. 369,496 1,439,749 3,772,140
Depreciation and amortization...... 340,614 2,205,176 6,626,912
---------- ----------- -----------
1,016,290 4,568,093 11,784,434
---------- ----------- -----------
Loss from operations................. (464,206) (861,364) (1,536,077)
Interest expense..................... 181,212 1,154,990 6,925,094
---------- ----------- -----------
Net loss............................. $ (645,418) $(2,016,354) $(8,461,171)
========== =========== ===========
Loss per common share................ $ (6.31) $ (8.10) $ (27.28)
Weighted average number of common
shares outstanding.................. 102,250 248,950 310,122
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
F-4
<PAGE>
PINNACLE HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
REDEEMABLE STOCK
----------------------------------
CLASS B CLASS D CLASS A CLASS E
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK ADDITIONAL STOCK
------------------ --------------- -------------- ------------- PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
------ ---------- ------- ------ ------- ------ ------ ------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 3,
1995............. 12,000 $1,200,000 20,000 $20 35,000 $ 35 -- $-- $ 3,499,965
Issuance of com-
mon stock, net of
issuance costs:
Class A......... 40,500 41 3,551,440
Class D......... 10,000 10
Stock subscrip-
tion $(180,015)
Net loss........ $ (645,418)
------ ---------- ------- --- ------- ---- ------ ---- ----------- --------- ------------
Balance at Decem-
ber 31, 1995..... 12,000 1,200,000 30,000 30 75,500 76 -- -- 7,051,405 (180,015) (645,418)
Issuance of com-
mon stock, net of
issuance costs:
Class A......... 127,000 127 12,699,873
Class D......... 8,000 8
Class E......... 51,300 51 5,129,941
Payment received
for stock
subscriptions 180,015
Net loss......... (2,016,354)
------ ---------- ------- --- ------- ---- ------ ---- ----------- --------- ------------
Balance at Decem-
ber 31, 1996..... 12,000 1,200,000 38,000 38 202,500 203 51,300 51 24,881,219 (2,661,772)
Issuance of com-
mon stock, net of
issuance costs:
Class B......... 500
Class D......... 11,000 11
Class E......... 15,789 16 1,555,533
Retirement of
common stock:
Class B......... (500)
Class D......... (10,000) (10)
Net loss......... (8,461,171)
Adjustment to
Class B common
stock............ 561,000 (561,000)
------ ---------- ------- --- ------- ---- ------ ---- ----------- --------- ------------
Balance at Decem-
ber 31, 1997..... 12,000 $1,761,000 39,000 $39 202,500 $203 67,089 $ 67 $25,875,752 -- $(11,122,943)
------ ---------- ------- --- ------- ---- ------ ---- ----------- --------- ------------
<CAPTION>
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance at May 3,
1995............. $ 3,500,000
Issuance of com-
mon stock, net of
issuance costs:
Class A......... 3,551,481
Class D.........
Stock subscrip-
tion (180,015)
Net loss........ (645,418)
-------------
Balance at Decem-
ber 31, 1995..... 6,226,048
Issuance of com-
mon stock, net of
issuance costs:
Class A......... 12,700,000
Class D.........
Class E......... 5,129,992
Payment received
for stock
subscriptions 180,015
Net loss......... (2,016,354)
-------------
Balance at Decem-
ber 31, 1996..... 22,219,701
Issuance of com-
mon stock, net of
issuance costs:
Class B.........
Class D.........
Class E......... 1,555,549
Retirement of
common stock:
Class B.........
Class D.........
Net loss......... (8,461,171)
Adjustment to
Class B common
stock............ (561,000)
-------------
Balance at Decem-
ber 31, 1997..... $14,753,079
-------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
F-5
<PAGE>
PINNACLE HOLDINGS
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(MAY 3, 1995)
THROUGH YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1997
------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................. $ (645,418) $(2,016,354) $(8,461,171)
Adjustments to reconcile net loss to
net cash provided by operating ac-
tivities:
Depreciation and amortization........ 340,614 2,205,176 6,626,912
Provision for doubtful accounts...... -- 45,000 25,000
(Increase) decrease in:
Accounts receivable, gross......... (74,818) (454,065) (1,118,692)
Notes receivable................... (387,455) 387,455 --
Prepaid expenses and other current
assets............................ (13,544) (277,604) (746,299)
Other assets....................... (175,172) (237,408) (358,587)
Increase (decrease) in:
Accounts payable................... 173,381 633,711 1,435,305
Accrued expenses................... 293,665 429,779 2,371,605
Deferred revenue................... 55,006 77,417 507,037
Other current liabilities.......... 490,000 (490,000) --
Other liabilities.................. -- 49,491 44,253
----------- ----------- -----------
Total adjustments.................. 701,677 2,368,952 8,786,534
----------- ----------- -----------
Net cash provided by operating activi-
ties.................................. 56,259 352,598 325,363
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments made in connection with ac-
quisitions:
Tower assets....................... (10,553,958) (31,845,153) (70,852,422)
Land............................... (774,153) (3,337,847) (2,738,951)
Capital expenditures:
Tower assets....................... (1,121,150) (7,036,048) (14,815,863)
Fixed assets....................... (287,711) (563,646) (1,023,513)
(Increase) decrease in restricted
cash................................ (297,118) 138,157 (25,750)
----------- ----------- -----------
Net cash used in investing activities.. (13,034,090) (42,644,537) (89,456,499)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under long-term debt, net
of deferred
loan costs.......................... 4,937,200 24,866,994 89,918,073
Repayment of long-term debt.......... -- (568,516) (695,982)
Proceeds from issuance of common
stock, net of
issuance costs and stock
subscriptions receivable............ 8,071,496 18,010,015 1,555,549
----------- ----------- -----------
Net cash provided by financing activi-
ties.................................. 13,008,696 42,308,493 90,777,640
----------- ----------- -----------
Net increase in cash and cash equiva-
lents................................. 30,865 16,554 1,646,504
----------- ----------- -----------
Cash and cash equivalents, beginning of
year.................................. -- 30,865 47,419
----------- ----------- -----------
Cash and cash equivalents, end of
year.................................. $ 30,865 $ 47,419 $ 1,693,923
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Cash paid for interest............... $ 185,980 $ 1,037,452 $ 5,786,816
=========== =========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
F-6
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
The accompanying consolidated financial statements reflect the financial
position and results of operations and cash flows of Pinnacle Holdings Inc.
and its wholly owned subsidiaries: Pinnacle Towers Inc., Coverage Plus Antenna
Systems, Inc. and Tower Systems, Inc., collectively referred to as the
"Company." The Company acquires, develops and operates telecommunication
towers and leases space on its towers to customers in the wireless
communications industries located in the United States. All significant
intercompany balances and transactions have been eliminated in consolidation.
2. 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 use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results may vary from estimates used.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all highly
liquid temporary cash investments with a maturity of three months or less to
be cash equivalents.
Concentration of Credit Risk
Substantially all of the accounts receivable are with federal, state and
local government agencies and national and local wireless communications
providers. The Company performs ongoing credit evaluations of its customers
but does not require collateral to support customer receivables. The Company
maintains an allowance for doubtful accounts on its customer receivables based
upon factors surrounding the credit risk of specific customers, historical
trends and other information.
Restricted Cash
Restricted cash reflects cash held in escrow restricted for the acquisition
of tower sites.
Tower Assets
Tower assets consists of towers and related attachments which are recorded
at cost and depreciated using the straight-line method over the estimated
useful life of the assets, which is 15 years for towers and 30 years for
buildings. Also included in tower assets are towers in progress of $2,815,153
and $3,452,045 as of December 31, 1996 and 1997, respectively. Improvements,
renewals and extraordinary repairs which increase the value or extend the life
of the asset are capitalized. Repairs and maintenance costs are expensed as
incurred.
Fixed Assets
Fixed assets are recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the fixed assets. Equipment held
under capital leases is amortized on a straight-line basis over the term of
the lease or the remaining life of the leased property, whichever is
F-7
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
shorter. Betterments, renewals and extraordinary repairs which increase the
value or extend the life of the asset are capitalized. Repairs and maintenance
costs are expensed as incurred.
Other Assets
Other assets consists primarily of organization costs of $98,553 and $32,313
at December 31, 1996 and 1997, respectively, (net of accumulated amortization
of $101,570 and $167,810, respectively), and costs associated with the
acquisition of debt, which are capitalized and amortized over the terms of the
related debt arrangements.
Impairment of Long-lived Assets
The Company evaluates the recoverability of its long-lived assets whenever
adverse events or changes in business climate indicate that the expected
undiscounted future cash flows from the related asset may be less than
previously anticipated. If the net book value of the related asset exceeds the
undiscounted future cash flows of the asset, the carrying amount would be
reduced to the present value of its expected future cash flows and an
impairment loss would be recognized. As of December 31, 1997 management does
not believe that an impairment reserve is required.
Fair Value of Financial Instruments
The carrying amount of the Company's financial instruments at December 31,
1996 and 1997, which includes cash, accounts receivable and debt, approximates
fair value due to the short maturity of those instruments. The Company
considers the fixed rate and variable rate financial instruments to be
representative of current market interest rates and, accordingly, the recorded
amounts approximate their present fair market value.
Tower Rental Revenue Recognition
Tower rental revenue is recognized on a straight-line basis over the life of
the related lease agreements. Revenue is recorded in the month in which it is
due. Any rental amounts received in advance of the month due are recorded as
deferred revenue.
Corporate Development Expenses
Corporate development expenses represent costs incurred in connection with
acquisitions, construction activities and expansion of the customer base.
These expenses consist primarily of allocated compensation and overhead costs
that are not directly related to the administration or management of existing
towers, and are expensed as incurred.
Income Taxes
The Company qualifies and intends to continue to qualify to be taxed as a
Real Estate Investment Trust ("REIT") under the Internal Revenue Code of 1986,
as amended, for each taxable year of operations. As a REIT, the Company is
allowed a tax deduction for the amount of dividends paid to its stockholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the stockholder level only, provided it distributes at least 95%
of its REIT taxable income and meets certain other requirements for qualifying
as a REIT. The Company incurred a loss for both book and tax purposes in the
years ended December 31, 1996 and 1997 and, therefore, was not required to pay
a cash dividend in order to retain its REIT status.
F-8
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Earnings Per Share
Basic net income per common share is based on the weighted average number of
shares of common stock outstanding during each period. The computation of
diluted earnings per share, assuming conversion of the Class D common shares
described in Note 9, has an antidilutive effect on earnings per share.
3. ACQUISITIONS
The Company actively acquires towers and assumes the sellers' related
customer activity on an ongoing basis. In January 1996, the Company acquired
telecommunications tower sites and related assets from an individual for cash
of $4,443,000. During May of 1996, the Company acquired the rooftop of the
Plaza Tower building including all of the related tower assets and fixtures
from Baha Towers Limited Partnership for a purchase price of $3,000,000 which
was paid in cash. In July 1996, the Company purchased the tower leases and
subleases of Florida Mobile Telephone, Inc. for a purchase price of
$2,270,000, which was also paid in cash. In September 1996, the Company
purchased 10 tower sites and related assets for $3,010,000, which consisted of
$792,325 in cash and $2,217,675 of notes payable to Tall Towers Rentals, Inc.
Additionally, the Company completed 44 other acquisitions of towers and
related assets, all of which were individually insignificant to the Company,
from various sellers during the year ended December 31, 1996. The aggregate
purchase price of $20,854,055 consisted of $15,578,475 in cash and $5,275,580
of notes payable to the former tower owners (see Note 6).
The Company completed 63 acquisitions during the year ended December 31,
1997, all of which were individually insignificant to the Company. The
aggregate purchase price for acquisitions for the year ended December 31, 1997
was $73,591,373, which consisted of $54,339,523 in cash and $19,251,850 of
notes payable to the former tower owners.
The Company accounts for its acquisitions using the purchase method of
accounting. The results of operations of the acquired assets are included with
those of the Company from the dates of the respective acquisitions. The pro-
forma results of operations listed below reflect purchase accounting and pro-
forma adjustments as if the transactions occurred as of January 1, 1996. The
unaudited pro- forma consolidated financial statements are not necessarily
indicative of the results that would have occurred if the assumed transaction
had occurred on the dates indicated and are not necessarily indicative of the
expected financial position or results of operations in the future.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Tower rental revenue........................... $ 9,427,245 $ 15,547,242
Gross profit, excluding depreciation and amor-
tization...................................... 7,375,124 12,381,646
Net loss....................................... (11,117,283) (11,780,246)
Net loss per common share...................... $ (44.66) $ (37.99)
</TABLE>
F-9
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. FIXED ASSETS
Fixed assets consist of the following:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL DECEMBER 31,
LIVES IN --------------------
YEARS 1996 1997
--------- -------- ----------
<S> <C> <C> <C>
Vehicles...................................... 5 $257,304 $ 489,778
Furniture, fixtures and other office equip-
ment......................................... 5 426,542 504,759
Data processing equipment..................... 5 167,511 880,333
-------- ----------
851,357 1,874,870
Accumulated depreciation...................... (93,762) (379,749)
-------- ----------
Fixed assets, net............................. $757,595 $1,495,121
======== ==========
</TABLE>
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1997
-------- ----------
<S> <C> <C>
Construction costs....................................... $ -- $1,071,719
Interest................................................. 199,385 1,337,662
Professional fees........................................ 146,000 150,000
Sales tax and other...................................... 109,446 148,115
Payroll and other........................................ 268,613 387,553
-------- ----------
$723,444 $3,095,049
======== ==========
</TABLE>
6. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
----------- ------------
<S> <C> <C>
Senior Credit Facility, monthly interest at
variable rates (7.75% and 8.25% at December 31,
1996 and 1997, respectively), quarterly princi-
pal installments beginning June 30, 2000, ma-
turing December 31, 2004....................... $21,100,000 $ 72,000,000
Notes payable to former tower owners, interest
from 8.5% to 13% per annum, monthly install-
ments of principal and interest of varying
amounts through December 31, 2020, secured by
various letters of credit...................... 9,322,180 28,581,867
Subordinated term note, quarterly interest at
variable rates (11.88% at December 31, 1997),
unsecured, principal and interest maturing Sep-
tember 22, 2000................................ -- 20,000,000
----------- ------------
30,422,180 120,581,867
Less current portion of long-term debt.......... (636,214) (11,122,077)
----------- ------------
$29,785,966 $109,459,790
=========== ============
</TABLE>
F-10
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The remaining principal payments at December 31, 1997 were due as follows:
1999-$357,561; 2000-$30,713,259; 2001-$10,243,954; 2002-$11,256,324; and 2003
and thereafter $56,888,692.
Senior Credit Facility
In September 1995, the Company entered into a credit agreement which
provided for $25,000,000 of senior debt financing through a reducing revolving
line of credit and revolver/term loan (as amended, the "Senior Credit
Facility"). In September 1996, the Company and its senior lender agreed to
expand the commitment amount to $100,000,000. Advances under the credit
agreement are limited to a borrowing base, which is based on the Company's
cash flows, as defined in the agreement.
Advances under the Senior Credit Facility accrue interest at the Company's
option at either LIBOR plus a margin of up to 2.375%, as defined in the
related agreement, or at the greater of the Federal Funds Effective Rate plus
0.50% or the prime rate, plus a margin of up to 1.375%. Advances under the
Senior Credit Facility bear interest payable in quarterly installments. In
addition, the Company is required to pay commitment fees based on the unused
portion of the commitments and customary facility fees on the total amount of
the commitments.
The Senior Credit Facility is secured by a lien on substantially all of the
Company's assets and a pledge of substantially all of the Company's capital
stock. The credit agreement contains customary covenants such as limitations
on the Company's ability to incur indebtedness, to incur liens or encumbrances
on assets, to make certain investments, to make distributions to shareholders,
or prepay subordinated debt. Under the credit agreement, the Company may not
permit the ratio of debt to annualized EBITDA to exceed certain amounts, as
defined in the agreement.
For the period from inception (May 3, 1995) through December 31, 1995 and
for the years ended December 31, 1996 and 1997, the Company incurred
commitment fees of approximately $38,000, $52,000, and $192,000, respectively.
Subsequent Events
On March 4, 1998, the Company amended the Senior Credit Facility to provide
for borrowings initially of up to $200,000,000. The facility comprises a
revolving line of credit under which the Company may make borrowings and
repayments until March 31, 2000, at which time the facility will convert into
a term loan payable through December 31, 2004. Advances under the Senior
Credit Facility accrue interest at the Company's option of either LIBOR plus a
margin of up to 2.75%, as defined in the related agreement, or at the greater
of the Federal Funds Effective Rate plus 0.50% or the prime rate, plus a
margin of up to 1.75%. Advances under the facility are available to fund
acquisitions and construction of towers and for general corporate purposes.
In February 1998, the Company entered into an agreement with its principal
stockholder (the "Bridge Loan"), whereby the Company borrowed $12,500,000 in
cash. Amounts outstanding under the Bridge Loan earn interest at the rate of
9% per annum. Interest and principal under the Bridge Loan are payable within
one year from the date of the related borrowing.
Subordinated Term Loan
On September 22, 1997, the Company entered into a term loan agreement for
$20,000,000, which is subordinated to the Company's Senior Credit Facility.
Borrowings under this agreement accrue
F-11
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
interest, at interest rates equal to a margin amount (as defined in the
agreement), plus LIBOR. The amount of the related margins are 6% through March
22, 1998, 7.5% through September 22, 1998, 10% through March 22, 1999 and the
ratio increases by 2% for each successive six month period to a maximum
combined rate of 18%. The Company may extend the maturity of the subordinated
debt to September 22, 2007 if the Company complies with the subordinated debt
covenants, as defined in the agreement. The Company may prepay this loan at
any time at the Company's option. In connection with the term loan agreement,
the Company issued warrants to lenders for 10,000 shares of the Company's
Class F Common Stock (see Note 9). As of December 31, 1997, no value was
assigned to the warrants.
Interest Rate Swap
The Company entered into interest rate swap agreements to manage the
interest rate risk associated with certain of its variable rate debt. The swap
agreement effectively converts the credit agreement floating rate debt from
LIBOR plus a margin, as defined in the agreement, to a fixed rate debt plus
the applicable margin under the credit agreement on an amount equal to the
notional value of the interest rate swap. The following table summarizes the
interest rate swap agreement:
<TABLE>
<CAPTION>
NOTIONAL AMOUNT
-----------------------------------
FIXED
PAY RATE DECEMBER 31, 1996 DECEMBER 31, 1997
-------- ----------------- -----------------
<S> <C> <C> <C>
EXPIRATION DATE
September 30, 2000.............. 5.75% $20,000,000 $20,000,000
May 1, 1998..................... 6.22% -- 20,000,000
December 24, 1998............... 5.90% -- 30,000,000
</TABLE>
Approximately $28,000 and $51,000 of interest expense was incurred in 1996
and 1997, respectively, related to the interest rate swap agreements.
7. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company is obligated under noncancellable leases for office space,
machinery and equipment and ground leases which expire at various times
through 2015. The majority of these leases have renewal options which range up
to 10 years. Certain of the leases have purchase options at the end of the
original lease term. The future minimum lease commitments under these leases
are as follows:
<TABLE>
<S> <C>
YEAR ENDING
DECEMBER 31,
1998.......................................................... $ 787,532
1999.......................................................... 781,319
2000.......................................................... 722,262
2001.......................................................... 574,192
2002.......................................................... 541,397
2003 and thereafter........................................... 6,623,432
-----------
Total minimum lease payments................................ $10,030,134
===========
</TABLE>
Total rent expense under noncancellable operating leases was approximately
$118,000, $468,083 and $1,468,323 for the period ended December 31, 1995 and
for the years ended December 31, 1996 and 1997, respectively.
F-12
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Employment Agreements
The Company has severance agreements with certain officers of the Company
which grant these employees the right to receive their base salary and
continuation of certain benefits for periods ranging from six to eighteen
months in the event of a termination (as defined by the agreement) of such
employees.
Litigation
The Company is not a party to any material legal proceedings other than
routine litigation incidental to its business. In the opinion of management,
the amount of ultimate liability with respect to these actions will not
materially affect the financial position or results of operations of the
Company.
8. TENANT LEASES
The following is a schedule by year of total rentals to be received for
tower space under noncancellable lease agreements as of December 31, 1997:
<TABLE>
<S> <C>
YEAR ENDING
DECEMBER 31,
1998........................................................... $ 6,333,611
1999........................................................... 5,813,840
2000........................................................... 5,204,757
2001........................................................... 3,858,188
2002........................................................... 3,046,291
2003 and thereafter............................................ 2,211,626
-----------
$26,468,313
===========
</TABLE>
Principally all of the leases provide for renewal at varying escalations.
These escalations have not been reflected above.
9.STOCKHOLDERS' EQUITY
Capital Contribution Commitment
In 1995, the Company and its principal shareholder entered into a capital
contribution agreement whereby the principal shareholder committed to invest
up to $20,000,000 as equity in the Company (the "Capital Contribution
Agreement") and at that time, management contributed $1,200,000. In February
1996, the Capital Contribution Agreement was amended and the principal
shareholder's equity commitment to the Company was increased to $50,000,000.
Redeemable Stock
Class D common stock is convertible into shares of Class C common stock.
Such conversion will be effected by the surrender of the Class D common stock
in exchange for the Class C common stock on a date to be approved by the Board
of Directors, or upon consummation of an initial public offering. Any Class D
common stock converted into Class C common stock will maintain the vesting
characteristics such Class D common stock had prior to the time of conversion.
F-13
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Shares of Class D Common Stock are held by various officers and employees of
the Company. Vesting of the ownership of these shares is subject to varying
schedules. Certain employees vest into the ownership of the shares at the rate
of 20% per year. Other employees vest according to the following schedule:
<TABLE>
<CAPTION>
VESTING FRACTION
OF SHARES
REMAINING UNVESTED
------------------
<S> <C>
ANNIVERSARY OF
THE CLOSING DATE
First................................................... 1/10
Second.................................................. 1/9
Third................................................... 1/8
Fourth.................................................. 2/7
Fifth................................................... 1/2
Sixth................................................... 1/1
</TABLE>
If certain employees cease to be employed prior to the third anniversary of
the date their respective shares were granted, any vested shares will become
unvested. In the event of an initial public offering or sale of the Company,
all unvested shares for any employee still employed will become vested shares.
In the event of termination of employment, all shares of Class D common stock
are subject to repurchase provisions, as defined below.
If any employee ceases to be employed, then such employee's Class B and
Class D common stock will be subject to repurchase by the Class A stockholders
and the Company. The employee will have the right to require the Company to
purchase any or all Class B and D common stock which are held, if such
employee's termination was with or without cause and any Class D stock if
termination is as a result of death or disability. If the employee is
terminated with or without cause, the repurchase price for Class B common
stock and vested Class D common stock will be fair market value, while the
repurchase price for unvested Class D common stock will be $.001 per share.
The Company's obligation to repurchase the Class D stock in the event of death
or disability of an employee stockholder is limited to the amount of shares
the Company could purchase with the proceeds of the life insurance policy
covering the respective Class D employee stockholder. Additionally, all
repurchases of shares are subject to the applicable restrictions contained in
the Company's debt agreements.
Common Stock
The Company has six classes of authorized common stock: Class A, B, C, D, E
and F. Under the Company's Amended and Restated Certificate of Incorporation,
the relative rights and preferences of each class of common stock are as
follows:
Voting Rights
All classes of common stock will vote together as a single combined class on
all matters submitted to a vote of the shareholders, with each holder of Class
A, B, C, E or F common shares being entitled to one vote per share of such
stock held and each holder of Class D common shares being entitled to a number
of votes equal to the number of shares of Class C stock which would be issued
upon conversion of the Class D stock, as described below.
F-14
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Distributions
The holders of the Class A and B common shares have an initial distribution
preference equal to 15% per annum (the "Yield") based on the initial purchase
price of $100 per share from the date of issuance through June 30, 1997. In
addition to the Yield, the holders of Class A, Class B and Class E common
stock are entitled to a distribution preference of $100 per share (the
"Preference Amount").
Holders of Class A common stock are entitled to receive their respective
Preference Amounts before any distributions are to be made to any other class
of stock. Similarly, holders of Class E Common stock are entitled to receive
their respective Preference Amount before any distributions are to be made to
the holders of Class B, C, D or F common stock. Once distributions have been
made to Class A and E, holders of Class B common stock will receive their
Preference Amounts. Remaining distributions will be made to all classes of
common stock on the basis of the number of Units (as defined by the Company's
Certificate of Incorporation) assigned to the respective shares.
Class F Common Shares
In connection with the Subordinated Term Loan agreement (see Note 6), the
Company issued warrants to the lenders for 10,000 shares of the Company's
Class F Common Stock. The warrants are exercisable by the holders only in the
event the Company defaults (as defined in the agreement) under the terms of
its loans or does not repay the Subordinated Term Loan on or before
September 22, 2000.
F-15
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Additional stock information is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1997
------- -------
<S> <C> <C>
Preferred stock:
Par value per share.......................................... $ 0.001 $ 0.001
Shares authorized............................................ 100,000 100,000
Shares issued and outstanding................................ -- --
Class A common stock:
Par value per share.......................................... $ 0.001 $ 0.001
Shares authorized............................................ 202,500 202,500
Shares issued and outstanding................................ 202,500 202,500
Class B common stock:
Par value per share.......................................... $ 0.001 $ 0.001
Shares authorized............................................ 12,000 12,000
Shares issued and outstanding................................ 12,000 12,000
Class C common stock:
Par value per share.......................................... $ 0.001 $ 0.001
Shares authorized............................................ 200,000 200,000
Shares issued and outstanding................................ -- --
Class D common stock:
Par value per share.......................................... $ 0.001 $ 0.001
Shares authorized............................................ 100,000 100,000
Shares issued and outstanding................................ 38,000 39,000
Class E common stock:
Par value per share.......................................... $ 0.001 $ 0.001
Shares authorized............................................ 300,000 300,000
Shares issued and outstanding................................ 51,300 67,089
Class F common stock:
Par value per share.......................................... $ -- $ 0.001
Shares authorized............................................ -- 10,000
Shares issued and outstanding................................ -- --
</TABLE>
10. RELATED PARTY TRANSACTIONS
Certain board members and/or stockholders provide management services to the
Company. The Company pays up to $75,000 plus reimbursable expenses each year
for such management services. For the period from inception (May 3, 1995)
through December 31, 1995, the Company paid approximately $12,500 for such
services and related expenses. The Company paid approximately $55,162 and
$78,166 for such services and related reimbursable expenses for the years
ended December 31, 1996 and 1997, respectively. At December 31, 1996 and 1997,
$88,016 and $29,950, respectively, was due to these related parties for
management services and related reimbursable expenses. A balance due from
current or former officers of $200,000 is included in other assets at December
31, 1997.
During 1997, the majority stockholder of the Company guaranteed a note
payable to a tower seller of $3,904,600 associated with a tower acquisition
(see Note 6).
F-16
<PAGE>
PINNACLE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11.EMPLOYEE BENEFIT PLAN
Effective January 1, 1997, the Company began participating in a 401(k) plan
of the majority stockholder. The plan covers substantially all employees.
Benefits vest based on number of years of service. To participate in the plan,
employees must be at least 21 years old and have completed six months of
service.
12.SUBSEQUENT EVENTS
Acquisitions
On March 4, 1998, the Company completed the acquisition of 201 towers from
Southern Communications Services, Inc. ("Southern Communications"), a
subsidiary of Southern Company. The Company paid $83,500,000 for these towers,
located in Georgia, Alabama, Mississippi, and Florida.
In connection with the acquisition of these towers, the Company and Southern
Communications or one of its affiliates have entered into leases whereby
Southern Communications or one of its affiliates is a customer on each of the
201 towers acquired. Under the lease agreement, Southern Communications and
its affiliates will pay initial annual aggregate rent of approximately
$5,500,000 in 1998. The leases have initial terms of ten years with five
optional renewal periods of five years exercisable at the customer's option.
The Company has also entered into an option agreement with Southern
Communications under which the Company may supply, acquire or develop an
additional 80 sites. Any of these additional sites would be rented under the
same terms as the original leases of the 201 towers described above.
In addition to the Southern Communications acquisition, subsequent to
December 31, 1997 the Company purchased a total of 33 towers for aggregate
consideration of approximately $14,328,000. Also subsequent to December 31,
1997, the Company entered into several letters of intent with various third
parties to purchase 52 towers. Under these agreements, the Company has
committed to pay approximately $22,190,000.
Private Placement
In March 1998 the Company initiated the sale of Senior Discount Notes due
2008 in a private placement offering to institutional investors. The Notes are
being issued at a substantial discount from their principal amount so as to
yield gross proceeds of approximately $150,000,000. The Company plans to use
proceeds from the sale to repay a portion of the Senior Credit Facility, repay
and retire all of the outstanding principal of $20,000,000 and accrued
interest under the Subordinated Term Loan, repay approximately $12.5 million
of the outstanding debt and accrued interest under the Bridge Loan (see Note
6), and to pay approximately $413,000 to the holders of the Company's Class B
common stock in settlement of a distribution preference on such stock.
F-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Southern Communications Services, Inc.:
We have audited the accompanying balance sheets of the tower operations (the
"Tower Operations" or "Company") of SOUTHERN COMMUNICATIONS SERVICES, INC. (a
Delaware corporation) as of December 31, 1997 and 1996 and the related
statements of operations, changes in accumulated deficit, and cash flows for
the years 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Tower Operations of
Southern Communications Services, Inc. as of December 31, 1997 and 1996 and
the results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
February 20, 1998
F-18
<PAGE>
SOUTHERN COMMUNICATIONS SERVICES, INC.
TOWER OPERATIONS
(A CARVE-OUT ENTITY OF SOUTHERN COMMUNICATIONS SERVICES, INC.)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Accounts receivable................................. $ 39,459 $ 169,994
Prepaids and other.................................. 117,599 102,942
----------- -----------
Total current assets.............................. 157,058 272,936
----------- -----------
Property and Equipment, at cost:
Tower investment.................................... 40,191,788 38,139,393
Less accumulated depreciation....................... (3,875,184) (1,928,510)
----------- -----------
Net property and equipment........................ 36,316,604 36,210,883
----------- -----------
Total assets...................................... $36,473,662 $36,483,819
=========== ===========
LIABILITIES AND ACCUMULATED DEFICIT
Current Liabilities:
Accounts Payable.................................... $ 78,342 $ 115,865
Due to Parent......................................... 40,930,277 39,007,286
Commitments and Contingencies
Accumulated Deficit................................... (4,534,957) (2,639,332)
----------- -----------
Total liabilities and accumulated deficit......... $36,473,662 $36,483,819
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-19
<PAGE>
SOUTHERN COMMUNICATIONS SERVICES, INC.
TOWER OPERATIONS
(A CARVE-OUT ENTITY OF SOUTHERN COMMUNICATIONS SERVICES, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Revenues............................................. $ 1,017,305 $ 349,428
Expenses:
Operations......................................... 876,613 748,001
Administrative and General......................... 89,642 54,072
Depreciation....................................... 1,946,674 1,810,282
----------- -----------
Total expenses..................................... 2,912,930 2,612,355
----------- -----------
Net Loss............................................. $(1,895,625) $(2,262,927)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
SOUTHERN COMMUNICATIONS SERVICES, INC.
TOWER OPERATIONS
(A CARVE-OUT ENTITY OF SOUTHERN COMMUNICATIONS SERVICES, INC.)
STATEMENTS OF CHANGES IN ACCUMULATED DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<S> <C>
Accumulated Deficit as of December 31, 1995....................... $ (376,405)
Net Loss.......................................................... (2,262,927)
-----------
Accumulated Deficit as of December 31, 1996....................... (2,639,332)
Net Loss.......................................................... (1,895,625)
-----------
Accumulated Deficit as of December 31, 1997....................... $(4,534,957)
===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-21
<PAGE>
SOUTHERN COMMUNICATIONS SERVICES, INC.
TOWER OPERATIONS
(A CARVE-OUT ENTITY OF SOUTHERN COMMUNICATIONS SERVICES, INC.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss........................................... $(1,895,625) $(2,262,927)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation...................................... 1,946,674 1,810,282
Changes in current assets and liabilities:
Decrease (increase) in accounts receivable....... 130,535 (169,994)
Decrease (increase) in prepaids and other........ (14,657) (102,942)
(Decrease) increase in accounts payable.......... (37,523) 115,865
----------- -----------
Total adjustments.............................. 2,025,029 1,653,211
----------- -----------
Net cash provided by (used in) operating activities.. 129,404 (609,716)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures............................... (2,052,395) (8,657,518)
----------- -----------
Net cash used by investing activities................ (2,052,395) (8,657,518)
CASH FLOW FROM FINANCING ACTIVITIES:
Change in Due to Parent............................ 1,922,991 9,267,234
----------- -----------
Net cash provided from financing activities.......... 1,922,991 9,267,234
Increase In Cash..................................... $ 0 $ 0
----------- -----------
Cash at Beginning of Year............................ $ 0 $ 0
=========== ===========
Cash at End of Year.................................. $ 0 $ 0
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-22
<PAGE>
SOUTHERN COMMUNICATIONS SERVICES, INC.
TOWER OPERATIONS
(A CARVE-OUT ENTITY OF SOUTHERN COMMUNICATIONS SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements present the financial position and the
results of operations of the Tower Operations (the "Company") of Southern
Communications Services, Inc. (the "Parent"), which includes the Parent's
business of leasing space on the 201 tower sites that are being acquired by
Pinnacle Towers Inc. ("Pinnacle") (See Note 4) to customers in the broadcast
and wireless communication industries. Tower leasing has been incidental to
the Parent's communications services business and it has had no concentrated
marketing and sales effort to generate revenues from tower leases.
Tower Operations is not a separate subsidiary, division or segment of the
Parent. The financial statements of the Tower Operations business have been
derived from the financial statements of the Parent and have been prepared to
present the financial position, results of operations, and cash flows on a
stand-alone basis. All revenues and expenses specifically identifiable to
tower ownership are included. Additionally, the accompanying financial
statements include certain costs and expenses that have been allocated to the
tower business from the Parent. These costs have been allocated on a pro rata
basis primarily on either revenues or total costs of infrastructure
operations, depending upon the nature of the cost.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Credit Risk
The owned tower site lease receivables potentially subject the business to
credit risk, as collateral is generally not required. The business risk of
loss is limited due to the significant number of leases with affiliated
companies and the superior credit ratings of non-affiliated lessees. The
carrying amount of the Company's receivables approximates fair value.
Property and Equipment
Towers are recorded at cost and include certain capitalized overhead costs
(primarily engineering). Depreciation is computed using the straight-line
method over the estimated useful lives of its towers, which are 20 years.
Long-Lived Assets
The business periodically reviews the values assigned to long-lived assets
to determine whether any impairments are other than temporary. Management
believes that the long-lived assets in the accompanying balance sheet are
appropriately valued.
Income Taxes
The Company is not in itself a taxable entity and no provision or benefit
for United States federal or state income taxes has been recorded.
F-23
<PAGE>
SOUTHERN COMMUNICATIONS SERVICES, INC.
TOWER OPERATIONS
(A CARVE-OUT ENTITY OF SOUTHERN COMMUNICATIONS SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Revenue Recognition
The Company earns revenues by leasing space on its towers to customers in
the broadcast and communication industries or to customers that have internal
communication systems. Lease revenues are recognized on a straight-line basis
over the noncancelable lease term.
2. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases land for certain tower sites under long-term operating
leases. The majority of these leases contain renewal provisions which
generally require renewals to be exercised at market rates. Rental expense for
the years ended December 31, 1997 and 1996 totaled $228,688 and $195,075,
respectively, and are included in Operations Expense in the accompanying
statement of operations.
Future minimum rental payments required under the operating leases that have
initial or remaining noncancelable lease terms in excess of one year as of
December 31, 1997 are as follows (in thousands):
<TABLE>
<S> <C>
1998.............................................................. $ 240,320
1999.............................................................. 240,320
2000.............................................................. 218,840
2001.............................................................. 203,544
2002 and thereafter............................................... 854,096
----------
Total............................................................. $1,757,120
==========
</TABLE>
3. RELATED PARTY TRANSACTIONS
Certain specialized services are performed for the Company by Southern
Company Services, Inc., an affiliate. Services provided include support in
major functional areas, such as engineering, site acquisition, site leasing,
benefits, cash management, legal, risk management, accounting, payroll, and
taxes. These services are provided at cost and totaled $38,994 and $37,054 in
1997 and 1996, respectively.
The Company purchases electrical power and leases land for towers from
affiliated companies. The costs of these services were $117,061 and $112,623
in 1997 and 1996, respectively.
The Company leases space on towers to certain of its affiliates. Revenues
for these sales and services were $371,936 and $169,995 in 1997 and 1996,
respectively.
At December 31, 1997 and December 31, 1996, the Company owed approximately
$26,574 and $71,267, respectively, to its affiliates for amounts due under the
agreements discussed above.
4. SALE AND LEASEBACK OF TOWER ASSETS
On January 9, 1998, the Parent entered into a definitive agreement to sell
201 towers and 90 parcels of land to Pinnacle for a purchase price of
$83,500,000, and received $6,000,000 from Pinnacle as a nonrefundable deposit
for the transaction. The transaction also includes the assignment
F-24
<PAGE>
SOUTHERN COMMUNICATIONS SERVICES, INC.
TOWER OPERATIONS
(A CARVE-OUT ENTITY OF SOUTHERN COMMUNICATIONS SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
of leases and related lease payments for 111 land leases related to towers
included in the sale. The transaction is expected to close on March 4, 1998.
The sale price will be adjusted proportionately to the average price per tower
site if the Parent or Pinnacle elect not to include certain sites in the
transaction for certain casualty, title, or lease defects.
In connection with the transaction, the Parent and Pinnacle have entered
into a lease agreement in which the Parent will lease space on each tower
included in the transaction for a period of 10 years at a cost of $1,500 per
month per site. Five five-year option periods are included in the lease
agreement.
The Parent and Pinnacle have also entered into an option agreement, in which
at the sole option of the Parent, Pinnacle may be used to construct up to 80
additional towers for the purpose of permitting the Parent to place thereon
communications antennae and related equipment.
F-25
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Pinnacle Holdings Inc.
In our opinion, the accompanying combined balance sheet and the related
combined statements of operations and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Shore
Communications ("Shore") at December 3, 1997, and the results of its
operations and their cash flows for the eleven month period from January 1,
1997 through December 3, 1997, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Shore's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Tampa, Florida
February 9, 1998
F-26
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC.,
WEST SHORE COMMUNICATIONS, INC., AND 28 WALKER ASSOCIATES, LLC)
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 3, 1997
----------------
<S> <C>
ASSETS
Current assets:
Accounts receivable......................................... $ 3,548
Due from affiliate.......................................... 58,107
Prepaid expenses............................................ 16,447
Stockholder receivable...................................... 91,745
Deferred tax asset.......................................... 22,007
Other current assets........................................ 6,948
----------
Total current assets...................................... 198,802
Fixed assets, net............................................. 9,638
Tower assets, net of accumulated depreciation of $229,580..... 2,254,591
Deferred loan costs, net of accumulated amortization of
$26,777...................................................... 48,599
----------
$2,511,630
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and other current liabilities.............. $ 62,251
Deferred revenue............................................ 60,391
Stockholder payable......................................... 328,494
Short-term debt............................................. 2,000,084
----------
Total current liabilities................................. 2,451,220
Customer deposits............................................. 2,600
----------
2,453,820
----------
Commitments and Contingencies (Note 6)
Stockholder's equity:
Common stock, $1 par value; 10,000 shares authorized; 100
shares issued and outstanding.............................. 100
Common stock, no par value; 5,000 shares authorized; 100
shares issued and outstanding.............................. --
Additional paid in capital.................................. 66,900
Retained earnings........................................... (9,190)
----------
57,810
----------
$2,511,630
==========
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of these combined financial statements.
F-27
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC.,
WEST SHORE COMMUNICATIONS, INC., AND 28 WALKER ASSOCIATES, LLC)
COMBINED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
THROUGH DECEMBER 3, 1997
------------------------
<S> <C>
Revenue.............................................. $667,263
Tower operating expenses, excluding depreciation and
amortization........................................ 145,938
--------
Gross margin..................................... 521,325
--------
Expenses:
General and administrative expenses................ 235,108
Depreciation and amortization...................... 96,554
--------
331,662
--------
Income from operations............................... 189,663
Interest expense..................................... 197,909
--------
Loss from operations................................. (8,246)
Income tax benefit................................... 22,007
--------
Net income........................................... $ 13,761
========
Pro-forma income tax benefit......................... $ 2,849
--------
Pro-forma net loss................................... $ (5,397)
========
Retained earnings at December 31, 1996............... $(22,951)
Net income........................................... 13,761
--------
Retained earnings at December 3, 1997................ $ (9,190)
========
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of these combined financial statements.
F-28
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC., WEST SHORE COMMUNICATIONS,
INC., AND 28 WALKER ASSOCIATES, LLC)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
THROUGH DECEMBER 3, 1997
------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................ $ (13,761)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 96,554
Deferred tax asset................................. (22,007)
(Increase) decrease in:
Accounts receivable............................... (3,548)
Due from affiliate................................ (58,107)
Prepaid expenses.................................. (11,261)
Stockholder receivable............................ 146,567
Other current assets.............................. 40,722
Increase (decrease) in:
Accounts payable and other current liabilities.... 52,011
Deferred revenue.................................. 42,874
Stockholder payable............................... 181,800
---------
Total adjustments............................... 465,605
---------
Net cash provided by operating activities............. 451,844
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures:
Tower assets...................................... (543,737)
Fixed assets...................................... (3,023)
---------
Net cash used in investing activities................. (546,760)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term note.......................... 339,379
Repayment of short-term debt........................ (403,662)
---------
Net cash used in financing activities................. (64,283)
Net decrease in cash.................................. (159,199)
---------
Cash at December 31, 1996............................. 159,199
---------
Cash at December 3, 1997.............................. $ --
=========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
Cash paid for interest................................ $ 199,547
=========
</TABLE>
The accompanying Notes to Combined Financial Statements are an integral part of
these combined financial statements.
F-29
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC.,
WEST SHORE COMMUNICATIONS, INC., AND 28 WALKER ASSOCIATES, LLC)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
On December 3, 1997, Pinnacle Towers Inc. acquired all of the outstanding
stock of Shore Communications, Inc. ("Shore Communications", a C Corporation)
and West Shore Communications, Inc. ("West Shore", a C Corporation) and
certain of the assets and business operations of 28 Walker Associates, LLC (
"Walker", a limited liability company). Shore Communications and West Shore
were wholly-owned by an individual. Walker is owned by two individuals.
Collectively, the acquired corporations, assets and related operations are
referred to hereafter as Shore Communications ("Shore"). Shore owns
telecommunication towers and leases space on these towers to customers in the
wireless communications industries in Maryland and Virginia.
Basis of Presentation
The combined financial statements of Shore have been derived from the
accounting records of Shore Communications, West Shore and Walker. Additional
allocations were made to reflect Shore's share of general and administrative
expenses on a carve-out basis as described in Note 2.
2. 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 use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results may vary from those estimates.
Due from Affiliate
Tower revenues related to Walker are collected by an affiliate on behalf of
Walker. Similarly, all direct tower operating expenses and general and
administrative expenses are paid by an affiliate on behalf of Walker.
Accordingly, a receivable from and payable to affiliates are recorded (see
Note 8).
Tower Assets
Tower assets consist of towers, buildings, and related attachments which are
recorded at cost and depreciated using the straight-line method over the
estimated useful lives of the assets, which range from 6 to 31.5 years.
Improvements, renewals and extraordinary repairs which increase the value or
extend the life of the asset are capitalized. Repairs and maintenance costs
are expensed as incurred.
Fixed Assets
Fixed assets are recorded at cost and depreciated using the straight-line
method over the estimated useful life of the assets, which range from 5 to 7
years. Improvements, renewals and extraordinary repairs which increase the
value or extend the life of the assets are capitalized. Repairs and
maintenance costs are expensed as incurred.
F-30
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC.,
WEST SHORE COMMUNICATIONS, INC., AND 28 WALKER ASSOCIATES, LLC)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Impairment of Long-lived Assets
Shore evaluates the recoverability of its long-lived assets whenever adverse
events or changes in business climate indicate that the expected undiscounted
future cash flows from the related asset may be less than previously
anticipated. If the net book value of the related asset exceeds the
undiscounted future cash flows of the asset, the carrying amount would be
reduced to the present value of its expected future cash flows and an
impairment loss would be recognized. As of December 3, 1997, management does
not believe that an impairment reserve is required.
Fair Value of Financial Instruments
The carrying amount of Shore's financial instruments at December 3, 1997,
which consists of accounts receivable, due from affilliate and short-term
debt, approximates fair value due to the short maturity of those instruments.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the life of the
related lease agreements. Revenue is recorded in the month in which it is due.
Allocation of Expenses
General and administrative expenses were allocated from Walker based on the
ratio of revenue generated from the acquired asset and related operations to
that of Walker.
Income Taxes
Shore accounts for income taxes using the liability method as required by
Statement No. 109, Accounting for Income Taxes, issued by the Financial
Accounting Standards Board.
Deferred income taxes are provided for temporary differences between the
basis of assets and liabilities for financial reporting and income tax
reporting.
As described in Note 1, Shore consisted of two C Corporations and a portion
of a limited liability company. As such, the combined accounts reflect an
income tax benefit for only the operations of the C Corporations at December
3, 1997. The Combined Statement of Operations and Retained Earnings also
reflects an income tax benefit for the operations of Shore at December 3, 1997
on a pro-forma basis as if Shore were treated as a C Corporation.
3. FIXED ASSETS
Fixed assets consist of the following:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES DECEMBER 3,
IN YEARS 1997
------------ -----------
<S> <C> <C>
Furniture, fixtures................................. 5, 7 $ 11,691
Automobile.......................................... 5 13,784
--------
25,475
Accumulated depreciation............................ (15,837)
--------
Fixed assets, net................................... $ 9,638
========
</TABLE>
F-31
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC.,
WEST SHORE COMMUNICATIONS, INC., AND 28 WALKER ASSOCIATES, LLC)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
4. SHORT-TERM DEBT
Shore maintained line of credit facilities with a bank under guidance line
notes which provided for secured borrowings up to $1,900,000. Amounts borrowed
under these lines of credit have been converted to term notes which bore
interest from 9.75% to 10.5% through December 3, 1997. At December 3, 1997,
$400,223 was available under the line of credit facilities. Shore paid $2,637
in unused commitment fees as of December 3, 1997. Shore also had a term note
which bore a variable interest rate (10.25% at December 3, 1997) which
$500,277 was outstanding at December 3, 1997. The term notes provided
borrowings for construction of tower sites and were secured by all of the
business assets of Shore Communications and the towers owned by Shore
Communications and West Shore. The term notes originally matured through
December 10, 2002. However, the outstanding balance was repaid subsequent to
December 3, 1997 as part of the purchase agreement with Pinnacle Towers, Inc.
(Note 10).
5. INCOME TAXES
As described in Note 1, Shore consisted of two C Corporations and a portion
of a limited liability company. As such, the combined accounts reflect an
income tax benefit for only the operations of the C Corporations at December
3, 1997. The Combined Statement of Operations and Retained Earnings also
reflects an income tax benefit for the operations of Shore at December 3, 1997
on a pro-forma basis as if Shore were treated as a C Corporation.
Significant components of the income tax benefit on a historical and pro-
forma basis were as follows:
<TABLE>
<CAPTION>
PRO-FORMA
DECEMBER 3, 1997 DECEMBER 3, 1997
---------------- ----------------
<S> <C> <C>
Current:
Federal.................................. $17,867 $2,313
State.................................... 4,140 536
------- ------
Income tax benefits........................ $22,007 $2,849
======= ======
</TABLE>
Significant components of the deferred tax asset on a historical and pro-
forma basis were as follows:
<TABLE>
<CAPTION>
PRO-FORMA
DECEMBER 3, 1997 DECEMBER 3, 1997
---------------- ----------------
<S> <C> <C>
Deferred tax asset:
Net operating loss....................... $22,007 $2,849
------- ------
$22,007 $2,849
======= ======
</TABLE>
The effective tax rate approximates the statutory federal and state rates on
a historical and pro-forma basis as no permanent differences exist for either
the C Corporations or Shore.
At December 3, 1997, Shore had cummulative federal tax net operating loss
("NOL") carryforward of approximately $8,246 which the Company was unable to
use due to its operating loss. This NOL carryforward expires in the year
ending December 3, 2013. Shore believes that it is more likely than
F-32
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC.,
WEST SHORE COMMUNICATIONS, INC., AND 28 WALKER ASSOCIATES, LLC)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
not that the NOL carryforward will be utilized prior to its expiration by
continuing to achieve future profitable operations. Shore does not believe
that the change in ownership (Note 10) will impact such operations. Because of
the extremely long period that is available to realize these future tax
benefits, a valuation allowance for the deferred tax asset is not necessary.
6. COMMITMENTS AND CONTINGENCIES
Operating Leases
Shore is obligated under noncancelable leases for ground leases which expire
at various times through 2009. The majority of these leases have renewal
options which range up to 15 years. The future minimum lease commitments under
these leases are as follows:
<TABLE>
<S> <C>
PERIOD FROM DECEMBER 4, 1997 THROUGH DECEMBER 31, 1997........... $ 4,583
YEAR ENDED DECEMBER 31,
1998........................................................... 55,554
1999........................................................... 47,864
2000........................................................... 34,521
2001........................................................... 22,806
2002........................................................... 14,419
2003 and thereafter............................................ 131,531
----------
$ 311,278
==========
</TABLE>
Rental expense under noncancelable ground leases for the period ended
December 3, 1997 was $52,299.
7. TENANT LEASES
The following is a schedule by year of total future rentals to be received
for tower space under noncancelable lease agreements as of December 3, 1997:
<TABLE>
<S> <C>
PERIOD DECEMBER 4, 1997 THROUGH DECEMBER 31, 1997................ $ 87,124
YEAR ENDED DECEMBER 31,
1998........................................................... 732,032
1999........................................................... 685,567
2000........................................................... 594,445
2001........................................................... 419,552
2002........................................................... 139,683
2003 and thereafter............................................ 13,200
----------
$2,671,603
==========
</TABLE>
8. RELATED PARTY TRANSACTIONS
Shore paid certain expenses related to development of a microwave
communications system on behalf of a company wholly owned by the sole
stockholder of Shore Communications and West Shore. Expenditures related to
the development of the microwave communications system were to be
F-33
<PAGE>
SHORE COMMUNICATIONS
(A CARVE-OUT ENTITY OF SHORE COMMUNICATIONS, INC.,
WEST SHORE COMMUNICATIONS, INC., AND 28 WALKER ASSOCIATES, LLC)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
reimbursed to Shore upon completion of the project. However, as Shore entered
into a purchase agreement with Pinnacle Towers Inc. (Note 10), the project was
terminated and the entire receivable from the related party of $91,461 was
expensed as of December 3, 1997 and is included in general and administrative
expenses.
Prior to the acquisition by Pinnacle Towers Inc., the carve-out entity of
Walker included transactions with the surviving Walker ("affiliate"). These
transactions are disclosed as related party transactions in these financial
statements.
The affiliate received rent payments related to Walker's lease agreements.
At December 3, 1997, due from affiliate of $72,818 reflected these receipts.
The affiliate paid tower operating expense related to Walker. For the period
January 1, 1997 through December 3, 1997, Walker incurred tower operating
expense of $6,701.
For the period January 1, 1997 through December 3, 1997, general and
administrative expenses of $8,010 were allocated to Walker from the affiliate.
9. EMPLOYEE BENEFIT PLANS
Shore Communications has defined contribution plans covering employees with
two years of service and are of the age of 21. Contributions under these plans
are based primarily on the performance of Shore Communications and employee
compensation. Total expense amounted to $7,130 for the period from January 1,
1997 through December 3, 1997.
10. SUBSEQUENT EVENTS
On December 3, 1997, Shore sold all of the outstanding stock of Shore
Communications and West Shore and certain of the assets of Walker to Pinnacle
Towers Inc. In accordance with the purchase agreement, Shore received
approximately $8,973,300 for the outstanding stock, a tower and related
assets. Also under the agreement, rent revenue reverted to Pinnacle Towers
Inc. as of December 4, 1997. Deferred revenue as of December 3, 1997 reflects
rent received by Shore to be remitted to Pinnacle Towers Inc. Of the total
purchase price, $2,000,084 was used by Pinnacle Towers Inc. to repay the
outstanding bank notes subsequent to December 3, 1997 in accordance with the
purchase agreement.
F-34
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Pinnacle Holdings Inc.
In our opinion, the accompanying combined balance sheet and the related
combined statements of operations and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Tidewater
Communications ("Tidewater") at July 31, 1997, and the results of their
operations and their cash flows for the seven month period January 1, 1997
through July 31, 1997, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Tidewater's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
Tidewater is a member of a group of affiliated companies and, as disclosed
in the financial statements, has extensive transactions and relationships with
members of the group. Because of these relationships, it is possible that the
terms of these transactions are not the same as those that would result from
transactions among wholly unrelated parties.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Tampa, Florida
February 9, 1998
F-35
<PAGE>
TIDEWATER COMMUNICATIONS
(A CARVE-OUT ENTITY OF ANTENNA RENTALS CORPORATION, JOHN HARRIS & ASSOCIATES,
INC., AND DARE COUNTY PROPERTIES)
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
JULY 31, 1997
-------------
<S> <C>
ASSETS
Current assets:
Due from affiliate.............................................. $ 249,796
Accounts receivable............................................. 33,843
Prepaid expenses................................................ 1,043
----------
Total current assets.......................................... 284,682
Tower assets, net of accumulated depreciation of $326,373......... 553,450
Land.............................................................. 380,009
----------
$1,218,141
==========
LIABILITIES AND RETAINED EARNINGS
Current liabilities:
Accounts payable and other current liabilities.................. $ 10,596
Deferred revenue................................................ 10,505
Short-term debt................................................. 264,982
----------
Total current liabilities..................................... 286,083
Commitments and Contingencies (Note 5)
Retained earnings................................................. 932,058
----------
$1,218,141
==========
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of these combined financial statements.
F-36
<PAGE>
TIDEWATER COMMUNICATIONS
(A CARVE-OUT ENTITY OF ANTENNA RENTALS CORPORATION, JOHN HARRIS & ASSOCIATES,
INC.,
AND DARE COUNTY PROPERTIES)
COMBINED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
THROUGH JULY 31, 1997
----------------------
<S> <C>
Revenue.................................................. $368,011
Tower operating expenses, excluding depreciation....... 56,961
--------
Gross margin......................................... 311,050
--------
Other expenses:
General and administrative expenses.................... 29,609
Depreciation........................................... 26,009
--------
55,618
--------
Income from operations................................... 255,432
Interest expense......................................... 14,055
--------
Net income............................................... $241,377
========
Pro-forma income tax expense............................. $ 91,785
--------
Pro-forma net income..................................... $149,592
========
Retained earnings at December 31, 1996................... $690,681
Net income............................................... 241,377
--------
Retained earnings at July 31, 1997....................... $932,058
========
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of these combined financial statements.
F-37
<PAGE>
TIDEWATER COMMUNICATIONS
(A CARVE-OUT ENTITY OF ANTENNA RENTALS CORPORATION, JOHN HARRIS & ASSOCIATES,
INC., AND DARE COUNTY PROPERTIES)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
THROUGH JULY 31, 1997
----------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................ $ 241,377
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation......................................... 26,009
(Increase) decrease in:
Due from affiliates................................. (249,796)
Accounts receivable................................. (11,529)
Prepaid expenses.................................... 2,353
Increase (decrease) in:
Accounts payable and other current liabilities...... 661
Deferred revenue.................................... (9,075)
---------
Total adjustments................................. (241,377)
---------
Net cash provided by operating activities............... --
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................. (46,189)
---------
Net cash used in investing activities................... (46,189)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term debt.......................... (28,811)
Borrowing under promissory notes...................... 75,000
---------
Net cash provided by financing activities............... 46,189
---------
Net increase in cash.................................... --
---------
Cash at December 31, 1996............................... --
---------
Cash at July 31, 1997................................... $ --
---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
Cash paid for interest.................................. $ 12,863
=========
</TABLE>
The accompanying Notes to Combined Financial Statements are an integral part of
these combined financial statements.
F-38
<PAGE>
TIDEWATER COMMUNICATIONS
(A CARVE-OUT ENTITY OF ANTENNA RENTALS CORPORATION, JOHN HARRIS & ASSOCIATES,
INC., AND DARE COUNTY PROPERTIES)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
On July 31, 1997, Pinnacle Towers Inc. acquired certain of the assets and
business operations of Antenna Rentals Corporation, Inc. (an S Corporation),
John Harris & Associates, Inc. (a partnership), and Dare County Properties (a
partnership). John W. Harris is the majority shareholder of Antenna Rentals
Corporation, Inc. and the general partner of John Harris & Associates, Inc.
and Dare County Properties. Collectively, the acquired assets and related
operations are referred to hereafter as Tidewater Communications
("Tidewater"). Tidewater owns telecommunication towers and leases space on
these towers to customers in the wireless communications industries in
Virginia and North Carolina.
Basis of Presentation
The combined financial statements of Tidewater have been derived from the
accounting records of Antenna Rentals Corporation, Inc., John Harris &
Associates, Inc., and Dare County Properties. Additional allocations were made
to reflect Tidewater's share of general and administrative expenses on a
carve-out basis as described in Note 2.
2. 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 use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results may vary from estimates used.
Due from Affiliate
All tower rent revenues are collected by affiliates on behalf of Tidewater.
Similarly, all direct tower operating expenses, general and administrative
expenses, and interest are paid by affiliates on behalf of Tidewater.
Accordingly, a receivable from and payable to affiliates are recorded (see
Note 7).
Tower Assets
Tower assets consist of towers, buildings, and related attachments which are
recorded at cost and depreciated using the straight-line method over the
estimated useful life of the assets, which range from 15 to 30 years.
Improvements, renewals and extraordinary repairs which increase the value or
extend the life of the asset are capitalized. Repairs and maintenance costs
are expensed as incurred.
Impairment of Long-lived Assets
Tidewater evaluates the recoverability of its long-lived assets whenever
adverse events or changes in business climate indicate that the expected
undiscounted future cash flows from the related asset may be less than
previously anticipated. If the net book value of the related asset exceeds the
undiscounted future cash flows of the asset, the carrying amount would be
reduced to the present value of its expected future cash flows and an
impairment loss would be recognized. As of July 31, 1997, management does not
believe that an impairment reserve is required.
F-39
<PAGE>
TIDEWATER COMMUNICATIONS
(A CARVE-OUT ENTITY OF ANTENNA RENTALS CORPORATION, JOHN HARRIS & ASSOCIATES,
INC.,
AND DARE COUNTY PROPERTIES)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Fair Value of Financial Instruments
The carrying amount of Tidewater's financial instruments at July 31, 1997,
which includes due from affiliate, accounts receivable and short-term debt,
approximates fair value due to the short maturity of those instruments.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the life of the
related lease agreements. Revenue is recorded in the month in which it is due.
Allocation of Expenses
General and administrative expenses were allocated from its affiliates based
on the ratio of revenue of Tidewater to total revenue of affiliates.
Income Taxes
Tidewater consisted of certain assets of an S Corporation and two
partnerships. As such, net income was not subject to income taxes as the
income is taxed directly to their owners. Pro forma income taxes are presented
using the liability method as required by Statement No. 109, Accounting for
Income Taxes, issued by the Financial Accounting Standards Board. Deferred
income taxes are provided for temporary differences between the basis of
assets and liabilities for financial reporting and income tax reporting.
3. SHORT-TERM DEBT
At July 31, 1997, $264,982 was outstanding under three bank loans, which
provided secured borrowings for the purchases of land and towers in North
Carolina. The loans were secured by mortgage deeds of trust on the land, the
tower assets and an assignment of rents and leases. The interest rates on all
the notes were prime plus 0.5%. The original maturity dates were July 30,
2001, October 9, 2001, and February 12, 2002. However, the outstanding balance
was repaid subsequent to July 31, 1997 as part of the purchase agreement with
Pinnacle Towers, Inc. (see Note 8).
4. INCOME TAXES
As described in Note 1, Tidewater consisted of certain assets of an S
Corporation and of two partnerships. As such, net income related to the S
Corporation and partnerships was not subject to income taxes as the income is
taxed directly to their owners. The Combined Statement of Operations and
Retained Earnings reflects a tax provision for the operations of Tidewater at
July 31, 1997 on a pro-forma basis as if Tidewater were treated as a C
Corporation.
Significant components of the provision for income taxes on a pro-forma
basis were as follows:
<TABLE>
<CAPTION>
PRO-FORMA
JULY 31, 1997
-------------
<S> <C>
Current:
Federal..................................................... $85,918
State....................................................... 17,567
-------
Total current............................................. 103,485
Deferred:
Federal..................................................... (9,822)
State....................................................... (1,878)
-------
Total deferred............................................ (11,700)
-------
Provision for income taxes.................................... $91,785
=======
</TABLE>
F-40
<PAGE>
TIDEWATER COMMUNICATIONS
(A CARVE-OUT ENTITY OF ANTENNA RENTALS CORPORATION, JOHN HARRIS & ASSOCIATES,
INC.,
AND DARE COUNTY PROPERTIES)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the deferred tax liability on a pro-forma basis
were as follows:
<TABLE>
<CAPTION>
PRO-FORMA
JULY 31, 1997
-------------
<S> <C>
Deferred tax liability:
Tax over book depreciation................................... $ 68,607
==========
The effective tax rate approximates the statutory federal and state rates on
a pro-forma basis as no permanent differences exist for Tidewater.
5. COMMITMENTS AND CONTINGENCIES
The Company is obligated under a noncancelable lease for land which expires
February 20, 2005. The lease has two five-year renewal options. The future
minimum lease commitments under these leases are as follows:
PERIOD AUGUST 1, 1997 THROUGH DECEMBER 31, 1997................ $ 2,750
YEAR ENDED DECEMBER 31,
1998......................................................... 6,500
1999......................................................... 6,500
2000......................................................... 6,500
2001......................................................... 6,500
2002......................................................... 6,500
2003 and thereafter.......................................... 14,300
----------
$ 49,550
==========
Rental expense for the seven month period ended July 31, 1997 was $3,792.
6. TENANT LEASES
The following is a schedule by year of total future rentals to be received
for tower space under noncancelable lease agreements as of July 31, 1997.
PERIOD AUGUST 1, 1997 THROUGH DECEMBER 31, 1997................ $ 202,501
YEAR ENDED DECEMBER 31,
1998......................................................... 431,775
1999......................................................... 388,806
2000......................................................... 335,024
2001......................................................... 139,554
2002......................................................... 82,200
2003 and thereafter.......................................... 151,550
----------
$1,731,410
==========
</TABLE>
7. RELATED PARTY TRANSACTIONS
Prior to the acquisition by Pinnacle Towers Inc. as described in Note 1, the
carve out entity of Tidewater included transactions with the surviving Antenna
Rentals Corporation, Inc., John Harris and
F-41
<PAGE>
TIDEWATER COMMUNICATIONS
(A CARVE-OUT ENTITY OF ANTENNA RENTALS CORPORATION, JOHN HARRIS & ASSOCIATES,
INC.,
AND DARE COUNTY PROPERTIES)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Associates, Inc. and Dare County Properties ("affiliates"). These transactions
are disclosed as related party transactions in these financial statements.
Affiliates received rent payments related to Tidewater's lease agreements.
At July 31, 1997, due from affiliates of $347,407 reflected these receipts.
Affiliates paid tower operating and interest expense as well as short-term
debt related to Tidewater. For the period January 1, 1997 through July 31,
1997, Tidewater incurred tower operating and interest expense of $56,961 and
$14,055, respectively. Short-term debt of $28,811 was paid by affiliates for
this period.
For the period January 1, 1997 through July 31, 1997, general and
administrative expenses of $29,609 were allocated to Tidewater from
affiliates.
Bay Tower Corporation, a minority shareholder in one of the entities which
owned Tidewater, is a customer on one tower. Bay Tower performs monthly
routine maintenance on all of Tidewater's towers at a reduced price, in
exchange for free rent on the tower. Tidewater has recorded both revenue and
maintenance expense related to Bay Tower Corporation at their fair market
value. Tower revenue and maintenance expense amounted to $2,100 and $5,600,
respectively, for the period January 1, 1997 through July 31, 1997.
Additionally, Bay Tower has built all of Tidewater's towers. Other related
parties are customers on two towers. Accounts receivable of $2,120 is due from
these related parties at July 31, 1997 and $6,920 of rent revenue was earned
for the period January 1, 1997 through July 31, 1997. Management believes that
these transactions were under terms no different than those arranged with
other parties.
8. SUBSEQUENT EVENTS
On July 31, 1997, Tidewater was sold to Pinnacle Towers Inc. In accordance
with the purchase agreement, the owners of Tidewater received approximately
$8,400,000 for thirteen towers, related assets and management contracts on two
additional towers. Deferred revenue as of July 31, 1997 reflects rent received
by Tidewater to be remitted to Pinnacle Towers Inc. Of the total purchase
price, $264,982 was used by Pinnacle Towers Inc. to repay outstanding bank
loans (see Note 3) subsequent to July 31, 1997 in accordance with the purchase
agreement.
Prior to the closing, Pinnacle Towers Inc. placed approximately $650,000 in
escrow due to conflicts with the terms under a land lease agreement related to
one of the management contracts. However, as the lease between Tidewater and
the lessor was amended to increase the initial lease period from 15 to 20
years, the consideration in escrow will be released in fulfillment of the
purchase agreement.
F-42
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Pinnacle Holdings Inc.
In our opinion, the accompanying combined balance sheet and the related
combined statements of operations and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Majestic
Communications ("Majestic") at June 27, 1997, and the results of their
operations and their cash flows for the six month period January 1, 1997
through June 27, 1997, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Majestic's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Tampa, Florida
February 9, 1998
F-43
<PAGE>
MAJESTIC COMMUNICATIONS
(A CARVE-OUT ENTITY OF MAJESTIC COMMUNICATIONS, INC.)
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 27, 1997
-------------
<S> <C>
ASSETS
Current assets:
Due from affiliate.............................................. $133,348
Accounts receivable............................................. 5,290
Prepaid expenses................................................ 4,014
--------
Total current assets.......................................... 142,652
Tower assets, net of accumulated depreciation of $227,974......... 511,571
Land.............................................................. 277,562
--------
$931,785
========
LIABILITIES AND RETAINED EARNINGS
Current liabilities:
Accounts payable and other current liabilities.................. $ 5,801
Taxes payable................................................... 10,339
Deferred revenue................................................ 18,831
Short-term debt................................................. 161,712
--------
Total current liabilities..................................... 196,683
Deferred tax liability............................................ 48,257
--------
244,940
Retained earnings................................................. 686,845
--------
$931,785
========
</TABLE>
The accompanying Notes to Combined Financial Statements
are an integral part of these combined financial statements.
F-44
<PAGE>
MAJESTIC COMMUNICATIONS
(A CARVE-OUT ENTITY OF MAJESTIC COMMUNICATIONS, INC.)
COMBINED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
THROUGH JUNE 27, 1997
----------------------
<S> <C>
Revenue.................................................. $192,123
Tower operating expenses, excluding depreciation....... 19,425
--------
Gross margin......................................... 172,698
--------
Other expenses:
General and administrative expenses.................... 27,739
Depreciation........................................... 24,033
--------
51,772
--------
Income from operations................................... 120,926
Interest expense......................................... 6,036
--------
Income before taxes...................................... 114,890
Income tax expense....................................... 9,838
--------
Net income............................................... $105,052
========
Pro-forma income tax expense............................. $ 40,895
--------
Pro-forma net income..................................... $ 73,995
========
Retained earnings at December 31, 1996................... $581,793
Net income............................................... 105,052
--------
Retained earnings at June 27, 1997....................... $686,845
========
</TABLE>
The accompanying Notes to Combined Financial Statements are an integral part of
these combined financial statements.
F-45
<PAGE>
MAJESTIC COMMUNICATIONS
(A CARVE-OUT ENTITY OF MAJESTIC COMMUNICATIONS, INC.)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
THROUGH JUNE 27, 1997
----------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................ $105,052
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation......................................... 24,033
(Increase) decrease in:
Due from affiliates................................. (133,348)
Accounts receivable................................. (1,530)
Prepaid expenses.................................... (4,014)
Increase (decrease) in:
Accounts payable and other current liabilities...... 3,444
Taxes payable....................................... 10,339
Deferred revenue.................................... 9,351
Deferred tax liability.............................. (501)
--------
Total adjustments................................. (92,226)
--------
Net cash provided by operating activities............... 12,826
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term debt.......................... (12,826)
--------
Net increase in cash.................................... --
--------
Cash at December 31, 1996............................... --
--------
Cash at June 27, 1997................................... $ --
--------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
Cash paid for interest.................................. $ 6,036
========
</TABLE>
The accompanying Notes to Combined Financial Statements are an integral part of
these combined financial statements.
F-46
<PAGE>
MAJESTIC COMMUNICATIONS
(A CARVE-OUT ENTITY OF MAJESTIC COMMUNICATIONS, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
On June 27, 1997, Pinnacle Towers Inc. acquired certain of the assets and
business operations of Majestic Communications, Inc. (a C Corporation) and two
sole proprietors. Majestic Communications, Inc. is owned 75%/25% by these two
sole proprietors. Collectively, the acquired assets and related operations are
referred to hereafter as Majestic Communications ("Majestic"). Majestic owns
telecommunication towers and leases space on these towers to customers in
wireless communications industries in Tennessee and Mississippi.
Basis of Presentation
The combined financial statements of Majestic have been derived from the
accounting records of Majestic Communications, Inc. and the two sole
proprietors. Additional allocations were made to reflect Majestic's share of
general and administrative expenses on a carve-out basis as described in Note
2.
2. 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 use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results may vary from those estimates.
Due from Affiliate
All tower rent revenues are collected by affiliates on behalf of Majestic.
Similarly, all direct tower operating expenses, general and administrative
expenses, and interest are paid by affiliates on behalf of Majestic.
Accordingly, a receivable from and payable to affiliates are recorded (see
Note 6).
Tower Assets
Tower assets consist of towers, buildings, and related attachments which are
recorded at cost and depreciated using the straight-line method over the
estimated useful life of the assets, which range from 15 to 30 years.
Improvements, renewals and extraordinary repairs which increase the value or
extend the life of the asset are capitalized. Repairs and maintenance costs
are expensed as incurred.
Impairment of Long-lived Assets
Majestic evaluates the recoverability of its long-lived assets whenever
adverse events or changes in business climate indicate that the expected
undiscounted future cash flows from the related asset may be less than
previously anticipated. If the net book value of the related asset exceeds the
undiscounted future cash flows of the asset, the carrying amount would be
reduced to the present value of its expected future cash flows and an
impairment loss would be recognized. As of June 27, 1997, management does not
believe that an impairment reserve is required.
Fair Value of Financial Instruments
The carrying amount of Majestic's financial instruments at June 27, 1997,
which includes due from affiliate, accounts receivable and short-term debt,
approximates fair value due to the short maturity of those instruments.
F-47
<PAGE>
MAJESTIC COMMUNICATIONS
(A CARVE-OUT ENTITY OF MAJESTIC COMMUNICATIONS, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the life of the
related lease agreements. Revenue is recorded in the month in which it is due.
Allocation of Expenses
General and administrative expenses were allocated from its affiliate based
on the ratio of revenue of Majestic to revenue of affiliates.
Income Taxes
Majestic accounts for income taxes using the liability method as required by
Statement No. 109, Accounting for Income Taxes, issued by the Financial
Accounting Standards Board.
Deferred income taxes are provided for temporary differences between the
basis of assets and liabilities for financial reporting and income tax
reporting.
As described in Note 1, Majestic consisted of a C Corporation and of two
sole proprietorships. As such, the combined accounts reflect a tax provision
for only the operations of the C Corporation at June 27, 1997. The Combined
Statement of Operations and Retained Earnings also reflects a tax provision
for the operations of Majestic at June 27, 1997 on a pro-forma basis as if
Majestic were treated as a C Corporation.
3. SHORT-TERM DEBT
At June 27, 1997, $161,712 was outstanding under a bank loan, which provided
secured borrowings for the purchases of land, a building and a tower in
Tennessee. The loan was secured by a mortgage deed of trust on the land, the
tower assets and an assignment of rents and leases. In addition, the loan as
guaranteed by Majestic Communications, Inc. The interest rate on this
borrowing was 7%. The original maturity date was August 1, 1999. However, the
outstanding balance was repaid subsequent to June 27, 1997 as part of the
purchase agreement with Pinnacle Towers Inc. (see Note 7).
4. INCOME TAXES
As described in Note 1, Majestic consisted certain assets of a C Corporation
and of two sole proprietorships. As such, the combined accounts reflect a tax
provision for only the operations of the C Corporation at June 27, 1997. The
Combined Statement of Operations and Retained Earnings also reflects a tax
provision for the operations of Majestic at June 27, 1997 on a pro-forma basis
as if Majestic were treated as a C Corporation.
Significant components of the provision for income taxes on a historical and
pro-forma basis were as follows:
<TABLE>
<CAPTION>
PRO-FORMA
JUNE 27, 1997 JUNE 27, 1997
------------- -------------
<S> <C> <C>
Current:
Federal....................................... $7,449 $37,610
State......................................... 2,890 6,840
------ -------
Total current............................... 10,339 44,450
Deferred:
Federal....................................... (367) (3,034)
State......................................... (134) (521)
------ -------
Total Deferred.............................. (501) (3,555)
------ -------
Provision for income taxes...................... $9,838 $40,895
====== =======
</TABLE>
F-48
<PAGE>
MAJESTIC COMMUNICATIONS
(A CARVE-OUT ENTITY OF MAJESTIC COMMUNICATIONS, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the deferred tax liability on a historical and
pro-forma basis were as follows:
<TABLE>
<CAPTION>
PRO-FORMA
JUNE 27, 1997 JUNE 27, 1997
------------- -------------
<S> <C> <C>
Deferred tax liability:
Tax over book depreciation..................... $48,257 $24,756
======= =======
</TABLE>
The effective tax rate approximates the statutory federal and state rates on
a historical and pro-forma basis as no permanent differences exist for either
the C Corporation or Majestic.
Net income related to sole proprietors was not subject to income taxes as
the income is taxed directly to their owners. The reported amounts for fixed
assets related to these sole proprietors was approximately $169,400 less than
its tax basis.
5. TENANT LEASES
The following is a schedule by year of total future rentals to be received
for tower space under noncancelable lease agreements as of June 27, 1997.
<TABLE>
<S> <C>
PERIOD JUNE 28, 1997
THROUGH DECEMBER 31, 1997.......................................... $187,929
YEAR ENDED DECEMBER 31,
1998.............................................................. 247,633
1999.............................................................. 185,029
2000.............................................................. 155,688
2001.............................................................. 84,493
2002.............................................................. 11,250
2003 and thereafter............................................... 25,860
--------
$897,882
========
</TABLE>
6. RELATED PARTY TRANSACTIONS
Prior to the acquisition by Pinnacle Towers Inc. (as described in Note 1),
the carve out entity of Majestic included transactions with the surviving
Majestic Communications, Inc. ("affiliates"). These transactions are disclosed
as related party transactions in these financial statements.
Affiliates received rent payments related to Majestic's lease agreements. At
June 27, 1997, due from affiliates of $199,944 reflected these receipts.
Affiliates paid tower operating and interest expense as well as short-term
debt related to Majestic. For the period January 1, 1997 through June 27,
1997, Majestic incurred tower operating and interest expense of $19,425 and
$6,036, respectively. Short-term debt of $12,826 was paid by affiliates for
this period.
For the period January 1, 1997 through June 27, 1997, general and
administrative expenses of $27,739 were allocated to Majestic from affiliates.
F-49
<PAGE>
MAJESTIC COMMUNICATIONS
(A CARVE-OUT ENTITY OF MAJESTIC COMMUNICATIONS, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
7. SUBSEQUENT EVENTS
On June 27, 1997, Majestic was sold to Pinnacle Towers Inc. In accordance
with the purchase agreement, the owners of Majestic received approximately
$4,758,500 for four towers and related assets. Also under the agreement, rent
revenue reverted to Pinnacle Towers Inc. as of July 1, 1997. Rent received by
Majestic related to the remaining days in June 1997 was adjusted as part of
the purchase price. Deferred revenue as of June 27, 1997 reflects rent
received by Majestic to be remitted to Pinnacle Towers Inc. Of the total
purchase price, $161,712 was used by Pinnacle Towers Inc. to repay the
outstanding bank loan subsequent to June 27, 1997 in accordance with the
purchase agreement.
F-50
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall under
any circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
---------------------------
TABLE OF CONTENTS
Page
----
Prospectus Summary .................................................... 1
Risk Factors ......................................................... 17
The Exchange Offer ................................................... 24
Capitalization ....................................................... 33
Use of Proceeds ...................................................... 33
Unaudited Pro Forma Consolidated Financial Statements ................ 35
Selected Historical and Unaudited Pro Forma
Consolidated Financial Data ........................................ 40
Management's Discussion and Analysis
of Financial Condition and Results of Operations ................. 42
Business ............................................................. 47
Management ........................................................... 64
Principal Stockholders ............................................... 68
Certain Relationships and Transactions ............................... 69
Description of Credit Facilities ..................................... 71
Description of New Notes ............................................. 72
Certain Federal Income Tax Considerations ............................ 100
Plan of Distribution ................................................. 101
Legal Opinions ....................................................... 101
Experts .............................................................. 102
Index to Financial Statements ........................................ F-1
$325,000,000
Pinnacle Holdings Inc.
10% Senior Discount
Notes due 2008
--------------------
--------------------
___________, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Pinnacle Holdings Inc., a Delaware corporation (the "Delaware Corporation").
The Delaware Corporation's Certificate of Incorporation and Bylaws contain
provisions limiting the personal liability of its directors for monetary damages
resulting from breaches of their duty of care to the extent permitted by Section
102(b)(7) of the Delaware General Corporation Law. The Delaware Corporation's
Certificate of Incorporation and Bylaws also contain provisions making
indemnification of the Delaware Corporation's directors and officers mandatory
to the fullest extent permitted by the Delaware General Corporation Law,
including circumstances in which indemnification is otherwise discretionary.
The Delaware General Corporation Law permits the indemnification by a Delaware
corporation of its directors, officers, employees and other agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement in connection with specified actions, suits or proceedings, whether
civil, criminal, administrative or investigative (other than derivative actions
which are by or in the right of the corporation) if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe their conduct was illegal. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and require
court approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
Exhibit No. Description
- ----------- -----------
3.1.1 Amended and Restated Certificate of Incorporation of the Company
3.1.2 Bylaws of the Company
4.1 Indenture dated as of March 20, 1998 among the Company and The
Bank of New York, as Trustee (the "Indenture")
4.2 Form of Original Note No. 1 for $200,000,000, and Original Note
No. 2 for $125,000,000, CUSIP No. 72346N-AA-9.
4.3 Form of New Note No. 1 for $200,000,000, and New Note No. 2
for $125,000,000, CUSIP No. 72346N-AB-7
4.4 Exchange and Registration Rights Agreement dated as of March 20,
1998 by and among the Company and each of the Purchasers referred
to therein
5.1 Legal Opinion of Holland & Knight
10.1 Purchase Agreement, dated as of March 17, 1998, by and among the
Company and the Initial Purchasers named therein
10.2 Second Amended and Restated Credit Agreement dated February 26,
1998 by and among Pinnacle Towers, Inc., a wholly-owned
subsidiary of the Company ("PTI"), NationsBank of Texas, N.A.
and Goldman, Sachs Credit Partner L.P.
10.3 First Amendment to Second Amended and Restated Credit Agreement
dated March 17, 1998
10.4 Form of Purchase and Sale Agreement dated January 9, 1998 by and
among PTI and Southern Communications
<PAGE>
Exhibit No. Description
- ----------- -----------
10.5 Form of Southern Communications Master Site Lease Agreement by and
among PTI and Southern Communications
10.6 Form of Option to Direct Construction or Acquisition of Additional
Tower Facilities by and among PTI and Southern Communications
10.7 Form of Exchange Agreement by and among PTI and Southern
Communications
10.8 Form of Lease Agreement - Non-Restricted Premises
10.9 Form of Lease Agreement - Restricted Premises
10.10 Form of Master Antenna Site Lease by and among PTI and Teletouch
Communications, Inc.
10.11 Contract of Sale by and among PTI and Teletouch Communications,
Inc. and First Amendment to Contract of Sale
10.12 Executive Employment Agreement between the Company and Robert
Wolsey dated May 3, 1995
10.13 Executive Employment Agreement between the Company and Steven Day
dated February 17, 1997
10.14 Executive Employment Agreement between the Company and James
Dell'Apa dated May 3, 1995
10.15 Subscription Agreement dated December 31, 1995 by and among ABRY
II and PTI
10.16 Second Amended and Restated Subscription and Stockholders
Agreement dated May 16, 1996 by and among PTI, the Company and
certain stockholders.
10.17 Capital Contribution Agreement dated February 26, 1998
10.18 Convertible Promissory Note due 1998 dated February 11, 1998 by
and among the Company and ABRY II
10.19 Services Agreement by and among PTI and PTI II
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 List of Subsidiaries
23.1 Consent of Holland & Knight LLP (contained in Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP, independent certified public
accountants
23.3 Consent of Arthur Andersen LLP, independent certified public
accountants
24.1 Powers of Attorney (included on signature pages of Registration
Statement)
25.1 Statement of Eligibility of Trustee, The Bank of New York, on
Form T-1
27.1 Financial Data Schedule for the period ended December 31, 1997
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Deliver
99.3 Exchange Agent Agreement
(b) Financial Statement Schedules
Page
----
Index of Financial Statement Schedules.................................. S-1
Report of Price Waterhouse LLP on Financial Statement Schedules......... S-2
Schedule __ - (to be provided by accountants)........................... S-3
(c) Not Applicable.
<PAGE>
Item 22. Undertakings.
(a) 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, 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 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.
(b)(1) 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
issuer 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.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act 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.
(c) The undersigned Registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
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 includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not subject of and included in the Registration Statement when it became
effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
PINNACLE HOLDINGS INC., a Delaware corporation, has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Sarasota, State of Florida on March 30, 1998.
PINNACLE HOLDINGS, INC.
By: /s/ Robert Wolsey
-----------------------------
Robert Wolsey
President
POWER OF ATTORNEY
Each of the undersigned officers and directors of PINNACLE HOLDINGS INC. (the
"Company"), a Delaware corporation, for himself and not for one another, does
hereby constitute and appoint Robert Wolsey and Steven Day, and each and any of
them and his substitutes, a true and lawful attorney in his name, place and
stead, in any and all capacities, to sign his name to any and all amendments to
this registration statement, including post-effective amendments, and to cause
the same to be filed with the Securities and Exchange Commission, granting unto
said attorneys and each of them full power of substitution and full power and
authority to do and perform any act and thing necessary and proper to be done in
the premises, as fully to all intents and purposes as the undersigned could do
if personally present, and each of the undersigned for himself hereby ratifies
and confirms all that said attorneys or any one of them shall lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Robert Wolsey Chief Executive Officer, President, March 30, 1998
- -------------------- Chief Operating Officer and Director
Robert Wolsey
/s/ Steven Day
- -------------------- Vice President, Chief Financial March 30, 1998
Steven Day Officer, Secretary and Director
/s/ James Dell'Apa
- -------------------- Executive Vice President and Director March 30, 1998
James Dell'Apa
/s/ Andrew Banks
- -------------------- Director March 30, 1998
Andrew Banks
/s/ Peni Garber
- -------------------- Director March 30, 1998
Peni Garber
<PAGE>
/s/ Peggy Koenig Director March 30, 1998
- -------------------- --------
Peggy Koenig
/s/ Royce Yudkoff Director March 30, 1998
- -------------------- --------
Royce Yudkoff
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
3.1.1 Amended and Restated Certificate of Incorporation of the
Company
3.1.2 Bylaws of the Company
4.1 Indenture dated as of March 20, 1998 among the Company and
The Bank of New York, as Trustee (the "Indenture")
4.2 Form of Original Note No. 1 for $200,000,000, and Original
Note No. 2 for $125,000,000, CUSIP No. 72346N-AA-9.
4.3 Form of New Note No. 1 for $200,000,000, and New Note No.
2 for $125,000,000, CUSIP No. 72346N-AB-7
4.4 Exchange and Registration Rights Agreement dated as of March
20, 1998 by and among the Company and each of the Purchasers
referred to therein
5.1 Legal Opinion of Holland & Knight
10.1 Purchase Agreement, dated as of March 17, 1998, by and among
the Company and the Initial Purchasers named therein
10.2 Second Amended and Restated Credit Agreement dated February
26, 1998 by and among Pinnacle Towers, Inc., a wholly-owned
subsidiary of the Company ("PTI"), NationsBank of Texas,
N.A. and Goldman, Sachs Credit Partner L.P.
10.3 First Amendment to Second Amended and Restated Credit
Agreement dated March 17, 1998
10.4 Form of Purchase and Sale Agreement dated January 9, 1998 by
and among PTI and Southern Communications
10.5 Form of Southern Communications Master Site Lease Agreement
by and among PTI and Southern Communications
10.6 Form of Option to Direct Construction or Acquisition of
Additional Tower Facilities by and among PTI and Southern
Communications
10.7 Form of Exchange Agreement by and among PTI and Southern
Communications
10.8 Form of Lease Agreement - Non-Restricted Premises
10.9 Form of Lease Agreement - Restricted Premises
10.10 Form of Master Antenna Site Lease by and among PTI and
Teletouch Communications, Inc.
10.11 Contract of Sale by and among PTI and Teletouch
Communications, Inc. and First Amendment to Contract of Sale
10.12 Executive Employment Agreement between the Company and
Robert Wolsey dated May 3, 1995
10.13 Executive Employment Agreement between the Company and
Steven Day dated February 17, 1997
10.14 Executive Employment Agreement between the Company and James
Dell'Apa dated May 3, 1995
10.15 Subscription Agreement dated December 31, 1995 by and among
ABRY II and PTI
10.16 Second Amended and Restated Subscription and Stockholders
Agreement dated May 16, 1996 by and among PTI, the Company
and certain stockholders.
10.17 Capital Contribution Agreement dated February 26, 1998
10.18 Convertible Promissory Note due 1998 dated February 11, 1998
by and among the Company and ABRY II
10.19 Services Agreement by and among PTI and PTI II
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 List of Subsidiaries
23.1 Consent of Holland & Knight LLP (contained in Exhibit 5.1)
<PAGE>
Exhibit No. Description
- ----------- -----------
23.2 Consent of Price Waterhouse LLP, independent certified
public accountants
23.3 Consent of Arthur Andersen LLP, independent certified public
accountants
24.1 Powers of Attorney (included on signature pages of
Registration Statement)
25.1 Statement of Eligibility of Trustee, The Bank of New York,
on Form T-1
27.1 Financial Data Schedule for the period ended December 31,
1997
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Deliver
99.3 Exchange Agent Agreement
<PAGE>
EXHIBIT 3.1.1
EXHIBIT A
---------
AMENDED AND RESTATED
--------------------
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
PINNACLE HOLDINGS INC.
---------------------
ARTICLE ONE
-----------
The name of the corporation is Pinnacle Holdings Inc.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent 19904. The name of its registered agent at such address is The Prentice-
Hall Corporation System, Inc.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
PART A. AUTHORIZED SHARES
-----------------
The total number of shares of capital stock which the corporation has
authority to issue is 924,500 shares, consisting of:
(1) 202,500 shares of Class A Common Stock, par value $0.001 per share
(the "Class A Common");
--------------
(2) 12,000 shares of Class B Common Stock, par value $0.001 per share
(the "Class B Common");
--------------
(3) 200,000 shares of Class C Common Stock, par value $0.001 per share
(the "Class C Common");
--------------
<PAGE>
(4) 100,000 shares of Class D Common Stock, par value $0.001 per share
(the "Class D Common");
--------------
(5) 300,000 shares of Class E Common Stock, par value $0.001 per share
(the "Class E Common");
--------------
(6) 10,000 shares of Class F Common Stock par value $0.001 per share
(the "Class F Common"); and
--------------
(7) 100,000 shares of Preferred Stock, par value $0.001 per share (the
"Preferred Stock").
---------------
The Class A Common, Class B Common, Class C Common, Class D Common,
Class E Common and Class F Common are collectively referred to as the "Common
------
Stock." Shares of Common Stock will have the rights, preferences and
- -----
limitations separately set forth below. Capitalized terms used but not
otherwise defined in this Article Four are defined in Section 8 of Part C below.
PART B. PREFERRED STOCK
---------------
Shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors of the corporation is hereby authorized to
determine and alter all rights, preferences and privileges and qualifications,
limitations and restrictions of any such series (including, without limitation,
voting rights and the limitation and exclusion of voting rights) granted to or
imposed upon any wholly unissued series of Preferred Stock and the number of
shares constituting any such series and the designation thereof, and to increase
or decrease (but not below the number of shares of such series then outstanding)
the number of shares of any series after the issuance of shares of that series.
If the number of shares of any series is so decreased, then the shares
constituting such reduction will resume the status which such shares had prior
to the adoption of the resolution originally fixing the number of shares of such
series. No share of any series of Preferred Stock will be sold or otherwise
transferred (with or without consideration) to any individual if such transfer
would result in the ownership by such individual in combination with four or
fewer individuals (within the meaning of Section 542(a)(2) of the Code) of more
than fifty percent of the aggregate value of all shares of all classes of
capital stock of the corporation (the "Percentage Ownership Limit").
--------------------------
PART C. COMMON STOCK
------------
Except as otherwise provided in this Part C or as otherwise required
by applicable law, all shares of Class A Common, Class B Common, Class C
Common, Class D Common, Class E Common and Class F Common will be identical in
all respects and will entitle the
2
<PAGE>
holders of such shares to the same rights and privileges, subject to the same
qualifications, limitations and restrictions.
1. VOTING RIGHTS. Except as otherwise provided in this Part C or as
-------------
otherwise required by applicable law, the holders of Class A Common, Class B
Common, Class C Common, Class D Common, Class E Common and Class F Common, as a
single combined class, will be entitled to vote in the election of directors and
on all other matters submitted to a vote of the corporation's stockholders, with
each holder of Class A Common, Class B Common, Class C Common, Class E Common or
Class F Common being entitled to a number of votes equal to the number of Units
assigned to the shares of Class A Common, Class B Common, Class C Common, Class
E Common or Class F Common held by such holder, and with each holder of Class D
Common being entitled to a number of votes equal to the number of Units assigned
to the shares of Class C Common which would be issued upon the conversion of the
shares of Class D Common held by such holder pursuant to Section 3 of this Part
C if the record date for such vote were the Conversion Date.
2. DISTRIBUTIONS. Subject to any right of any holder of Preferred
-------------
Stock to receive any amount of any Distribution, each Distribution will be made
to the holders of Class A Common, Class B Common, Class C Common, Class D
Common, Class E Common and Class F Common in the following priority:
2A. SENIOR YIELD. First, in an amount up to the aggregate Unpaid
------------
Yield on the shares of Class A Common outstanding immediately prior to such
Distribution pro rata among the holders of Class F Common and Class A Common
outstanding immediately prior to such Distribution as follows: (x) to the
holders of the Class F Common, as a separate class, an amount equal to the
product of the Applicable Class F Percentage multiplied by the aggregate amount
of such Distribution and (y) to the holders of Class A Common, as a separate
class, an amount equal to the product of the Remaining Percentage multiplied by
the aggregate amount of such Distribution. Any amount paid to the holders of
Class A Common pursuant to this paragraph 2A will be paid pro rata among the
holders of Class A Common based upon the aggregate amount of the Unpaid Yield on
the shares of Class A Common held by them immediately prior to such Distribution
and any amount paid to the holders of Class F Common pursuant to this paragraph
2A will be paid pro rata among the holders of Class F Common based upon the
number of shares held thereby. No Distribution will be made under any of
paragraphs 2B through 2F unless the amount of the Unpaid Yield on each
outstanding share of Class A Common is equal to zero. Any Distribution made
pursuant to this paragraph 2A will be treated for purposes of determining
whether all required Distributions have been made under this Section 2A as a
payment of the Yield on the Class A Common.
2B. SENIOR PREFERENCE AMOUNT. Second, in an amount up to the
------------------------
aggregate Unpaid Preference Amount for the shares of Class A Common outstanding
immediately prior to such Distribution pro rata among the holders of Class F
Common and Class A Common outstanding immediately prior to such Distribution as
follows: (x) to the holders of the Class F Common, as a separate class, an
amount equal to the product of the Applicable Class F
3
<PAGE>
Percentage multiplied by the aggregate amount of such Distribution and (y) to
the holders of Class A Common, as a separate class, an aggregate amount equal to
the product of the Remaining Percentage multiplied by the aggregate amount of
such Distribution. Any amount paid to holders of Class A Common pursuant to
this paragraph 2B will be paid pro rata among the holders of Class A Common
based upon the aggregate amount of the Unpaid Preference Amount for the shares
of Class A Common held by them immediately prior to such Distribution and any
amount paid to the holders of Class F Common pursuant to this paragraph 2B will
be paid pro rata among the holders of Class F Common based upon the number of
shares held thereby. No Distribution will be made under any of paragraphs 2C
through 2F unless the amount of the Unpaid Preference Amount for each
outstanding share of Class A Common is equal to zero. Any Distribution made
pursuant to this paragraph 2B will be treated for purposes of determining
whether all required Distributions have been made pursuant to this Section 2B as
a payment of the Preference Amount for the Class A Common.
2C. MEZZANINE PREFERENCE AMOUNT. Third, in an amount up to the
---------------------------
aggregate Unpaid Preference Amount for the shares of Class E Common outstanding
immediately prior to such Distribution pro rata among the holders of Class F
Common and Class A Common outstanding immediately prior to such Distribution as
follows: (x) to the holders of the Class F Common, as a separate class, an
amount equal to the product of the Applicable Class F Percentage multiplied by
the aggregate amount of such Distribution and (y) to the holders of Class E
Common, as a separate class, an amount equal to the product of the Remaining
Percentage multiplied by the aggregate amount of such Distribution. Any amount
paid to the holders of class E Common pursuant to this paragraph 2C will be paid
pro rata among the holders of Class E Common based upon the aggregate amount of
the Unpaid Preference Amount for the shares of Class E Common held by them
immediately prior to such Distribution and any amount paid to the holders of
Class F Common pursuant to this paragraph 2C will be paid pro rata among the
holders of Class F Common based upon the number of shares held thereby. No
Distribution will be made under any of paragraphs 2D through 2F unless the
amount of the Unpaid Preference Amount for each outstanding share of Class E
Common is equal to zero. Any Distribution made pursuant to this paragraph 2C
will be treated for purposes of determining whether all required Distributions
have been made pursuant to this Section 2C as a payment of the Preference Amount
for the Class E Common.
2D. JUNIOR YIELD. Fourth, to the holders of Class B Common, as a
------------
separate class, in an amount up to the aggregate Unpaid Yield on the outstanding
shares of Class B Common immediately prior to such Distribution. Any amount
paid pursuant to this paragraph 2D will be paid pro rata among holders of Class
B Common based upon the aggregate amount of the Unpaid Yield on the shares of
Class B Common held by them immediately prior to such Distribution. No
Distribution will be made under paragraph 2E or 2F unless the amount of the
Unpaid Yield on each outstanding share of Class B Common is equal to zero. Any
Distribution made pursuant to this paragraph 2D will constitute a payment of the
Yield on the Class B Common.
4
<PAGE>
2E. JUNIOR PREFERENCE AMOUNT. Fifth, to the holders of Class B
------------------------
Common, as a separate class, in an amount up to the aggregate Unpaid Preference
Amount for the outstanding shares of Class B Common immediately prior to such
Distribution. Any amount paid pursuant to this paragraph 2E will be paid pro
rata among the holders of Class B Common based upon the aggregate amount of the
Unpaid Preference Amount for the shares of Class B Common held by them
immediately prior to such Distribution. No Distribution will be made under
paragraph 2F unless the amount of the Unpaid Preference Amount for each
outstanding share of Class B Common is equal to zero. Any Distribution made
pursuant to this paragraph 2E will constitute a payment of the Preference Amount
for the Class B Common.
2F. ALL COMMON. After the required amounts (if any) of the
----------
Distribution have been made pursuant to each of paragraphs 2A through 2E, the
holders of Class A Common, Class B Common, Class C Common, Class D Common, Class
E Common and Class F Common (if any), as a single combined class, will be
entitled to receive the remaining portion of such Distribution, ratably among
such holders on the following basis: for any holder of Class A Common, Class B
Common, Class C Common, Class E Common or Class F Common (if any), on the basis
of the number of Units assigned to the shares of Class A Common, Class B Common,
Class C Common, Class E Common and Class F Common (if any) held by such holder
immediately prior to such Distribution, and for any holder of Class D Common, on
the basis of the number of Units assigned to the shares of Class C Common which
would be issued upon the conversion of the shares of Class D Common held by such
holder pursuant to Section 3 of this Part C if the record date for such
Distribution were the Conversion Date.
3. CONVERSION OF CLASS D COMMON AND UNIT DETERMINATIONS.
----------------------------------------------------
3A. CONVERSION OF CLASS D COMMON. On and after the Conversion Date,
----------------------------
the holders of Class D Common will be entitled to convert shares of Class D
Common into shares of Class C Common in accordance with this Section 3. The
number of shares of Class C Common issuable upon the conversion of all Class D
Common outstanding on the Conversion Date will be 53,625, and such shares of
Class C Common will be issued upon such conversion to the holders of Class D
Common pro rata according to the number of shares of Class D Common held by them
at the close of business on the Conversion Date.
3B. CONVERSION PROCEDURE. Each conversion of shares of Class D
--------------------
Common into shares of Class C Common will be effected by the surrender of the
certificate or certificates representing the shares of Class D Common to be
converted at the principal office of the corporation at any time during normal
business hours, together with a written notice by the holder of such Class D
Common stating that such holder desires to convert the shares of Class D Common
represented by such certificate or certificates into shares of Class C Common.
Each such conversion will be deemed to have been effected as of the close of
business on the date on which such certificate or certificates have been
surrendered and such notice has been received (or, if later, at the close of
business on the Conversion Date), and at such effective time the rights of the
holder of the converted Class D Common as such holder will cease and the person
or persons
5
<PAGE>
in whose name or names the certificate or certificates for shares of Class C
Common are to be issued upon such conversion will be deemed to have become the
holder or holders of record of the shares of Class C Common to be represented by
such certificate(s). Promptly after such effective time, the corporation will
issue and deliver in accordance with the surrendering holder's instructions the
certificate or certificates for the Class C Common issuable upon such
conversion. The corporation will at all times reserve and keep available out of
its authorized but unissued shares of Class C Common, solely for the purpose of
issuance upon the conversion of the Class D Common, such number of shares of
Class C Common issuable upon the conversion of all outstanding Class D Common.
All shares of Class C Common which are so issuable will, when issued, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The corporation will take all reasonable actions which may be
necessary and which may be within the corporation's control to assure that all
such shares of Class C Common may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Class C Common may be listed (except
for official notice of issuance which will be immediately transmitted by the
corporation upon issuance). The corporation will not close its books against
the transfer of shares of Common Stock in any manner which would interfere with
the timely conversion of Class D Common in accordance with this Section 3.
3C. DETERMINATION OF CLASS C COMMON UNITS. The number of Units
-------------------------------------
assigned to each share of Class C Common will be 1.0, increased by the sum of:
a. 0.000000512447552448 multiplied by the lesser of (1) the number
of shares of Class E Common outstanding at the time of
determination and (2) 100,000; plus
----
b. 0.00000212289044289 multiplied by the lesser of (1) the number of
shares of Class E Common outstanding at the time of determination
in excess of 100,000 shares, if any, and (2) 100,000; plus
----
c. 0.00000304839160839 multiplied by the lesser of (1) the number of
shares of Class E Common outstanding at the time of determination
in excess of 200,000, if any, and (2) 100,000.
3D. DETERMINATION OF CLASS F COMMON UNITS. The number of Units
-------------------------------------
assigned to each share of Class F Common will be equal to a fraction (a) the
numerator of which is equal to the quotient of the aggregate number of Units
assigned to the outstanding shares of Class A Common, Class C Common and Class E
Common divided by 19 and (b) the denominator of which is the total number of
shares of Class F Common outstanding as of the date of determination.
4. STOCK SPLITS AND STOCK DIVIDENDS. The corporation will not in
--------------------------------
any manner subdivide (by stock split, stock dividend or otherwise) or combine
(by reverse stock split or otherwise) the outstanding Common Stock of one class
unless the outstanding
6
<PAGE>
Common Stock of all the other classes will be proportionately subdivided or
combined. All such subdivisions will be payable only in Class A Common to the
holders of Class A Common, in Class B Common only to the holders of Class B
Common, in Class C Common only to the holders of Class C Common, in Class D
Common only to the holders of Class D Common and in Class E Common only to the
holders of Class E Common.
5. TRANSFER OF COMMON STOCK.
------------------------
5A. TRANSFER RESTRICTIONS. Inasmuch as it is the intention of
---------------------
the corporation and its stockholders that the corporation satisfy the provisions
of the Code relating to qualification of the corporation as a "real estate
investment trust," particularly Section 856(a)(5) of the Code, no holder of any
share of any class of Common Stock may transfer any such share or any interest
therein to any other individual, firm, corporation, entity or other person if,
as a result of such transfer, either (i) beneficial ownership of all shares of
all classes of Common Stock would be held by less than 100 persons (the
"Aggregate Ownership Limit"), if beneficial ownership of all shares of all
-------------------------
classes of Common Stock was held by 100 or more persons prior to such transfer,
or (ii) a violation of the Percentage Ownership Limit (as defined in Part B)
would occur.
5B. REGISTRATION OF TRANSFERS. The corporation will keep at its
-------------------------
principal office (or such other place as the corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender
at such place of any certificate representing shares of any class of Common
Stock with respect to all of which a transfer would satisfy all requirements of
paragraph 5A of this Part C, the corporation will, at the request of the
registered holder of such certificate, execute and deliver a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares of the class represented by the surrendered certificate, and the
corporation forthwith will cancel such surrendered certificate. Each such new
certificate will be registered in such name and will represent such number of
shares of such class as is requested by the holder of the surrendered
certificate (so long as the requirements of this paragraph 5B and paragraph 5A
of this Part C are otherwise satisfied with respect to the Common Stock
represented by such certificate) and will be substantially identical in form to
the surrendered certificate. The issuance of new certificates will be made
without charge to the holders of the surrendered certificates for any issuance
tax in respect thereof or other cost incurred by the corporation in connection
with such issuance.
6. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to
-----------
the corporation (an affidavit of the registered holder being satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of any class of Common Stock, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the corporation (provided that if the holder is a financial
institution or other institutional investor then its own agreement will be
satisfactory) or, in the case of any such mutilation upon surrender of such
certificate, the corporation will (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
7
<PAGE>
7. AMENDMENT AND WAIVER. No amendment or waiver of any provision of
--------------------
this Part C will be effective without the prior approval of the holders of a
majority of the votes entitled to be cast by the holders of Common Stock, as
described in Section 1 of this Part C.
8. DEFINITIONS. As used in this Part C and in the following Part D,
-----------
the following terms will have the following respective meanings:
"APPLICABLE CLASS F PERCENTAGE" means, as of any date of
-----------------------------
determination, the percentage determined by multiplying 5% by a fraction the
numerator of which is the total number of outstanding shares of Class F Common
as of such date and the denominator of which is the total number of authorized
shares of Class F Common as of such date.
"CODE" means the Internal Revenue Code of 1986, as in effect from time
----
to time.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement dated as of
----------------------
the date of the initial issuance of Common Stock among the corporation, Pinnacle
Towers Inc., ABRY Broadcast Partners II, L.P., Michael D. Craig, the Gardere &
Wynne Savings and Retirement Plan Trust for the Benefit of Michael D. Craig,
James M. Dell'Apa and Robert J. Wolsey, as such Agreement has been and is in
effect from time to time.
"CONVERSION DATE" has the meaning assigned to that term in the Second
---------------
Amended and Restated Subscription and Stockholders Agreement dated as of May 16,
1996 among the corporation, Pinnacle Towers Inc., ABRY Broadcast Partners II,
L.P., Michael D. Craig, the Gardere & Wynne Savings and Retirement Plan Trust
for the Benefit of Michael D. Craig, James M. Dell'Apa and Robert J. Wolsey, as
such Agreement has been and is in effect from time to time.
"DISTRIBUTION" means each distribution made by the corporation to
------------
holders of Common Stock, whether in cash, property, or securities of the
corporation and whether by dividend, liquidation distribution or otherwise;
provided that none of the following will be a Distribution: (a) any redemption
- --------
or repurchase by the corporation of any shares of Class B Common, Class C Common
or Class D Common for any reason, (b) any recapitalization or exchange of any
shares of Common Stock, or any subdivision (by stock split, stock dividend or
otherwise) or any combination (by reverse stock split or otherwise) of any
outstanding shares of Common Stock, (c) the consolidation or merger of the
corporation into or with any other entity or entities, nor the sale or transfer
by the corporation of all or any part of its assets, nor the reduction of the
capital stock of the corporation, or (d) a change in the number of Units in
respect of shares of Class C Common or Class F Common.
"REMAINING PERCENTAGE" means, as of any date of determination, 100%
--------------------
minus the Applicable Class F Percentage as of such date.
- -----
8
<PAGE>
"UNIT" means the right to vote pursuant to paragraph 1 of this Part C
----
and the right to participate in Distributions pursuant to paragraph 2F of this
Part C and the number of Units per share of Common Stock shall be 1.0, except,
in the case of (i) Class C Common, as adjusted pursuant to paragraph 3C of this
Part C and (ii) in the case of the Class F Common, as adjusted pursuant to
paragraph 3D of this Part C.
"UNPAID PREFERENCE AMOUNT" for any share of Class A Common, Class B
------------------------
Common or Class E Common means $100.00 (in each case, as such amount is
proportionately reduced to reflect any split or subdivision of the Class A
Common, Class B Common or Class E Common and proportionately increased to
reflect any reverse split or combination of the Class A Common, Class B Common
or Class E Common), reduced by the aggregate amount of all Distributions made
----------
in respect of such share pursuant to paragraphs 2B, 2C or 2E, respectively, of
this Part C.
"UNPAID YIELD" for any share of Class A Common or Class B Common means
------------
an amount equal to the excess, if any, of (a) the aggregate Yield accrued on
---------- ------
such share over (b) the aggregate amount of Distributions made by the
----
corporation in respect of such share pursuant to paragraph 2A or paragraph 2D of
this Part C.
"YIELD" for any outstanding share of Class A Common or Class B Common
-----
on any date means the amount accruing daily on the Unpaid Preference Amount for
such share from time to time from the date of its issuance through and including
June 30, 1997, at the rate of 15% per annum, compounded annually, taking into
account the amount and timing of all Distributions in respect of such share
pursuant to paragraph 2B or paragraph 2E of this Part C; provided that, for
--------
purposes of determining the amount of the Yield thereon, each share of Class A
Common or Class B Common issued pursuant to the Contribution Agreement will be
deemed to have been issued on May 3, 1995.
PART D. UNAUTHORIZED TRANSFERS
----------------------
1. EFFECT OF UNAUTHORIZED TRANSFERS. Any transfer of any share of
--------------------------------
any class of capital stock of the corporation in violation of the Percentage
Ownership Limit, the Aggregate Ownership Limit, and/or any other restriction or
requirement specified in this Article Four (a "Purported Transfer") will be void
------------------
and of no legal effect. Any Purported Transfer will cause (without action on
the part of the corporation, the transferee (the "Prohibited Transferee"), or
---------------------
the transferor) all shares (or interests therein) involved in such Purported
Transfer to be transferred to the corporation, as trustee (in such capacity, the
"Trustee") in trust for the exclusive benefit of one or more organizations
-------
described in Section 501(c)(3) of the Code (the "Charitable Beneficiaries").
------------------------
The Trustee will be deemed to own such shares for the benefit of the Charitable
Beneficiaries on the day prior to the date of the Purported Transfer. Any
dividends or distributions paid by the corporation to the Purported Transferee
prior to discovery of a Purported Transfer will be disgorged and repaid to the
corporation, as Trustee, by the Prohibited Transferee. Any dividend declared
after a Purported Transfer but unpaid will be
9
<PAGE>
rescinded as void ab initio with respect to the Prohibited Transferee. Any
dividends so disgorged or rescinded will then be paid over to the Trustee and
held in trust for the Charitable Beneficiaries. Any vote taken by a Prohibited
Transferee prior to the discovery by the corporation of a Purported Transfer
will be rescinded as void ab initio. With respect to the shares involved in the
Purported Transfer, the Trustee will be deemed to have an irrevocable proxy to
vote such shares for the benefit of the Charitable Beneficiaries.
2. NOTIFICATION OF PROPOSED TRANSFERS. In order that the
----------------------------------
corporation may enforce the Aggregate Ownership Limit and the Percentage
Ownership Limit, no share of any class or series of capital stock of the
corporation will be transferrable by the holder thereof unless, not less than 30
days prior to any such proposed transfer, the holder of any and all shares
proposed to be transferred ("Transferred Shares") delivers to the corporation
------------------
written notice of its intention to effect such a transfer.
ARTICLE FIVE
------------
The corporation is to have perpetual existence.
ARTICLE SIX
-----------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the bylaws of the corporation.
ARTICLE SEVEN
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE EIGHT
-------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation will not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this Article Eight will not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
10
<PAGE>
ARTICLE NINE
------------
The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE TEN
-----------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
11
<PAGE>
Exhibit 3.1.2
BYLAWS
OF
PINNACLE HOLDINGS INC.
(A DELAWARE CORPORATION)
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I
OFFICES
Section 1. Registered Office................................................... 1
Section 2. Other Offices....................................................... 1
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings.......................................... 1
Section 2. Annual Meetings..................................................... 1
Section 3. Notice of Annual Meetings........................................... 1
Section 4. Special Meetings.................................................... 1
Section 5. Notice of Special Meetings.......................................... 1
Section 6. Quorum.............................................................. 1
Section 7. Organization........................................................ 2
Section 8. Voting.............................................................. 2
Section 9. List of Stockholders................................................ 2
Section 10. Inspectors of Votes................................................. 3
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers.............................................................. 3
Section 2. Number, Qualification, and Term of Office........................... 3
Section 3. Resignations........................................................ 4
Section 4. Removal of Directors................................................ 4
Section 5. Vacancies........................................................... 4
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. Place of Meetings................................................... 4
Section 7. Annual Meetings..................................................... 4
Section 8. Regular Meetings.................................................... 4
Section 9. Special Meetings; Notice............................................ 4
Section 10. Quorum and Manner of Acting......................................... 5
Section 11. Remuneration........................................................ 5
</TABLE>
<PAGE>
<TABLE>
<S> <C>
COMMITTEES OF DIRECTORS
Section 12. Executive Committee; How Constituted and Powers..................... 5
Section 13. Organization........................................................ 5
Section 14. Meetings............................................................ 5
Section 15. Quorum and Manner of Acting......................................... 6
Section 16. Other Committees.................................................... 6
Section 17. Alternate Members of Committees..................................... 6
Section 18. Minutes of Committees............................................... 7
GENERAL
Section 19. Actions Without a Meeting........................................... 7
Section 20. Presence at Meetings by Means of Communications
Equipment........................................................... 7
ARTICLE IV
NOTICES
Section 1. Type of Notice...................................................... 7
Section 2. Waiver of Notice.................................................... 7
Section 3. When Notice Unnecessary............................................. 7
ARTICLE V
OFFICERS
Section 1. General............................................................. 8
Section 2. Election or Appointment............................................. 8
Section 3. Salaries of Elected Officers........................................ 8
Section 4. Term................................................................ 8
Section 5. Chairman of the Board............................................... 8
Section 6. Chief Executive Officer............................................. 8
Section 7. President........................................................... 9
Section 8. Vice Presidents..................................................... 9
Section 9. Assistant Vice Presidents........................................... 9
Section 10. Secretary........................................................... 9
Section 11. Assistant Secretaries............................................... 10
Section 12. Treasurer........................................................... 10
Section 13. Assistant Treasurers................................................ 10
Section 14. Controller.......................................................... 10
Section 15. Assistant Controllers............................................... 11
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI
INDEMNIFICATION
Section 1. Damages and Expenses................................................ 11
Section 2. Prepaid Expenses.................................................... 11
Section 3. Right to Indemnification upon Application; Procedure upon
Application......................................................... 11
Section 4. Other Rights and Remedies........................................... 11
Section 5. Insurance........................................................... 12
Section 6. Mergers............................................................. 12
Section 7. Savings Provision................................................... 12
ARTICLE VII
CERTIFICATES REPRESENTING STOCK
Section 1. Right to Certificate................................................ 12
Section 2. Facsimile Signatures................................................ 13
Section 3. New Certificates.................................................... 13
Section 4. Transfers........................................................... 13
Section 5. Record Date......................................................... 13
Section 6. Registered Stockholders............................................. 14
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends........................................................... 14
Section 2. Reserves............................................................ 14
Section 3. Annual Statement.................................................... 14
Section 4. Checks.............................................................. 14
Section 5. Fiscal Year......................................................... 14
Section 6. Corporate Seal...................................................... 15
ARTICLE IX
AMENDMENTS.............................................................................. 15
</TABLE>
iii
<PAGE>
ARTICLE I
OFFICES
1. Registered Office. The registered office of the Corporation shall be in
-- -----------------
the City of Wilmington, County of New Castle, State of Delaware.
2. Other Offices. The Corporation may also have offices at such other place
-- -------------
or places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
3. Time and Place of Meetings. All meetings of the stockholders for the
-- --------------------------
election of directors shall be held at such time and place, either within or
without the State of Delaware, as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
4. Annual Meetings. Annual meetings of stockholders shall be held on such
-- ---------------
date and at such time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which meeting the
stockholders shall elect by a plurality vote a Board of Directors and transact
such other business as may properly be brought before the meeting.
5. Notice of Annual Meetings. Written notice of the annual meeting, stating
-- -------------------------
the place, date, and hour of the meeting, shall be given to each stockholder of
record entitled to vote at such meeting not less than 10 or more than 60 days
before the date of the meeting.
6. Special Meetings. Special meetings of the stockholders for any purpose
-- ----------------
or purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called at any time by order of the Board of Directors.
7. Notice of Special Meetings. Written notice of a special meeting, stating
-- --------------------------
the place, date, and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be given to each stockholder of record entitled to
vote at such meeting not less than 10 or more than 60 days before the date of
the meeting.
8. Quorum. Except as otherwise provided by statute or the Certificate of
-- ------
Incorporation, the holders of stock having a majority of the voting power of the
stock entitled to be voted thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time without notice (other than announcement at the meeting
at which the
<PAGE>
adjournment is taken of the time and place of the adjourned meeting) until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
9. Organization. At each meeting of the stockholders, the Chairman of the
-- ------------
Board or the Chief Executive Officer, determined as provided in Article V of
these Bylaws, or if those officers shall be absent therefrom, another officer of
the Corporation chosen as chairman by a majority of the votes cast by the
stockholders present in person or by proxy and entitled to vote thereat, or if
all the officers of the Corporation shall be absent therefrom, a stockholder
holding of record shares of stock of the Corporation so chosen, shall act as
chairman of the meeting and preside thereat. The Secretary or, if he shall be
absent from such meeting or shall be required pursuant to the provisions of this
Section 7 to act as chairman of such meeting, the person whom the chairman of
such meeting shall appoint shall act as secretary of such meeting and keep the
minutes thereof.
10. Voting. Except as otherwise provided in the Certificate of
--- ------
Incorporation, each stockholder shall, at each meeting of the stockholders, be
entitled to one vote in person or by proxy for each share of stock of the
Corporation held by him and registered in his name on the books of the
Corporation on the date fixed pursuant to the provisions of Section 5 of Article
VII of these Bylaws as the record date for the determination of stockholders who
shall be entitled to notice of and to vote at such meeting. Shares of its own
stock belonging to the Corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held directly or indirectly by the Corporation, shall not be
entitled to vote. Any vote by stock of the Corporation may be given at any
meeting of the stockholders by the stockholder entitled thereto, in person or by
his proxy appointed by an instrument in writing subscribed by such stockholder
or by his attorney thereunto duly authorized and delivered to the Secretary of
the Corporation or to the secretary of the meeting; provided, however, that no
proxy shall be voted or acted upon after three years from its date, unless said
proxy shall provide for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and unless otherwise made
irrevocable by law. At all meetings of the stockholders all matters, except
where other provision is made by law, the Certificate of Incorporation, or these
Bylaws, shall be decided by the vote of a majority of the votes cast by the
stockholders present in person or by proxy and entitled to vote thereat, a
quorum being present. Unless demanded by a stockholder of the Corporation
present in person or by proxy at any meeting of the stockholders and entitled to
vote thereat, or so directed by the chairman of the meeting, the vote thereat on
any question other than the election or removal of directors need not be by
written ballot. Upon a demand of any such stockholder for a vote by written
ballot on any question or at the direction of such chairman that a vote by
written ballot be taken on any question, such vote shall be taken by written
ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and shall state the
number of shares voted.
<PAGE>
11. List of Stockholders. It shall be the duty of the Secretary or other
--- --------------------
officer of the Corporation who shall have charge of its stock ledger, either
directly or through another officer of the Corporation designated by him or
through a transfer agent appointed by the Board of Directors, to prepare and
make, at least 10 days before every meeting of the stockholders, a complete list
of the stockholders entitled to vote thereat, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days before said meeting, either at
a place within the city where said meeting is to be held, which place shall be
specified in the notice of said meeting, or, if not so specified, at the place
where said meeting is to be held. The list shall also be produced and kept at
the time and place of said meeting during the whole time thereof, and may be
inspected by any stockholder of record who shall be present thereat. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, such list or the books of the Corporation, or to vote
in person or by proxy at any meeting of stockholders.
12. Inspectors of Votes. At each meeting of the stockholders, the chairman
--- -------------------
of such meeting may appoint two Inspectors of Votes to act thereat, unless the
Board of Directors shall have theretofore made such appointments. Each
Inspector of Votes so appointed shall first subscribe an oath or affirmation
faithfully to execute the duties of an Inspector of Votes at such meeting with
strict impartiality and according to the best of his ability. Such Inspectors
of Votes, if any, shall take charge of the ballots, if any, at such meeting and,
after the balloting thereat on any question, shall count the ballots cast
thereon and shall make a report in writing to the secretary of such meeting of
the results thereof. An Inspector of Votes need not be a stockholder of the
Corporation, and any officer of the Corporation may be an Inspector of Votes on
any question other than a vote for or against his election to any position with
the Corporation or on any other question in which he may be directly interested.
ARTICLE III
BOARD OF DIRECTORS
13. Powers. The business and affairs of the Corporation shall be managed by
--- ------
its Board of Directors, which shall have and may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute, the
Certificate of Incorporation, or these Bylaws directed or required to be
exercised or done by the stockholders.
14. Number, Qualification, and Term of Office. The number of directors
--- -----------------------------------------
which shall constitute the whole Board of Directors shall not be less than one
(1) or more than ten (10). Within the limits above specified, the number of
directors which shall constitute the whole Board of Directors shall be
determined from time to time by resolution of the Board of Directors. Directors
need not be stockholders. The directors shall be elected at the annual meeting
of the stockholders, except as provided in Sections 4 and 5 of this Article III,
and each director elected shall hold office until the annual meeting next after
his election and until his successor is duly elected and qualified, or until his
death or retirement or until he resigns or is removed in the manner hereinafter
provided. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy and entitled to vote on the election
of directors at any annual or special meeting of stockholders. Such election
shall be by written ballot.
<PAGE>
15. Resignations. Any director may resign at any time by giving written
--- ------------
notice of his resignation to the Corporation. Any such resignation shall take
effect at the time specified therein, or if the time when it shall become
effective shall not be specified therein, then it shall take effect immediately
upon its receipt by the Corporation. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
16. Removal of Directors. Any director may be removed, either with or
--- --------------------
without cause, at any time, by the affirmative vote by written ballot of a
majority in voting interest of the stockholders of record of the Corporation
entitled to vote, given at an annual meeting or at a special meeting of the
stockholders called for that purpose. The vacancy in the Board of Directors
caused by any such removal shall be filled by the stockholders at such meeting
or, if not so filled, by the Board of Directors as provided in Section 5 of this
Article III.
17. Vacancies. Vacancies and newly created directorships resulting from any
--- ---------
increase in the authorized number of directors may be filled by a majority of
the directors then in office though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the annual meeting
next after their election and until their successors are elected and qualified,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute.
MEETINGS OF THE BOARD OF DIRECTORS
18. Place of Meetings. The Board of Directors of the Corporation may hold
--- -----------------
meetings, both regular and special, either within or without the State of
Delaware.
19. Annual Meetings. The first meeting of each newly elected Board of
--- ---------------
Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order legally to constitute the meeting, provided a quorum shall
be present. In the event such meeting is not held immediately following the
annual meeting of stockholders, the meeting may be held at such time and place
as shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors.
20. Regular Meetings. Regular meetings of the Board of Directors may be
--- ----------------
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors.
21. Special Meetings; Notice. Special meetings of the Board of Directors
--- ------------------------
may be called by the Chairman of the Board, the Chief Executive Officer, or the
Secretary on 24 hours' notice to each director, either personally or by
telephone or by mail, telegraph, telex, cable, wireless, or other form of
recorded communication; special meetings shall be called by the Chairman of the
Board, the President, or the Secretary in like manner and on like notice on the
written request of two directors. Notice of any such meeting need not be given
to any director, however, if waived by him in writing or by telegraph, telex,
cable, wireless, or other form of recorded communication, or if he shall be
present at such meeting.
<PAGE>
22. Quorum and Manner of Acting. At all meetings of the Board of Directors,
--- ---------------------------
a majority of the directors at the time in office (but not less than one-third
of the whole Board of Directors) shall constitute a quorum for the transaction
of business, and the act of a majority of the directors present at any meeting
at which a quorum is present shall be the act of the Board of Directors, except
as may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
23. Remuneration. Unless otherwise expressly provided by resolution adopted
--- ------------
by the Board of Directors, none of the directors shall, as such, receive any
stated remuneration for his services; but the Board of Directors may at any time
and from time to time by resolution provide that a specified sum shall be paid
to any director of the Corporation, either as his annual remuneration as such
director or member of any committee of the Board of Directors or as remuneration
for his attendance at each meeting of the Board of Directors or any such
committee. The Board of Directors may also likewise provide that the
Corporation shall reimburse each director for any expenses paid by him on
account of his attendance at any meeting. Nothing in this Section 11 shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving remuneration therefor.
COMMITTEES OF DIRECTORS
24. Executive Committee; How Constituted and Powers. The Board of Directors
--- -----------------------------------------------
may in its discretion, by resolution passed by a majority of the whole Board of
Directors, designate an Executive Committee consisting of one or more of the
directors of the Corporation. Subject to the provisions of Section 141 of the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation, and these Bylaws, the Executive Committee shall have and may
exercise, when the Board of Directors is not in session, all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have the power to authorize the seal of
the Corporation to be affixed to all papers which may require it; but the
Executive Committee shall not have the power to fill vacancies in the Board of
Directors, the Executive Committee, or any other committee of directors or to
elect or approve officers of the Corporation. The Executive Committee shall
have the power and authority to authorize the issuance of common stock and grant
and authorize options and other rights with respect to such issuance. The Board
of Directors shall have the power at any time, by resolution passed by a
majority of the whole Board of Directors, to change the membership of the
Executive Committee, to fill all vacancies in it, or to dissolve it, either with
or without cause.
25. Organization. The Chairman of the Executive Committee, to be selected
--- ------------
by the Board of Directors, shall act as chairman at all meetings of the
Executive Committee and the Secretary shall act as secretary thereof. In case
of the absence from any meeting of the Executive Committee of the Chairman of
the Executive Committee or the Secretary, the Executive Committee may appoint a
chairman or secretary, as the case may be, of the meeting.
<PAGE>
26. Meetings. Regular meetings of the Executive Committee, of which no
--- --------
notice shall be necessary, may be held on such days and at such places, within
or without the State of Delaware, as shall be fixed by resolution adopted by a
majority of the Executive Committee and communicated in writing to all its
members. Special meetings of the Executive Committee shall be held whenever
called by the Chairman of the Executive Committee or a majority of the members
of the Executive Committee then in office. Notice of each special meeting of
the Executive Committee shall be given by mail, telegraph, telex, cable,
wireless, or other form of recorded communication or be delivered personally or
by telephone to each member of the Executive Committee not later than the day
before the day on which such meeting is to be held. Notice of any such meeting
need not be given to any member of the Executive Committee, however, if waived
by him in writing or by telegraph, telex, cable, wireless, or other form of
recorded communication, or if he shall be present at such meeting; and any
meeting of the Executive Committee shall be a legal meeting without any notice
thereof having been given, if all the members of the Executive Committee shall
be present thereat. Subject to the provisions of this Article III, the
Executive Committee, by resolution adopted by a majority of the whole Executive
Committee, shall fix its own rules of procedure.
27. Quorum and Manner of Acting. A majority of the Executive Committee
--- ---------------------------
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at a meeting thereof at which a quorum is present
shall be the act of the Executive Committee.
28. Other Committees. The Board of Directors may, by resolution or
--- ----------------
resolutions passed by a majority of the whole Board of Directors, designate one
or more other committees consisting of one or more directors of the Corporation,
which, to the extent provided in said resolution or resolutions, shall have and
may exercise, subject to the provisions of Section 141 of the Delaware General
Corporation Law, and the Certificate of Incorporation and these Bylaws, the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and shall have the power to authorize the seal
of the Corporation to be affixed to all papers which may require it; but no such
committee shall have the power to fill vacancies in the Board of Directors, the
Executive Committee, or any other committee or in their respective membership,
to appoint or remove officers of the Corporation, or to authorize the issuance
of shares of the capital stock of the Corporation, except that such a committee
may, to the extent provided in said resolutions, grant and authorize options and
other rights with respect to the common stock of the Corporation pursuant to and
in accordance with any plan approved by the Board of Directors. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors. A majority of all the
members of any such committee may determine its action and fix the time and
place of its meetings and specify what notice thereof, if any, shall be given,
unless the Board of Directors shall otherwise provide. The Board of Directors
shall have power to change the members of any such committee at any time to fill
vacancies, and to discharge any such committee, either with or without cause, at
any time.
29. Alternate Members of Committees. The Board of Directors may designate
--- -------------------------------
one or more directors as alternate members of the Executive Committee or any
other committee, who may replace any absent or disqualified member at any
meeting of the committee, or if none be so appointed the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
<PAGE>
30. Minutes of Committees. Each committee shall keep regular minutes of its
--- ---------------------
meetings and proceedings and report the same to the Board of Directors at the
next meeting thereof.
GENERAL
31. Actions Without a Meeting. Unless otherwise restricted by the
--- -------------------------
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
the committee.
32. Presence at Meetings by Means of Communications Equipment. Members of
--- ---------------------------------------------------------
the Board of Directors, or of any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting conducted pursuant to this Section 20 shall
constitute presence in person at such meeting.
ARTICLE IV
NOTICES
33. Type of Notice. Whenever, under the provisions of any applicable
--- --------------
statute, the Certificate of Incorporation, or these Bylaws, notice is required
to be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, in person or by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given in any manner permitted by
Article III hereof and shall be deemed to be given at the time when first
transmitted by the method of communication so permitted.
34. Waiver of Notice. Whenever any notice is required to be given under the
--- ----------------
provisions of any applicable statute, the Certificate of Incorporation, or these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto, and transmission of a waiver of notice by a director or
stockholder by mail, telegraph, telex, cable, wireless, or other form of
recorded communication may constitute such a waiver.
<PAGE>
35. When Notice Unnecessary. Whenever, under the provisions of the Delaware
--- -----------------------
General Corporation Law, the Certificate of Incorporation or these Bylaws, any
notice is required to be given to any stockholder, such notice need not be given
to the stockholder if:
(a) notice of two consecutive annual meetings and all notices of meetings
held during the period between those annual meetings, if any, or
(b) all (but in no event less than two) payments (if sent by first class
mail) of distributions or interest on securities during a 12-months
period,
have been mailed to that person, addressed at his address as shown on the
records of the Corporation, and have been returned undeliverable. Any action or
meeting taken or held without notice to such a person shall have the same force
and effect as if the notice had been duly given. If such a person delivers to
the Corporation a written notice setting forth his then current address, the
requirement that notice be given to that person shall be reinstated.
ARTICLE V
OFFICERS
36. General. The elected officers of the Corporation shall be a President
--- -------
and a Secretary. The Board of Directors may also elect or appoint a Chairman of
the Board, a Chief Executive Officer, one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer, one
or more Assistant Treasurers, a Controller, one or more Assistant Controllers,
and such other officers and agents as may be deemed necessary or advisable from
time to time, all of whom shall also be officers. Two or more offices may be
held by the same person.
37. Election or Appointment. The Board of Directors at its annual meeting
--- -----------------------
shall elect or appoint, as the case may be, the officers to fill the positions
designated in or pursuant to Section 1 of this Article V. Officers of the
Corporation may also be elected or appointed, as the case may be, at any other
time.
38. Salaries of Elected Officers. The salaries of all elected officers of
--- ----------------------------
the Corporation shall be fixed by the Board of Directors.
39. Term. Each officer of the Corporation shall hold his office until his
--- ----
successor is duly elected or appointed and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. Any officer elected or appointed by the Board of Directors
or the Executive Committee may be removed at any time by the affirmative vote of
a majority of the whole Board of Directors. Any vacancy occurring in any office
of the Corporation by death, resignation, removal, or otherwise may be filled by
the Board of Directors.
40. Chairman of the Board. The Chairman of the Board, if any, shall be a
--- ---------------------
member of the Board of Directors and shall preside when present at all meetings
of the Board of Directors. The Chairman of the Board shall preside when present
at all meetings of the stockholders of the Corporation unless he delegates such
authority to another officer of the
<PAGE>
Corporation. The Chairman of the Board shall advise and counsel the Chief
Executive Officer and the other officers of the Corporation and shall exercise
such powers and perform such duties as shall be assigned to or required of him
from time to time by the Board of Directors.
41. Chief Executive Officer. The Chief Executive Officer, if any, shall
--- -----------------------
have general supervision of the affairs of the Corporation and general and
active control of all its business. He shall preside, in the absence of the
Chairman of the Board, at all meetings of stockholders and at all meetings of
the Board of Directors. He shall see that all orders and resolutions of the
Board of Directors and the stockholders are carried into effect. He shall have
general authority to execute bonds, deeds and contracts in the name of the
Corporation and affix the corporate seal thereto; to sign stock certificates; to
cause the employment or appointment of such employees and agents of the
Corporation as the proper conduct of operations may require, and to fix their
compensation, subject to the provisions of these Bylaws; to remove or suspend
any employee or agent who shall have been employed or appointed under his
authority or under authority of an officer subordinate to him; to suspend for
cause, pending final action by the authority which shall have elected or
appointed him, any officer subordinate to the Chief Executive Officer; and, in
general, to exercise all the powers and authority usually appertaining to the
chief executive officer of a corporation, except as otherwise provided in these
Bylaws.
42. President. The President shall be the Chief Operating Officer of the
--- ---------
Corporation, shall in the absence or disability of the Chief Executive Officer
perform the duties and exercise the powers of the Chief Executive Officer, and
shall have, subject to review and approval of the Chief Executive Officer, if
one is elected, responsibility for the general day-to-day operations of the
Corporation's properties and facilities and such other duties and
responsibilities as (i) are customarily possessed by a chief operating officer
of a corporation similar in size and line of business as the Corporation and
(ii) may be delegated to him from time to time by the Board of Directors or the
Chief Executive Officer of the Corporation.
43. Vice Presidents. In the absence of the President or in the event of
--- ---------------
his inability or refusal to act, the Vice President (or in the event there be
more than one Vice President, the Vice Presidents in the order designated, or in
the absence of any designation, then in the order of their election) shall
perform the duties of the President and, when so acting, shall have all the
powers of and be subject to ali the restrictions upon the President. The Vice
Presidents shall perform such other duties and have such other powers as the
Board of Directors or the President may from time to time prescribe.
<PAGE>
44. Assistant Vice Presidents. In the absence of a Vice President or in
--- -------------------------
the event of his inability or refusal to act, the Assistant Vice President (or
in the event there shall be more than one, the Assistant Vice Presidents in the
order designated by the Board of Directors or in the absence of any designation,
then in the order of their appointment) shall perform the duties and exercise
the powers of that Vice President, and shall perform such other duties and have
such other powers as the Board of Directors, the President, or the Vice
President under whose supervision he is appointed may from time to time
prescribe.
45. Secretary. The Secretary shall attend all meetings of the Board of
--- ---------
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the Executive Committee
or other standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or the President, under whose supervision he shall be. He shall
have custody of the corporate seal of the Corporation, and he, or an Assistant
Secretary, shall have authority to affix the same to any instrument requiring
it, and when so affixed, it may be attested by his signature or by the signature
of such Assistant Secretary. The Board of Directors may give general authority
to any other officer to affix the seal of the Corporation and to attest the
affixing by his signature. The Secretary shall keep and account for all books,
documents, papers, and records of the Corporation, except those for which some
other officer or agent is properly accountable. He shall have authority to sign
stock certificates and shall generally perform all the duties usually
appertaining to the office of the secretary of a corporation.
46. Assistant Secretaries. In the absence of the Secretary or in the
--- ---------------------
event of his inability or refusal to act, the Assistant Secretary (or, if there
shall be more than one, the Assistant Secretaries in the order designated by the
Board of Directors, or in the absence of any designation, then in the order of
their appointment) shall perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors, the President, or the Secretary may from time to time
prescribe.
47. Treasurer. The Treasurer shall have the custody of the corporate
--- ---------
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings or when the
Board of Directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the Corporation. If required by the Board of
Directors, he shall give the Corporation a bond (which shall be renewed every
six years) in such sum and with such surety or sureties as shall be satisfactory
to the Board of Directors for the faithful performance of the duties of his
office and for the restoration to the Corporation, in case of his death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in his possession or under his
control belonging to the Corporation. The Treasurer shall be under the
supervision of the Vice President in charge of finance if one is so designated,
and he shall perform such other duties as may be prescribed by the Board of
Directors, the President or any such Vice President in charge of finance.
<PAGE>
48. Assistant Treasurers. The Assistant Treasurer or Assistant Treasurers
--- --------------------
shall assist the Treasurer, and in the absence of the Treasurer or in the event
of his inability or refusal to act, the Assistant Treasurer (or in the event
there shall be more than one, the Assistant Treasurers in the order designated
by the Board of Directors, or in the absence of any designation, then in the
order of their appointment) shall perform the duties and exercise the powers of
the Treasurer and shall perform such other duties and have such other powers as
the Board of Directors, the President, or the Treasurer may from time to time
prescribe.
49. Controller. The Controller, if one is appointed, shall have
--- ----------
supervision of the accounting practices of the Corporation and shall prescribe
the duties and powers of any other accounting personnel of the Corporation. He
shall cause to be maintained an adequate system of financial control through a
program of budgets and interpretive reports. He shall initiate and enforce
measures and procedures whereby the business of the Corporation shall be
conducted with the maximum efficiency and economy. If required, he shall
prepare a monthly report covering the operating results of the Corporation. The
Controller shall be under the supervision of the Vice President in charge of
finance, if one is so designated, and he shall perform such other duties as may
be prescribed by the Board of Directors, the President, or any such Vice
President in charge of finance.
50. Assistant Controllers. The Assistant Controller or Assistant
--- ---------------------
Controllers shall assist the Controller, and in the absence of the Controller or
in the event of his inability or refusal to act, the Assistant Controller (or,
if there shall be more than one, the Assistant Controllers in the order
designated by the Board of Directors, or in the absence of any designation, then
in the order of their appointment) shall perform the duties and exercise the
powers of the Controller and perform such other duties and have such other
powers as the Board of Directors, the President, or the Controller may from time
to time prescribe.
ARTICLE VI
INDEMNIFICATION
51. Damages and Expenses. To the fullest extent permitted by law, the
--- --------------------
Corporation shall indemnify any person 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, by reason
of the fact that he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise (all of such persons being hereafter
referred to in this Article as a "Corporate Functionary"), against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit, or
proceeding.
<PAGE>
52. Prepaid Expenses. Expenses incurred in defending a civil or criminal
--- ----------------
action, suit, or proceeding shall be paid by the Corporation in advance of the
final disposition of such action suit, or proceeding, upon receipt of an
undertaking by or on behalf of the Corporate Functionary to repay such amount if
it shall ultimately be determined he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
53. Right to Indemnification upon Application: Procedure upon Application.
--- ---------------------------------------------------------------------
Any indemnification under this Article VI shall be made promptly upon, and in
any event within 60 days after, the written request of the Corporate
Functionary, unless a determination is reasonably and promptly made by the Board
of Directors by majority vote of the disinterested directors that such Corporate
Functionary acted in a manner set forth in such Sections as to justify the
Corporation in not indemnifying or making an advance of expenses to the
Corporate Functionary. The right to indemnification or advance of expenses
granted by this Article VI shall be enforceable by the Corporate Functionary in
any court of competent jurisdiction if the Board of Directors denies his claim,
in whole or in part, or if no disposition of such claim is made within 60 days.
The expenses of the Corporate Functionary incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any such proceeding shall also be indemnified by the Corporation.
54. Other Rights and Remedies. The indemnification and advancement of
--- -------------------------
expenses or provided by or granted pursuant to this Article VI shall not be
deemed exclusive of any other rights to which any person seeking indemnification
and advancement of expenses or may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Corporate Functionary and shall
inure to the benefit of the heirs, executors, and administrators of such a
person. Any repeal or modification of these Bylaws or relevant provisions of
the Delaware General Corporation Law and other applicable law, if any, shall not
affect any then existing rights of a Corporate Functionary to indemnification or
advancement of expenses.
55. Insurance. Upon resolution passed by the Board of Directors, the
--- ---------
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article VI.
56. Mergers. For purposes of this Article VI, references to "the
--- -------
Corporation" shall include, in addition to the resulting or surviving
corporation, constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, or agents, so that any person who is or was a
director, officer, employee, or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee, or agent of another corporation, partnership. joint venture,
trust, or other enterprise shall stand in the same position under the provisions
of this Article VI with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
<PAGE>
57. Savings Provision. If this Article VI or any portion hereof shall be
--- -----------------
invalidated on any ground by a court of competent jurisdiction the Corporation
shall nevertheless indemnify each Corporate Functionary as to expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
with respect to any action, suit, proceeding, or investigation, whether civil,
criminal or administrative, including a grand jury proceeding or action or suit
brought by or in the right of the Corporation, to the full extent permitted by
any applicable portion of this Article VI that shall not have been invalidated.
ARTICLE VII
CERTIFICATES REPRESENTING STOCK
58. Right to Certificate. Every holder of stock in the Corporation shall
--- --------------------
be entitled to have a certificate, signed by, or in the name of the Corporation
by, the Chairman of the Board, the Chief Executive Officer, the President, or a
Vice President and by the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the Corporation.
If the Corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences, and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations, or restrictions of
such preferences or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock; provided, that, except as otherwise provided in
Section 202 of the Delaware General Corporation Law, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences, and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of such
preferences or rights.
59. Facsimile Signatures. Any of or all the signatures on the certificate
--- --------------------
may be facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
60. New Certificates. The Board of Directors may direct a new certificate
--- ----------------
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation and alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen, or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
or to give the Corporation a bone in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen, or destroyed or the issuance of
such new certificate.
<PAGE>
61. Transfers. Upon surrender to the Corporation or the transfer agent of
--- ---------
the Corporation or a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation, or authority to transfer, it shall
be the duty of the Corporation, subject to any proper restrictions on transfer,
to issue a new certificate to the person entitled thereto, cancel the old
certificate, and record the transaction upon its books.
62. Record Date. The Board of Directors may fix in advance a date, not
--- -----------
preceding the date on which the resolution fixing the record date is adopted,
and
(i) not more than 60 days nor less than 10 days preceding the date of any
meeting of stockholders, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof,
(ii) not more than 10 days after the date on which the resolution fixing
the record date is adopted, as a record date in connection with
obtaining a consent of the stockholders in writing to corporate
action without a meeting, or
(iii) not more than 60 days before the date for payment of any dividend or
distribution, or the date for the allotment of rights, or the date
when any change, or conversion or exchange of capital stock shall go
into effect, or the date on which any other lawful action shall be
taken, as the record date for determining the stockholders entitled
to receive payment of any such dividend or distribution, or to
receive any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock
or other lawful action of the corporation,
and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, any such meeting and any adjournment thereof (provided, however,
that the Board of Directors may fix a new record date for an adjourned meeting),
or to give such consent, or to receive payment of such dividend or distribution,
or to receive such allotment of rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
63. Registered Stockholders. The Corporation shall be entitled to
--- -----------------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other c!aim to or
interest in such share or shares on the part of any other person, whether or not
provided by the laws of the State of Delaware.
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
64. Dividends. Dividends upon the capital stock of the Corporation, if
--- ---------
any, subject to the provisions of the Certificate of Incorporation, may be
declared by the Board of Directors (but not any committee thereof) at any
regular meeting, pursuant to law. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
65. Reserves. Before payment of any dividend, there may be set aside out
--- --------
of any funds of the Corporation available for dividends such sum or sums as the
Board of Directors from time to time, in their absolute discretion, thinks
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Board of Directors shall think conducive to the
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
66. Annual Statement. The Board of Directors shall present at each annual
--- ----------------
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the Corporation.
67. Checks. All checks or demands for money and promissory notes of the
--- ------
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time prescribe.
68. Fiscal Year. The fiscal year of the Corporation shall be determined
--- -----------
by the Board of Directors.
69. Corporate Seal. The corporate seal shall have inscribed thereon the
--- --------------
name of the Corporation, the year of its organization, and the word "Delaware."
The seal may be used by causing it or a facsimile thereof to be impressed,
affixed, reproduced, or otherwise.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended, or repealed or new Bylaws may be
adopted by the stockholders or by the Board of Directors at any regular meeting
of the stockholders or the Board of Directors or at any special meeting of the
stockholders or the Board of Directors if notice of such alteration, amendment,
repeal, or adoption of new Bylaws be contained in the notice of such special
meeting.
<PAGE>
CERTIFICATION
I, Michael D. Craig, Secretary of the Corporation, hereby certify that the
foregoing is a true accurate and complete copy of the Bylaws of Pinnacle
Holdings Inc. adopted by its Board of Directors as of August 18, 1995.
/s/ Michael D. Craig
------------------------------------
Michael D. Craig, Secretary
<PAGE>
EXHIBIT 4.1
________________________________________________________________________________
PINNACLE HOLDINGS INC.
As Issuer
---------
TO
THE BANK OF NEW YORK
As Trustee
----------
______________
INDENTURE
Dated as of March 20, 1998
______________
___________
10% SENIOR DISCOUNT NOTES DUE 2008
________________________________________________________________________________
<PAGE>
Pinnacle Holdings Inc.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of November 26, 1996
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
(S) 310(a)(1) ......................... 609
(a)(2) ......................... 609
(a)(3) ......................... Not
Applicable
(a)(4) ......................... Not
Applicable
(b) ......................... 608
610
(S) 311(a) ......................... 613
(b) ......................... 613
(S) 312(a) ......................... 701
702
(b) ......................... 702
(c) ......................... 702
(b) ......................... 703
(c) ......................... 703
(d) ......................... 703
(S) 314(a) ......................... 704
(a)(4) ......................... 1020
(b) ......................... Not
Applicable
(c)(1) ......................... 102
(c)(2) ......................... 102
(c)(3) ......................... Not
Applicable
(d) ......................... Not
Applicable
(e) ......................... 102
</TABLE>
______________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
i
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Indentrure
Act Section Section
- --------------- -----------
<S> <C>
(S) 315(a) ......................... 601
(b) ......................... 602
(c) ......................... 601
(d) .........................
(d)(1) ......................... 601
(e) ......................... 514
(S) 316(a) ......................... 101
(a)(1)(A) 502
512
(a)(1)(B) ......................... 513
(a)(2) ......................... Not
Applicable
(b) ......................... 508
(S) 317(a)(1) ......................... 503
(a)(2) ......................... 504
(b) ......................... 1003
(S) 318(a) ......................... 107
</TABLE>
______________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS OF THE COMPANY 1
ARTICLE ONE Definitions and Other Provisions of General Application
SECTION 101. Definitions 1
ABRY 2
ABRY II 2
ABRY Subordinated Debt 2
Accreted Value 3
Acquisition Debt 3
Act 3
Adjusted Consolidated Cash Flow 3
Affiliate 4
Agent Member 4
Applicable Procedures 4
Asset Disposition 4
Authenticating Agent 5
Board of Directors 5
Board Resolution 5
Business Day 5
Capital Lease Obligation 5
Capital Stock 5
Cash Equivalents 5
Cedel 6
Change of Control 6
Closing Date 6
Commission 6
Common Stock 6
Consolidated Cash Flow 6
Consolidated Income Tax Expense 6
Consolidated Interest Expense 6
Consolidated Net Income 7
Consolidated Net Worth 7
Continuing Directors 7
Corporate Development Expenses 7
Corporate Trust Office 8
corporation 8
Debt 8
Default Amount 8
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Defaulted Interest 8
Depositary 8
Dollars 9
DTC 9
Euroclear 9
Event of Default 9
Exchange Act 9
Exchange and Registration Rights Agreement 9
Exchange Offer 9
Exchange Offer Registration Statement 9
Exchange Securities 9
Expiration Date 9
Full Accretion Date 9
Global Security 9
Guarantee 9
Holder 10
Incur 10
Indenture 10
Initial Purchasers 10
Interest Payment Date 10
Interest Rate or Currency Protection Agreement 10
Internal Revenue Code 10
Investment 10
Issuer 11
Issuer request; Issuer Order 11
Lien 11
Maturity 11
Net Cash Proceeds 11
Offer 12
Offer Expiration Date 12
Offer to Purchase 12
Officers' Certificate 14
Opinion of Counsel 14
Original Securities 14
Outstanding 14
Owner Securities Certification 15
pari passu 15
Paying Agent 15
Permitted Holder 15
Permitted Interest Rate or Currency Protection Agreement 15
Permitted Senior Bank Debt 15
Person 16
Pinnacle Towers 16
Predecessor Security 16
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Preferred Stock 16
Public Equity Offering 16
Purchase Agreement 16
Purchase Amount 16
Purchase Date 16
Purchase Money Secured Debt 16
Purchase Price 16
Receivables 17
Receivables Sale 17
Redeemable Stock 17
Redemption Date 17
Redemption Price 17
Registered Securities 17
Registration Default 17
Registration Default Period 18
Regular Record Date 18
Regulation S 18
Regulation S Certificate 18
Regulation S Global Security 18
Regulation S Legend 18
Regulation S Securities 18
Regulation S Temporary Global Security 18
Related Person 18
Required Filing Date 18
Resale Registration Statement 18
Responsible Officer 19
Restricted Global Security 19
Restricted Payments 19
Restricted Period 19
Restricted Securities 19
Restricted Securities Certificate 19
Restricted Securities Legend 19
Restricted Subsidiary 19
Rule 144 19
Rule 144A 19
Rule 144A Securities 19
Securities 19
Securities Act 19
Securities Act Legend 20
Securities Payment 20
Security Register; Security Register 20
Senior Credit Facility 20
Site Management Contract 20
Special Record Date 20
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
Stated Maturity 20
Subordinated Debt 20
Subsidiary 21
Successor Security 21
Tower Asset Exchange 21
Tower Assets 21
Trust Indenture Act 21
Trustee 22
Unregistered Security 22
Unrestricted Securities Certificate 22
Unrestricted Subsidiary 22
U.S. Person 22
Vice President 23
Voting Stock 23
Wholly Owned Restricted Subsidiary 23
SECTION 102. Compliance Certificates and Opinions 23
SECTION 103. Form of Documents Delivered to Trustee 24
SECTION 104. Acts of Holders; Record Date 25
SECTION 105. Notices, Etc., to Trustee and Issuer 27
SECTION 106. Notice to Holders; Waiver 27
SECTION 107. Conflict with Trust Indenture Act 28
SECTION 108. Effect of Headings and Table of Contents 28
SECTION 109. Successors and Assigns 28
SECTION 110. Separability Clause 28
SECTION 111. Benefits of Indenture 28
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C>
SECTION 112. Governing Law 29
SECTION 113. Legal Holidays 29
ARTICLE TWO Security Forms
SECTION 201. Forms Generally; Initial Forms of Rule 144A and Regulation S
Securities 29
SECTION 202. Form of Face of Security 30
SECTION 203. Form of Reverse of Security 34
SECTION 204. Form of Trustee's Certificate of Authentication 38
ARTICLE THREE The Securities
SECTION 301. Title and Terms 38
SECTION 302. Denominations 39
SECTION 303. Execution, Authentication, Delivery and Dating 39
SECTION 304. Temporary Securities 40
SECTION 305. Global Securities 41
SECTION 306. Registration, Registration of Transfer and Exchange Generally;
Restrictions on Transfer and Exchange; Securities Act Legends 42
SECTION 307. Mutilated, Destroyed, Lost and Stolen Securities 46
SECTION 308. Payment of Interest; Interest Rights Preserved 47
SECTION 309. Persons Deemed Owners 48
SECTION 310. Cancellation 49
SECTION 311. CUSIP Numbers
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE FOUR Satisfaction and Discharge
<S> <C>
SECTION 401. Satisfaction and Discharge of Indenture 49
SECTION 402. Application of Trust Money 50
ARTICLE FIVE Remedies
SECTION 501. Events of Default 51
SECTION 502. Acceleration of Maturity; Rescission and Annulment 53
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee 54
SECTION 504. Trustee May File Proofs of Claim 55
SECTION 505. Trustee May Enforce Claims Without Possession of Securities 55
SECTION 506. Application of Money Collected 56
SECTION 507. Limitation on Suits 56
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest 57
SECTION 509. Restoration of Rights and Remedies 57
SECTION 510. Rights and Remedies Cumulative 57
SECTION 511. Delay or Omission Not Waiver 58
SECTION 512. Control by Holders 58
SECTION 513. Waiver of Past Defaults 58
SECTION 514. Undertaking for Costs 59
SECTION 515. Waiver of Stay, or Extension Laws 59
ARTICLE SIX The Trustee
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<TABLE>
<S> <C>
SECTION 601. Certain Duties and Responsibilities 59
SECTION 602. Notice of Defaults 60
SECTION 603. Certain Rights of Trustee 61
SECTION 604. Not Responsible for Recitals or Issuance of Securities 62
SECTION 605. May Hold Securities 62
SECTION 606. Money Held in Trust 62
SECTION 607. Compensation and Reimbursement 62
SECTION 608. Disqualification; Conflicting Interests 63
SECTION 609. Corporate Trustee Required; Eligibility 64
SECTION 610. Resignation and Removal; Appointment of Successor 64
SECTION 611. Acceptance of Appointment by Successor 65
SECTION 612. Merger, Conversion, Consolidation or Succession to Business 66
SECTION 613. Preferential Collection of Claims Against Issuer 66
SECTION 614. Appointment of Authenticating Agent 66
SECTION 615. Trustee's Application for Instructions
ARTICLE SEVEN Holders' Lists and Reports by Trustee and Issuer
SECTION 701. Issuer to Furnish Trustee Names and Addresses of Holders 68
SECTION 702. Preservation of Information; Communications to Holders 68
SECTION 703. Reports by Trustee 69
SECTION 704. Reports by the Issuer 69
SECTION 705. Officers' Certificate with Respect to Change in Interest Rates. 69
</TABLE>
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<TABLE>
<S> <C>
SECTION 706. Calculation of Original Issue Discount
ARTICLE EIGHT Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Issuer may Consolidate, Etc. Only on Certain Terms 70
SECTION 802. Successor Substituted 71
ARTICLE NINE Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders 71
SECTION 902. Supplemental Indentures with Consent of Holders 72
SECTION 903. Execution of Supplemental Indentures 73
SECTION 904. Effect of Supplemental Indentures 73
SECTION 905. Conformity with Trust Indenture Act 73
SECTION 906. Reference in Securities to Supplemental Indentures 74
SECTION 1001. Payment of Principal, Premium and Interest 74
SECTION 1002. Maintenance of Office or Agency 74
SECTION 1003. Money for Security Payments to Be Held in Trust 75
SECTION 1004. Existence 76
SECTION 1005. Maintenance of Properties 76
SECTION 1006. Payment of Taxes and Other Claims 76
SECTION 1007. Maintenance of Insurance 77
SECTION 1008. Limitation on Debt 77
</TABLE>
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<TABLE>
<S> <C>
SECTION 1009. Limitation on Subordinated Debt of Restricted Subsidiaries 79
SECTION 1010. Limitation on Guarantees of Issuer Debt by Restricted
Subsidiaries 79
SECTION 1011. Limitation on Restricted Payments 79
SECTION 1012. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries 82
SECTION 1013. Limitation on Liens 83
SECTION 1014. Limitation on Ownership of Capital Stock of Restricted
Subsidiaries 85
SECTION 1015. Asset Dispositions 85
SECTION 1016. Change of Control 87
SECTION 1017. Transactions with Affiliates and Related Persons 88
SECTION 1018. Provision of Financial Information 88
SECTION 1019. Statement by Officers as to Default; Compliance Certificates 89
SECTION 1020. Waiver of Certain Covenants 90
ARTICLE ELEVEN Redemption of Securities
SECTION 1101. Right of Redemption 90
SECTION 1102. Applicability of Article 91
SECTION 1103. Election to Redeem; Notice to Trustee 91
SECTION 1104. Selection by Trustee of Securities to Be Redeemed 91
SECTION 1105. Notice of Redemption 92
SECTION 1106. Deposit of Redemption Price 92
SECTION 1107. Securities Payable on Redemption Date 93
SECTION 1108. Securities Redeemed in Part 93
</TABLE>
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<TABLE>
ARTICLE TWELVE Defeasance and Covenant Defeasance
<S> <C>
SECTION 1201. Company's Option to Effect Defeasance or Covenant Defeasance 93
SECTION 1202. Defeasance and Discharge 94
SECTION 1203. Covenant Defeasance 94
SECTION 1204. Conditions to Defeasance or Covenant Defeasance 94
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions 96
SECTION 1206. Reinstatement 97
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TESTIMONIUM 98
SIGNATURE AND SEALS 98
ACKNOWLEDGMENT 99
ANNEX A -- Form of Regulation S Certificate A-1
ANNEX B -- Form of Restricted Securities Certificate B-1
ANNEX C -- Form of Unrestricted Securities Certificate C-1
ANNEX D -- Form of Certification to Be Given by Holders of Beneficial
Interest in a Regulation S Temporary Global Note D-1
ANNEX E -- Form of Certification to Be Given by the Euroclear
Clearance System or Cedel Bank E-1
EXHIBIT 1 -- Form of Registration Rights Agreement
SCHEDULE I -- Existing Debt that may be Refinanced
SCHEDULE II -- Existing Restrictions on Dividends
and Other Payments
SCHEDULE III -- Existing Liens
</TABLE>
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INDENTURE, dated as of March 20, 1998, between Pinnacle Holdings Inc.,
corporation duly organized and existing under the laws of the State of Delaware,
having its principal office at 1549 Ringling Boulevard, Sarasota, Florida 34236
(the "Issuer"), and The Bank of New York, a New York banking corporation, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Issuer has duly authorized the creation of an issue of its 10%
Senior Notes due 2008 (the "Securities") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Issuer has duly authorized
the execution and delivery of this Indenture. The Securities may consist of
Original Securities, Additional Securities or Exchange Securities, each as
defined herein. The Original Securities, Additional Securities and Exchange
Securities shall rank pari passu with one another.
All things necessary to make the Securities, when executed by the
Issuer and authenticated and delivered hereunder and duly issued by the Issuer,
the valid obligations of the Issuer, and to make this Indenture a valid
agreement of the Issuer, in accordance with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
<PAGE>
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles (whether or not such is indicated herein), and, except as
otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted in the United States as consistently applied by the Issuer at the
Closing Date;
(4) unless otherwise specifically set forth herein, all calculations
or determinations of a Person shall be performed or made on a consolidated
basis in accordance with generally accepted accounting principles but shall
not include the accounts of Unrestricted Subsidiaries, except to the extent
of dividends and distributions actually paid to an Issuer or a Restricted
Subsidiary;
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(6) unless the context otherwise requires, any reference to a
"Clause," an "Article" or a "Section", or to an "Annex" or a "Schedule",
refers to a Clause, an Article or Section of, or to an Annex or a Schedule
attached to, this Indenture, as the case may be; and
(7) unless the context otherwise requires, any reference to a statue,
rule or regulation refers to the same (including any successor statute,
rule or regulation thereto) as it may be amended from time to time.
Certain terms, used principally in Article Six, are defined in that
Article.
"ABRY" means ABRY Partners, Inc., a ________________ corporation.
"ABRY II" means ABRY Broadcast Partners II, L.P., a _____________
limited partnership.
"ABRY Subordinated Debt" means Debt of the Issuer in principal amount
not to exceed $15 million in the aggregate at any time outstanding (a) that is
owed to ABRY II, ABRY, any other investment fund controlled by ABRY, Robert
Wolsey or any Person the majority of whose Voting Stock is directly or
indirectly owned by Robert Wolsey and (b) as to which the payment of principal
of (and premium, if any) and interest and other payment obligations in respect
of such Debt shall be subordinate to the prior payment in full of the Securities
to at least the following extent: (i) no payments of principal of (or premium,
if any) or interest on or otherwise due in respect of such Debt may be permitted
for so long as any default in the payment of principal (or premium, if any) or
interest on the Securities exists; (ii) in the event that any
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other default that with the passing of time or the giving of notice, or both,
would constitute an event of default exists with respect to the Securities, upon
notice by 25% or more in principal amount of the Securities to the Trustee, the
Trustee shall have the right to give notice to the Issuer and the holders of
such Debt (or trustees or agents therefor) of a payment blockage, and thereafter
no payments of principal of (or premium, if any) or interest on or otherwise due
in respect of such Debt may be made for a period of 179 days from the date of
such notice.
"Accreted Value" means, as of any date prior to the Full Accretion
Date, an amount per $1,000 principal amount at maturity of Securities that is
equal to the sum of (a) the initial offering price ($614.74 per $1,000 principal
amount at maturity of Securities) of the Original Securities and (b) the portion
of the excess of the principal amount of such Securities over such initial
offering price which shall have been amortized through such date, such amount to
be so amortized on a daily basis and compounded semi-annually on each March 15
and September 15 at the rate of 10% per annum from the Closing Date through the
date of determination computed on the basis of a 360-day year of twelve 30-day
months, and as of any date on or after the Full Accretion Date, the principal
amount of each Security.
"Acquisition Debt" means with respect to any specified Person, Debt
that is Incurred in connection with an acquisition of assets consisting of (i)
Debt Incurred for the purpose of financing all or part of the cost of an
acquisition by such Person or any of its Restricted Subsidiaries of assets
(including Capital Stock of a Person that will become a Restricted Subsidiary of
such Person or be merged or consolidated with or into such Person or a
Restricted Subsidiary of such Person) in an amount not to exceed 100% of the
purchase price of such acquisition, (ii) Debt of any other Person existing at
the time such other Person merged with or into or became a Subsidiary of such
specified Person, including, without limitation, Debt Incurred in connection
with, or in contemplation of, such other Person merging with or into or becoming
a Subsidiary of such specified Person, or (iii) Debt secured by a Lien
encumbering any assets acquired by such specified Person, provided in each case
(i), (ii) and (iii) that after giving pro forma effect to the Incurrence of such
Debt the ratio of (a) the aggregate consolidated principal amount of Debt of
the Issuer and its Restricted Subsidiaries outstanding as of the most recent
available quarterly or annual balance sheet, after giving pro forma effect to
the Incurrence of such Debt and any other Debt Incurred since such balance sheet
date that remains outstanding and the receipt and application of the proceeds
thereof, to (b) Adjusted Consolidated Cash Flow (after giving effect to such
acquisition) is not greater than such actual ratio prior to the Incurrence of
such Debt.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Securities" shall mean any Securities issued by the Issuer
in compliance with the terms and provisions of this Indenture in addition to (i)
the Original Securities and their Successor Securities and (ii) any Exchange
Securities.
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"Adjusted Consolidated Cash Flow" means the Consolidated Cash Flow for
the most recent fiscal quarter for which financial statements are available,
determined (i) after giving effect on a pro forma basis to (a) any Asset
Disposition or acquisition of assets (including acquisitions of other Persons by
merger, consolidation or purchase of Capital Stock) by the Issuer or any
Restricted Subsidiaries during or after such quarter as if such Asset
Disposition or acquisition had taken place on the first day of such quarter, (b)
any new lease or Site Management Contract entered into by the Issuer or any
Restricted Subsidiary in the ordinary course of business with respect to Tower
Assets during or after such quarter as if such new lease or Site Management
Contract had been signed on the first day of such quarter and the rent required
by the terms of such lease or Site Management Contract for such quarter had been
received by the Issuer or a Restricted Subsidiary during such quarter, (c) the
loss after the first day of such quarter of any lease or Site Management
Contract of the Issuer or a Restricted Subsidiary with respect to any Tower
Assets that was in effect on the first day of such quarter as if such lease or
Site Management Contract had not been in effect during such quarter and no rent
under such lease had been received during such quarter, and (d) any rent
increases received by the Issuer or any Restricted Subsidiary during or after
such quarter related to leases or Site Management Contracts on Tower Assets as
if such increased rental rate had been in effect on the first day of such
quarter and the Issuer had received such increased amount of rent during such
quarter, and (ii) as adjusted to add back Corporate Development Expenses which
had been deducted from consolidated revenues in determining Consolidated Net
Income for such quarter, multiplied by four.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, Euroclear and Cedel,
in each case to the extent applicable to such transaction and as in effect at
the time of such transfer or transaction.
"Asset Disposition" by any Person means any transfer, conveyance,
sale, lease or other disposition by such Person or any of its Restricted
Subsidiaries (including a consolidation or merger or other sale of any such
Restricted Subsidiary with, into or to another Person in a transaction in which
such Restricted Subsidiary ceases to be a Restricted Subsidiary, but excluding a
disposition by a Restricted Subsidiary of such Person to such Person or a Wholly
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Owned Restricted Subsidiary of such Person or by such Person to a Wholly Owned
Restricted Subsidiary of such Person) of (i) shares of Capital Stock (other than
directors' qualifying shares) or other ownership interests of a Restricted
Subsidiary of such Person, (ii) substantially all of the assets of such Person
or any of its Restricted Subsidiaries representing a division or line of
business or (iii) other assets or rights of such Person or any of its Restricted
Subsidiaries outside of the ordinary course of business, provided in each case
that the aggregate consideration for such transfer, conveyance, sale, lease or
other disposition is equal to $1 million or more.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means either the board of directors of the
relevant Issuer or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the relevant Issuer to have been duly
adopted by the Board of Directors and to be in full force and effect on the date
of such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York,
New York are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty. The principal amount of such obligation shall be the
capitalized amount thereof that would appear on the face of a balance sheet of
such Person in accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Cash Equivalents" means (i) 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 six months from the
date of acquisition, (ii) certificates of deposit with maturities of not more
than 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 domestic commercial
5
<PAGE>
bank having capital and surplus in excess of $500.0 million and a Thompson Bank
Watch Rating of "B" or better, (iii) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(i) and (ii) above entered into with any financial institution meeting the
qualifications specified in clause (ii) above, (iv) 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 (v) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i)-(iv) of this
definition.
"Cedel" means Cedel, S.A. (or any successor securities clearing
agency).
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Issuer and its Subsidiaries, taken as a whole, to any Person
or group of related Persons, as defined in Section 13(d) of the Exchange Act (a
"Group"), other than to Permitted Holders; (ii) the approval by the holders of
Capital Stock of the Issuer of any plan or proposal for the liquidation or
dissolution of the Issuer (whether or not otherwise in compliance with the
provisions of the applicable Indenture); (iii) any Person or Group (other than
Permitted Holders) shall become the owner, directly or indirectly, beneficially
or of record, of shares representing more than 50% of the aggregate ordinary
voting power represented by the issued and outstanding Voting Stock of the
Issuer or any successor to all or substantially all of its assets; or (iv) the
first day on which a majority of the members of the Board of Directors of the
Issuer are not Continuing Directors.
"Closing Date" means March 20, 1998.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow" for any period means the Consolidated Net
Income for such period increased by the sum of (i) Consolidated Interest Expense
for such period, plus (ii) Consolidated Income Tax Expense for such period, plus
(iii) the consolidated depreciation and amortization expense included in the
income statement of the Issuer and its Restricted Subsidiaries for such period,
plus (iv) other non-cash charges of such Person for such period deducted from
consolidated revenues in determining Consolidated Net Income for such period,
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<PAGE>
minus (v) other non-cash items of the Issuer and its Restricted Subsidiaries for
such period increasing consolidated revenues in determining Consolidated Net
Income for such period.
"Consolidated Income Tax Expense" for any period means the
consolidated provision for income taxes of the Issuer and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the consolidated
interest expense included in a consolidated income statement (without deduction
of interest income) of the Issuer and its Restricted Subsidiaries for such
period calculated on a consolidated basis in accordance with generally accepted
accounting principles, including without limitation or duplication (or, to the
extent not so included, with the addition of), (i) the amortization of Debt
discounts; (ii) any payments or fees with respect to letters of credit, bankers'
acceptances or similar facilities; (iii) fees (net of any amounts received) with
respect to interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements; (iv) Preferred Stock dividends of the Issuer and
its Restricted Subsidiaries (other than with respect to Redeemable Stock)
declared and paid or payable, other than dividends paid in Capital Stock that is
not Redeemable Stock; (v) accrued Redeemable Stock dividends of the Issuer and
its Restricted Subsidiaries, whether or not declared or paid; (vi) interest on
Debt guaranteed by the Issuer and its Restricted Subsidiaries; and (vii) the
portion of any rental obligation allocable to interest expense.
"Consolidated Net Income" for any period means the consolidated net
income (or loss) of the Issuer and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Issuer or a Restricted
Subsidiary of the Issuer in a pooling-of-interests transaction for any period
prior to the date of such transaction, (b) the net income (or loss) of any
Person that is not a Restricted Subsidiary of the Issuer except to the extent of
the amount of dividends or other distributions actually paid to the Issuer or a
Restricted Subsidiary of the Issuer by such Person during such period, (c)
gains or losses on Asset Dispositions by the Issuer or its Restricted
Subsidiaries, (d) all extraordinary gains and extraordinary losses, (e) the
cumulative effect of changes in accounting principles and (f) the tax effect of
any of the items described in clauses (a) through (e) above.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with generally accepted accounting principles, less amounts
attributable to Redeemable Stock of such Person; provided that, with respect to
the Issuer, adjustments following the date of the Indenture to the accounting
books and records of the Issuer in accordance with Accounting Principles Board
Opinions Nos. 16 and 17 (or successor opinions thereto), or otherwise resulting
from the acquisition of control of the Issuer by another Person shall not be
given effect.
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"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Issuer who (i) was a member of such
Board of Directors on the date of the original issuance of the Securities or
(ii) was nominated for election or elected to such Board of Directors by any of
the Permitted Holders or with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"Corporate Development Expenses" means non-tower-level costs incurred
in connection with acquisitions and development of Tower Assets.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which is, at the date as of which this Indenture is dated, located at 101
Barclay Street, Floor 21 West, New York, New York 10286.
"corporation" means a corporation, association, company, joint-stock
company, limited liability company, partnership or business trust.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (including securities repurchase agreements but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith), (v) every Capital Lease Obligation of such Person, (vi) all Receivables
Sales of such Person, together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith, (vii) all Redeemable Stock issued by such
Person, (viii) if such Person is a Restricted Subsidiary, all Preferred Stock
issued by such Person, (ix) every obligation under Interest Rate or Currency
Protection Agreements of such Person and (x) every obligation of the type
referred to in clauses (i) through (x) of another Person and all dividends of
another Person the payment of which, in either case, such Person has Guaranteed
or is responsible or liable, directly or indirectly, as obligor, Guarantor or
otherwise. The "amount" or "principal amount" of Debt at any time of
determination as used herein represented by (a) any contingent Debt, shall be
the maximum principal amount hereof, (b) any Debt issued at a price that is less
than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (c) any Receivables Sale, shall be the amount, if any, in
connection with such Receivables Sale for which there is recourse to the seller
or any of its Subsidiaries, (d) any Redeemable Stock, shall be
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the maximum fixed redemption or repurchase price in respect thereof, and (e) any
Preferred Stock, shall be the maximum voluntary or involuntary liquidation
preference plus accrued and unpaid dividends in respect thereof, in each case as
of such time of determination.
"Default Amount" has the meaning specified in Section 502.
"Defaulted Interest" has the meaning specified in Section 308.
"Depositary" means The Depository Trust Company or, if The Depository
Trust Company shall cease to be a clearing agency registered under the Exchange
Act, any other clearing agency registered under the Exchange Act that is
designated as the successor Depositary in an Issuer Order delivered to the
Trustee.
"Dollars" and "$" means such coins or currency of the United States of
America which is legal tender for payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" refers to the Securities Exchange Act of 1934 as it may
be amended and any successor act thereto.
"Exchange and Registration Rights Agreement" means (i) the Exchange
and Registration Rights Agreement, dated as of March 20, 1998, between the
Issuer and the Initial Purchasers, as such agreement may be amended from time to
time, the form of which is attached hereto as Exhibit A, and (ii) any other
agreement entered into by the Issuer in the future that provides for an Exchange
Offer or resale registration with respect to any Additional Securities.
"Exchange Offer" means an offer made by the Issuer pursuant to the
Exchange and Registration Rights Agreement, in the case of the Original
Securities, or otherwise under an effective registration statement under the
Securities Act to exchange securities substantially identical to Outstanding
Securities (except for the differences provided for herein) for Outstanding
Securities.
"Exchange Offer Registration Statement" means a registration statement
of the Issuer under the Securities Act registering Exchange Securities for
distribution pursuant to an Exchange Offer.
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"Exchange Securities" means any Securities issued pursuant to an
Exchange Offer and their Successor Securities.
"Expiration Date" has the meaning specified in Section 104.
"Full Accretion Date" means March 15, 2003.
"Global Security" means a Security that is registered in the Security
Register in the name of a Depositary or a nominee thereof.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purpose of assuring
the holder of such Debt of the payment of such Debt, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guaranty by any
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including by acquisition of Restricted Subsidiaries or the recording, as
required pursuant to generally accepted accounting principles or otherwise, of
any such Debt or other obligation on the balance sheet of such Person (and
"Incurrence", "Incurred", "Incurable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in generally
accepted accounting principles that results in an obligation of such Person that
exists at such time becoming Debt shall not be deemed an Incurrence of such
Debt.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Initial Purchasers" means Goldman, Sachs & Co. and NationsBanc
Montgomery Securities LLC as purchasers of the Securities from the Issuer
pursuant to the Purchase Agreement.
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"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Securities.
"Interest Rate or Currency Protection Agreement" of any Person means
any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices.
"Internal Revenue Code" means the Internal Revenue Code of 1986.
"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) to, or purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidence of Debt
issued by, any other Person, including any payment on a Guarantee of any
obligation of such other Person, but shall not include trade accounts receivable
in the ordinary course of business on credit terms made generally available to
the customers of such Person.
"Issuer" means the Persons named as the "Issuer" in the first
paragraph of this instrument until a successor Person or Persons shall have
become such pursuant to the applicable provisions of this Indenture and
thereafter "Issuer" shall mean such successor Person.
"Issuer request" or "Issuer Order" means a written request or order
signed in the name of the Issuer by the Issuer's Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Cash Proceeds" from any Asset Disposition by any Person means
cash or Cash Equivalents received (including by way of sale or discounting of a
note, instalment receivable or other receivable, but excluding any other
consideration received in the form of
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assumption by the acquiror of Debt or other obligations relating to such
properties or assets) therefrom by such Person, net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses Incurred and all
federal, state, foreign and local taxes required to be accrued as a liability as
a consequence of such Asset Disposition, (ii) all payments made by such Person
or its Restricted Subsidiaries on any Debt which is secured by such assets in
accordance with the terms of any Lien upon or with respect to such assets or
which must by the terms of such Lien, or in order to obtain a necessary consent
to such Asset Disposition or by applicable law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other payments made to
minority interest holders in Restricted Subsidiaries of such Person or joint
ventures as a result of such Asset Disposition and (iv) appropriate amounts to
be provided by such Person or any Restricted Subsidiary thereof, as the case may
be, as a reserve in accordance with generally accepted accounting principles
against any liabilities associated with such assets and retained by such Person
or any Restricted Subsidiary thereof, as the case may be, after such Asset
Disposition, including, without limitation, liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such Asset Disposition, in each case as determined by the Board
of Directors, in its reasonable good faith judgment evidenced by a resolution of
the Board of Directors filed with the Trustee; provided, however, that any
reduction in such reserve within twelve months following the consummation of
such Asset Disposition will be treated for all purposes of the Indenture and the
Securities as a new Asset Disposition at the time of such reduction with Net
Cash Proceeds equal to the amount of such reduction.
"Offer" has the meaning specified in the definition of Offer to
Purchase.
"Offer Expiration Date" has the meaning specified in the definition of
Offer to Purchase.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Issuer by first class mail, postage prepaid, to each Holder at his address
appearing in the Securities Register on the date of the Offer offering to
purchase up to the principal amount of Securities at the purchase price
specified in such Offer (as determined pursuant to this Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Offer Expiration Date") of the Offer to Purchase which shall be, subject
to any contrary requirements of applicable law, not less than 20 business days
or more than 60 days after the date of such Offer and a settlement date (the
"Purchase Date") for purchase of tendered Securities within five Business Days
after the Offer Expiration Date. The Issuer shall notify the Trustee at least
15 Business Days (or such shorter period as is acceptable to the Trustee) prior
to the mailing of the Offer of the Issuer's obligation to make an Offer to
Purchase, and the Offer shall be mailed by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer. The Offer
shall contain information concerning the business of the Issuer and its
Restricted Subsidiaries which the Issuer in good faith believes will enable such
Holders to make an informed decision with respect to the Offer to Purchase
(which at a minimum will include (i) the most recent annual
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and quarterly financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the documents
required to be filed with the Trustee pursuant to this Indenture (which
requirements may be satisfied by delivery of such documents together with the
Offer)), (ii) a description of material developments in the Issuer's business
subsequent to the date of the latest of such financial statements referred to in
clause (i) (including a description of the events requiring the Issuer to make
the Offer to Purchase), (iii) if applicable, appropriate pro forma financial
information concerning the Offer to Purchase and the events requiring the Issuer
to make the Offer to Purchase and (iv) any other information required by
applicable law to be included therein. The Offer shall contain all instructions
and materials necessary to enable such Holders to tender Securities pursuant to
the Offer to Purchase. The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Offer Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Securities
offered to be purchased by the Issuer pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such has been determined
pursuant to the Section of this Indenture requiring the Offer to Purchase)
(the "Purchase Amount");
(4) the purchase price to be paid for each $1,000 aggregate principal
amount of Securities accepted for payment (as specified pursuant to this
Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Securities not tendered or tendered but not
purchased by the Issuer pursuant to the Offer to Purchase will continue to
accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each tendered Security being accepted for payment pursuant to
the Offer to Purchase and that interest thereon shall cease to accrue on
and after the Purchase Date (unless the Issuer shall default in the payment
of the Purchase Price and accrued interest);
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(9) that each Holder electing to tender a Security pursuant to the
Offer to Purchase will be required to surrender such Security at the place
or places specified in the Offer prior to the close of business on the
Offer Expiration Date (such Security being, if the Issuer or the Trustee so
requires, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Issuer (or its Paying Agent) receives, not later
than the close of business on the Offer Expiration Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security the Holder tendered, the certificate number of the
Security the Holder tendered and a statement that such Holder is
withdrawing all or a portion of his tender;
(11) that (a) if Securities in an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Issuer shall purchase all such
Securities and (b) if Securities in an aggregate principal amount in excess
of the Purchase Amount are tendered and not withdrawn pursuant to the Offer
to Purchase, the Issuer shall purchase Securities having an aggregate
principal amount equal to the Purchase Amount on a pro rata basis (with
such adjustments as may be deemed appropriate so that only Securities in
denominations of $1,000 or integral multiples thereof shall be purchased);
and
(12) that in the case of any Holder whose Security is purchased only
in part, the Issuer shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Security so tendered.
Any Offer to Purchase shall be governed by and effected in accordance
with the Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Issuer and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Issuer, and who shall be acceptable to the Trustee.
"Original Securities" means the Securities issued on the Closing Date
and their Successor Securities.
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"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Issuer) in trust or set aside and segregated
in trust by the Issuer (if the Issuer shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made; and
(3) Securities which have been paid pursuant to Section 307 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Issuer;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Issuer or any other obligor upon the Securities or any Affiliate of the
Issuer or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Issuer or any other obligor upon the Securities or
any Affiliate of the Issuer or of such other obligor.
"Owner Securities Certification" has the meaning specified in Section
201.
"pari passu", when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that each such Debt (a)
either (i) is not subordinated in right of payment to any other Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right of payment to the other or to any Debt of such Person as to
which the other is not so subordinate.
"Paying Agent" means any Person authorized by the Issuer to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Issuer.
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"Permitted Holder" means as of the date of determination (i) Andrew
Banks, Royce Yudkoff or Robert Wolsey and any of their respective spouses,
estates, lineal descendants (including adoptive children), heirs, executors,
personal representatives, administrators and trusts for any of their benefit and
(ii) any other Person, the majority of whose Voting Stock is directly or
indirectly owned by any Person described in clause (i) above.
"Permitted Interest Rate or Currency Protection Agreement" of any
Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Permitted Senior Bank Debt" means Debt under the Senior Credit
Facility and any extension, renewal, refinancing or refunding thereof in an
aggregate amount not to exceed at any one time outstanding the sum of $250
million less the aggregate amount of any such Debt that is repaid pursuant to
the provisions of clause (iii) of Section 1015(a).
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Pinnacle Towers" means Pinnacle Towers Inc., a Delaware corporation.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 307 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Public Equity Offering" means an underwritten primary public offering
of Common Stock of the Issuer pursuant to an effective registration statement
under the Securities Act of 1933, as amended.
"Purchase Agreement" means the Purchase Agreement, dated March 17,
1998, between the Issuer and the Initial Purchasers, as such agreement may be
amended from time to time.
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"Purchase Amount" has the meaning specified in the definition of Offer
to Purchase.
"Purchase Date" has the meaning specified in the definition of Offer
to Purchase.
"Purchase Money Secured Debt" of any Person means Debt of such Person
secured by a Lien on real or personal property of such Person which Debt (a)
constitutes all or a part of the purchase price or construction cost of such
property or (b) is Incurred prior to, at the time of or within 180 days after
the acquisition or substantial completion of such property for the purpose of
financing all or any part of the purchase price or construction cost thereof;
provided, however, that (w) the Debt so incurred does not exceed 100% of the
purchase price or construction cost of such property, (x) such Lien does not
extend to or cover any property other than such item of property and any
improvements on such item, (y) the purchase price or construction cost for such
property is or should be included in "addition to property, plant and equipment"
in accordance with generally accepted accounting principles and (z) the purchase
or construction of such property is not part of any acquisition of a Person or
business unit or line of business.
"Purchase Price" has the meaning specified in the definition of Offer
to Purchase.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing arrangement.
"Redeemable Stock" of any Person means any Capital Stock of such
Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or otherwise (including upon the
occurrence of an event other than a Change of Control or substantially similar
event) matures or is required to be redeemed (pursuant to any sinking fund
obligation or otherwise, but other than as a result of the death of the holder
thereof) or is convertible into or exchangeable for Debt or is redeemable at the
option of the holder thereof, in whole or in part, at any time prior to the
final Stated Maturity of the Securities; provided, however, that any Capital
Stock which would not constitute Redeemable Stock but for provisions thereof
giving holders thereof the right to require the Issuer or a Restricted
Subsidiary to repurchase or redeem such Capital Stock upon the occurrence of an
Asset Disposition occurring prior to the final maturity of the Securities shall
not constitute Redeemable Stock if such provisions applicable to such Capital
Stock are no more favorable to the holders of such stock than the provisions
applicable to the Securities contained in the covenant described under
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"Asset Dispositions" and such provisions applicable to such Capital Stock
specifically provide that the Issuer and its Restricted Subsidiaries will not
repurchase or redeem any such stock pursuant to such provisions prior to the
repurchase of such Securities as are required to be repurchased pursuant to the
covenant described under "Asset Dispositions."
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Securities" means the Exchange Securities and all other
Securities sold or otherwise disposed of pursuant to an effective registration
statement under the Securities Act, together with its respective Successor
Securities.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the March 1 or September 1 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in Section
201.
"Regulation S Legend" means a legend substantially in the form of the
legend required in the form of Security set forth in Section 202 to be placed
upon Regulation S Securities.
"Regulation S Securities" means all Securities required pursuant to
Section 306(c) to bear a Regulation S Legend.
"Regulation S Temporary Global Security" has the meaning specified in
Section 201.
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 5% or more of the Outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person) or (b) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Required Filing Date" has the meaning specified in Section 1018.
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"Resale Registration Statement" means a shelf registration statement
under the Securities Act filed by the Issuer, if required by, and meeting the
requirements of, the Exchange and Registration Rights Agreement, registering
Original Securities for resale.
"Responsible Officer", when used with respect to the Trustee, means
any vice president, any assistant vice president, any assistant secretary, any
assistant treasurer, any trust officer or assistant trust officer, the
controller or any assistant controller 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 Global Security" has the meaning set forth in Section 201.
"Restricted Payments" has the meaning specified in Section 1010.
"Restricted Period" means the period of 40 consecutive days commencing
on the later of (i) the date the Initial Purchasers advise the Issuer and the
Trustee in writing as the day on which Securities are first offered to persons
other than distributors (as defined in Regulation S) in reliance on Regulation S
and (ii) the Closing Date.
"Restricted Securities" means all Securities required pursuant to
Section 306(c) to bear a Restricted Securities Legend. Such term includes the
Restricted Global Securities.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Annex B.
"Restricted Securities Legend" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 202 to
be placed upon a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Issuer, whether
existing on or after the date of this Indenture, unless such Subsidiary is an
Unrestricted Subsidiary.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means (i) in the case of the Original
Securities, the Securities purchased by the Initial Purchasers from the Issuer
pursuant to the Purchase Agreement, other than the Regulation S Securities, and
(ii) in the case of Additional Securities, any Additional Securities purchased
from the Issuer for resale pursuant to Rule 144A.
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"Securities" has the meaning specified in the first paragraph of the
recitals to this instrument and includes the Exchange Securities and Additional
Securities.
"Securities Act" means the Securities Act of 1933, as it may be
amended and any successor act thereto.
"Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.
"Securities Payment" has the meaning set forth in Section 1202.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 306.
"Senior Credit Facility" means the Second Amended and Restated Credit
Agreement, dated as of February 26, 1998, among the Issuer, NationsBank of
Texas, National Association, as Administrative Lender, and the lenders named
therein, as amended by the First Amendment thereto dated as of March 17, 1998.
"Site Management Contract" means any agreement pursuant to which the
Issuer or any of its Restricted Subsidiaries has the right to substantially
control Tower Assets and the revenues derived from the rental or use thereof.
"Special Interest" has the meaning specified in the Exchange and
Registration Rights Agreement.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 308.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subordinated Debt" means Debt of the Issuer as to which the payment
of principal of (and premium, if any) and interest and other payment obligations
in respect of such Debt shall be subordinate to the prior payment in full of the
Securities to at least the following extent: (i) no payments of principal of
(or premium, if any) or interest on or otherwise due in respect of such Debt may
be permitted for so long as any default in the payment of principal (or premium,
if any) or interest on the Securities exists; (ii) in the event that any other
default that with the passing of time or the giving of notice, or both, would
constitute an event of default exists with respect to the Securities, upon
notice by 25% or more in principal amount of the
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Securities to the Trustee, the Trustee shall have the right to give notice to
the Issuer and the holders of such Debt (or trustees or agents therefor) of a
payment blockage, and thereafter no payments of principal of (or premium, if
any) or interest on or otherwise due in respect of such Debt may be made for a
period of 179 days from the date of such notice; and (iii) such Debt may not (x)
provide for payments of principal of such Debt at the stated maturity thereof or
by way of a sinking fund applicable thereto or by way of any mandatory
redemption, defeasance, retirement or repurchase thereof by the Issuer
(including any redemption, retirement or repurchase which is contingent upon
events or circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each case
prior to the final Stated Maturity of the Securities or (y) permit redemption or
other retirement (including pursuant to an offer to purchase made by the Issuer)
of such other Debt at the option of the holder thereof prior to the final Stated
Maturity of the Securities, other than a redemption or other retirement at the
option of the holder of such Debt (including pursuant to an offer to purchase
made by the Issuer) which is conditioned upon a change of control of the Issuer
pursuant to provisions substantially similar to those contained in Section 1016
(and which shall provide that such Debt will not be repurchased pursuant to such
provisions prior to the Issuer's repurchase of the Securities required to be
repurchased by the Issuer pursuant to the provisions contained in Section 1016);
provided, however, that any Debt which would constitute Subordinated Debt but
for provisions thereof giving holders thereof the right to require the Issuer or
a Restricted Subsidiary to repurchase or redeem such Subordinated Debt upon the
occurrence of an Asset Disposition occurring prior to the final maturity of the
Securities shall constitute Subordinated Debt if such provisions applicable to
such Subordinated Debt are no more favorable to the holders of such Debt than
the provisions applicable to the Securities contained in Section 1015 and such
provisions applicable to such Debt specifically provide that the Issuer and its
Restricted Subsidiaries will not repurchase or redeem any such Debt pursuant to
such provisions prior to the repurchase of such Securities as are required to be
repurchased pursuant to Section 1015.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Restricted Subsidiaries thereof,
or (ii) any other Person (other than a corporation) in which such Person, or one
or more other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purpose of this definition, any
Security authenticated and delivered under Section 307 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
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"Tower Asset Exchange" means any transaction in which the Issuer or a
Restricted Subsidiary 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 Issuer and its
Restricted Subsidiaries in such exchange is at least equal to the fair market
value of the assets disposed in such exchange.
"Tower Assets" means (i) wireless transmission towers and related
assets that are located on the site of a transmission tower and rooftop and
other wireless transmission sites and related assets located at such site and
(ii) Site Management Contracts.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the ATrustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unregistered Security" means any Security that is not a Registered
Security.
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth in Annex C.
"Unrestricted Subsidiary" means (1) any Subsidiary designated as such
by the Board of Directors as set forth below where (a) neither the Issuer nor
any of its other Subsidiaries (other than another Unrestricted Subsidiary) (i)
provides credit support for, or Guarantee of, any Debt of such Subsidiary or any
Subsidiary of such Subsidiary (including any undertaking, agreement or
instrument evidencing such Debt) or (ii) is directly or indirectly liable for
any Debt of such Subsidiary or any Subsidiary of such Subsidiary, and (b) no
default with respect to any Debt of such Subsidiary or any Subsidiary of such
Subsidiary (including any right which the holders thereof may have to take
enforcement action against such Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Debt of the Issuer and its Subsidiaries
(other than another Unrestricted Subsidiary) to declare a default on such other
Debt or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity and (2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, any other Subsidiary of the Issuer which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary, provided that either (x) the Subsidiary to be so designated has
total assets of $1,000 or less or (y) immediately after giving effect to such
designation, the Issuer could Incur at least $1.00 of
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<PAGE>
additional Debt pursuant to the first paragraph of Section 1008 and provided,
further, that the Issuer could make a Restricted Payment in an amount equal to
the greater of the fair market value and book value of such Subsidiary pursuant
to Section 1011 and such amount is thereafter treated as a Restricted Payment
for the purpose of calculating the aggregate amount available for Restricted
Payments thereunder.
"U.S. Person" means (i) any individual resident in the United States,
(ii) any partnership or corporation organized or incorporated under the laws of
the United States, (iii) any estate of which an executor or administrator is a
U.S. Person (other than an estate governed by foreign law and of which at least
one executor or administrator is a non-U.S. Person who has sole or shared
investment discretion with respect to its assets), (iv) any trust of which any
trustee is a U.S. Person (other than a trust of which at least one trustee is a
non-U.S. Person who has sole or shared investment discretion with respect to its
assets and no beneficiary of the trust (and no settlor if the Trust is
revocable) is a U.S. Person), (v) any agency or branch of a foreign entity
located in the United States, (vi) any non-discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. Person, (vii) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States (other than
such an account held for the benefit or account of a non-U.S. Person) and (viii)
any partnership or corporation organized or incorporated under the laws of a
foreign jurisdiction and formed by a U.S. Person principally for the purpose of
investing in securities not registered under the Securities Act (unless it is
organized or incorporated, and owned, by accredited investors within the meaning
of Rule 501(a) under the Securities Act who are not natural persons, estates or
trusts); provided, however, that the term AU.S. Person" does not include (A) a
branch or agency of a U.S. Person that is located and operating outside the
United States for valid business purposes as a locally regulated branch or
agency engaged in the banking or insurance business, (B) any employee benefit
plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (C) the international
organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and its
agencies, affiliates and pension plans.
"Vice President", when used with respect to the Issuer, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"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
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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 or by such Person and one or more Wholly Owned Restricted Subsidiaries of
such Person.
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Issuer, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include (in form
reasonably satisfactory to the Trustee)
(10 a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(20 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;
(30 a statement that, in the opinion of each such individual, he has
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 complied with (which, in the case of an Opinion of Counsel and if
permitted under the Trust Indenture Act, may be limited to reliance on an
Officers' Certificate as to matters of fact); and
(40 a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters
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and one or more other such eligible and qualified Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Issuer stating that the
information with respect to such factual matters is in the possession of the
Issuer unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Date.
----------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee in
accordance with Section 105 hereof, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
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Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Issuer may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Issuer may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If not set by the Issuer prior to the first solicitation of a
Holder made by any Person in respect of any such matter referred to in the
foregoing sentence, the record date for any such matter shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 701) prior to such first solicitation. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to take
the relevant action, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities on such record date. Nothing in this
paragraph shall be construed to prevent the Issue from setting a new record date
for any action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Issuer, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Securities in the manner
set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph
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(whereupon the record date previously set shall automatically and with no action
by any Person be cancelled and of no effect), and nothing in this paragraph
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Issuer's expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Issuer in writing and to each Holder of Securities in the manner set forth in
Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
106, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Issuer.
------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(10 the Trustee by any Holder or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing,
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Trustee Administration, or
(20 the Issuer by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, or delivered to the
Issuer addressed to it at the address of its principal office specified in
the first paragraph of this instrument
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or at any other address previously furnished in writing to the Trustee by
the Issuer.
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice, with a copy to the Trustee at the same
time mailed or delivered in accordance with Section 105(1) hereof. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be part
of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be. Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Issuer and the Trustee shall be deemed for
all purposes hereof to be subject to and governed by the Trust Indenture Act to
the same extent as would be the case if this Indenture were so qualified on the
date hereof.
SECTION 108. Effect of Headings and Table of Contents.
----------------------------------------
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The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Issuer shall
bind its respective successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities 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 111. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and its successors
hereunder and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, Purchase
Date or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date or Purchase
Date, or at the Stated Maturity, provided that no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date or Purchase
Date or Stated Maturity, as the case may be.
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ARTICLE TWO
Security Forms
SECTION 201. Forms Generally; Initial Forms of Rule 144A and Regulation S
------------------------------------------------------------
Securities.
- ----------
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by its execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or may
be produced in any other manner provided that such manner is permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by its
execution of such Securities.
Upon their original issuance, Rule 144A Securities shall be issued in
the form of one or more Global Securities registered in the name of DTC, as
Depositary, or its nominee and deposited with the Trustee at its Corporate Trust
Office, as custodian for DTC, for credit by DTC to the respective accounts of
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct). Such Global Securities, together with its Successor
Securities which are Global Securities other than the Regulation S Global
Security, are collectively herein called the "Restricted Global Security".
Upon their original issuance, Regulation S Securities (herein called
"Regulation S Temporary Global Security") shall be issued in the form of a
single temporary Global Security registered in the name of DTC, as Depositary,
or its nominee and deposited with the Trustee at its Corporate Trust Office, as
custodian for DTC, for credit to Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of Euroclear and Cedel, in turn for credit to the
respective accounts of beneficial owners of the Securities represented thereby
(or such other accounts as such beneficial owners may direct) in accordance with
the rules thereof.
Beneficial interests in the Regulation S Temporary Global Security may
only be held through Euroclear and Cedel until such interests are exchanged for
corresponding interests in an unrestricted Global Security (the "Regulation S
Global Security") registered in the name of DTC, as Depositary, or its nominee
and deposited with the Trustee at its Corporate Trust Office, as custodian for
DTC, as provided in the next sentence. A holder of a beneficial interest in the
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Regulation S Temporary Global Security must provide written certification to
Euroclear or Cedel, as the case may be, that the beneficial owner of the
interest in such Global Security is not a U.S. Person (an "Owner Securities
Certification" in the form set forth in Annex D), and Euroclear or Cedel, as the
case may be, must provide to the Trustee a similar certificate in the form set
forth in Annex E (a "Depositary Securities Certification"), prior to any
exchange of such beneficial interest for a beneficial interest in the Regulation
S Global Security.
SECTION 202. Form of Face of Security.
------------------------
[IF THE SECURITY IS A RESTRICTED SECURITY, THEN INSERT -- THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
OF REGULATION D UNDER THE SECURITIES ACT) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.]
[IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT -- THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND
NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME
OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[IF THIS SECURITY IS A GLOBAL SECURITY AND THE DEPOSITORY TRUST
COMPANY IS TO BE THE DEPOSITARY THEREFOR, THEN INSERT -- UNLESS THIS SECURITY IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE Issuer or Its AGENT FOR REGISTRATION
31
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OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[IF THIS SECURITY IS A REGULATION S SECURITY, THEN INSERT -- THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD OR
DELIVERED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S.
PERSON, UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE.]
[IF THE SECURITY IS A REGULATION S TEMPORARY GLOBAL SECURITY, THEN
INSERT -- THIS SECURITY IS A REGULATION S TEMPORARY GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS REGULATION
S TEMPORARY GLOBAL SECURITY MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON PRIOR TO
THE EXPIRATION OF THE RESTRICTED PERIOD (AS DEFINED IN THE INDENTURE) EXCEPT IN
CERTAIN LIMITED CIRCUMSTANCES IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.]
THE SECURITIES EVIDENCED HEREBY WERE ISSUED WITH ORIGINAL ISSUE
DISCOUNT. FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS SECURITY IS
61.474% OF ITS PRINCIPAL AMOUNT, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS
$385.26 PER $1,000 OF STATED FACE AMOUNT, THE ISSUE DATE IS MARCH 20, 1998 AND
THE YIELD TO MATURITY IS 10% PER ANNUM.
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008
[If Restricted Security C CUSIP No. 72346N AA 9]
32
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[If Regulation S Temporary Global Security -- CUSIP No. U72300 AA 1]
[If Regulation S Security -- ISIN No. USU72300AA15]
No. __________ $________
Public Holdings Inc., a corporation duly organized and existing under
the laws of Delaware (herein called the "Issuer", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promise to pay to __________________, or registered assigns,
the principal sum of _____________________ Dollars (such amount the "principal
amount" of this Security) [IF THE SECURITY IS A GLOBAL SECURITY, THEN INSERT --
, or such other principal amount (which, when taken together with the principal
amounts of all other Outstanding Securities, shall not exceed $___________ in
the aggregate at any time) as may be set forth in the records of the Trustee as
referred to in accordance with the Indenture,] on March 15, 2008 and to pay
interest thereon from March 15, 2003 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, payable in arrears
semi-annually on March 15 and September 15 in each year, commencing September
15, 2003 at the rate of 10% per annum, until the principal hereof is paid or
made available for payment, provided that any amount of principal of (and
premium, if any) and interest on this Security which is overdue shall bear
interest (to the extent that payment thereof shall be legally enforceable) at
the rate of 11.5% per annum, from the date such amount is due to the day it is
paid or made available for payment, and such overdue interest shall be payable
on demand. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the March 1 or September 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on the relevant Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee in accordance
with Section 308 of the Indenture, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Interest on this Security shall be computed on the basis set forth
in the Indenture.
The principal of this Security shall not accrue interest until March
15, 2003, except as otherwise provided herein or in the case of a default in
payment of principal and premium, if any, upon acceleration or redemption, in
which case interest shall be payable pursuant to the preceding paragraph on such
overdue principal (and premium, if any), such interest shall be payable on
demand and, if not so paid on demand, such interest shall itself bear
33
<PAGE>
interest at the rate of 11.5% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest on unpaid interest shall also be payable on
demand.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Issuer in
the Borough of Manhattan, The City of New York, New York, maintained for such
purpose and at any other office or agency maintained by the Issuer for such
purpose, 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,
however, that at the option of the Issuer payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register; provided further that all payments of the
principal (and premium, if any) and interest on Securities, the Holders of which
have given wire transfer instructions to the Issuer or its agent at least 10
Business Days prior to the applicable payment date, will be required to be made
by wire transfer of immediately available funds to the accounts specified by
such Holders in such instructions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
34
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
PINNACLE HOLDINGS INC.
By_______________________
SECTION 203. Form of Reverse of Security.
---------------------------
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 10% Senior Notes due 2008 (herein called the
"Securities"), unlimited in aggregate principal amount, issued and to be issued
under an Indenture, dated as of March 20, 1998 (herein called the "Indenture",
which term shall have the meaning assigned to it in such instrument), among the
Issuer and The Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Issuer, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption in the event that on or
before March 15, 2001 the Issuer receives net proceeds from the sale of its
Common Stock in one or more Public Equity Offerings, in which case the Issuer
may, at its option, use all or a portion of any such net proceeds to redeem
Securities in a principal amount of at least $5 million and up to an aggregate
of 35% of the outstanding Securities, provided, however, that at least
$211,250,000 in an aggregate principal amount of the Securities remain
outstanding after each such redemption. Any such redemption must occur on a
Redemption Date within 60 days of any such sale at a redemption price of 110% of
the Accreted Value of the Securities to but excluding the Redemption Date plus
accrued and unpaid Special Interest, if any, thereon to but excluding the
Redemption Date.
35
<PAGE>
The Securities are further subject to redemption upon not less than 30
nor more than 60 days' notice by mail appearing, at any time on or after March
15, 2003, as a whole or in part, at the election of the Issuer, at the following
Redemption Prices (expressed as percentages of the principal amount): If
redeemed during the 12-month period beginning March 15 of the year indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2003................. 105.000%
2004................. 103.333%
2005................. 101.667%
2006 and thereafter.. 100.000%
</TABLE>
together, in the case of any such redemption with accrued interest to but
excluding the Redemption Date, provided that interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Regular Record Dates referred to on the face
hereof, all as provided in the Indenture.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, there may be
declared due and payable the Default Amount of the Securities, in the manner and
with the effect provided in the Indenture. Until March 15, 2003, the Default
Amount in respect of this Security as of any particular date of acceleration
shall equal the Accreted Value of this Security. On and after March 15, 2003,
the Default Amount in respect of this Security shall equal 100% of the principal
amount of this Security.
[IF APPLICABLE, THEN INSERT -- The Holder of this Security (and any
Person that has a beneficial interest in this Security) is entitled to the
benefits of an Exchange and Registration Rights Agreement, dated as of March 20,
1998, and as the same may be amended from time to time (the "Exchange and
Registration Rights Agreement"), executed by the Company. The Exchange and
Registration Rights Agreement provides that Special Interest will be payable by
the Company on the Securities for specified periods if the Company does
36
<PAGE>
not comply with certain of its obligations thereunder. Such provisions of the
Exchange and Registration Rights Agreement are hereby incorporated by reference
and made a part hereof.]
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Issuer a result of Asset
Dispositions or (ii) a Change of Control occurs, the Issuer shall be required to
make an Offer to Purchase for all or a specified portion of the Securities.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Securities under the Indenture at
any time by the Issuer and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and its consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at
the time Outstanding a direction inconsistent with such request and shall have
failed to institute any such proceeding for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to
certain suits described in the Indenture, including any suit instituted by the
Holder of this Security for the enforcement of any payment of principal hereof
or any premium or interest hereon on or after the respective due dates expressed
herein (or, in the case of redemption, on or after the Redemption Date or, in
the case of any purchase of this Security required to be made pursuant to an
Offer to Purchase, on the Purchase Date).
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
37
<PAGE>
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Issuer and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Issuer pursuant to Section 1015 or 1016 of the Indenture, check the box:
[_]
38
<PAGE>
If you want to elect to have only a part of this Security purchased by
the Issuer pursuant to Section 1015 or 1016 of the Indenture, state the amount:
$
Dated: Your Signature:__________________________
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:_____________________________________________
(Signature must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank or
trust company)
SECTION 204. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
The Bank of New York
as Trustee
By ____________________
Authorized Signatory
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
---------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. On the Closing
Date the Issuer shall issue $325,000,000 aggregate principal amount of
Securities (constituting the Original Securities). The Issuer may from time to
time issue Additional Securities, in each case pursuant to a Board Resolution
and subject to Section 303, provided that such issuance does not result in a
breach or violation any of the covenants contained herein. The Issuer may issue
Exchange Securities from time to time pursuant to an Exchange Offer, in each
case pursuant to a Board Resolution and
39
<PAGE>
subject to Section 303, in authorized denominations in exchange for a like
principal amount of Original Securities or Additional Securities. Upon any such
exchange the Original Securities or Additional Securities, as the case may be,
shall be cancelled in accordance with Section 310 and shall no longer be deemed
Outstanding for any purpose.
The Securities shall be known and designated as the "10% Senior
Discount Notes due 2008" of the Issuer. Their Stated Maturity shall be March
15, 2008 and they shall bear interest at the rate of 10% per annum, from March
15, 2003 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, as the case may be, payable semi-annually in
arrears on March 15 and September 15, commencing September 15, 2003, until the
principal thereof is paid or made available for payment. Notwithstanding the
foregoing, Special Interest shall be payable on the Securities under the
circumstances and in the manner specified in the Exchange and Registration
Rights Agreement, which is hereby incorporated by reference herein and made a
part hereof. Accrued Special Interest, if any, shall be paid in cash in arrears
semi-annually on March 15 and September 15 in each year. Whenever in this
Indenture there is mentioned, in any context, interest on, or in respect of, any
Security, such mention shall be deemed to include mention of Special Interest to
the extent that, in such context, Special Interest is, was or would be accrued
or payable in respect thereof and express mention of Special Interest in any
provisions hereof shall not be construed as excluding Special Interest in those
provisions hereof where such express mention is not made.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York maintained for such purpose and at any other
office or agency maintained by the Issuer for such purpose; provided, however,
that at the option of the Issuer payment of interest may be made by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Security Register.
The Securities shall be subject to repurchase by the Issuer pursuant
to an Offer to Purchase as provided in Sections 1015 and 1016.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be subject to defeasance and covenant defeasance
as provided in Article Twelve.
The Securities shall not have the benefit of any sinking fund
obligation.
Unless the context otherwise requires, the Original Securities, the
Additional Securities and the Exchange Securities shall constitute one series
for all purposes under this Indenture, including with respect to any amendment,
waiver, acceleration or other Act of Holders, redemption or Offer to Purchase.
40
<PAGE>
SECTION 302. Denominations.
-------------
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiples thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Issuer by any two
of the Chairman of the Board, the President, any Vice President, the Secretary,
any Assistant Secretary, the Chief Financial Officer, the Treasurer or any
Assistant Treasurer. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of an Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices at the time of the authentication and delivery of such Securities or did
not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Original Securities executed by the
Issuer to the Trustee for authentication, together with an Issuer Order for the
authentication and delivery of such Original Securities; and the Trustee in
accordance with the Issuer order shall authenticate and make available for
delivery such Original Securities as provided in this Indenture and not
otherwise.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may, pursuant to a Board Resolution, deliver
Additional Securities executed by the Issuer to the Trustee for authentication,
together with an Issuer Order for the authentication and delivery of such
Additional Securities and an Officers' Certificate stating that the issuance of
such Additional Securities will not result in a breach or violation of any of
the covenants contained in this Indenture and setting forth the manner of such
determination, and the Trustee in accordance with the Issuer Order shall
authenticate and make available for delivery such Securities. Prior to
authenticating such Additional Securities, and accepting any additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, if requested, and (subject to Section 601)
shall be fully protected in relying upon, an Opinion of Counsel stating in
substance:
(a) that the issuance of such Additional Securities will not result in
a breach or violation of any of the covenants contained in this Indenture;
and
41
<PAGE>
(b) that all conditions hereunder precedent to the authentication and
delivery of such Additional Securities have been complied with and that
such Additional Securities, when such Securities have been duly
authenticated and delivered by the Trustee (and subject to any other
conditions specified in such Opinion of Counsel), will be duly issued and
delivered and will constitute valid and legally binding obligations of the
Issuer enforceable in accordance with their terms except that (a) the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws now or
hereafter in effect relating to creditors' rights generally; and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or equity).
At any time and from time to time after the execution and delivery of
this Indenture and after the effectiveness of a registration statement under the
Securities Act with respect to such Securities, the Issuer may deliver Exchange
Securities executed by the Issuer to the Trustee for authentication, together
with an Issuer Order for the authentication and delivery of such Exchange
Securities and a like principal amount of Original Securities for cancellation
in accordance with Section 310 of this Indenture, and the Trustee in accordance
with the Issuer Order shall authenticate and make available for delivery such
Securities. Prior to authenticating such Exchange Securities, and accepting any
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, if requested, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating in
substance:
(a) that all conditions hereunder precedent to the authentication and
delivery of such Exchange Securities have been complied with and that such
Exchange Securities, when such Securities have been duly authenticated and
delivered by the Trustee (and subject to any other conditions specified in
such Opinion of Counsel), will be duly issued and delivered and will
constitute valid and legally binding obligations of the Issuer enforceable
in accordance with their terms except that (a) the enforceability thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws now or hereafter in effect relating to
creditors' rights generally; and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or equity); and
(b) that the issuance of the Exchange Securities in exchange for
Original Securities has been effected in compliance with the Securities
Act.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and
42
<PAGE>
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 304. Temporary Securities.
--------------------
Pending the preparation of definitive Securities, the Issuer may
execute, and upon Issuer order, the Trustee shall authenticate and deliver,
temporary Securities, which Securities are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by its execution thereof.
If temporary Securities are issued, the Issuer will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Issuer designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation (which cancellation shall be only
by the Trustee) of any one or more temporary Securities, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same rights and benefits under this Indenture as definitive Securities.
SECTION 305. Global Securities.
-----------------
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Issuer for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary (A) has notified the Issuer that it is
unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act,
and in either case the Issuer fails to appoint a successor Depositary within 120
days of such notice, (ii) the Issuer execute and deliver to the Trustee an
Issuer Order stating that they elect to cause the issuance of the Securities in
certificated form and that all Global Securities shall be exchanged in whole for
Securities that are not Global Securities (in which case such exchange
43
<PAGE>
shall be effected by the Trustee) or (iii) there shall have occurred and be
continuing an Event of Default with respect to the Securities.
(3) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Trustee, as Security Registrar, for exchange or cancellation
as provided in this Article Three. If any Global Security is to be exchanged
for other Securities or cancelled in part, or if another Security is to be
exchanged in whole or in part for a beneficial interest in any Global Security,
then either (i) such Global Security shall be so surrendered for exchange or
cancellation as provided in this Article Three or (ii) the principal amount
thereof shall be reduced or increased by an amount equal to the portion thereof
to be so exchanged or cancelled, or equal to the principal amount of such other
Security to be so exchanged for a beneficial interest therein, as the case may
be, by means of an appropriate adjustment made on the records of the Trustee, as
Security Registrar, whereupon the Trustee, in accordance with the Applicable
Procedures, shall instruct the Depositary or its authorized representative to
make a corresponding adjustment to its records. Upon any such surrender or
adjustment of a Global Security, the Trustee shall, subject to Section 306(b)
and as otherwise provided in this Article Three, authenticate and deliver any
Securities issuable in exchange for such Global Security (or any portion
thereof) to or upon the order of, and registered in such names as may be
directed by, the Depositary or its authorized representative. Upon the request
of the Trustee in connection with the occurrence of any of the events specified
in the preceding paragraph, the Issuer shall promptly make available to the
Trustee a reasonable supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to rely upon any order, direction or
request of the Depositary or its authorized representative which is given or
made pursuant to this Article Three if such order, direction or request is given
or made in accordance with the Applicable Procedures and in accordance with all
applicable laws.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(5) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members.
SECTION 306. Registration, Registration of Transfer and Exchange Generally;
44
<PAGE>
Restrictions on Transfer and Exchange; Securities Act Legends.
-------------------------------------------------------------
(a) Registration, Registration of Transfer and Exchange Generally.
-------------------------------------------------------------
The Issuer shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the register maintained in such office and in any other office or
agency of the Issuer designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the
registration of Securities and of transfers and exchanges of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges of Securities as herein provided. Such
Security Register shall distinguish between Original Securities and Exchange
Securities.
Upon surrender for registration of transfer of any Security at an
office or agency of the Issuer designated pursuant to Section 1002 for such
purpose, the Issuer shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations, of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 306, Securities may be exchanged for other Securities of any
authorized denominations, of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture upon surrender of the
Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, the Issuer shall execute, and the
Trustee shall authenticate and make available for delivery, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer, evidencing the same
debt, and (except for the differences between Original Securities and Exchange
Securities provided for herein) entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Issuer or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Issuer and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or
45
<PAGE>
exchange of Securities, other than exchanges pursuant to Sections 303, 304, 305,
306, 906, 1013, 1016 or 1108 not involving any transfer.
The Issuer and the Trustee shall not be required (i) to issue,
register the transfer of, or exchange any Security during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities selected for redemption under Section 1104 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption, in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
(b) Certain Transfers and Exchanges. Notwithstanding any other
-------------------------------
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 306(b) shall be made only in accordance with this Section
306(b). Transfers and exchanges subject to this Section 306(b) shall also be
subject to the other provisions of this Indenture that are not inconsistent with
this Section 306(b).
(1) Restricted Global Security to Regulation S Temporary Global
-----------------------------------------------------------
Security or Regulation S Global Security. If the owner of a beneficial
----------------------------------------
interest in the Restricted Global Security wishes at any time to
transfer such interest to a Person who is required or permitted to
acquire the same in the form of a beneficial interest in the
Regulation S Temporary Global Security (if before the expiration of
the Restricted Period) or in the Regulation S Global Security (if
thereafter), such transfer may be effected only in accordance with the
provisions of this Clause (b)(i) subject to the Applicable Procedures.
Upon receipt by the Trustee, as Security Registrar, of (A) an order
given by the Depositary or its authorized representative directing
that a beneficial interest in the Regulation S Temporary Global
Security or Regulation S Global Security (as applicable) in a
specified principal amount be credited to a specified Agent Member's
account and that a beneficial interest in the Restricted Global
Security in an equal principal amount be debited from another
specified Agent Member's account and (B) a Regulation S Certificate,
satisfactory to the Trustee and duly executed by the owner of such
beneficial interest in the Restricted Global Security or his attorney
duly authorized in writing, then the Trustee, as Security Registrar
but subject to Clause (b)(iv) below, shall reduce the principal amount
of the Restricted Global Security and increase the principal amount of
the Regulation S Temporary Global Security or Regulation S Global
Security (as applicable) by such specified principal amount as
provided in Section 305(c).
(2) Regulation S Temporary Global Security to Restricted Global
-----------------------------------------------------------
Security. If the owner of a beneficial interest in the Regulation S
--------
Temporary Global Security wishes at any time to transfer such interest
to a Person who is required or permitted to acquire the same in the
form of a beneficial interest in the Restricted Global Security, such
transfer may be effected only in accordance with this Clause (b)(ii)
and subject to the Applicable Procedures. Upon receipt by the Trustee,
as Security Registrar,
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<PAGE>
of (A) an order given by the Depositary or its authorized
representative directing that a beneficial interest in the Restricted
Global Security in a specified principal amount be credited to a
specified Agent Member's account and that a beneficial interest in the
Regulation S Temporary Global Security in an equal principal amount be
debited from another specified Agent Member's account and (B) if such
transfer is to occur during the Restricted Period, a Restricted
Securities Certificate, satisfactory to the Trustee and duly executed
by the owner of such beneficial interest in the Regulation S Temporary
Global Security or his attorney duly authorized in writing, then the
Trustee, as Security Registrar, shall reduce the principal amount of
the Regulation S Temporary Global Security and increase the principal
amount of the Restricted Global Security by such specified principal
amount as provided in Section 305(c).
(3) Exchanges between Global Security and Non-Global Security. A
---------------------------------------------------------
beneficial interest in a Global Security may be exchanged for a
Security that is not a Global Security as provided in Section 305,
--------
provided that, if such interest is a beneficial interest in the
Restricted Global Security, or if such interest is a beneficial
interest in the Regulation S Temporary Global Security, then such
interest shall be exchanged for a Restricted Security (subject in each
case to Section 306(c)).
(4) Regulation S Temporary Global Security to be Held Through
---------------------------------------------------------
Euroclear or Cedel during Restricted Period. The Issuer shall use its
-------------------------------------------
best efforts to cause the Depositary to ensure that beneficial
interests in the Regulation S Temporary Global Security may be held
only in or through accounts maintained at the Depositary by Euroclear
or Cedel (or by Agent Members acting for the account thereof), and no
person shall be entitled to effect any transfer or exchange that would
result in any such interest being held otherwise than in or through
such an account; provided that this Clause (b)(iv) shall not prohibit
--------
any transfer or exchange of such an interest in accordance with Clause
(b)(ii) above.
(3) Securities Act Legends. Rule 144A Securities and its respective
----------------------
Successor Securities shall bear a Restricted Securities Legend, and Regulation S
Securities and its Successor Securities shall bear a Regulation S Legend,
subject to the following:
(1) subject to the following Clauses of this Section 306(c), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Securities Act Legend borne by such Global Security while represented
thereby;
(2) subject to the following Clauses of this Section 306(c), a
new Security which is not a Global Security and is issued in exchange
for another Security (including a Global Security) or any portion
thereof, upon transfer or otherwise, shall bear the Securities Act
Legend borne by such other Security, provided that, if such new
Security is required pursuant to Section 306(b)(iii) to be issued in
the form of a Restricted Security,
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it shall bear a Restricted Securities Legend and, if such new Security
is so required to be issued in the form of a Regulation S Security, it
shall bear a Regulation S Legend;
(3) Registered Securities shall not bear a Securities Act Legend;
(4) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject
to transfer restrictions pursuant to the Securities Act, a new
Security which does not bear a Securities Act Legend may be issued in
exchange for or in lieu of a Security (other than a Global Security)
or any portion thereof which bears such a legend if the Trustee has
received an Unrestricted Securities Certificate, satisfactory to the
Trustee and duly executed by the Holder of such legended Security or
his attorney duly authorized in writing, and after such date and
receipt of such certificate, the Trustee shall authenticate and make
available for delivery such a new Security in exchange for or in lieu
of such other Security as provided in this Article Three;
(5) a new Security which does not bear a Securities Act Legend
may be issued in exchange for or in lieu of a Security (other than a
Global Security) or any portion thereof which bears such a legend if,
in the Issuer's judgment, placing such a legend upon such new Security
is not necessary to ensure compliance with the registration
requirements of the Securities Act, and the Trustee, at the direction
of the Issuer, shall authenticate and deliver such a new Security as
provided in this Article Three provided that, the Trustee, if it deems
reasonably necessary or appropriate, may request an Opinion of Counsel
in connection with such direction; and
(6) notwithstanding the foregoing provisions of this Section
306(c), a Successor Security of a Security that does not bear a
particular form of Securities Act Legend shall not bear such form of
legend unless the Issuer has reasonable cause to believe that such
Successor Security is a "restricted security" within the meaning of
Rule 144, in which case the Trustee, at the direction of the Issuer,
shall authenticate and make available for delivery a new Security
bearing a Restricted Securities Legend in exchange for such Successor
Security as provided in this Article Three.
Each Holder of a Security agrees to indemnify the Trustee against
any liability that may result from the transfer, exchange or assignment of such
Holder's Security in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation or
evidence as are expressly
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<PAGE>
required by, and to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
SECTION 307. Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If any mutilated Security is surrendered to the Trustee, the Issuer
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Issuer and the Trustee (i) evidence
to its satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by either of them to save each of
them and any agent of either of them completely harmless, then, in the absence
of notice to the Issuer or the Trustee that such Security has been acquired by a
bona fide purchaser, the Issuer shall execute and upon its written request the
Trustee shall authenticate and make available for delivery, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Issuer in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Issuer
and the Trustee (without duplication) may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and reasonable attorneys' fees) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Issuer, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 308. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder on such date,
and such Defaulted Interest may be paid by the Issuer, at its election in
each case, as provided in Clause (1) or (2) below:
(1) The Issuer may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or its respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner: The Issuer shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Issuer shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Issuer of such
Special Record Date and, in the name and at the sole expense of the Issuer,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities (or its respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Issuer may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may
be
50
<PAGE>
required by such exchange, if, after written notice given by the Issuer to
the Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee in its reasonable
judgment.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 309. Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 308) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Issuer, the
Trustee nor any agent of the Issuer or the Trustee shall be affected by notice
to the contrary.
None of the Issuer, the Trustee or any agent of the Issuer or the
Trustee shall have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Security in global form, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests. Notwithstanding the
foregoing, with respect to any Security in global form, nothing herein shall
prevent the Issuer or the Trustee, or any agent of the Issuer or the Trustee,
from giving effect to any written certification, proxy or other authorization
furnished by any Depositary (or its nominee), as a Holder, with respect to such
Security in global form or impair, as between such Depositary and owners of
beneficial interests in such Security in global form, the operation of customary
practices governing the exercise of the rights of such Depositary (or its
nominee) as a Holder of such Security in global form.
SECTION 310. Cancellation.
------------
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any Offer to Purchase pursuant to
Section 1015 or 1016 shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it and only by it.
The Issuer may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Issuer may
have acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture.
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<PAGE>
All canceled Securities held by the Trustee shall be disposed of as directed by
an Issuer order, provided, that in no event shall the Trustee be required to
destroy such canceled Securities.
SECTION 311. CUSIP Numbers.
-------------
The Issuer in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
as a convenience to Holders; provided that any such notice may state that no
--------
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice and that reliance may be placed
only on the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Issuer will promptly notify the Trustee of any change in the "CUSIP"
numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on written demand of and at the sole
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture (including, but not limited to,
Article Twelve hereof), when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 307 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(1) have become due and payable, or
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<PAGE>
(2) will become due and payable at its Stated Maturity within one
year, or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the sole expense,
of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, have
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be including, without
limitation, the payment of all fees and expenses of the Trustee, its
agents and counsel;
(2) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer including, without limitation, the payment of all
fees and expenses of the Trustee, its agents and counsel; and
(3) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article Four, the obligations of the Issuer to the Trustee under Section
607 and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of Clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
ARTICLE FIVE
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Remedies
SECTION 501. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity; or
(2) default in the payment of any interest (including Additional
Interest) upon any Security when it becomes due and payable, and
continuance of such default for a period of 30 days; or
(3) default, on the applicable Purchase Date, in the purchase of
Securities required to be purchased by the Issuer pursuant to an Offer to
Purchase described under Section 1015 or 1016 as to which an Offer has been
mailed to Holders; or
(4) default in the performance, or breach, of Section 801; or
(5) default in the performance, or breach, of any covenant or warranty
of the Issuer in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a
period of 60 days after there has been given, by registered or certified
mail, to the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(6) a default or defaults under the terms of any instrument evidencing
or securing Debt for money borrowed by the Issuer or any Restricted
Subsidiary having an outstanding principal amount of $5 million or more
individually or in the aggregate, whether such Debt now exists or shall
hereafter be created, which default or defaults shall constitute a failure
to pay all or any portion of the principal amount of such indebtedness when
due or shall have resulted in such Debt becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable; or
(7) a final judgment or final judgments (not subject to appeal) for
the payment of money are entered against the Issuer or any Restricted
Subsidiary in an aggregate
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<PAGE>
amount in excess of $5 million by a court of competent jurisdiction which
judgments remain undischarged or unbonded for a period (during which
execution shall not be effectively stayed) of 60 days after the right to
appeal all such judgments has expired; or
(8) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Issuer or any Restricted
Subsidiary in an involuntary case or proceeding under any applicable U.S.
Federal or State or other applicable bankruptcy, insolvency, reorganization
or other similar law or (B) a decree or order adjudging the Issuer or any
Restricted Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Issuer or any Restricted Subsidiary
under any applicable U.S. Federal or State, or other applicable law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Issuer or any Restricted
Subsidiary or of any substantial part of the property of the Issuer or any
Restricted Subsidiary, or ordering the winding up or liquidation of the
affairs of the Issuer or any Restricted Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(9) the commencement by the Issuer or any Restricted Subsidiary of a
voluntary case or proceeding under any applicable U.S. Federal or State, or
other applicable bankruptcy, insolvency, reorganization or other similar
law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Issuer or any Restricted Subsidiary to the
entry of a decree or order for relief in respect of the Issuer or such
Restricted Subsidiary in an involuntary case or proceeding under any
applicable U.S. Federal or State, or other applicable bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against the Issuer or a
Restricted Subsidiary, or the filing by the Issuer or any Restricted
Subsidiary of a petition or answer or consent seeking reorganization or
relief under any applicable U.S. Federal or State, or other applicable law,
or the consent by the Issuer or any Restricted Subsidiary to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Issuer or any Restricted Subsidiary or of any substantial part of
the property of the Issuer or any Restricted Subsidiary, or the making by
the Issuer or any Restricted Subsidiary of an assignment for the benefit of
creditors, or the admission by the Issuer or any Restricted Subsidiary in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Issuer or any Restricted Subsidiary
in furtherance of any such action.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
55
<PAGE>
If an Event of Default (other than an Event of Default specified in
Section 501(8) or (9)) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the Default Amount of all the Securities to
be due and payable immediately, by a notice in writing to the Issuer (and to the
Trustee if given by Holders), and upon any such declaration such Default Amount
and any accrued interest shall become immediately due and payable. If an Event
of Default specified in Section 501(8) or (9) occurs, the Default Amount and any
accrued interest on the Securities then Outstanding shall ipso facto become
immediately due and payable without any declaration or other Act on the part of
the Trustee or any Holder.
Until the Full Accretion Date, the "Default Amount" in respect of any
particular Security as of any particular date of acceleration shall equal to
Accreted Value of the Security on such date. On the Full Accretion Date, the
Default Amount in respect of any particular Security shall equal 100% of the
principal amount of the Security.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Issuer and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of
acceleration (including any Securities required to have been purchased
on the Purchase Date pursuant to an Offer to Purchase made by the
Issuer) and, to the extent that payment of such interest is lawful,
any interest and Additional Amounts thereon at the rate provided
therefor in the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate provided therefor in the
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
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(2) all Events of Default, other than the non-payment of the principal
of (and premium, if any) or interest on, the Securities which have become
due solely by such declaration of acceleration, have been cured or waived
as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Issuer covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof or, with respect to any
Security required to have been purchased pursuant to an Offer to Purchase
made by the Issuer, at the Purchase Date thereof,
the Issuer will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
provided therefor in the Securities, and, in addition thereto, 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 and any amounts due the Trustee under
Section 607 hereof.
If the Issuer fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Issuer or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Issuer or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
57
<PAGE>
SECTION 504. Trustee May File Proofs of Claim.
--------------------------------
In case of any judicial proceeding relative to the Issuer or any other
obligor upon the Securities, or its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect, receive and distribute
any moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official 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 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 607. 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 607 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 which the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
No provision of this Indenture 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
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
amounts due the Trustee under Section 607 hereof, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
------------------------------
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Subject to Article Twelve, any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts including, without limitation,
the reasonable compensation, expenses, disbursements and advances due the
Trustee, its agents and counsel and any other amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities due the
Holders in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal (and
premium, if any) and interest, respectively.
SECTION 507. Limitation on Suits.
-------------------
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings or pursue remedies in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered and provided to the Trustee
reasonable indemnity satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding or
pursued any remedies; and
(5) no direction which in Trustee's reasonable judgment is
inconsistent with such written request has been given to the Trustee during
such 60-day period by the Holders of a majority in principal amount of the
Outstanding Securities;
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it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
----------------------------------------------------------------
Interest.
- --------
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 308) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or in the case of an Offer to Purchase made by the Issuer and required to
be accepted as to such Security, on the Purchase Date) and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired or
affected without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Issuer, the Trustee and the Holders shall
be restored severally and respectively to its former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 307, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders 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 assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
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No delay or omission of the Trustee or of any Holder of any Security
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 or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
(1) the Trustee may refuse to follow any direction which
(1) conflicts with any rule of law or with this Indenture, or
(2) the Trustee, in its reasonable judgment, determines may be
unduly prejudicial to the rights of other Holders of Securities, or
may involve the Trustee in personal liability, or does not have
adequate indemnification against any loss or expense resulting from
the compliance therewith, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities, by
written notice to the Trustee, waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to have
been purchased pursuant to an Offer to Purchase which has been made by the
Issuer), or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
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Upon any such waiver, such default shall be cured and 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 514. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the reasonable costs of such suit, and may assess
reasonable costs against any such party litigant, in the manner and to the
extent provided in the Trust Indenture Act; provided, that neither this Section
nor the Trust Indenture Act shall be deemed to authorize any court to require
such an undertaking or to make such an assessment in any suit instituted by the
Issuer and provided, further that, subject to a court's discretion, this Section
shall not apply to a suit by the Trustee, and the Issuer shall not seek such
undertaking from any court against the Trustee.
SECTION 515. Waiver of Stay, or Extension Laws.
---------------------------------
The Issuer covenants (to the extent that they may lawfully do so) that
they will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Issuer (to the extent that they
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that they will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
(1) 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 his own affairs.
(2) Except during the continuance of an Event of Default:
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(1) 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
(2) 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 (but need
not confirm or investigate the accuracy of mathematical calculations or
other facts stated therein).
(3) 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:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) 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;
(3) 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 512 hereof; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(4) 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.
SECTION 602. Notice of Defaults.
------------------
The Trustee shall give the Holders notice of any default hereunder of
which it has knowledge as and to the extent provided by the Trust Indenture Act;
provided, however, that in
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the case of any default specified in Section 501(5), no such notice to Holders
shall be given until at least 30 days after the occurrence of such default
(without regard to any Notice of Default). For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default.
Except in the case of an Event of Default in payment of principal of
(premium, if any) or interest on any Security, the Trustee may withhold 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.
SECTION 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 601:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties, without any independent
investigation of any fact or matter therein;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer request or Issuer order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel, shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) 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 pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
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(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Issuer,
personally or by agent or attorney upon reasonable advance notice to the
Issuer;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be liable for any action it takes, suffers
to be taken, or omits in good faith; and
(i) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Securities or this Indenture.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Issuer, and the Trustee assumes no responsibility for its correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Issuer of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Issuer, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Issuer and any other obligor upon the
Securities with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
-------------------
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Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Issuer.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Issuer agrees
(1) to pay to the Trustee from time to time such reasonable
compensation for all services rendered by it hereunder as may be agreed in
writing from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the
compensation, expenses and disbursements of its agents, accountants,
experts and counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee and any predecessor Trustee and their
agents for, and to hold them harmless against, any loss, damage, claims,
liability or expense (including, without limitation, reasonable attorneys'
fees and expenses and taxes (other than taxes based upon, measured by or
determined by the income of such Person) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability (not arising from negligence or bad
faith) in connection with the exercise or performance of any of its powers
or duties hereunder.
The Trustee shall notify the Issuer promptly upon acquiring knowledge
of any claim for which it is entitled to be indemnified hereunder. Failure by
the Trustee to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder unless the Issuer are prejudiced thereby. If the Issuer
elect to defend the claim, the Issuer shall be entitled to control the defense
of such claim and the Trustee shall cooperate in such defense. The Trustee may
have separate counsel, and the Issuer shall pay the reasonable fees and expenses
of such counsel until such time as the Issuer assumes the defense of such claim,
and thereafter, to the extent that in the Trustee's reasonable judgment its
interests conflict with or differ from those of the Issuer under such claim.
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The Issuer need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.
The obligations of the Issuer under this Section 607 shall survive the
resignation or removal of the Trustee and/or satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 501(8) or (9) 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
applicable bankruptcy law.
SECTION 608. Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest within 90 days, apply to the Commission for permission to continue, or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in the Borough of Manhattan, The City of New York. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
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(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuer. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee, the Issuer
or the Holders of at least 10% in principal amount of the Outstanding
Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to
the Trustee and to the Issuer.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Issuer or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Issuer or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, (i)
the Issuer by Board Resolutions of the Issuer may remove the Trustee, or
(ii) subject to Section 514, any Holder who has been a bona fide Holder of
a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(5) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Issuer, by Board Resolutions of the Issuer, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Issuer and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee and supersede the successor
Trustee appointed by the
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Issuer. If, within 30 days after the retiring Trustee resigns, no successor
Trustee shall have been so appointed by the Issuer or the Holders of a
majority in principal amount of the Outstanding Securities and accepted
appointment in the manner hereinafter provided, the retiring Trustee or any
Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(6) The Issuer shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders
in the manner provided in Section 106. Each notice shall include the name
of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and to the retiring Trustee a written instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the Issuer
or the successor Trustee, such retiring Trustee shall, upon payment of all
sums owing to the retiring Trustee hereunder and subject to the Lien provided
for in Section 607 hereof, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder. Upon request of any
such successor Trustee, the Issuer shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts. Notwithstanding the replacement of the Trustee
pursuant to this Section 611, the Issuer's obligations under Section 607 hereof
shall continue for the benefit of the retiring Trustee.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties
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hereto. In case any Securities shall have been authenticated, but not delivered,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee, or any corporation into which all
or substantially all of its corporate trust business is transferred, may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Issuer.
------------------------------------------------
If and when the Trustee shall be or become a creditor of the Issuer(or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Issuer(or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
-----------------------------------
The Trustee may appoint an Authenticating Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer, partial
conversion or partial redemption or pursuant to Section 307, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be reasonably acceptable to the Issuer and shall
at all times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
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under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Issuer. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be reasonably acceptable to the Issuer and shall mail written
notice of such appointment by first-class mail, postage prepaid, to all Holders
as its names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments from the Issuer,
subject to the provisions of Section 607.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
The Bank of New York,
As Trustee
By___________________________
Authorized Signatory
SECTION 615. Trustee's Application for Instructions from the Company.
-------------------------------------------------------
Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date
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specified in such application (which date shall not be less than three Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Issuer
SECTION 701. Issuer to Furnish Trustee Names and Addresses of Holders.
--------------------------------------------------------
The Issuer will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each March 1 and
September 1, commencing March 1, 1999, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders as of
such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to its rights under this Indenture or under the Securities and the
corresponding rights and duties of the Trustee shall be provided by the
Trust Indenture Act.
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(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Issuer and the Trustee that neither the Issuer nor the
Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to the names and addresses of Holders
made pursuant to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
------------------
(a) The Trustee shall mail or transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto.
(b) A copy of each such report shall, at the time of such mailing or
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, if any, with the Commission and with
the Issuer. The Issuer will notify the Trustee when the Securities are
listed on any stock exchange, or any delisting thereof.
SECTION 704. Reports by the Issuer.
---------------------
The Issuer shall file with the Trustee and the Commission, and mail or
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission. Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates and written notices
delivered to the Trustee in accordance with the terms of this Indenture).
SECTION 705. Officers Certificate with Respect to Change in Interest Rates.
--------------------------------------------------------------
Within five days after the day on which any Additional Interest begins
accruing, and within five days after any Additional Interest ceases to accrue,
the Issuer shall deliver an Officers' Certificate to the Trustee, stating the
interest rate thereupon in effect for the Unregistered Securities (if any are
Outstanding) and the date on which such rate became effective.
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SECTION 706. Calculation of Original Issue Discount
--------------------------------------
The Company shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the
Internal Revenue Code.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Issuer may Consolidate, Etc. Only on Certain Terms.
--------------------------------------------------
The Issuer may not, in a single transaction or a series of related
transactions, (i) consolidate or merge with or into any other Person or permit
any other Person to consolidate or merge with or into the Issuer or (ii)
directly or indirectly, transfer, sell, lease or otherwise dispose of all or
substantially all of its assets, unless:
(1) in a transaction in which the Issuer does not survive or in which
the Issuer transfers, sells, leases or otherwise disposes of all or
substantially all of its assets, the successor entity to the Issuer (for
purposes of this Article Eight, a "Successor Entity") shall be a
corporation, shall be organized and validly existing under the laws of the
United States of America, any State thereof, or the District of Columbia,
and shall expressly assume by an indenture supplemental hereto executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any) and interest on
all the Securities and the performance of every covenant of this Indenture
on the part of the Issuer to be performed or observed;
(2) immediately before and after giving effect to such transaction on
a pro forma basis (including treating any Debt Incurred by the Issuer or a
Restricted Subsidiary as a result of such transaction as having been
Incurred by the Issuer or such Restricted Subsidiary at the time of such
transaction), no Event of Default, and no event which, after notice or
lapse of time, or both, would constitute an Event of Default, shall have
occurred and be continuing;
(3) except in the case of any such consolidation or merger of the
Issuer with or into, or any such transfer, sale, lease or other disposition
of assets to, a Wholly Owned Restricted Subsidiary, immediately after
giving effect to such transaction, the Consolidated Net Worth of the Issuer
(or the Successor Entity) is equal to or greater than the Consolidated Net
Worth of the Issuer immediately prior to such transaction;
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(4) except in the case of any such consolidation or merger of the
Issuer with or into, or any such transfer, sale, lease or other disposition
of assets to, a Wholly Owned Restricted Subsidiary, immediately after
giving effect to such transaction and treating any Debt which becomes an
obligation of the Issuer or a Restricted Subsidiary as a result of such
transaction as having been Incurred by the Issuer or such Restricted
Subsidiary at the time of the transaction, the Issuer (or the Successor
Entity) could Incur at least $1.00 of additional Debt pursuant to the first
paragraph of Section 1008;
(5) if, as a result of any such transaction, property and assets of
the Issuer would become subject to a Lien which would not be permitted by
Section 1013, the Issuer or, if applicable, the Successor Entity, as the
case may be, shall take such steps as shall be necessary effectively to
secure the Securities equally and ratably with (or prior to, as the case
may be) Debt secured by such Lien; and
(6) the Issuer has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that such amalgamation,
consolidation, merger, conveyance, transfer, sale, lease or disposition
and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture, complies with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with, and, with respect to such Officer's
Certificate, setting forth the manner of determination of the Consolidated
Net Worth and the ability to Incur Debt in accordance with Clauses (3) and
(4) of this Section 801, of the Issuer or, if applicable, of the Successor
Entity as required pursuant to the foregoing.
SECTION 802. Successor Substituted.
---------------------
Upon any consolidation of the Issuer with, or merger of the Issuer
into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Issuer as an entirety in accordance with Section 801, the Successor Entity shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under this Indenture with the same effect as if such successor Person
had been named herein as the Issuer herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
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Without the consent of any Holders, the Issuer, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to an Issuer and the
assumption by any such successor of the covenants of the Issuer herein and
in the Securities; or
(2) to add to the covenants of the Issuer for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Issuer; or
(3) to secure the Securities pursuant to the requirements of Section
1013 or otherwise; or
(4) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions of
this Indenture, provided that such action pursuant to this Clause (5) shall
not adversely affect the interests of the Holders in any material respect;
or
(6) to evidence and provide for the acceptance and appointment
hereunder of a successor Trustee with respect to the Securities.
SECTION 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Issuer and the Trustee, the Issuer, when authorized by Board Resolutions
of the Issuer, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
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(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable thereon, or
change the place of payment where, or the coin or currency in which, any
Security or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date or, in the case of an Offer to Purchase which has been
made, on or after the applicable Purchase Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and its consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1017, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(4) following the mailing of an Offer with respect to an Offer to
Purchase pursuant to Section 1015 or 1020, modify the provisions of this
Indenture with respect to such Offer to Purchase in a manner adverse to
such Holder.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
---------------------------------
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Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Issuer, to any such supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
------------------------------------------
The Issuer will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Issuer will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Issuer in respect of the
Securities and this Indenture may be served. The Issuer will 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 Issuer 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, and the
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Issuer hereby appoint the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Issuer may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York) where the Securities 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 Issuer of
its obligation to maintain an office or agency in the Borough of Manhattan, The
City of New York, for such purposes. The Issuer will 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.
SECTION 1003. Money for Security Payments to Be Held in Trust.
-----------------------------------------------
If the Issuer shall at any time act as its own Paying Agent, they
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Issuer shall have one or more Paying Agents, they will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
as provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Issuer will promptly notify the Trustee of its action or failure so
to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent (or, until such time as this Indenture shall
be qualified under the Trust Indenture Act, which would be applicable to it as
Paying Agent if this Indenture were so qualified) and (ii) in the event and
during the continuance of any default by the Issuer(or any other obligor upon
the Securities) in the making of any payment in respect of the Securities, upon
the written request of the Trustee, forthwith pay to the Trustee all sums held
in trust by such Paying Agent as such.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuer or such Paying Agent, such sums
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to be held by the Trustee upon the same trusts as those upon which such sums
were held by the Issuer or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuer, in trust for the payment of the principal of (and premium, if
any) or interest on any Security 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 Issuer on Issuer request, or (if then held by the Issuer)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Issuer 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
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, 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 publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer.
SECTION 1004. Existence.
---------
Subject to Article Eight and Section 1015, the Issuer will do or cause
to be done all things necessary to preserve and keep in full force and effect
its respective existence, rights (charter and statutory) and franchises;
provided, however, that an Issuer shall not be required to preserve any such
right or franchise if the Issuer in good faith shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Issuer and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 1005. Maintenance of Properties.
-------------------------
The Issuer will cause all properties used or useful in the conduct of
its business or the business of any Restricted Subsidiary of the Issuer to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Issuer may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent an Issuer or any of its Restricted Subsidiaries from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined by the Issuer or Restricted Subsidiary in good
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faith, desirable in the conduct of its business or the business of any
Restricted Subsidiary and not disadvantageous in any material respect to the
Holders.
SECTION 1006. Payment of Taxes and Other Claims.
---------------------------------
The Issuer will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments
and governmental charges levied or imposed upon the Issuer or any of its
Restricted Subsidiaries or upon the income, profits or property of the Issuer or
any of its Restricted Subsidiaries, and (2) all material lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien upon
the property of the Issuer or any of its Restricted Subsidiaries; provided,
however, that the Issuer shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
negotiations or proceedings.
SECTION 1007. Maintenance of Insurance.
------------------------
The Issuer shall, and the Issuer shall cause its Restricted
Subsidiaries to, keep at all times all of its properties which are of an
insurable nature insured (which may include self-insurance) against loss or
damage with insurers believed by the Issuer to be responsible to the extent that
property of similar character is usually so insured by corporations similarly
situated and owning like properties in accordance with good business practice.
SECTION 1008. Limitation on Consolidated Debt.
-------------------------------
The Issuer may not, and may not permit any Restricted Subsidiary of
the Issuer to Incur any Debt unless the ratio of (a) the aggregate consolidated
principal amount of Debt of the Issuer and its Restricted Subsidiaries
outstanding as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the Incurrence of such Debt and any other Debt
Incurred since such balance sheet date that remains outstanding and the receipt
and application of the proceeds thereof, less the principal amount of any Debt
that was outstanding as of such balance sheet date that no longer remains
outstanding, to (b) Adjusted Consolidated Cash Flow, determined on a pro forma
basis as if any such Debt had been incurred and the proceeds thereof had been
applied at the beginning of the relevant fiscal quarter, would be less than or
equal to 7.0 to 1.
Notwithstanding the foregoing limitation, the following Debt may be
Incurred:
(1) Permitted Senior Bank Debt;
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(2) Debt owed by the Issuer to any Wholly Owned Restricted Subsidiary
of the Issuer for which fair value has been received or Debt owed by a
Restricted Subsidiary of the Issuer to the Issuer or a Wholly Owned
Restricted Subsidiary of the Issuer; provided, however, that (a) any such
Debt owing by the Issuer to a Wholly Owned Restricted Subsidiary shall be
Subordinated Debt evidenced by an intercompany promissory note and (b) upon
either (1) the transfer or other disposition by such Wholly Owned
Restricted Subsidiary or the Issuer of any Debt so permitted to a Person
other than the Issuer or another Wholly Owned Restricted Subsidiary of the
Issuer or (2) the issuance (other than directors' qualifying shares), sale,
lease, transfer or other disposition of shares of Capital Stock (including
by consolidation or merger) of such Wholly Owned Restricted Subsidiary to a
Person other than the Issuer or another such Wholly Owned Restricted
Subsidiary, the provisions of this clause (ii) shall no longer be
applicable to such Debt and such Debt shall be deemed to have been Incurred
at the time of such transfer or other disposition;
(3) Debt consisting of Permitted Interest Rate or Currency Protection
Agreements;
(4) Debt which is exchanged for or the proceeds of which are used to
refinance or refund, or any extension or renewal of (each of the foregoing,
a "refinancing"), (a) the Securities, (b) Debt incurred pursuant to clause
(v) of this paragraph or (c) Debt that is not described in any other clause
hereof that is outstanding at the Closing Date after giving effect to the
application of the proceeds from the sale of the Original Securities as
described in Schedule I hereto, in each case in an aggregate principal
amount not to exceed the principal amount of the Debt so refinanced plus
the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Debt so refinanced or the amount
of any premium reasonably determined by the Issuer as necessary to
accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of the Issuer or the Restricted
Subsidiary, as the case may be, Incurred in connection with such
refinancing; provided, however, that (A) Debt the proceeds of which are
used to refinance the Securities or Debt which is pari passu with or
subordinate in right of payment to the Securities shall only be permitted
if (x) in the case of any refinancing of the Securities or Debt which is
pari passu to the Securities, the refinancing Debt is Incurred by the
Issuer and made pari passu to the Securities or subordinated to the
Securities, and (y) in the case of any refinancing of Debt which is
subordinated to the Securities, the refinancing Debt is Incurred by the
Issuer and constitutes Subordinated Debt; (B) the refinancing Debt by its
terms, or by the terms of any agreement or instrument pursuant to which
such Debt is issued, (1) does not provide for payments of principal of such
Debt at the stated maturity thereof or by way of a sinking fund applicable
thereto or by way of any mandatory redemption, defeasance, retirement or
repurchase thereof (including any redemption, defeasance, retirement or
repurchase which is contingent upon events or circumstances,
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but excluding any retirement required by virtue of acceleration of such
Debt upon any event of default thereunder or a redemption or retirement
permitted in clause (2) below), in each case prior to the stated maturity
of the Debt being refinanced and (2) does not permit redemption or other
retirement (including pursuant to an offer to purchase) of such debt at the
option of the holder thereof prior to the final stated maturity of the Debt
being refinanced, other than a redemption or other retirement at the option
of the holder of such Debt (including pursuant to an offer to purchase)
which is conditioned upon provisions substantially similar to those
contained in Sections 1015 and 1016; (C) in the case of any refinancing of
Debt Incurred by the Issuer, the refinancing Debt may be Incurred only by
the Issuer, and in the case of any refinancing of Debt Incurred by a
Restricted Subsidiary, the refinancing Debt may be Incurred only by such
Restricted Subsidiary or the Issuer; and (D) in the case of any refinancing
of Preferred Stock of a Restricted Subsidiary, such Preferred Stock may be
refinanced only with Preferred Stock of such Restricted Subsidiary or the
Issuer;
(5) Acquisition Debt;
(6) ABRY Subordinated Debt;
(7) the Exchange Securities;
(8) Subordinated Debt of the Issuer owed to any of its shareholders
not to exceed in principal face amount in the aggregate for any taxable
year the amount necessary to enable Pinnacle Towers to obtain the maximum
possible deduction for dividends paid, as defined in Section 561 of the
Code and further described in Section 857 of the Internal Revenue Code for
such year, taking into account the sum of all distributions previously made
to shareholders of the Issuer permitted by the provisions described in
clause (iii) of the second paragraph of Section 1011 for such fiscal year,
provided that, any determination under Section 857 of the Internal Revenue
Code shall take into consideration for such purpose the necessity of
increasing the aggregate amounts distributed to reflect the fact that
distributions in payment of any preferred return on any class of stock will
be treated as being made partly from earnings and partly from capital.
SECTION 1009. Limitation on Subordinated Debt of Restricted Subsidiaries.
----------------------------------------------------------
The Issuer may not permit any Restricted Subsidiary to Incur any Debt
that is subordinated in right of payment to any other Debt of such Restricted
Subsidiary, other than Debt that is owed to the Issuer or any other Restricted
Subsidiary.
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SECTION 1010. Limitation on Guarantees of Issuer Debt by Restricted
-----------------------------------------------------
Subsidiaries.
- ------------
The Issuer may not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee, assume or in any other manner become liable for the
payment of any Debt of the Issuer unless: (i) (A) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture providing for a
Guarantee of payment of the Securities by such Restricted Subsidiary; and (B)
with respect to any Guarantee of Debt of the Issuer that is subordinate in right
of payment to the Securities, such Guarantee shall be subordinated to such
Restricted Subsidiary's Guarantee with respect to the Securities at least to the
same extent as such Debt is subordinated to the Securities, and (ii) such
Restricted Subsidiary waives, and will not in any manner whatsoever claim or
take the benefit or advantage of, any rights of reimbursement, indemnity or
subrogation or any other rights against the Issuer or any other Restricted
Subsidiary as a result of any payment by such Restricted Subsidiary under its
Guarantee until the Securities have been paid in full.
SECTION 1011. Limitation on Restricted Payments.
---------------------------------
The Issuer (i) may not, and may not permit any Restricted Subsidiary
of the Issuer to, directly or indirectly, declare or pay any dividend or make
any distribution (including any payment in connection with any merger or
consolidation derived from assets of the Issuer or any Restricted Subsidiary) in
respect of its Capital Stock or to the holders thereof, excluding (a) any
dividends or distributions by the Issuer payable solely in shares of its Capital
Stock (other than Redeemable Stock) or in options, warrants or other rights to
acquire its Capital Stock (other than Redeemable Stock), and (b) in the case of
a Restricted Subsidiary, dividends or distributions payable to the Issuer or a
Wholly Owned Restricted Subsidiary or pro rata dividends or distributions, (ii)
may not, and may not permit any Restricted Subsidiary to, purchase, redeem, or
otherwise acquire or retire for value (a) any Capital Stock of the Issuer or any
Related Person of the Issuer or (b) any options, warrants or other rights to
acquire shares of Capital Stock of the Issuer or any Related Person of the
Issuer or any securities convertible or exchangeable into shares of Capital
Stock of the Issuer or any Related Person of the Issuer, excluding any purchase
from the Issuer by a Wholly Owned Restricted Subsidiary of any Capital Stock of
the Issuer or options, warrants or other rights to acquire shares of Capital
Stock of the Issuer or any securities convertible or exchangeable into shares of
Capital Stock of the Issuer, (iii) may not make, or permit any Restricted
Subsidiary to make, any Investment in any Unrestricted Subsidiary or any
Affiliate or any Person that would become an Affiliate after giving effect
thereto or any Related Person, other than an Investment in the Issuer or a
Restricted Subsidiary or a Person that will become or be merged with or into or
consolidated with a Restricted Subsidiary as a result of such Investment and
which is not subject to any restriction that would prevent such Restricted
Subsidiary from repaying such Investment and (iv) may not, and may not permit
any Restricted Subsidiary to, redeem, repurchase, defease or otherwise acquire
or retire for value prior to any scheduled maturity, repayment or sinking fund
payment Debt of the Issuer (other than ABRY
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Subordinated Debt) which is pari passu with or subordinate in right of payment
to the Securities (each of clauses (i) through (iv) being a "Restricted
Payment") if:
(1) an Event of Default, or an event that with the passing of time or
the giving of notice, or both, would constitute an Event of Default, shall
have occurred and is continuing or would result from such Restricted
Payment, or
(2) after giving pro forma effect to such Restricted Payment as if
such Restricted Payment had been made at the beginning of the applicable
fiscal-quarter period, the Issuer could not Incur at least $1.00 of
additional Debt pursuant to the first paragraph of Section 1008, or
(3) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments from the Closing Date exceeds the sum of: (a)
cumulative Consolidated Cash Flow since the Closing Date through the last
day of the last full fiscal quarter ending immediately preceding the date
of such Restricted Payment for which quarterly or annual financial
statements are available; minus (b) 1.75 times cumulative Consolidated
Interest Expense of the Issuer since the Closing Date through the last day
of the last full fiscal quarter ending immediately preceding the date of
such Restricted Payment for which quarterly or annual financial statements
are available; plus (c) $10 million.
Prior to the making of any Restricted Payment, the Issuer shall deliver to the
Trustee an Officers' Certificate setting forth the computations by which the
determinations required by clauses (2) and (3) above were made and stating that
no Event of Default, or event that with the passing of time or the giving of
notice, or both, would constitute an Event of Default, has occurred and is
continuing or will result from such Restricted Payment.
Notwithstanding the foregoing, so long as no Event of Default, or
event that with the passing of time or the giving of notice, or both, would
constitute an Event of Default, shall have occurred and is continuing or would
result therefrom:
(1) the Issuer may make Restricted Payments in an aggregate
amount up to the amount of the net proceeds received by the Issuer after
the Closing Date, including the fair market value of property other than
cash (determined in good faith by the Board of Directors as evidenced by a
resolution of the Board of Directors filed with the Trustee), from
contributions of capital or the issuance and sale (other than to a
Subsidiary or from or to an employee stock ownership plan financed by loans
from the Issuer or a Subsidiary of the Issuer) of Capital Stock (other than
Redeemable Stock) of the Issuer, options, warrants or other rights to
acquire Capital Stock (other than Redeemable Stock) of the Issuer and Debt
of the Issuer that has been converted into or exchanged for Capital
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Stock (other than Redeemable Stock and other than by or from a Subsidiary)
of the Issuer after the Closing Date;
(2) the Issuer and any Restricted Subsidiary of the Issuer may pay
any dividend on Capital Stock of any class within 60 days after the
declaration thereof if, on the date when the dividend was declared, the
Issuer or such Restricted Subsidiary could have paid such dividend in
accordance with the foregoing provisions;
(3) (a) the Issuer may use cash distributions received from Pinnacle
Towers to make distributions to shareholders of the Issuer, each such
distribution in an aggregate amount per taxable year equal to (1) the
amount of gross income actually includible by the shareholders of the
Issuer on their tax returns with respect to such taxable year solely as a
result of the operations of the Issuer and its Subsidiaries, multiplied by
(2) the sum of the highest marginal federal and highest marginal state
income tax rates applicable to one or more of the shareholders of the
Issuer; and (b) Pinnacle Towers may make one or more distributions with
respect to any taxable year, which distribution may consist of subordinated
debt of Pinnacle Towers, and, to the extent such distribution is made by
Pinnacle Towers, the Issuer may make one or more distributions to its
shareholders consisting of Subordinated Debt of the Issuer, each such
distribution constituting Subordinated Debt not to exceed in the aggregate
an amount necessary to enable the Issuer to obtain the maximum possible
deduction for dividends paid, as defined in Section 561 of the Internal
Revenue Code and further described in Section 857 of the Internal Revenue
Code, for such year, taking into account the sum of all distributions
previously paid to shareholders of the Issuer in accordance with the terms
of clause (a) of this clause (iii), provided that, in connection with any
such distribution, the Issuer shall take into consideration for such
purpose the necessity of increasing the aggregate amounts distributed to
reflect the fact that distributions in payment of any preferred return on
any class of stock will be treated as being made partly from earnings and
profits and partly from capital;
(4) the Issuer may repurchase Capital Stock of the Issuer owned by
any deceased shareholder of the Issuer (a) to the extent that the Issuer or
any Restricted Subsidiary was the beneficiary of a key-man life insurance
policy on such shareholder and (b) in an amount not to exceed the net
proceeds received by the Issuer or such Restricted Subsidiary from such
key-man life insurance;
(5) the Issuer may repurchase Capital Stock of the Issuer owned by
either any deceased shareholder of the Issuer or former employee of the
Issuer, provided that the aggregate amount of such repurchases (which shall
not include any repurchases made pursuant to and in compliance with clause
(iv) above) in any twelve-month period may not exceed $1 million; and
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(6) the Issuer may refinance any Debt otherwise permitted by clause
(iv) of the second paragraph of Section 1008.
Any payment made pursuant to clause (ii) of this paragraph shall be a Restricted
Payment for purposes of calculating aggregate Restricted Payments pursuant to
the requirements of clause (3) of the preceding paragraph and any payment made
pursuant to clauses (i), (iii), (iv), (v) and (vi) of this paragraph shall not
be a Restricted Payment for purposes of calculating aggregate Restricted
Payments pursuant to the requirements of clause (3) of the preceding paragraph.
SECTION 1012. Limitation on Dividend and Other Payment Restrictions Affecting
---------------------------------------------------------------
Restricted Subsidiaries.
-----------------------
The Issuer may not, and may not permit any Restricted Subsidiary 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 (i) to pay dividends (in cash or otherwise) or make any other
distributions in respect of its Capital Stock owned by the Issuer or any other
Restricted Subsidiary or pay any Debt or other obligation owed to the Issuer or
any other Restricted Subsidiary; (ii) to make loans or advances to the Issuer or
any other Restricted Subsidiary; or (iii) to transfer any of its property or
assets to the Issuer or any other Restricted Subsidiary. Notwithstanding the
foregoing, the Issuer may, and may permit any Restricted Subsidiary to, suffer
to exist any such encumbrance or restriction:
(1) pursuant to any agreement in effect on the Closing Date
(including the Senior Credit Facility and the agreements executed in
connection therewith) as described in Schedule II hereto;
(2) pursuant to an agreement relating to any Debt Incurred by a
Person (other than a Restricted Subsidiary existing on the Closing Date or
any Restricted Subsidiary carrying on any of the businesses of any such
Restricted Subsidiary) prior to the date on which such Person became a
Restricted Subsidiary and outstanding on such date and not Incurred in
anticipation of becoming a Restricted Subsidiary, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person so acquired;
(3) pursuant to an agreement effecting a renewal, extension,
refunding or refinancing of Debt Incurred pursuant to an agreement referred
to in clause (a) or (b) above, provided, however, that the provisions
contained in such renewal, extension, refunding or refinancing agreement
relating to such encumbrance or restriction are no more restrictive in any
material respect than the provisions contained in the agreement the subject
thereof, as determined in good faith by the Board of Directors and
evidenced by a Board Resolution;
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(4) in the case of clause (iii) above, restrictions contained in any
security agreement (including a capital lease) securing Debt of a
Restricted Subsidiary otherwise permitted under this Indenture, but only to
the extent such restrictions restrict the transfer of the property subject
to such security agreement;
(5) in the case of clause (iii) above, customary nonassignment
provisions entered into in the ordinary course of business in leases and
other contracts to the extent such provisions restrict the transfer or
subletting of any such lease or the assignment of rights under any such
contract;
(6) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of
such Restricted Subsidiary, provided that consummation of such transaction
would not result in an Event of Default or an event that, with the passing
of time or the giving of notice or both, would constitute an Event of
Default, that such restriction terminates if such transaction is closed or
abandoned and that the closing or abandonment of such transaction occurs
within one year of the date such agreement was entered into; or
(7) such encumbrance or restriction is the result of applicable
corporate law or regulation relating to the payment of dividends or
distributions.
SECTION 1013. Limitation on Liens.
-------------------
The Issuer may not, and may not permit any Restricted Subsidiary to,
Incur or suffer to exist any Lien on or with respect to any property or assets
now owned or hereafter acquired to secure any Debt without making, or causing
such Restricted Subsidiary to make, effective provision for securing the
Securities (x) equally and ratably with such Debt as to such property for so
long as such Debt will be so secured or (y) in the event such Debt is Debt of
the Issuer which is subordinate in right of payment to the Securities, prior to
such Debt as to such property for so long as such Debt will be so secured.
The foregoing restrictions shall not apply to:
(1) Liens in existence on the Closing Date (other than Liens
described in clause (iv) below) as described in Schedule III hereto;
(2) Liens securing only the Securities;
(3) Liens in favor of the Issuer;
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(4) Liens to secure Debt under the Senior Credit Facility and any
extension, renewal, refinancing or refunding thereof (or successive
extensions, renewals, refinancings or refundings) so long as the Incurrence
of such Debt is permitted under the Indenture;
(5) Liens on real or personal property of the Issuer or a Restricted
Subsidiary as described in the definition of "Purchase Money Secured Debt"
to secure Purchase Money Secured Debt;
(6) Liens on property existing immediately prior to the time of
acquisition thereof (and not Incurred in anticipation of the financing of
such acquisition);
(7) Liens on property of a Person (a) existing at the time such
Person becomes a Restricted Subsidiary and not incurred in anticipation of
becoming a Restricted Subsidiary or (b) existing immediately prior to the
time such Person is merged or consolidated with or into the Issuer or any
Restricted Subsidiary and not incurred in anticipation of such merger or
consolidation;
(8) any interest in or title of a lessor to any property subject to a
Capital Lease Obligation which is permitted under the Indenture; or
(9) Liens to secure Debt Incurred to extend, renew, refinance or
refund (or successive extensions, renewals, refinancings or refundings), in
whole or in part, Debt secured by any Lien referred to in the foregoing
clauses (i), (ii), (v), (vi) and (vii) so long as such Lien does not extend
to any other property and the principal amount of Debt so secured is not
increased except as otherwise permitted under clause (iv) of Section 1008.
SECTION 1014. Limitation on Ownership of Capital Stock of Restricted
------------------------------------------------------
Subsidiaries.
------------
The Issuer may not, and may not permit any Restricted Subsidiary to,
issue, transfer, convey, lease or otherwise dispose of any shares of Capital
Stock of a Restricted Subsidiary or securities convertible or exchangeable into,
or options, warrants, rights or any other interest with respect to, Capital
Stock of a Restricted Subsidiary to any person other than the Issuer or a Wholly
Owned Restricted Subsidiary except in a transaction consisting of a sale of all
of the Capital Stock of such Restricted Subsidiary owned by the Issuer and any
Restricted Subsidiary and that complies with the provisions of Section 1015 to
the extent such provisions apply.
SECTION 1015. Asset Dispositions.
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(1) The Issuer will not, and will not permit any Restricted
Subsidiary to, consummate an Asset Disposition unless (i) the Issuer or the
applicable Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Disposition at least equal to the fair market value of
the assets sold or otherwise disposed of (as evidenced by a Board Resolution and
set forth in an Officers' Certificate), (ii) except in the case of a Tower Asset
Exchange, at least 75% of the consideration received by the Issuer or the
Restricted Subsidiary, as the case may be, from such Asset Disposition shall be
cash or Cash Equivalents; provided that the amount of (a) any liabilities (as
shown on the Issuer's or such Restricted Subsidiary's most recent balance sheet)
of the Issuer or any such Restricted Subsidiary (other than liabilities that are
by their terms subordinated to the Securities) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Issuer or such Restricted Subsidiary from further liability, (b)
any securities, notes or other obligations received by the Issuer or any such
Restricted Subsidiary from such transferee that are converted by the Issuer or
such Restricted Subsidiary into cash (to the extent of the cash received) within
20 days of the applicable Asset Disposition and (c) any liabilities (as shown on
the Issuer's or such Restricted Subsidiary's most recent balance sheet) of a
Restricted Subsidiary all of the Capital Stock of which is disposed of in such
Asset Disposition, which liabilities have ceased to be liabilities of the Issuer
or any Restricted Subsidiary as a result of such Asset Disposition, shall be
considered cash for purposes of such provision, and (iii) after the consummation
of such Asset Disposition, the Issuer shall apply, or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Disposition
within 365 days of receipt thereof, less any amounts invested in assets related
to, or the majority voting Capital Stock of entities operating in, the same line
of business as the Issuer or a business reasonably ancillary thereto, to
permanently repay Debt under the Senior Credit Facility or any renewal,
extension, refinancing or refunding thereof to the extent that any such
instrument would require or, at the Issuer's option, permit such application or
prohibit the Offer to Purchase referred to below and, in the case of any Debt
under any revolving credit facility, effect a commitment reduction under such
revolving credit facility. Pending the final application of any such Net Cash
Proceeds, the Issuer or such Restricted Subsidiary may temporarily reduce
indebtedness under a revolving credit facility, if any, or otherwise invest such
Net Cash Proceeds in Cash Equivalents. Any Net Cash Proceeds from Asset
Dispositions that are not applied or invested as provided will be deemed to
constitute "Excess Proceeds," which shall be applied by the Issuer or such
Restricted Subsidiary to make an Offer to Purchase that amount of Securities
equal to the amount of Excess Proceeds at a price equal to 100% of the principal
amount of the Securities (or, if such Offer to Purchase is to be consummated
prior to the Full Accretion Date, 100% of the Accreted Value of Securities) to
be purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase and, to the extent required by the terms thereof, any other Debt of the
Issuer that is pari passu with the Securities or Debt of a Restricted Subsidiary
at a price no greater than 100% of the principal amount thereof plus accrued
interest to the date of purchase or, if such Debt was issued at a discount, 100%
of the accreted value thereof to the date of purchase on a pro rata basis with
the Securities; provided, however, that if at any time any non-cash
consideration received by the Issuer or any Restricted Subsidiary, as the case
may be in connection with any Asset Disposition is converted into or sold or
otherwise disposed of for cash
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(other than interest received with respect to any such non-cash consideration),
then such conversion or disposition shall be deemed to constitute an Asset
Disposition hereunder and the Net Cash Proceeds thereof shall be applied in
accordance with this covenant. Each Offer to Purchase shall be mailed within 390
days following the Asset Disposition that required such Offer to Purchase.
Following the completion of an Offer to Purchase, to the extent there are any
remaining Excess Proceeds the Issuer may use such Excess Proceeds to any use
which is not otherwise prohibited by the Indenture.
Notwithstanding the foregoing, if the Excess Proceeds resulting from
an Asset Disposition are less than $10.0 million, the application of such Excess
Proceeds to an Offer to Purchase may be deferred until such time as the sum of
such Excess Proceeds plus the aggregate amount of all Excess Proceeds arising
subsequent to such Asset Disposition from all subsequent Asset Dispositions by
the Issuer and its Restricted Subsidiaries aggregates at least $10.0 million, at
which time the Issuer or such Restricted Subsidiary shall apply all Excess
Proceeds that have been so deferred to make an Offer to Purchase as provided
above.
The Issuer shall not be entitled to any credit against its obligations
in connection with any Offer to Purchase made pursuant to this Section 1015 for
the principal amount of any Securities acquired by the Issuer otherwise than
pursuant to such Offer to Purchase.
(2) Not later than the date of the Offer with respect to an Offer to
Purchase pursuant to this Section 1015, the Issuer shall deliver to the Trustee
an Officers' Certificate as to (i) the Purchase Amount, (ii) the allocation of
the Net Available Proceeds from the Asset Disposition pursuant to which such
Offer is being made, including, if amounts are invested in assets related to the
business of the Issuers, the actual assets acquired and a statement indicating
the relationship of such assets to the business of the Issuer and (iii) the
compliance of such allocation with the provisions of Section 1015(a).
The Issuer shall perform its obligations specified in the Offer for
the Offer to Purchase. On or prior to the Purchase Date, the Issuer shall (i)
accept for payment (on a pro rata basis, if necessary) Securities or portions
thereof tendered pursuant to the Offer, (ii) deposit with the paying agent (or,
if the Issuer is acting as its own paying agent, segregate and hold in trust as
provided in Section 1003) money sufficient to pay the purchase price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee all Securities so accepted together with an Officers=
Certificate stating the Securities or portions thereof accepted for payment by
the Issuers. The paying agent (or the Issuers, if so acting) shall promptly
mail or deliver to Holders of Securities so accepted payment in an amount equal
to the purchase price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Security not accepted for
payment shall be promptly mailed or delivered by the Issuer to the Holder
thereof. The Issuer shall publicly announce the results of the Offer on or as
soon as practicable after the Purchase Date.
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SECTION 1016. Change of Control.
-----------------
(1) Upon the occurrence of a Change in Control, each Holder of a
Security shall have the right to have all or any part of such Security
repurchased by the Company on the terms and conditions precedent set forth in
this Section 1016 and this Indenture. The Company shall, within 30 days
following the date of the consummation of a transaction resulting in a Change of
Control, mail an Offer with respect to an Offer to Purchase all Outstanding
Securities for cash at a purchase price equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase or, if such Offer to Purchase is to be consummated prior to the Full
Accretion Date, 101% of the Accreted Value thereof on the date of purchase plus
accrued and unpaid Special Interest thereon, if any, to the date of purchase,
(provided, however, that instalments of interest whose Stated Maturity is on or
prior to the Purchase Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 308). Each Holder shall be entitled to tender all or any
portion of the Securities owned by such Holder pursuant to the Offer to
Purchase, subject to the requirement that any portion of a Security tendered
must be tendered in an integral multiple of $1,000 principal amount.
(2) The Company and the Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. Prior to the
Purchase Date, the Company shall (i) accept for payment Securities or portions
thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or,
if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) money sufficient to pay the purchase price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee all Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security or Securities equal in principal amount to any unpurchased portion of
the Security surrendered as requested by the Holder. Any Security not accepted
for payment shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Offer on or as
soon as practicable after the Purchase Date.
(3) Notwithstanding the foregoing, the Issuer will not be required to
make an Offer to Purchase upon a Change of Control if a third party makes the
Offer to Purchase in the manner, at the times and otherwise in compliance with
the requirements set forth in this Section 1016 and this Indenture applicable to
the Offer to Purchase made by the Issuer and purchases all Notes validly
tendered and not withdrawn under such Offer to Purchase.
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SECTION 1017. Transactions with Affiliates and Related Persons.
------------------------------------------------
The Issuer may not, and may not permit any Restricted Subsidiary to,
enter into any transaction (or series of related transactions) not in the
ordinary course of business with an Affiliate or Related Person of the Issuer
(other than the Issuer or a Wholly Owned Restricted Subsidiary) involving
aggregate consideration in excess of $1.0 million, including any Investment,
either directly or indirectly, unless such transaction is on terms no less
favorable to the Issuer or such Restricted Subsidiary than those that could be
obtained in a comparable arm's-length transaction with an entity that is not an
Affiliate or Related Person and is in the best interest of the Issuer or such
Restricted Subsidiary. For any transaction (or series of related transactions)
that involves less than or equal to $10 million, the Chief Executive Officer or
Chief Operating Officer of the Issuer shall determine that the transaction
satisfies the above criteria and shall evidence such a determination by an
Officer's certificate filed with the Trustee. For any transaction that involves
in excess of $10 million, a majority of the disinterested members of the Board
of Directors shall determine that the transaction satisfies the above criteria
and shall evidence such a determination by a Board Resolution filed with the
Trustee; provided, however, that, if there are no disinterested directors with
respect to such transaction, there shall be delivered to the Trustee an opinion
of a naturally recognized accounting appraisal or investment banking firm
stating that such transaction is fair from a financial point of view.
SECTION 1018. Provision of Financial Information.
----------------------------------
Whether or not the Issuer is required to be subject to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, or any successor provision
thereto, from and after the earlier of (a) the effectiveness of either the
Exchange Offer Registration Statement with respect to the Original Securities or
the Resale Registration Statement or (b) the date that is 150 days after the
Closing Date the Issuer shall file with the Commission the annual reports,
quarterly reports and other documents which the Issuer would have been required
to file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto if the Issuer were so required, such documents to be
filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Issuer would have been required so to file such
documents if the Issuer were so required. The Issuer shall also in any event (a)
within 15 days of each Required Filing Date (i) transmit by mail to all Holders,
as their names and addresses appear in the Security Register, without cost to
such Holders, and (ii) file with the Trustee, copies of the annual reports,
quarterly reports and other documents which the Issuer files with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto or
would have been required to file with the Commission pursuant to such Section
13(a) or 15(d) or any successor provisions thereto if the Issuer were required
to be subject to such Sections and (b) if filing such documents by the Issuer
with the Commission is not permitted under the Securities Exchange
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Act of 1934, promptly upon written request supply copies of such documents to
any prospective Holder.
SECTION 1019. Statement by Officers as to Default; Compliance Certificates.
------------------------------------------------------------
(1) The Issuer will deliver to the Trustee, within 90 days after the
end of each fiscal year, and within 60 days after the end of each fiscal quarter
(other than the fourth fiscal quarter), of the Issuer ending after the date
hereof an Officers= Certificate, stating whether or not to the best knowledge of
the signers thereof the Issuer is in default in the performance and observance
of any of the terms, provisions and conditions of Section 801 or Sections 1004
to 1018, inclusive, and if an Issuer shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
(2) The Issuer shall deliver to the Trustee, as soon as possible and
in any event within 10 days after an Issuer becomes aware of the occurrence of
an Event of Default or an event which, with notice or the lapse of time or both,
would constitute an Event of Default, an Officers= Certificate setting forth the
details of such Event of Default or default, and the action which the Issuer
proposes to take with respect thereto.
(3) The Issuer shall deliver to the Trustee within 90 days after the
end of each fiscal year a written statement by the Issuer's independent public
accountants stating (A) that their audit examination has included a review of
the terms of this Indenture and the Securities as they relate to accounting
matters, and (B) whether, in connection with their audit examination, any event
which, with notice or the lapse of time or both, would constitute an Event of
Default has come to their attention and, if such a default has come to their
attention, specifying the nature and period of the existence thereof.
SECTION 1020. Waiver of Certain Covenants.
---------------------------
The Issuer may omit in any particular instance to comply with any
covenant or condition set forth in Section 801 and Sections 1004 to 1017, if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Issuer and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect; provided, however, with respect to an Offer to Purchase as to
which an Offer has been mailed, no such waiver may be made or shall be effective
against any Holder tendering Securities pursuant to such Offer, and the Issuer
may not omit to comply with the terms of such Offer as to such Holder.
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ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
-------------------
(1) The Securities may be redeemed at the election of the Issuer from
time to time in the event that on or before March 15, 2001 the Issuer receives
net proceeds from the sale of its Common Stock in one or more Public Equity
Offerings, in which case the Issuer may, at its option and from time to time,
use all or a portion of any such net proceeds to redeem Securities in a
principal amount of at least $5 million and up to an aggregate principal amount
equal to 35% of the outstanding Securities, provided, however, that Securities
in an aggregate principal amount equal to at least $211,250,000 remain
outstanding after each such redemption. Any such redemption must occur on a
Redemption Date within 60 days of any such sale at a Redemption Price of 110% of
the Accreted Value of the Securities to but excluding the Redemption Date plus
accrued and unpaid Special Interest, if any, thereon to but excluding the
Redemption Date.
(2) The Securities further may be redeemed at the election of the
Issuer, as a whole or from time to time in part, at any time on or after March
15, 2003, at the Redemption Prices specified in the form of Security
hereinbefore set forth together with accrued interest to the Redemption Date.
SECTION 1102. Applicability of Article.
------------------------
Redemption of Securities at the election of the Issuer, as permitted
by any provision of this Indenture, shall be made in accordance with such
provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Issuer to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution of the Issuer. In case of
any redemption at the election of the Issuer of less than all the Securities,
the Issuer shall, at least 60 days prior to the Redemption Date fixed by the
Issuer (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed. In the case of any redemption pursuant to Section
1101(a), the Issuer shall also furnish the Trustee an Officers= Certificate
stating that the Issuer is entitled to effect such redemption and setting forth
a statement of facts showing that the condition or conditions precedent to the
right of the Issuer to redeem have occurred or been satisfied.
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SECTION 1104. Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000.
The Trustee shall promptly notify the Issuer and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, (with a copy to the Trustee,
delivered or mailed to the Corporate Trust Office) at his address appearing in
the Security Register.
All notices of redemption shall include the CUSIP number and shall
state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) whether the redemption is being made pursuant to Section
1101(a) or (b) and, if being made pursuant to Section 1101(a), a brief
statement setting forth the Issuer's right to effect such redemption and
the Issuer's basis therefor,
(4) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed,
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(5) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date, and
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Issuer shall be given by the Issuer or, at the Issuer's request, by the
Trustee in the name and at the sole expense of the Issuer.
SECTION 1106. Deposit of Redemption Price.
---------------------------
Prior to any Redemption Date, the Issuer shall deposit with the
Trustee or with a Paying Agent (or, if the Issuer is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and any after such date (unless the
Issuer shall default in the payment of the Redemption Price and any accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Issuer at the Redemption Price, together with any applicable
accrued interest to the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to its terms and the provisions of Section 308.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
SECTION 1108. Securities Redeemed in Part.
---------------------------
97
<PAGE>
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Issuer designated for that purpose pursuant to
Section 1002 (with, if the Issuer or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Issuer and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Issuer shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Issuer's Option to Effect Defeasance or Covenant Defeasance.
-----------------------------------------------------------
The Issuer may at its option by Board Resolution, at any time, elect
to have either Section 1202 or Section 1203 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
Twelve.
SECTION 1202. Defeasance and Discharge.
------------------------
Upon the Issuer's exercise of the option provided in Section 1201
applicable to this Section, the Issuer shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Issuer shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities and
to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Issuer, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of such Securities to receive,
solely from the trust fund described in Section 1204 and as more fully set forth
in such Section, payments in respect of the principal of (and premium, if any)
and interest on such Securities when such payments are due, (B) the Issuer's
obligations with respect to such Securities under Sections 304, 305, 306, 1002
and 1003, (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (D) this Article Twelve. Subject to compliance with this Article
Twelve, the Issuer may exercise its option under this Section 1202
notwithstanding the prior exercise of its option under Section 1203.
SECTION 1203. Covenant Defeasance.
-------------------
98
<PAGE>
Upon the Issuer's exercise of the option provided in Section 1201
applicable to this Section, (i) the Issuer shall be released from its
obligations under Sections 1005 through 1018, inclusive, and Clauses (3), (4)
and (5) of Section 801 and (ii) the occurrence of an event specified in Sections
501(3), 501(4) (with respect to Clauses (3), (4) or (5) of Section 801), 501(5)
(with respect to any of Sections 1005 through 1018, inclusive), 501(6) and
501(7) shall not be deemed to be an Event of Default on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance").
For this purpose, such covenant defeasance means that the Issuer may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Clause, whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
Clause or by reason of any reference in any such Section or Clause to any other
provision herein or in any other document, but the remainder of this Indenture
and such Securities shall be unaffected thereby.
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.
------------------------------------------------
The following shall be the conditions to application of either Section
1202 or Section 1203 to the then Outstanding Securities:
(1) The Issuer shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this
Article Twelve applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the principal
of, premium, if any, and each instalment of interest on the Securities on
the Stated Maturity of such principal or instalment of interest in
accordance with the terms of this Indenture and of such Securities. For
this purpose, "U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of
1933, as amended) as custodian with respect to any such
99
<PAGE>
U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt, provided that (except
--------
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 1202, the Issuer
shall have delivered to the Trustee an Opinion of Counsel stating that (x)
the Issuer has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this Indenture there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Securities will not recognize gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred.
(3) In the case of an election under Section 1203, the Issuer
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities will not recognize gain or
loss for Federal income tax purposes as a result of such deposit and
covenant defeasance and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would have been the
case if such deposit and covenant defeasance had not occurred.
(4) The Issuer shall have delivered to the Trustee an Officer's
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 608 and for
purposes of the Trust Indenture Act with respect to any securities of the
Issuer.
(6) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 501(8)
and (9) are concerned, at any time during the period ending on the 121st
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
100
<PAGE>
(7) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Issuer is a party or by which it is bound.
(8) The Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 1202
or the covenant defeasance under Section 1203 (as the case may be) have
been complied with.
(9) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment Issuer as
defined in the Investment Issuer Act of 1940, as amended, or such trust
shall be qualified under such act or exempt from regulation thereunder.
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held in
-------------------------------------------------------------
Trust; Other Miscellaneous Provisions.
-------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee--collectively, for
purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in
respect of the Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Issuer
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities, of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1204 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 Securities.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request
any money or U.S. Government Obligations held by it as provided in Section 1204
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
SECTION 1206. Reinstatement.
-------------
101
<PAGE>
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 1202 or 1203 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Issuer's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Twelve until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 1202 or 1203;
provided, however, that if the Issuer makes any payment of principal of (and
premium, if any) or interest on] any Security following the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money held by the Trustee or the
Paying Agent.
____________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
102
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
PINNACLE HOLDINGS INC.
By:___________________________
Name:
Title:
THE BANK OF NEW YORK
By:___________________________
Name:
Title:
103
<PAGE>
STATE OF NEW YORK )
) ss.:
CITY OF NEW YORK )
On the _____ day of March, 1998, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that he is ___________________________________________________ of
the Pinnacle Holdings Inc., one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and that he
signed his name thereto by like authority.
______________________________
STATE OF NEW YORK )
) ss.:
CITY OF NEW YORK )
On the _____ day of March, 1998, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that he is ___________________________________________________ of
The Bank of New York, one of the corporations described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said corporation; and that he signed
his name thereto by like authority.
______________________________
104
<PAGE>
ANNEX A -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to (S) 306(b)(i) of the Indenture)
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: 10% Senior Discount Notes due 2008 of
Pinnacle Holdings Inc. (the "Securities")
------------------------------------------
Reference is made to the Indenture, dated as of March 20, 1998 (the
"Indenture"), between Pinnacle Holdings Inc. (the "Issuer") and The Bank of New
York, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Under signed, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Regulation S Security or an interest therein. In connection with such transfer,
the Owner hereby certifies that, unless such transfer is being effected pursuant
to an effective registration statement under the Securities Act, it is being
A-1
<PAGE>
effected in accordance with Rule 904 or Rule 144 under the Securities Act and
with all applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
------------------
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Issuer or any such distributor or a person acting on
behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any
person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(ii) the transaction is being executed in, on or through the
facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another designated
offshore securities market and neither the Owner nor any person
acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts in contravention of Rule 904(b)
have been made in the United States by or on behalf of the Owner or
any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other remuneration in respect of the
Specified Securities, and the transfer is to occur during the
Restricted Period, then the requirements of Rule 904(c)(1) have been
satisfied; and
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant
------------------
to Rule 144:
(A) the transfer is occurring after a holding period of at least
one year (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the Specified Securities were last acquired from an
Issuer or from an affiliate of the
A-2
<PAGE>
Issuer, whichever is later, and is being effected in accordance with
the applicable amount, manner of sale and notice requirements of Rule
144;
(B) the transfer is occurring after a holding period of at least
two years has elapsed since the Specified Securities were last
acquired from the Issuer or from an affiliate of the Issuer, whichever
is later, and the Owner is not, and during the preceding three months
has not been, an affiliate of the Issuer; and
(C) the Specified Securities are being transferred in compliance
with any applicable "blue sky" securities laws of all applicable
states of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
Dated:
_________________________________________________________
(Print the name of the Undersigned, as such term is defined in
the second paragraph of this certificate.)
By: *
----
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of the
Undersigned must be stated.)
* Signature must be guaranteed by an eligible Guarantor Institution (banks,
stockbrokers, savings and loan associations and credit unions) with
membership in an approved signature medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.
A-3
<PAGE>
ANNEX B -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to (S) 306(b)(ii) of the Indenture)
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: 10% Senior Discount Notes due 2008
of Pinnacle Holdings Inc. (the "Securities")
--------------------------------------------
Reference is made to the Indenture, dated as of March 20, 1998 (the
"Indenture"), between Pinnacle Holdings Inc. (the "Issuer") and The Bank of New
York, as Trustee. Terms used herein and defined in the Indenture or in Rule
144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act")
are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
ISIN No(s), If any. ____________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Restricted Security or an interest in a Restricted Global Security. In
connection with such transfer, the Owner hereby certifies that,
B-1
<PAGE>
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, (i) the Owner is not a U.S. Person (as
defined in the Indenture) and (ii) such transfer is being effected in accordance
with Rule 144A or Rule 144 under the Securities Act and all applicable
securities laws of the states of the United States and other jurisdictions.
Accordingly, the Owner hereby further certifies as follows:
(1) Rule 144A Transfers. If the transfer is being effected in
-------------------
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably believe
is a "qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner
may be relying on Rule 144A in connection with the transfer; and
(C) the Specified Securities are being transferred in compliance
with any applicable "blue sky" securities laws of all applicable
states of the United States.
(2) Rule 144 Transfers. If the transfer is being effected pursuant
------------------
to Rule 144:
(A) the transfer is occurring after a holding period of at least
one year (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the Specified Securities were last acquired from an
Issuer or from an affiliate of the Issuer, whichever is later, and is
being effected in accordance with the applicable amount, manner of
sale and notice requirements of Rule 144;
(B) the transfer is occurring after a holding period of at least
two years has elapsed since the Specified Securities were last
acquired from an Issuer or from an affiliate of the Issuer, whichever
is later, and the Owner is not, and during the preceding three months
has not been, an affiliate of the Issuer; and
(C) the Specified Securities are being transferred in compliance
with any applicable "blue sky" securities laws of all applicable
states of the United States.
B-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer, and the Initial Purchasers.
Dated: _____________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By: *
----
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
* Signature must be guaranteed by an eligible Guarantor Institution (banks,
stockbrokers, savings and loan associations and credit unions) with
membership in an approved signature medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.
<PAGE>
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to (S) 306(c))
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: 10% Senior Discount Notes due 2008
of Pinnacle Holdings Inc. (the "Securities")
--------------------------------------------
Reference is made to the Indenture, dated as of March 20, 1998 (the
"Indenture"), between Pinnacle Holdings Inc. (the "Issuer") and The Bank of New
York, as Trustee. Terms used herein and defined in the Indenture or in Rule 144
under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as
so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Under signed, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 306(c) of the
Indenture. In connection
<PAGE>
with such exchange, the Owner hereby certifies that the exchange is occurring
after a holding period of at least two years (computed in accordance with
paragraph (d) of Rule 144) has elapsed since the Specified Securities were last
acquired from an Issuer or from an affiliate of the Issuer, whichever is later,
and the Owner is not, and during the preceding three months has not been, an
affiliate of the Issuer. The Owner also acknowledges that any future transfers
of the Specified Securities must comply with all applicable securities laws of
the states of the United States and other jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer, and the Initial Purchasers.
Dated: _______________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By: *
----
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
* Signature must be guaranteed by an eligible Guarantor Institution (banks,
stockbrokers, savings and loan associations and credit unions) with
membership in an approved signature medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.
<PAGE>
ANNEX D -- Form of Certification to
Be Given by Holders of Beneficial
Interest in a Regulation S Temporary
Global Security
OWNER SECURITIES CERTIFICATION
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008 (the "Securities")
This is to certify that, as of the date hereof, $________ of the
above-captioned Securities are beneficially owned by non-U.S. person(s). As used
in this paragraph, the term "U.S. person" has the meaning given to it by
Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the Securities
held by you for our account in accordance with your operating procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings.
Dated:______________, ____
By:____________________________________________
As, or as agent for, the beneficial owner(s)
of the Securities to which this certificate
relates.
<PAGE>
ANNEX E -- Form of Certification to
Be Given by the Euroclear Clearance
System or Cedel Bank
DEPOSITARY SECURITIES CERTIFICATION
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008 (the "Securities")
This is to certify that, with respect to U.S.$___________ principal
amount of the above-captioned Securities, except as set forth below, we have
received in writing, by tested telex or by electronic transmission, from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount of Securities set forth above (our "Member Organizations"),
certifications with respect to such portion, substantially to the effect set
forth in the Indenture.
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the Regulation S Temporary Global Security (as defined in the
Indenture) excepted in such certifications and (ii) that as of the date hereof
we have not received any notification from any of our Member Organizations to
the effect that the statements made by such Member Organizations with respect to
any portion of the part submitted herewith for exchange (or, if relevant,
exercise of any rights or collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
<PAGE>
We understand that this certification is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certification is or would be relevant, we irrevocably authorize
you to produce this certification to any interested party in such proceedings.
Dated: _____________, _______
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels office,
as operator of the Euroclear Clearance System]
or
[CEDEL BANK]
By____________________________
<PAGE>
EXHIBIT 4.2
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM
THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
OF REGULATION D UNDER THE SECURITIES ACT) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE SECURITIES EVIDENCED HEREBY WERE ISSUED WITH ORIGINAL ISSUE
DISCOUNT. FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS SECURITY IS
61.474% OF ITS
<PAGE>
PRINCIPAL AMOUNT, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $385.26 PER $1,000 OF
STATED FACE AMOUNT, THE ISSUE DATE IS MARCH 17, 1998 AND THE YIELD TO MATURITY
IS 10% PER ANNUM.
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008
CUSIP No. 72346N AA 9
No. G-2 $125,000,000
PINNACLE HOLDINGS INC., a corporation duly organized and existing
under the laws of Delaware (herein called the "Issuer", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promise to pay to CEDE & Co., or registered assigns, the
principal sum of One Hundred Twenty-Five Million Dollars ($125,000,000) (such
amount the "principal amount" of this Security), or such other principal amount
(which, when taken together with the principal amounts of all other Outstanding
Securities, shall not exceed $325,000,000 in the aggregate at any time) as may
be set forth in the records of the Trustee as referred to in accordance with the
Indenture, on March 15, 2008 and to pay interest thereon from March 15, 2003 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, payable in arrears semi-annually on March 15 and September 15
in each year, commencing September 15, 2003 at the rate of 10% per annum, until
the principal hereof is paid or made available for payment, provided that any
amount of principal of (and premium, if any) and interest on this Security which
is overdue shall bear interest (to the extent that payment thereof shall be
legally enforceable) at the rate of 11.5 per annum, from the date such amount is
due to the day it is paid or made available for payment, and such overdue
interest shall be payable on demand. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the March 1 or September 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on the relevant Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee in accordance with Section 308 of the Indenture, notice whereof
-2-
<PAGE>
shall be given to Holders of Securities not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Interest on this
Security shall be computed on the basis set forth in the Indenture.
The principal of this Security shall not accrue interest until March
15, 2003, except as otherwise provided herein or in the case of a default in
payment of principal and premium, if any, upon acceleration or redemption, in
which case interest shall be payable pursuant to the preceding paragraph on such
overdue principal (and premium, if any), such interest shall be payable on
demand and, if not so paid on demand, such interest shall itself bear interest
at the rate of 11.5% per annum (to the extent that the payment of such interest
shall be legally enforceable), which shall accrue from the date of such demand
for payment to the date payment of such interest has been made or duly provided
for, and such interest on unpaid interest shall also be payable on demand.
Payment of the principal of (and premium, if any) and any such interest on
this Security will be made at the office or agency of the Issuer in the Borough
of Manhattan, The City of New York, New York, maintained for such purpose and at
any other office or agency maintained by the Issuer for such purpose, 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, however, that at
the option of the Issuer payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register; provided further that all payments of the principal (and
premium, if any) and interest on Securities, the Holders of which have given
wire transfer instructions to the Issuer or its agent at least 10 Business Days
prior to the applicable payment date, will be required to be made by wire
transfer of immediately available funds to the accounts specified by such
Holders in such instructions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
-3-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
PINNACLE HOLDINGS INC.
By:__________________________
By:__________________________
Trustee's Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
THE BANK OF NEW YORK,
as Trustee
By:_____________________
Authorized Signatory
<PAGE>
[Reverse of Security]
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 10% Senior Notes due 2008 (herein called the
"Securities"), unlimited in aggregate principal amount, issued and to be issued
under an Indenture, dated as of March 20, 1998 (herein called the "Indenture",
which term shall have the meaning assigned to it in such instrument), among the
Issuer and The Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Issuer, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption in the event that on or
before March 15, 2001 the Issuer receives net proceeds from the sale of its
Common Stock in one or more Public Equity Offerings, in which case the Issuer
may, at its option, use all or a portion of any such net proceeds to redeem
Securities in a principal amount of at least $5 million and up to an aggregate
of 35% of the outstanding Securities, provided, however, that at least
$211,250,000 in an aggregate principal amount of the Securities remain
outstanding after each such redemption. Any such redemption must occur on a
Redemption Date within 60 days of any such sale at a redemption price of 110% of
the Accreted Value of the Securities to but excluding the Redemption Date plus
accrued and unpaid Special Interest, if any, thereon to but excluding the
Redemption Date.
The Securities are further subject to redemption upon not less than 30
nor more than 60 days' notice by mail appearing, at any time on or after March
15, 2003, as a whole or in part, at the election of the Issuer, at the following
Redemption Prices (expressed as percentages of the principal amount). If
redeemed during the 12-month period beginning March 15 of the year indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2003......................... 105.000%
2004......................... 103.333%
2005......................... 101.667%
2006 and thereafter.......... 100.000%
</TABLE>
together, in the case of any such redemption with accrued interest to but
excluding the Redemption Date, provided that interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or
-1-
<PAGE>
more Predecessor Securities, of record at the close of business on the relevant
Regular Record Dates referred to on the face hereof, all as provided in the
Indenture.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, there may be
declared due and payable the Default Amount of the Securities, in the manner and
with the effect provided in the Indenture. Until and including March 15, 2003,
the Default Amount in respect of this Security as of any particular date of
acceleration shall equal the Accreted Value of this Security. On and after
March 15, 2003, the Default Amount in respect of this Security shall equal 100%
of the principal amount of this Security.
The Holder of this Security (and any Person that has a beneficial
interest in this Security) is entitled to the benefits of an Exchange and
Registration Rights Agreement, dated as of March 20, 1998, and as the same may
be amended from time to time (the "Exchange and Registration Rights Agreement"),
executed by the Company. The Exchange and Registration Rights Agreement
provides that Special Interest will be payable by the Company on the Securities
for specified periods if the Company does not comply with certain of its
obligations thereunder. Such provisions of the Exchange and Registration Rights
Agreement are hereby incorporated by reference and made a part hereof.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Issuer a result of Asset
Dispositions or (ii) a Change of Control occurs, the Issuer shall be required to
make an Offer to Purchase for all or a specified portion of the Securities.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Securities under the Indenture at
any time by the Issuer and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and its consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof
-2-
<PAGE>
or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at the
time Outstanding a direction inconsistent with such request and shall have
failed to institute any such proceeding for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to
certain suits described in the Indenture, including any suit instituted by the
Holder of this Security for the enforcement of any payment of principal hereof
or any premium or interest hereon on or after the respective due dates expressed
herein (or, in the case of redemption, on or after the Redemption Date or, in
the case of any purchase of this Security required to be made pursuant to an
Offer to Purchase, on the Purchase Date).
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Issuer and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
-3-
<PAGE>
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
-4-
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Issuer pursuant to Section 1015 or 1016 of the Indenture, check the box:
[_]
If you want to elect to have only a part of this Security purchased by
the Issuer pursuant to Section 1015 or 1016 of the Indenture, state the amount:
$
Dated: Your Signature:__________________________________
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:________________________________________
(Signature must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank or
trust company)
-5-
<PAGE>
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM
THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
OF REGULATION D UNDER THE SECURITIES ACT) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE SECURITIES EVIDENCED HEREBY WERE ISSUED WITH ORIGINAL ISSUE
DISCOUNT. FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS SECURITY IS
61.474% OF ITS
<PAGE>
PRINCIPAL AMOUNT, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $385.26 PER $1,000 OF
STATED FACE AMOUNT, THE ISSUE DATE IS MARCH 17, 1998 AND THE YIELD TO MATURITY
IS 10% PER ANNUM.
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008
CUSIP No. 72346N AA 9
No. G-2 $200,000,000
PINNACLE HOLDINGS INC., a corporation duly organized and existing
under the laws of Delaware (herein called the "Issuer", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promise to pay to CEDE & Co., or registered assigns, the
principal sum of Two Hundred Million Dollars ($200,000,000) (such amount the
"principal amount" of this Security), or such other principal amount (which,
when taken together with the principal amounts of all other Outstanding
Securities, shall not exceed $325,000,000 in the aggregate at any time) as may
be set forth in the records of the Trustee as referred to in accordance with the
Indenture, on March 15, 2008 and to pay interest thereon from March 15, 2003 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, payable in arrears semi-annually on March 15 and September 15
in each year, commencing September 15, 2003 at the rate of 10% per annum, until
the principal hereof is paid or made available for payment, provided that any
amount of principal of (and premium, if any) and interest on this Security which
is overdue shall bear interest (to the extent that payment thereof shall be
legally enforceable) at the rate of 11.5 per annum, from the date such amount is
due to the day it is paid or made available for payment, and such overdue
interest shall be payable on demand. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the March 1 or September 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on the relevant Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee in accordance
-2-
<PAGE>
with Section 308 of the Indenture, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Interest on this Security shall be computed on the basis set forth in
the Indenture.
The principal of this Security shall not accrue interest until March
15, 2003, except as otherwise provided herein or in the case of a default in
payment of principal and premium, if any, upon acceleration or redemption, in
which case interest shall be payable pursuant to the preceding paragraph on such
overdue principal (and premium, if any), such interest shall be payable on
demand and, if not so paid on demand, such interest shall itself bear interest
at the rate of 11.5% per annum (to the extent that the payment of such interest
shall be legally enforceable), which shall accrue from the date of such demand
for payment to the date payment of such interest has been made or duly provided
for, and such interest on unpaid interest shall also be payable on demand.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Issuer in
the Borough of Manhattan, The City of New York, New York, maintained for such
purpose and at any other office or agency maintained by the Issuer for such
purpose, 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,
however, that at the option of the Issuer payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register; provided further that all payments of the
principal (and premium, if any) and interest on Securities, the Holders of which
have given wire transfer instructions to the Issuer or its agent at least 10
Business Days prior to the applicable payment date, will be required to be made
by wire transfer of immediately available funds to the accounts specified by
such Holders in such instructions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
-3-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
PINNACLE HOLDINGS INC.
By:__________________________
By:__________________________
Trustee's Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
THE BANK OF NEW YORK,
as Trustee
By:_____________________
Authorized Signatory
<PAGE>
[Reverse of Security]
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 10% Senior Notes due 2008 (herein called the
"Securities"), unlimited in aggregate principal amount, issued and to be issued
under an Indenture, dated as of March 20, 1998 (herein called the "Indenture",
which term shall have the meaning assigned to it in such instrument), among the
Issuer and The Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Issuer, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption in the event that on or
before March 15, 2001 the Issuer receives net proceeds from the sale of its
Common Stock in one or more Public Equity Offerings, in which case the Issuer
may, at its option, use all or a portion of any such net proceeds to redeem
Securities in a principal amount of at least $5 million and up to an aggregate
of 35% of the outstanding Securities, provided, however, that at least
$211,250,000 in an aggregate principal amount of the Securities remain
outstanding after each such redemption. Any such redemption must occur on a
Redemption Date within 60 days of any such sale at a redemption price of 110% of
the Accreted Value of the Securities to but excluding the Redemption Date plus
accrued and unpaid Special Interest, if any, thereon to but excluding the
Redemption Date.
The Securities are further subject to redemption upon not less than 30
nor more than 60 days' notice by mail appearing, at any time on or after March
15, 2003, as a whole or in part, at the election of the Issuer, at the following
Redemption Prices (expressed as percentages of the principal amount). If
redeemed during the 12-month period beginning March 15 of the year indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2003......................... 105.000%
2004......................... 103.333%
2005......................... 101.667%
2006 and thereafter.......... 100.000%
</TABLE>
together, in the case of any such redemption with accrued interest to but
excluding the Redemption Date, provided that interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or
-1-
<PAGE>
more Predecessor Securities, of record at the close of business on the relevant
Regular Record Dates referred to on the face hereof, all as provided in the
Indenture.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, there may be
declared due and payable the Default Amount of the Securities, in the manner and
with the effect provided in the Indenture. Until and including March 15, 2003,
the Default Amount in respect of this Security as of any particular date of
acceleration shall equal the Accreted Value of this Security. On and after
March 15, 2003, the Default Amount in respect of this Security shall equal 100%
of the principal amount of this Security.
The Holder of this Security (and any Person that has a beneficial
interest in this Security) is entitled to the benefits of an Exchange and
Registration Rights Agreement, dated as of March 20, 1998, and as the same may
be amended from time to time (the "Exchange and Registration Rights Agreement"),
executed by the Company. The Exchange and Registration Rights Agreement
provides that Special Interest will be payable by the Company on the Securities
for specified periods if the Company does not comply with certain of its
obligations thereunder. Such provisions of the Exchange and Registration Rights
Agreement are hereby incorporated by reference and made a part hereof.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Issuer a result of Asset
Dispositions or (ii) a Change of Control occurs, the Issuer shall be required to
make an Offer to Purchase for all or a specified portion of the Securities.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Securities under the Indenture at
any time by the Issuer and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and its consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof
-2-
<PAGE>
or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at the
time Outstanding a direction inconsistent with such request and shall have
failed to institute any such proceeding for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to
certain suits described in the Indenture, including any suit instituted by the
Holder of this Security for the enforcement of any payment of principal hereof
or any premium or interest hereon on or after the respective due dates expressed
herein (or, in the case of redemption, on or after the Redemption Date or, in
the case of any purchase of this Security required to be made pursuant to an
Offer to Purchase, on the Purchase Date).
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Issuer and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
-3-
<PAGE>
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
-4-
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Issuer pursuant to Section 1015 or 1016 of the Indenture, check the box:
[_]
If you want to elect to have only a part of this Security purchased by
the Issuer pursuant to Section 1015 or 1016 of the Indenture, state the amount:
$
Dated: Your Signature:_____________________________________
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:______________________________________
(Signature must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank or
trust company)
-5-
<PAGE>
EXHIBIT 4.3
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008
CUSIP No. 72346N AB 7
No. G-2 $200,000,000
PINNACLE HOLDINGS INC., a corporation duly organized and existing
under the laws of Delaware (herein called the "Issuer", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promise to pay to CEDE & Co., or registered assigns, the
principal sum of Two Hundred Million Dollars ($200,000,000) (such amount the
?principal amount" of this Security) , or such other principal amount (which,
when taken together with the principal amounts of all other Outstanding
Securities, shall not exceed $325,000,000 in the aggregate at any time) as may
be set forth in the records of the Trustee as referred to in accordance with the
Indenture, on March 15, 2008 and to pay interest thereon from March 15, 2003 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, payable in arrears semi-annually on March 15 and September 15
in each year, commencing September 15, 2003 at the rate of 10% per annum, until
the principal hereof is paid or made available for payment, provided that any
amount of principal of (and premium, if any) and interest on this Security which
is overdue shall bear interest (to the extent that payment thereof shall be
legally enforceable) at the rate of 11.5 per annum, from the date such amount is
due to the day it is paid or made available for payment, and such overdue
interest shall be payable on demand. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is regis tered at the close of business on the
Regular Record Date for such interest, which shall be the March 1 or September 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on the relevant
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee in accordance with Section 308 of the Indenture, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Interest on this
Security shall be computed on the basis set forth in the Indenture.
The principal of this Security shall not accrue interest until March
15, 2003, except as otherwise provided herein or in the case of a default in
payment of principal and premium, if any, upon acceleration or redemption, in
which case interest shall be payable pursuant to the preceding paragraph on such
overdue principal (and premium, if any), such interest shall be payable on
demand and, if not so paid on demand, such interest shall itself bear interest
at the rate of 11.5% per annum (to the extent that the payment of such interest
shall be
<PAGE>
legally enforceable), which shall accrue from the date of such demand for
payment to the date payment of such interest has been made or duly provided for,
and such interest on unpaid interest shall also be payable on demand.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Issuer in
the Borough of Manhattan, The City of New York, New York, maintained for such
purpose and at any other office or agency maintained by the Issuer for such
purpose, 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,
however, that at the option of the Issuer payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register; provided further that all payments of the
principal (and premium, if any) and interest on Securities, the Holders of which
have given wire transfer instructions to the Issuer or its agent at least 10
Business Days prior to the applicable payment date, will be required to be made
by wire transfer of immediately available funds to the accounts specified by
such Holders in such instructions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
PINNACLE HOLDINGS INC.
By:________________________
By:_______________________
Trustee's Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
THE BANK OF NEW YORK,
as Trustee
By:________________________
Authorized Signatory
3
<PAGE>
[Reverse of Security]
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 10% Senior Notes due 2008 (herein called the
"Securities"), unlimited in aggregate principal amount, issued and to be issued
under an Indenture, dated as of March 20, 1998 (herein called the "Indenture",
which term shall have the meaning assigned to it in such instrument), among the
Issuer and The Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Issuer, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption in the event that on or
before March 15, 2001 the Issuer receives net proceeds from the sale of its
Common Stock in one or more Public Equity Offerings, in which case the Issuer
may, at its option, use all or a portion of any such net proceeds to redeem
Securities in a principal amount of at least $5 million and up to an aggregate
of 35% of the outstanding Securities, provided, however, that at least
$211,250,000 in an aggregate principal amount of the Securities remain
outstanding after each such redemption. Any such redemption must occur on a
Redemption Date within 60 days of any such sale at a redemption price of 110% of
the Accreted Value of the Securities to but excluding the Redemption Date plus
accrued and unpaid Special Interest, if any, thereon to but excluding the
Redemption Date.
The Securities are further subject to redemption upon not less than 30
nor more than 60 days= notice by mail appearing, at any time on or after March
15, 2003, as a whole or in part, at the election of the Issuer, at the following
Redemption Prices (expressed as percentages of the principal amount). If
redeemed during the 12-month period beginning March 15 of the year indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ----------------
<S> <C>
2003........................................................... 105.000%
2004........................................................... 103.333%
2005........................................................... 101.667%
2006 and thereafter............................................ 100.000%
</TABLE>
together, in the case of any such redemption with accrued interest to but
excluding the Redemption Date, provided that interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Regular Record Dates referred to on the face
hereof, all as provided in the Indenture.
The Securities do not have the benefit of any sinking fund
obligations.
1
<PAGE>
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, there may be
declared due and payable the Default Amount of the Securities, in the manner and
with the effect provided in the Indenture. Until and including March 15, 2003,
the Default Amount in respect of this Security as of any particular date of
acceleration shall equal the Accreted Value of this Security. On and after
March 15, 2003, the Default Amount in respect of this Security shall equal 100%
of the principal amount of this Security.
The Holder of this Security (and any Person that has a beneficial
interest in this Security) is entitled to the benefits of an Exchange and
Registration Rights Agreement, dated as of March 20, 1998, and as the same may
be amended from time to time (the "Exchange and Registration Rights Agreement"),
executed by the Company. The Exchange and Registration Rights Agreement
provides that Special Interest will be payable by the Company on the Securities
for specified periods if the Company does not comply with certain of its
obligations thereunder. Such provisions of the Exchange and Registration Rights
Agreement are hereby incorporated by reference and made a part hereof.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Issuer a result of Asset
Dispositions or (ii) a Change of Control occurs, the Issuer shall be required to
make an Offer to Purchase for all or a specified portion of the Securities.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Securities under the Indenture at
any time by the Issuer and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and its consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registra tion of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings
2
<PAGE>
in respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity and the Trustee shall not have received from the Holders of
a majority in principal amount of Securities at the time Outstanding a direction
inconsistent with such request and shall have failed to institute any such
proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to certain suits described in the
Indenture, including any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein (or, in the case of
redemption, on or after the Redemption Date or, in the case of any purchase of
this Security required to be made pursuant to an Offer to Purchase, on the
Purchase Date).
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Issuer and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
3
<PAGE>
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Issuer pursuant to Section 1015 or 1016 of the Indenture, check the box:
[_]
If you want to elect to have only a part of this Security purchased by
the Issuer pursuant to Section 1015 or 1016 of the Indenture, state the amount:
$
Dated: Your Signature:__________________________________
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:_______________________________
(Signature must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank or
trust company)
5
<PAGE>
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008
CUSIP No. 72346N AB 7
No. G-2 $125,000,000
PINNACLE HOLDINGS INC., a corporation duly organized and existing
under the laws of Delaware (herein called the "Issuer", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promise to pay to CEDE & Co., or registered assigns, the
principal sum of One Hundred Twenty-Five Million Dollars ($125,000,000) (such
amount the ?principal amount" of this Security) , or such other principal amount
(which, when taken together with the principal amounts of all other Outstanding
Securities, shall not exceed $325,000,000 in the aggregate at any time) as may
be set forth in the records of the Trustee as referred to in accordance with the
Indenture, on March 15, 2008 and to pay interest thereon from March 15, 2003 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, payable in arrears semi-annually on March 15 and September 15
in each year, commencing September 15, 2003 at the rate of 10% per annum, until
the principal hereof is paid or made available for payment, provided that any
amount of principal of (and premium, if any) and interest on this Security which
is overdue shall bear interest (to the extent that payment thereof shall be
legally enforceable) at the rate of 11.5 per annum, from the date such amount is
due to the day it is paid or made available for payment, and such overdue
interest shall be payable on demand. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the March 1 or September 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on the relevant
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee in accordance with Section 308 of the Indenture, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Interest on this
Security shall be computed on the basis set forth in the Indenture.
The principal of this Security shall not accrue interest until March
15, 2003, except as otherwise provided herein or in the case of a default in
payment of principal and premium, if any, upon acceleration or redemption, in
which case interest shall be payable pursuant to the preceding paragraph on such
overdue principal (and premium, if any), such interest shall be payable on
demand and, if not so paid on demand, such interest shall itself bear
<PAGE>
interest at the rate of 11.5% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest on unpaid interest shall also be payable on
demand.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Issuer in
the Borough of Manhattan, The City of New York, New York, maintained for such
purpose and at any other office or agency maintained by the Issuer for such
purpose, 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,
however, that at the option of the Issuer payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register; provided further that all payments of the
principal (and premium, if any) and interest on Securities, the Holders of which
have given wire transfer instructions to the Issuer or its agent at least 10
Business Days prior to the applicable payment date, will be required to be made
by wire transfer of immediately available funds to the accounts specified by
such Holders in such instructions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
PINNACLE HOLDINGS INC.
By:_________________________
By:_________________________
Trustee's Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
THE BANK OF NEW YORK,
as Trustee
By:_______________________
Authorized Signatory
3
<PAGE>
[Reverse of Security]
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 10% Senior Notes due 2008 (herein called the
"Securities"), unlimited in aggregate principal amount, issued and to be issued
under an Indenture, dated as of March 20, 1998 (herein called the "Indenture",
which term shall have the meaning assigned to it in such instrument), among the
Issuer and The Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Issuer, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption in the event that on or
before March 15, 2001 the Issuer receives net proceeds from the sale of its
Common Stock in one or more Public Equity Offerings, in which case the Issuer
may, at its option, use all or a portion of any such net proceeds to redeem
Securities in a principal amount of at least $5 million and up to an aggregate
of 35% of the outstanding Securities, provided, however, that at least
$211,250,000 in an aggregate principal amount of the Securities remain
outstanding after each such redemption. Any such redemption must occur on a
Redemption Date within 60 days of any such sale at a redemption price of 110% of
the Accreted Value of the Securities to but excluding the Redemption Date plus
accrued and unpaid Special Interest, if any, thereon to but excluding the
Redemption Date.
The Securities are further subject to redemption upon not less than 30
nor more than 60 days= notice by mail appearing, at any time on or after March
15, 2003, as a whole or in part, at the election of the Issuer, at the following
Redemption Prices (expressed as percentages of the principal amount). If
redeemed during the 12-month period beginning March 15 of the year indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ----------------
<S> <C>
2003......................................................... 105.000%
2004......................................................... 103.333%
2005......................................................... 101.667%
2006 and thereafter.......................................... 100.000%
</TABLE>
together, in the case of any such redemption with accrued interest to but
excluding the Redemption Date, provided that interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Regular Record Dates referred to on the face
hereof, all as provided in the Indenture.
The Securities do not have the benefit of any sinking fund
obligations.
1
<PAGE>
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, there may be
declared due and payable the Default Amount of the Securities, in the manner and
with the effect provided in the Indenture. Until and including March 15, 2003,
the Default Amount in respect of this Security as of any particular date of
acceleration shall equal the Accreted Value of this Security. On and after
March 15, 2003, the Default Amount in respect of this Security shall equal 100%
of the principal amount of this Security.
The Holder of this Security (and any Person that has a beneficial
interest in this Security) is entitled to the benefits of an Exchange and
Registration Rights Agreement, dated as of March 20, 1998, and as the same may
be amended from time to time (the "Exchange and Registration Rights Agreement"),
executed by the Company. The Exchange and Registration Rights Agreement
provides that Special Interest will be payable by the Company on the Securities
for specified periods if the Company does not comply with certain of its
obligations thereunder. Such provisions of the Exchange and Registration Rights
Agreement are hereby incorporated by reference and made a part hereof.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Issuer a result of Asset
Dispositions or (ii) a Change of Control occurs, the Issuer shall be required to
make an Offer to Purchase for all or a specified portion of the Securities.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Securities under the Indenture at
any time by the Issuer and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and its consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registra tion of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings
2
<PAGE>
in respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity and the Trustee shall not have received from the Holders of
a majority in principal amount of Securities at the time Outstanding a direction
inconsistent with such request and shall have failed to institute any such
proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to certain suits described in the
Indenture, including any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein (or, in the case of
redemption, on or after the Redemption Date or, in the case of any purchase of
this Security required to be made pursuant to an Offer to Purchase, on the
Purchase Date).
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Issuer and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
3
<PAGE>
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Issuer pursuant to Section 1015 or 1016 of the Indenture, check the box:
[_]
If you want to elect to have only a part of this Security purchased by
the Issuer pursuant to Section 1015 or 1016 of the Indenture, state the amount:
$
Dated: Your Signature:_______________________________________
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:__________________________________
(Signature must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank or
trust company)
5
<PAGE>
EXHIBIT 4.4
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of March 20, 1998, by and
between Pinnacle Holdings Inc. (the "Company") and Goldman, Sachs & Co. and
NationsBanc Montgomery Securities LLC (collectively, the "Initial Purchasers")
as the purchasers of the 10% Senior Discount Notes due 2008 of the Company.
1. Certain Definitions.
For purposes of this Agreement, the following terms shall have the following
respective meanings:
(a) "Closing Date" shall mean the date on which the Securities are
initially issued.
(b) "Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
(c) "Effective Time", in the case of an Exchange Offer, shall mean the date
on which the Commission declares the Exchange Offer registration statement
effective or on which such registration statement otherwise becomes effective
and, in the case of a Shelf Registration, shall mean the date on which the
Commission declares the Shelf Registration effective or on which the Shelf
Registration otherwise becomes effective.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934.
(e) "Exchange Offer" shall have the meaning assigned thereto in Section 2.
(f) "Exchange Securities" shall have the meaning assumed thereto in Section
2.
(g) The term "holder" shall mean the Initial Purchasers for so long as they
own any Registrable Securities and any person who is a holder or beneficial
owner of any Registrable Securities, for so long as such person owns any
Registrable Securities.
(h) "Indenture" shall mean the Indenture, dated as of March 20, 1998,
between the Company and The Bank of New York, as Trustee.
(i) The term "person" shall mean a corporation, limited liability company,
association, partnership, organization, business, individual, trust,
government or political subdivision thereof or governmental agency.
(j) "Purchase Agreement" shall mean the Purchase Agreement, dated March 17,
1998, between the Company and the Initial Purchasers.
<PAGE>
(k) "Registrable Securities" shall mean the Securities; provided,
however, that such Securities shall cease to be Registrable Securities when
(i) in the circumstances contemplated by Section 2(a), such Securities have
been exchanged for Exchange Securities in an Exchange Offer as contemplated
in Section 2(a) by a person other than a broker-dealer, (ii) in the case of
a broker-dealer, following the exchange of such Securities for Exchange
Securities by such broker-dealer, the date on which such Exchange
Securities have been sold to a purchaser who receives from such broker-
dealer on or prior to the date of such sale a copy of the prospectus for
use in connection with resales by broker-dealers referred to in Section
2(a); (iii) in the circumstances contemplated by Section 2(b), a
registration statement registering such Securities under the Securities Act
has been declared or becomes effective and such Securities have been sold
or otherwise transferred by the holder thereof pursuant to such effective
registration statement; (iv) such Securities are sold pursuant to Rule 144
under circumstances in which any legend borne by such Securities relating
to restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company or pursuant to the Indenture or such
Securities are eligible to be sold pursuant to paragraph (k) of Rule 144;
or (iv) such Securities shall cease to be outstanding.
(l) "Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
(m) "Restricted Holder" shall mean (i) a holder that is an affiliate
of the Company within the meaning of Rule 405 under the Securities Act,
(ii) a holder who acquires Exchange Securities outside the ordinary course
of such holder's business or (iii) a holder who has arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing Exchange Securities.
(n) "Rule 144", "Rule 405" and "Rule 415" shall mean, in each case,
such rule promulgated under the Securities Act.
(o) "Securities" shall mean, collectively, the $325 million aggregate
principal amount of 10% Senior Discount Notes due 2008 of the Company to be
issued and sold to the Initial Purchasers and securities issued in exchange
therefor or in lieu thereof pursuant to the Indenture.
(p) "Securities Act" shall mean the Securities Act of 1933.
(q) "Shelf Registration" shall have the meaning assigned thereto in
Section 2 hereof.
(r) "Trust Indenture Act" shall mean the Trust Indenture Act of 1939.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Agreement, and the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision. Unless the context otherwise requires, any
reference to a statute, rule or regulation refers to the same (including any
successor statute, rule or regulation thereto) as it may be amended from time to
time.
<PAGE>
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to use
its best efforts to file under the Securities Act, as soon as practicable, but
no later than 60 days after the Closing Date, a registration statement relating
to an offer to exchange (the "Exchange Offer") any and all of the Securities for
a like aggregate principal amount of debt securities of the Company which are
substantially identical to the Securities (and which are entitled to the
benefits of a trust indenture which is substantially identical to the Indenture
or is the Indenture and which has been qualified under the Trust Indenture Act)
except that they have been registered pursuant to an effective registration
statement under the Securities Act and will not contain provisions for the
additional interest contemplated by Section 2(c) hereof or provisions
restricting transfer (such new debt securities hereinafter called "Exchange
Securities"). The Company agrees to use its best efforts to cause such
registration statement to become effective under the Securities Act as soon as
practicable, but no later than 150 days after the Closing Date. The Exchange
Offer will be registered under the Act on the appropriate form and will comply
with all applicable tender offer rules and regulations under the Exchange Act.
The Company further agrees to use its best efforts to commence and complete the
Exchange Offer promptly after such registration statement has become effective,
hold the Exchange Offer open for at least 20 business days and exchange the
Exchange Securities for all Registrable Securities that have been tendered and
not withdrawn on or prior to the expiration of the Exchange Offer. The Exchange
Offer will be deemed to have been completed only if the Exchange Securities
received by holders other than Restricted Holders in the Exchange Offer for
Registrable Securities are, upon receipt, transferable by each such holder
without restriction under the Securities Act and without material restrictions
under the blue sky or securities laws of a substantial majority of the States of
the United States of America, it being understood that broker-dealers receiving
Exchange Securities will be subject to certain prospectus delivery requirements
with respect to resale of the Exchange Securities. The Exchange Offer shall be
deemed to have been completed upon the earlier to occur of (i) the Company
having exchanged the Exchange Securities for all outstanding Registrable
Securities pursuant to the Exchange Offer and (ii) the Company having exchanged,
pursuant to the Exchange Offer, Exchange Securities for all Registrable
Securities that have been properly tendered and not withdrawn before the
expiration of the Exchange Offer, which shall be on a date that is at least 20
business days following the commencement of the Exchange Offer. The Company
agrees (i) to include in the registration statement a prospectus for use in any
resales by any holder of Securities that is a broker-dealer and (ii) to keep
such registration statement effective for a period ending on the earlier of the
180th day after the Exchange Offer has been completed or such time as such
broker-dealers no longer own any Registrable Securities. With respect to such
registration statement such holders shall have the benefit of the rights of
indemnification and contribution set forth in Section 6 hereof.
(b) If (i) on or prior to the consummation of the Exchange Offer existing
Commission interpretations are changed such that the Exchange Securities
received by holders other than Restricted Holders in the Exchange Offer for
Registrable Securities are not or would not be, upon receipt, transferable by
each such holder without restriction under the Securities Act, or (ii) any
Holder of Restricted Securities notifies the Issuer prior to the 20th day
following consummation of the Exchange Offer that (A) it was prohibited by law
or Commission policy from participating in the Exchange Offer or (B) that it may
not resell the Exchange Securities acquired by it in the
<PAGE>
Exchange Offer to the public without delivering a prospectus and the resale
prospectus contained in the registration statement for the Exchange Offer
referred to in Section 2(a) is not appropriate or available for such resales or
(C) that it is a broker-dealer and owns Securities acquired directly from the
Company or an affiliate of the Company, in lieu of or, in the case of clause
(ii), in addition to conducting the Exchange Offer contemplated by Section 2(a)
the Company shall file under the Securities Act as soon as practicable a "shelf"
registration statement providing for the registration of, and the sale on a
continuous or delayed basis by the holders of, all of the Registrable
Securities, pursuant to Rule 415 under the Securities Act and/or any similar
rule that may be adopted by the Commission (the "Shelf Registration"). The
Company agrees to use its best efforts to file the registration statement
relating to the Shelf Registration not later than 45 days after such filing
obligation arises and to cause the Shelf Registration to become or be declared
effective no later than 90 days after such obligation arises and to keep such
Shelf Registration continuously effective for a period ending on the earlier of
the second anniversary of the Effective Time or such time as there are no longer
any Registrable Securities outstanding. The Company further agrees to supplement
or make amendments to the Shelf Registration, as and when required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration or by the Securities Act or rules and
regulations thereunder for shelf registration, and the Company agrees to furnish
to the holders of the Registrable Securities copies of any such supplement or
amendment prior to its being used and/or filed with the Commission.
(c) In the event that (i) the Company has not filed (a) the registration
statement relating to the Exchange Offer on or before the 60th day after the
Closing Date or (b) the Shelf Registration on or before the 45th day after the
date on which the filing obligation for the Shelf Registration has arisen or
(ii) either such registration statement has not become effective or been
declared effective by the Commission on or before the 150th day after the
Closing Date, in the case of the Exchange Offer, or the 90th day after the date
on which the filing obligation for the Shelf Registration has arisen, in the
case of the Shelf Registration, or (iii) the Exchange Offer has not been
completed within 30 business days after the initial effective date of the
registration statement (if the Exchange Offer is then required to be made) or
(iv) any registration statement required by Section 2(a) or 2(b) is filed and
declared effective but shall thereafter cease to be effective or usable for
transfers or Registrable Securities during the periods referred to in Sections
2(c) and 2(b) without being succeeded immediately by an additional registration
statement filed and declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), then the Company shall pay cash
interest on the Securities ("Special Interest") to each holder thereof in an
amount equal to $.05 per week per $1,000 principal amount of Securities held by
such holder, which amount shall increase after the first 90-day period following
the occurrence of the first Registration Default by an additional $.05 per week
per $1,000 principal amount of Securities with respect to each subsequent week
during which any Registration Default exists, up to a maximum amount of $.50 per
week per $1,000 principal amount of Securities, for the period from and
including the date of occurrence of the first Registration Default until such
time as no Registration Default is in effect (after which such Special Interest
shall cease to be payable). In the event that any Special Interest becomes
payable, the Company shall promptly notify the Trustee of such event, including
any subsequent increase in the amount of Special Interest, and the beginning and
ending dates therefor.
<PAGE>
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a) or
Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company shall qualify the Indenture under
the Trust Indenture Act of 1939.
(b) In the event that such qualification would require the appointment of
a new trustee under the Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the Shelf
Registration, if applicable, the Company shall use its best efforts to effect or
cause the Shelf Registration to permit the sale of the Registrable Securities by
the holders thereof in accordance with the intended method or methods of
distribution thereof described in the Shelf Registration. In connection
therewith, the Company shall:
(i) as soon as reasonably possible, prepare and file with the
Commission a registration statement with respect to the Shelf Registration
on any form which may be utilized by the Company and which shall permit the
disposition of the Registrable Securities in accordance with the intended
method or methods thereof, as specified in writing by the holders of the
Registrable Securities, and use its best efforts to cause such registration
statement to become effective as soon as reasonably possible thereafter;
(ii) as soon as reasonably possible, prepare and file with the
Commission such amendments and supplements to such registration statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such registration statement for the period
specified in Section 2(b) hereof and as may be required by the applicable
rules and regulations of the Commission and the instructions applicable to
the form of such registration statement, and furnish to the holders of the
Registrable Securities copies of any such supplement or amendment prior to
its being used and/or filed with the Commission;
(iii) as soon as reasonably possible, comply with the provisions of
the Securities Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance
with the intended methods of disposition by the holders thereof set forth
in such registration statement;
(iv) provide (A) the holders of the Registrable Securities to be
included in such registration statement, (B) the underwriters (which term,
for purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act) if
any, thereof, (C) the sales or placement agent, if any, therefor, (D)
counsel for such underwriters or agent, and (E) not more than one counsel
for all the holders of such Registrable Securities the opportunity to
participate in the preparation of such registration statement, each
<PAGE>
prospectus included therein or filed with the Commission, and each
amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period specified in Section 2(b), make
available at reasonable times at the Company's principal place of business
or such other reasonable place for inspection by the parties referred to in
Section 3(c)(iv) who shall certify to the Company that they have a current
intention to sell the Registrable Securities pursuant to the Shelf
Registration such financial and other information and books and records of
the Company, and cause the officers, employees, counsel and independent
certified public accountants of the Company to respond to such inquiries,
as shall be reasonably necessary, in the reasonable judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
provided, however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company in writing as being
confidential, until such time as (A) such information becomes a matter of
public record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required, or shall
deem it advisable, so to disclose such information pursuant to the subpoena
or order of any court or other governmental agency or body having
jurisdiction over the matter (subject to the requirements of such order,
and only after such person shall have given the Company prompt prior
written notice thereof), or (C) such information is required to be set
forth in such registration statement or the prospectus included therein or
in an amendment to such registration statement or an amendment or
supplement to such prospectus in order that such registration statement,
prospectus, amendment or supplement, as the case may be, does not contain
an untrue statement of a material fact or omit to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(vi) promptly notify the selling holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing underwriter
or underwriters, if any, thereof and confirm such advice in writing, (A)
when such registration statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such registration statement or any post-
effective amendment, when the same has become effective, (B) of any
comments by the Commission, the Blue Sky or securities commissioner or
regulator of any state with respect thereto or any request by the
Commission for amendments or supplements to such registration statement or
prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings
for that purpose, (D) if at any time the representations and warranties of
the Company contemplated by Section 3(c)(xv) or Section 5 cease to be true
and correct in all material respects, (E) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (F) at any time when a
prospectus is required to be delivered under the Securities Act, that such
registration statement, prospectus, prospectus amendment or supplement or
post-effective amendment, or any document incorporated by reference in any
of the foregoing, contains an untrue statement of a material fact or omits
to state any material fact
<PAGE>
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(vii) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any post-
effective amendment thereto at the earliest practicable date;
(viii) if requested by any managing underwriter or underwriters, any
placement or sales agent or any holder of Registrable Securities, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as is required by the applicable rules and regulations of the
Commission and as such managing underwriter or underwriters, such agent or
such holder specifies should be included therein relating to the terms of
the sale of such Registrable Securities, including, without limitation,
information with respect to the principal amount of Registrable Securities
being sold by such holder or agent or to any underwriters, the name and
description of such holder, agent or underwriter, the offering price of
such Registrable Securities and any discount, commission or other
compensation payable in respect thereof, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
offering of the Registrable Securities to be sold by such holder or agent
or to such underwriters; and make all required filings of such prospectus
supplement or post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(ix) furnish to each holder of Registrable Securities, each placement
or sales agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(c)(iv) an executed copy of such
registration statement, each such amendment and supplement thereto (in each
case including all exhibits thereto and documents incorporated by reference
therein) and such number of copies of such registration statement
(excluding exhibits thereto and documents incorporated by reference therein
unless specifically so requested by such holder, agent or underwriter, as
the case may be) and of the prospectus included in such registration
statement (including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act, and
such other documents, as such holder, agent, if any, and underwriter, if
any, may reasonably request in order to facilitate the offering and
disposition of the Registrable Securities owned by such holder, offered or
sold by such agent or underwritten by such underwriter and to permit such
holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Securities Act; and the Company hereby consents to the
use of such prospectus (including such preliminary and summary prospectus)
and any amendment or supplement thereto by each such holder and by any such
agent and underwriter, in each case in the form most recently provided to
such party by the Company, in connection with the offering and sale of the
Registrable Securities covered by the prospectus (including such
preliminary and summary prospectus) or any supplement or amendment thereto;
(x) use its best efforts to (A) register or qualify the Registrable
Securities to be included in such registration statement under such
securities laws or blue sky laws of such jurisdictions as any holder of
such Registrable Securities and each placement or sales agent, if any,
therefor and underwriter, if any, thereof shall reasonably request, (B)
keep such registrations or qualifications
<PAGE>
in effect and comply with such laws so as to permit the continuance of
offers, sales and dealings therein in such jurisdictions during the period
the Shelf Registration is required to remain effective under Section 2(b)
above and for so long as may be necessary to enable any such holder, agent
or underwriter to complete its distribution of Securities pursuant to such
registration statement and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each such holder, agent, if
any, and underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that the
Company shall not be required for any such purpose to (1) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(c)(x), (2)
consent to general service of process or taxation in any such jurisdiction
or (3) make any changes to its articles of incorporation or by-laws or any
agreement between it and its stockholders;
(xi) use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state, provincial or
local, which may be required to effect the Shelf Registration or the
offering or sale in connection therewith or to enable the selling holder or
holders to offer, or to consummate the disposition of, their Registrable
Securities;
(xii) cooperate with the holders of the Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends;
(xiii) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the Shelf Registration;
(xiv) enter into one or more reasonable forms of underwriting
agreements, engagement letters, agency agreements, "best efforts"
underwriting agreements or similar agreements, as appropriate, including
(without limitation) customary provisions relating to indemnification and
contribution, and take such other actions in connection therewith as any
holders of Registrable Securities aggregating at least 25% in aggregate
principal amount of the Registrable Securities at the time outstanding
shall reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities; provided, that the Company shall not be
required to enter into any such agreement more than twice with respect to
all of the Registrable Securities and may delay entering into such
agreement until the consummation of any underwritten public offering which
the Company shall have then engaged;
(xv) whether or not an agreement of the type referred to in Section
(3)(c)(xiv) hereof is entered into and whether or not any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any other entity,
(A) make such representations and warranties to the holders of such
Registrable Securities and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof substantially the same as those set
forth in Section 1 of the Purchase Agreement and such other representations
and warranties in form, substance and scope as are customarily reasonably
made in connection with an offering of debt securities pursuant to any
appropriate agreement and/or to a registration statement filed on the form
applicable to the Shelf Registration; (B) obtain an opinion or opinions of
counsel to the Company in customary form and covering such other
<PAGE>
matters of the type customarily covered by such an opinion, as the managing
underwriters, if any, and as any holders of at least 25% in aggregate
principal amount of the Registrable Securities at the time outstanding may
reasonably request, addressed to such holder or holders and the placement
or sales agent, if any, therefor and the underwriters, if any, thereof and
dated the effective date of such registration statement (and if such
registration statement contemplates an underwritten offering of a part or
all of the Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that such opinion
shall be in substantially the same form as is required pursuant to Section
7(b) of the Purchase Agreement, with such differences as is appropriate to
reflect a registered transaction and the particular form on which such
Shelf Registration is filed); (C) obtain a "cold comfort" letter or letters
from the independent certified public accountants of the Company addressed
to the selling holders of Registrable Securities and the placement or sales
agent, if any, therefor and the underwriters, if any, thereof, dated (i)
the effective date of such registration statement and (ii) the effective
date of any prospectus supplement to the prospectus included in such
registration statement or post-effective amendment to such registration
statement which includes unaudited or audited financial statements as of a
date or for a period subsequent to that of the latest such statements
included in such prospectus (and, if such registration statement
contemplates an underwritten offering pursuant to any prospectus supplement
to the prospectus included in such registration statement or post-effective
amendment to such registration statement which includes unaudited or
audited financial statements as of a date or for a period subsequent to
that of the latest such statements included in such prospectus, dated the
date of the closing under the underwriting agreement relating thereto),
such letter or letters to be in customary form and covering such matters of
the type customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as may be
reasonably requested by any holders of at least 25% in aggregate principal
amount of the Registrable Securities at the time outstanding and the
placement or sales agent, if any, therefor and the managing underwriters,
if any, thereof to evidence the accuracy of the representations and
warranties made pursuant to clause (A) above or those contained in Section
5(a) hereof and the compliance with or satisfaction of any agreements or
conditions contained in the underwriting agreement or other agreement
entered into by the Company; and (E) undertake such obligations relating to
expense reimbursement, indemnification and contribution as are provided in
Section 6 hereof;
(xvi) notify in writing each holder of Registrable Securities of any
proposal by the Company to amend or waive any provision of this Agreement
pursuant to Section 9(h) hereof and of any amendment or waiver effected
pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be;
(xvii) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Conduct (the "Rules of
Conduct") of the National Association of Securities Dealers, Inc. ("NASD"))
thereof, whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, assist such broker-dealer in complying with the
requirements of such Rules of Conduct, including, without limitation, by
(A) if such Rules of
<PAGE>
Conduct shall so require, engaging a "qualified independent underwriter"
(as defined in such Rules of Conduct) to participate in the preparation of
the registration statement relating to such Registrable Securities, to
exercise usual standards of due diligence in respect thereto and, if any
portion of the offering contemplated by such registration statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the yield of such Registrable Securities, (B) indemnifying any
such qualified independent underwriter to the extent of the indemnification
of underwriters provided in Section 6 hereof, and (C) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules of Conduct; and
(xviii) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders not later
than eighteen months after the effective date of such registration
statement, an earning statement of the Company and its subsidiaries
complying with Section 11(a) of the Securities Act (including, at the
option of the Company, Rule 158 thereunder).
(d) In the event that the Company would be required, pursuant to Section
3(c)(vi)(F) above, to notify the selling holders of Registrable Securities, the
placement or sales agent, if any, therefor and the managing underwriters, if
any, thereof, the Company shall without delay prepare and furnish to each such
holder, to each placement or sales agent, if any, and to each underwriter, if
any, a reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to Initial Purchasers of Registrable Securities,
such prospectus shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
Each holder of Registrable Securities agrees that upon receipt of any notice
from the Company pursuant to Section 3(c)(vi)(F) hereof, such holder shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until such
holder shall have received copies of such amended or supplemented prospectus,
and if so directed by the Company, such holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus covering such Registrable Securities
at the time of receipt of such notice.
(e) The Company may require each holder of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such holder and such holder=s intended method of
distribution of such Registrable Securities as the Company may from time to time
reasonably request in writing, but only to the extent that such information is
required in order to comply with the Securities Act. Each such holder agrees to
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such holder to the Company or of the
occurrence of any event in either case as a result of which any prospectus
relating to such registration contains or would contain an untrue statement of a
material fact regarding such holder or such holder's intended method of
distribution of such Registrable Securities or omits to state any material fact
regarding such holder or such holder's intended method of distribution of such
Registrable Securities required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and promptly to furnish to the Company any additional information required to
correct and update any previously furnished
<PAGE>
information or required so that such prospectus shall not contain, with respect
to such holder or the distribution of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid all expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, (a) all Commission and any NASD registration and
filing fees and expenses, (b) all fees and expenses in connection with the
qualification of the Securities or Exchange Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(c)(x)
hereof, including reasonable fees and disbursements of counsel for the placement
or sales agent or underwriters in connection with such qualifications, (c) all
expenses relating to the preparation, printing, distribution and reproduction of
each registration statement required to be filed hereunder, each prospectus
included therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the certificates representing the Securities and
Exchange Securities and all other documents relating hereto, (d) messenger and
delivery expenses, (e) fees and expenses of the Trustee under the Indenture and
of any escrow agent or custodian, (f) internal expenses (including, without
limitation, all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company (including
the expenses of any opinions or "cold comfort" letters required by or incident
to such performance and compliance), (h) reasonable fees, disbursements and
expenses of any "qualified independent underwriter" engaged pursuant to Section
3(c)(xvii) hereof, (i) reasonable fees, disbursements and expenses of one
counsel for the holders of Registrable Securities retained in connection with a
Shelf Registration, as selected by the holders of at least a majority in
aggregate principal amount of the Registrable Securities being registered, and
fees, expenses and disbursements of any other persons, including special
experts, retained by the Company in connection with such registration
(collectively, the "Registration Expenses"). To the extent that any Registration
Expenses are incurred, assumed or paid by any holder of Registrable Securities
or any placement or sales agent therefor or underwriter thereof, the Company
shall reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor.
Notwithstanding the foregoing, the holders of the Registrable Securities being
registered shall pay all agency fees and commissions and underwriting discounts
and commissions attributable to the sale of such Registered Securities and the
fees and disbursements of any counsel or other advisors or experts retained by
such holders (severally or jointly), other than the counsel and experts
specifically referred to above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, the Initial
Purchasers and each of the holders from time to time of Registrable Securities
that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section
<PAGE>
3(c)(ix) hereof and any further amendments or supplements to any such
registration statement or prospectus, when it becomes effective or is filed
with the Commission, as the case may be, and, in the case of an
underwritten offering of Registrable Securities, at the time of the closing
under the underwriting agreement relating thereto, will conform in all
material respects to the requirements of the Securities Act and the Trust
Indenture Act and any such registration statement and any amendment thereto
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and any such prospectus or any amendment
or supplement thereto will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and at all times subsequent to the Effective
Time when a prospectus would be required to be delivered under the
Securities Act, other than from (i) such time as a notice has been given to
holders of Registrable Securities pursuant to Section 3(c)(vi)(F) hereof
until (ii) such time as the Company furnishes an amended or supplemented
prospectus pursuant to Section 3(d) hereof, each such registration
statement, and each prospectus (including any summary prospectus) contained
therein or furnished pursuant to Section 3(c)(ix) hereof, as then amended
or supplemented, will conform in all material respects to the requirements
of the Securities Act and the Trust Indenture Act and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or
were filed with the Commission, as the case may be, will conform or
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents will
contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
(c) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will
not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
subsidiary of the Company is a party or by which the Company or any
subsidiary of the Company is bound or to which any of the property or
assets of the Company or any subsidiary of the Company is subject nor will
such action result in any violation of the provisions of the articles of
incorporation or by-laws of the Company or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any subsidiary of the Company or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or
<PAGE>
body is required for the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the
Securities Act of the Registrable Securities, qualification of the
Indenture under the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
State securities or blue sky laws in connection with the offering and
distribution of the Registrable Securities.
(d) This Agreement has been duly authorized, executed and delivered by
the Company.
6. Indemnification.
(a) Indemnification by the Company. Upon the registration of the
Registrable Securities pursuant to Section 2 hereof, and in consideration of the
agreements of the Initial Purchasers contained herein, and as an inducement to
the Initial Purchasers to purchase the Securities, the Company shall, and it
hereby agrees to, indemnify and hold harmless each of the holders 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 against any losses, claims, damages or liabilities,
joint or several, to which such holder, agent or underwriter 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 under which such Registrable Securities were registered
under the Securities Act, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such holder, agent or
underwriter, 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
required to be stated therein or necessary to make the statements therein not
misleading, and the Company shall, and hereby it agrees to, reimburse such
holder, such agent and such underwriter for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable to any such person 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 such registration statement, or preliminary, final or summary
prospectus, or amendment or supplement thereto (i) in reliance upon and in
conformity with written information furnished to the Company by holders of
Registrable Securities expressly for use therein or (ii) if and to the extent
that such untrue statement or omission or alleged untrue statement or omission
is eliminated or remedied by the Company through furnishing such holder of
Registrable Securities a supplemented or amended prospectus pursuant to Section
3(d) hereof prior to the use by such holder of Registrable Securities of a
prospectus that has not been so supplemented or amended and from which the need
to indemnify arises;
(b) Indemnification by the Holders and any Agents and Underwriters. The
Company may require, as a condition to including any Registrable Securities in
any registration statement filed pursuant to Section 2 hereof and to entering
into any underwriting agreement with respect thereto, that the Company shall
have received an undertaking reasonably satisfactory to it from the holder of
such Registrable Securities and from each underwriter named in any such
underwriting agreement, severally and not jointly, to indemnify and hold
harmless the Company and all other holders
<PAGE>
of Registrable Securities, against any losses, claims, damages or liabilities to
which the Company or such other holders of Registrable Securities 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 such registration statement, or any preliminary, final or summary
prospectus contained therein or furnished by the Company to any such holder,
agent or underwriter, 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
required to be stated therein 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 reliance upon and in conformity with written information furnished to the
Company by such holder or underwriter expressly for use therein, provided,
however, that no such holder shall be required to undertake liability to any
person under this Section 6(b) for any amounts in excess of the dollar amount of
the proceeds to be received by such holder from the sale of such holder's
Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of written notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such 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
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party (which consent shall not be
unreasonably withheld), 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, such indemnifying party shall not be liable to such
indemnified party 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 other than reasonable costs of investigation. 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 the cost of any settlement effected by an
indemnified party without the written consent of such indemnifying party, which
consent shall not be unreasonably withheld.
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims damages or liabilities (or actions in respect
<PAGE>
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 fault of the indemnifying
party and the indemnified party 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 considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or by
such indemnified party, and the parties= relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro rata
allocation (even if the holders or any agents or underwriters or all of them
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 in this Section 6(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 shall be deemed to include any reasonable legal or
other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6(d), no holder shall be required
to contribute any amount in excess of the amount by which the dollar amount of
the proceeds received by such holder from the sale of any Registrable Securities
(after deducting any fees, discounts and commissions applicable thereto) exceeds
the amount of any damages which such holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter 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 underwriters= obligations in this
Section 6(d) to contribute shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may be,
by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
each holder, agent and underwriter and each person, if any, who controls any
holder, agent or underwriter within the meaning of the Securities Act; and the
obligations of the holders and any underwriters contemplated by this Section 6
shall be in addition to any liability which the respective holder or underwriter
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company including any person who, with his consent,
is named in any registration statement as about to become a director of the
Company and to each person, if any, who controls the Company within the meaning
of the Securities Act.
<PAGE>
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities covered
by the Shelf Registration are to be sold pursuant to an underwritten offering,
the managing underwriter or underwriters thereof shall be designated by the
holders of at least a majority in aggregate principal amount of the Registrable
Securities to be included in such offering, provided that such designated
managing underwriter or underwriters is or are reasonably acceptable to the
Company.
(b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (1) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities that to the
extent it shall be required to do so under the Exchange Act, it shall timely
file the reports required to be filed by it under the Exchange Act or the
Securities Act (including, but not limited to, the reports under Section 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144) and
the rules and regulations adopted by the Commission thereunder, and shall 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 limitations of the exemption provided by Rule 144 or any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities in connection with that holder's sale pursuant to Rule
144, the Company shall deliver to such holder a written statement as to whether
it has complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants, covenants
and agrees that it has not granted, and shall not grant, registration rights
with respect to Registrable Securities or any other securities which would be
inconsistent with the terms contained in this Agreement.
(b) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under this Agreement
in accordance with the terms and conditions of this Agreement, in any court of
the United States or any State thereof having jurisdiction.
<PAGE>
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Company, to it
at 1549 Ringling Boulevard, Sarasota, Florida 34236, Attention: Chief Financial
Officer and if to a holder, to the address of such holder set forth in the
security register or other records of the Company, or to such other address as
any party may have furnished to the others in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be enforceable by
the respective successors and assigns of the parties hereto. In the event that
any transferee of any holder of Registrable Securities shall acquire Registrable
Securities, in any manner, whether by gift, bequest, purchase, operation of law
or otherwise, such transferee shall, without any further writing or action of
any kind, be deemed a party hereto for all purposes and such Registrable
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such transferee shall be entitled
to receive the benefits of and be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any holder of
Registrable Securities, any director, officer or partner of such holder, any
agent or underwriter or any director, officer or partner thereof, or any
controlling person of any of the foregoing, and shall survive delivery of and
payment for the Registrable Securities pursuant to the Purchase Agreement and
the transfer and registration of Registrable Securities by such holder and the
consummation of an Exchange Offer.
(f) LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(h) Entire Agreement; Amendments. This Agreement and the other writings
referred to herein (including the Indenture and the form of Securities) or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a written instrument
duly executed by the Company and the holders of at least 66b percent in
aggregate principal amount of the Registrable Securities at the time
outstanding. Each holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any amendment or waiver effected pursuant to this
Section 9(h), whether or not any notice, writing or
<PAGE>
marking indicating such amendment or waiver appears on such Registrable
Securities or is delivered to such holder.
(i) Inspection. For so long as this Agreement shall be in effect, this
Agreement and a complete list of the names and addresses of all the holders of
Registrable Securities shall be made available for inspection and copying on any
business day by any holder of Registrable Securities at the offices of the
Company at the address thereof set forth in Section 9(c) above and at the office
of the Trustee under the Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
<PAGE>
Agreed to and accepted as of the date referred to above.
PINNACLE HOLDINGS INC.
By:_____________________________
Name:
Title:
GOLDMAN, SACHS & CO.
NATIONSBANC MONTGOMERY
SECURITIES LLC
By: GOLDMAN, SACHS & CO.
_____________________________
(Goldman, Sachs & Co.)
<PAGE>
Exhibit 5.1
__________, 1998
Pinnacle Holdings Inc.
1549 Ringling Boulevard
3rd Floor
Sarasota, FL 34236
Re: Registration Statement on Form S-4
Registration No. ____________
Gentlemen:
We have acted as counsel for Pinnacle Holdings Inc. (the "Corporation"), a
Delaware corporation, in connection with the preparation of the above-referenced
registration statement (the "Registration Statement"), filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), to register the exchange of an aggregate principal of $325,000,000 of
its 10% Senior Discount Notes Due 2008 (the "New Notes") for an equal principal
amount of its outstanding 10% Senior Discount Notes Due 2008 (the "Original
Notes," and with the New Notes collectively, the "Notes"). The Notes have been
issued pursuant to an indenture between the Company and The Bank of New York, as
Trustee, dated as of March 20, 1998 (the "Indenture"). In this connection, you
have requested our opinion as to certain matters with respect to the New Notes.
Capitalized terms defined in the Registration Statement and not otherwise
defined herein are used herein with the meanings as so defined.
This letter is governed by, and shall be interpreted in accordance with,
the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this letter should be read in
conjunction therewith.
We have reviewed the Registration Statement, the Indenture and such other
documents, records and certificates of officers of the Corporation and its
<PAGE>
Pinnacle Holdings Inc.
subsidiaries and other instruments relating to the authorization and issuance of
New Notes as we deemed relevant or necessary for the opinions herein expressed.
Based on the above, it is our opinion that the $325,000,000 principal
amount of New Notes proposed to be issued in exchange for an equal principal
amount of Original Notes have been duly authorized and when issued for exchange
in accordance with the Registration Statement, the Indenture and the Letter of
Transmittal, will be validly issued. The New Notes, upon due acceptance by the
Corporation of the Original Notes being tendered in exchange therefor as
provided in the Registration Statement, the Indenture and the Letter of
Transmittal will constitute valid and binding obligations of the Corporation,
enforceable against the Corporation in accordance with the terms of such
documents.
For the purposes hereof, we do not purport to be expert in the law of any
state other than Florida, the General Corporation Law of the State of Delaware
and the United States. We express no opinions as to matters which may be
governed by the substantive laws of any state other than Florida or the General
Corporation law of the State of Delaware. Accordingly, the opinions set forth in
this letter are qualified in their entirety regarding matters that would be
controlled by the substantive laws of any other state (including the laws of New
York) by our having assumed that, to the extent relevant to the opinions
expressed above, the internal laws of any such other State conform in all
material respects with the internal laws of the state of Florida.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to all references to our firm in the Registration
Statement.
This opinion is rendered solely for your benefit in connection with the
transactions described above. This opinion may not be used or relied upon by any
other person and, except as provided in the preceding paragraphs, may not be
disclosed, quoted, filed with a governmental agency or otherwise referred to
without our prior written consent.
Very truly yours,
HOLLAND & KNIGHT LLP
<PAGE>
EXHIBIT 10.1
PINNACLE HOLDINGS INC.
10% Senior Discount Notes due 2008
____________
Purchase Agreement
------------------
March 17, 1998
Goldman, Sachs & Co.,
NationsBanc Montgomery Securities LLC,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Pinnacle Holdings Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$325,000,000 principal amount of the Notes specified above (the "Securities").
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated March 5, 1998 (the
"Preliminary Offering Circular") and an offering circular, dated March 17,
1998 (the "Offering Circular" in each case including the international
supplement thereto) have been prepared in connection with the offering of
the Securities. Any reference to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include any Additional
Issuer Information (as defined in Section 5(f)) furnished by the Company
prior to the completion of the distribution of the Securities. The
Preliminary Offering Circular or the Offering Circular and any amendments
or supplements thereto did not and will not, as of their respective dates,
contain an untrue statement of a material fact or omit 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
Goldman, Sachs & Co. expressly for use therein;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Offering Circular any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree,
<PAGE>
otherwise than as set forth or contemplated in the Offering Circular; and,
since the respective dates as of which information is given in the Offering
Circular, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Offering Circular;
(c) The Company and its subsidiaries have good and indefeasible title
to, or a valid leasehold interest in, all of their material assets, except
as is described in the Offering Circular or where the failure thereof would
not reasonably be expected to have a material adverse effect on the
financial condition, results of operations, business or property of the
Company and its subsidiaries on a consolidated basis (a "Material Adverse
Effect");
(d) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware; each of the Company and its subsidiaries has the
corporate power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted as described
in the Offering Circular. Each of the Company and its subsidiaries is duly
qualified, in good standing and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect;
(e) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company 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 Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares and as described in the Offering Circular) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(f) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
indenture to be dated as of March 20, 1998 (the "Indenture") between the
Company and The Bank of New York, as Trustee (the "Trustee"), under which
they are to be issued, which will be substantially in the form previously
delivered to you; the Indenture has been duly authorized and, when executed
and delivered by the Company and the Trustee, the Indenture will constitute
a valid and legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Securities and the Indenture will conform to the descriptions thereof in
the Offering Circular and will be in substantially the form previously
delivered to you;
(g) The Exchange and Registration Rights Agreement among the Company
and the Purchasers to be dated as of March 20, 1998 (the "Registration
Rights Agreement") has been duly authorized by the Company, and, when
executed and delivered by the Company, will
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<PAGE>
constitute a valid and legally binding agreement of the Company enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to principles of equity generally
applicable; and the Registration Rights Agreement will conform in all
material respects to the description thereof in the Offering Circular;
(h) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System;
(i) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Securities;
(j) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Registration Rights Agreement and this Agreement and the consummation of
the transactions herein and therein contemplated 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, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except for any such
conflicts, breaches or violations that, individually or 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 Company or any of its subsidiaries or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or blue sky
laws in connection with the purchase and distribution of the Securities by
the Underwriters and for the filing of a registration statement by the
Company with the Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and state securities or blue sky laws in connection
with the exchange offer or resale registration statement described in the
Offering Circular and contemplated by the Registration Rights Agreement;
(k) The Company and its subsidiaries are in compliance in all
material respects with all of the provisions of their respective
certificate of incorporation and by-laws, and no event has occurred or
failed to occur, which has not been remedied or waived, the occurrence or
non-occurrence of which constitutes, or which with the passage of time or
giving of notice or both would constitute, a default by the Company or any
of its subsidiaries under any indenture, agreement or other instrument, or
any judgment, decree or order to which the Company or any
3
<PAGE>
of its subsidiaries is a party or by which they or any of their properties
is bound which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect;
(l) The statements set forth in the Offering Circular under the
caption "Description of Notes" insofar as they purport to constitute a
summary of the terms of the Securities, under the caption "Certain Federal
Income Tax Consequences", and under the caption "Underwriting", insofar as
they purport to describe the provisions of the laws and documents referred
to therein, are accurate, complete and fair;
(m) Other than as set forth in the Offering Circular, there is no
action, suit, proceeding or any other litigation pending or, to the best of
the Company's knowledge, threatened against the Company or any of its
subsidiaries, or in any other manner relating directly and materially
adversely to the Company, any of its subsidiaries, or any of their material
properties, in any court or before any arbitrator of any kind or before or
by any governmental body which would reasonably be expected to have a
Material Adverse Effect;
(n) All licenses, permits, consents, certificates of need,
authorizations, certifications, accreditations, franchises, approvals,
grants of rights by, or filings or registrations with, any federal, state,
local or foreign court or governmental or public body, authority, or other
instrumentality or third person (including without limitation the Federal
Communications Commission (the "FCC") and the Federal Aviation Authority
("FAA")) (any of the foregoing a "License") necessary for the Company and
its subsidiaries to own, build, maintain or operate their businesses or
properties have been duly authorized and obtained, are in full force and
effect except where the failure to so be obtained or in effect would not,
individually or in the aggregate, have a Material Adverse Effect; and the
Company and its subsidiaries are and will continue to be in compliance in
all material respects with all provisions thereof; no event has occurred
which permits (or with the passage of time would permit) the revocation or
termination of any License, or which could result in the imposition of any
restriction thereon, which is of such a nature or the effect of which would
reasonably be expected to have a Material Adverse Effect; no material
License is the subject of any pending or, to the best of the Company's
knowledge, threatened challenge or revocation which, if such License were
revoked, would reasonably be expected to have a Material Adverse Effect;
the Company and its subsidiaries are not required to obtain any material
License that has not already been obtained from, or effect any material
filing or registration that has not already been effected with, the FCC,
the FAA or any other federal, state or local regulatory authority in
connection with the execution and delivery of this Agreement, the
Securities, the Indenture or the Registration Rights Agreement, or the
performance thereof, in accordance with their respective terms;
(o) The Company and its subsidiaries are in compliance in all
material respects with all applicable laws; the Company and its
subsidiaries have duly and timely filed all reports, statements and filings
that are required to be filed by any of them under the Communications Act
and the rules and regulations promulgated thereunder, and are in all
material respects in compliance therewith, including without limitation the
rules and regulations of the FCC and FAA; the Company is not aware of any
event or circumstance constituting noncompliance (or any person alleging
noncompliance) with any rule or regulation of the FAA which such event or
circumstance would reasonably be expected to have a Material Adverse
Effect;
4
<PAGE>
(p) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Act as securities which are listed on a national
securities exchange registered under Section 6 of the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act") or quoted
in a U.S. automated inter-dealer quotation system;
(q) The Company is not required to register under the provisions of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"). Neither the entering into or performance by the Company of this
Agreement nor the offering and sale of the Securities violates any
provision of such act or requires any consent, approval, or authorization
of, or registration with, the Commission or any other governmental or
public body of authority pursuant to any provisions of such act;
(r) Neither the Company, nor any person acting on its or their behalf
has offered or sold the Securities by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act or,
with respect to Securities sold outside the United States to non-U.S.
persons (as defined in Rule 902 under the Act), by means of any directed
selling efforts within the meaning of Rule 902 under the Act and the
Company, any affiliate of the Company and any person acting on its or their
behalf has complied with and will implement the "offering restriction"
within the meaning of such Rule 902;
(s) Within the preceding six months neither the Company nor any other
person acting on behalf of the Company has offered or sold to any person
any Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by the Company, within six months
subsequent to the date on which the distribution of the Securities has been
completed (as notified to the Company by Goldman, Sachs & Co.), is made
under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Securities Act;
(t) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(u) Price Waterhouse LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder; and
(v) The Company is organized in conformity with the requirements for
qualification as a real estate investment trust under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended (the "Code"), and its
proposed method of operation as described in the Offering Circular will
enable it to continue to maintain the requirements for taxation as a real
estate investment trust under the Code.
5
<PAGE>
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 61.474% of the principal amount thereof less the underwriting discount
of 3% of such purchase price ($5,993,715 in the aggregate), plus accrued
original issue discount, if any, from March 20, 1998 to the Time of Delivery
hereunder, the principal amount of Securities set forth opposite the name of
such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the
Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A under the Act in transactions meeting the
requirements of Rule 144A or upon the terms and conditions set forth in
Annex I to this Agreement;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the
methods described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will
be represented by one or more definitive global Securities in book-entry form
which will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Goldman, Sachs & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by
certified or official bank check or checks, payable to the order of the Company
in, or by wire transfer to the account specified by the Company of, immediately
available (same day) funds, by causing DTC to credit the Securities to the
account of Goldman, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Goldman, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on March 20, 1998 or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing. Such time and date are
herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by
the Purchasers pursuant to Section 7(h) hereof, will be delivered at such
time and date at the offices of Sullivan & Cromwell, 125 Broad Street, New
York, New York 10004 (the "Closing Location"), and the Securities will be
delivered at the Designated Office, all at the Time of Delivery. A meeting
will be held at the Closing Location at 2:00 p.m., New York City time, on
the New York Business Day next preceding the Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by
law or executive order to close.
6
<PAGE>
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to
make no amendment or any supplement to the Offering Circular which shall be
disapproved by you promptly after reasonable notice thereof; and to furnish
you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under
the securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete
the distribution of the Securities, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Purchasers with three copies of the Offering
Circular and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in the
Offering Circular, and any amendment or supplement containing amendments to
the financial statements covered by such report(s), signed by the
accountants, and, prior to 10:00 a.m. New York City time on the New York
Business Day next succeeding the date of this Agreement and from time to
time, additional copies thereof in such quantities as you may from time to
time reasonably request, and if, at any time prior to the expiration of
nine months after the date of the Offering Circular, any event shall have
occurred as a result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Offering Circular is delivered, not misleading, or, if for any other
reason it shall be necessary or desirable during such same period to amend
or supplement the Offering Circular, to notify you and upon your request to
prepare and furnish without charge to each Purchaser and to any dealer in
securities as many copies as you may from time to time reasonably request
of an amended Offering Circular or a supplement to the Offering Circular
which will correct such statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing
until the date six months after the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the Securities;
(e) Not to be or become, at any time prior to the expiration of three
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for the benefit of holders from time to time of
Securities, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Act;
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<PAGE>
(g) To use its best efforts to cause the Securities to be eligible
for the PORTAL trading system of the National Association of Securities
Dealers, Inc.;
(h) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows
of the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the date of the Offering Circular), consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(i) During a period of three years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) furnished to stockholders of the Company, and to
deliver to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
securities exchange on which the Securities or any class of securities of
the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to
time reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to the
Commission);
(j) During the period of two years after the Time of Delivery, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144 under the Securities Act) to, resell any of the Securities
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them;
(k) As promptly as is reasonably practicable to file and use its best
efforts to cause to be declared or become effective under the Act the
registration statement relating to the exchange offer or resale
registration, as applicable, described in the Offering Circular and
contemplated by the Registration Rights Agreement; and
(l) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the Offering
Circular under the caption "Use of Proceeds".
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and all other expenses in connection with the
preparation, printing and filing of the Preliminary Offering Circular and the
Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, the Registration Rights Agreement, the Blue Sky Memorandum, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Purchasers in
connection with such qualification and in connection with the Blue Sky and legal
investment surveys; (iv) any fees charged by securities rating services for
rating the Securities; (v) the cost of preparing the Securities; (vi) the fees
and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in
8
<PAGE>
connection with the Indenture and the Securities; (vii) any cost incurred in
connection with the designation of the Securities for trading in PORTAL; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
and Sections 8 and 11 hereof, the Purchasers will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) Sullivan & Cromwell, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to the Securities, this Agreement and the Registration Rights
Agreement, the Offering Circular and the offering of the Securities as well
as such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(b) Holland & Knight LLP, counsel for the Company, shall have
furnished to you their written opinion, dated the Time of Delivery, in form
and substance satisfactory to you, to the effect set forth in Annex II
hereto;
(c) On the date of the Offering Circular prior to the execution of
this Agreement and also at the Time of Delivery, Price Waterhouse LLP shall
have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect
set forth in Annex III hereto;
(d) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Offering Circular, and (ii) since the respective dates as of which
information is given in the Offering Circular there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Offering Circular, the effect of which, in any such
case described in Clause (i) or (ii), is in your judgment so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in the
manner contemplated in this Agreement and in the Offering Circular;
(e) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under
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the Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities;
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities declared by either Federal or
New York State authorities; (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in
this Clause (iii) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated in
the Offering Circular; or (iv) the occurrence of any material adverse
change in the existing, financial, political or economic conditions in the
United States or elsewhere which, in the judgment of the Purchasers, would
materially and adversely affect the financial markets or the markets for
the Securities and other debt securities.
(g) The Securities have been designated for trading on PORTAL;
(h) The Company shall have furnished or caused to be furnished to you
at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (e) of this Section and as to such other matters as
you may reasonably request; and
(i) The Company shall have furnished or caused to be furnished to you
at the Time of Delivery evidence satisfactory to you that the issuance and
sale of the Securities, the application of the proceeds therefrom as
described in the Offering Circular and the consummation of the transactions
contemplated herein will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, the Senior Credit
Facility (as defined in the Offering Circular) as in effect immediately
prior to, at, and immediately after the Time of Delivery, which evidence
shall consist of an amendment, waiver, consent or other instrument.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the 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 Preliminary Offering Circular or the Offering
Circular, 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 Purchaser
for any legal or other expenses reasonably incurred by such Purchaser in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company 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 Preliminary Offering Circular or the
Offering Circular or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Purchaser
through Goldman, Sachs & Co. expressly for use therein.
10
<PAGE>
(b) Each Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the 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 Preliminary Offering Circular or the Offering
Circular, 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
Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Purchaser through Goldman,
Sachs & Co. expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company 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 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 other than reasonable costs of investigation. 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.
(d) If the indemnification provided for in this Section 8 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 Company on the
one hand and the Purchasers on the other from the offering of the
Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or
11
<PAGE>
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 Company on the one hand and the Purchasers 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 considerations. The relative benefits
received by the Company on the one hand and the Purchasers on the other
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the
Purchasers, in each case as set forth in the Offering Circular. 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 Company on the one hand or the Purchasers on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Purchasers 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 Purchasers 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
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it
and distributed to investors were offered to investors exceeds the amount
of any damages which such Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. The Purchasers' obligations in this subsection (d) to contribute
are several in proportion to their respective underwriting obligations and
not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Act; and the obligations
of the Purchasers under this Section 8 shall be in addition to any
liability which the respective Purchasers may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of
the Company and to each person, if any, who controls the Company within the
meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or
12
<PAGE>
in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh
of the aggregate principal amount of all the Securities, then the Company
shall have the right to require each non-defaulting Purchaser to purchase
the principal amount of Securities which such Purchaser agreed to purchase
hereunder and, in addition, to require each non-defaulting Purchaser to
purchase its pro rata share (based on the principal amount of Securities
which such Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Purchaser or Purchasers for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of all the Securities, or if the Company shall
not exercise the right described in subsection (b) above to require non-
defaulting Purchasers to purchase Securities of a defaulting Purchaser or
Purchasers, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company,
except for the expenses to be borne by the Company and the Purchasers as
provided in Section 6 hereof and the indemnity and contribution agreements
in Section 8 hereof; but nothing herein shall relieve a defaulting
Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including reasonable fees and disbursements
of counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you.
13
<PAGE>
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives at 85 Broad Street, New
York, New York 10004, Attention: Registration Department; and if to the Company
shall be delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Offering Circular, Attention: Secretary;
provided, however, that any notice to a Purchaser pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Purchaser at its address set forth in its Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16 This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
14
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
Pinnacle Holdings Inc.
By:.................................
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
NationsBanc Montgomery Securities LLC
By: Goldman, Sachs & Co.
...........................
(Goldman, Sachs & Co.)
15
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
SECURITIES
PURCHASER TO BE
--------- PURCHASED
---------
<S> <C>
Goldman, Sachs & Co............................................................... $227,500,000
NationsBanc Montgomery Securities LLC............................................. 97,500,000
--------------
Total............................................................... $325,000,000
==============
</TABLE>
16
<PAGE>
ANNEX I
(1) The Securities have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Purchaser represents that it has offered and sold the Securities, and
will offer and sell the Securities (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S or Rule 144A under the Act. Accordingly, each Purchaser agrees
that neither it, its affiliates nor any persons acting on its or their behalf
has engaged or will engage in any directed selling efforts with respect to the
Securities, and it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Purchaser agrees that, at or
prior to confirmation of sale of Securities (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the offering
and the closing date, except in either case in accordance with Regulation S
(or Rule 144A if available) under the Securities Act. Terms used above
have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation
S.
Each Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(2) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1996 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(3) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Goldman, Sachs & Co.'s express written consent and then only at its own
risk and expense.
I-1
<PAGE>
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries under rule 101 of the American
Institute of Certified Public Accountants' Code of Professional Conduct,
and its interpretations and rulings;
(ii) In their opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the Offering
Circular comply as to form in all material respects with the applicable
requirements of the Exchange Act and the related published rules and
regulations;
(iii) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form
in all material respects with the applicable accounting requirements
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(B) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Offering Circular or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Purchasers, or any increases in any items
specified by the Purchasers, in each case as compared with amounts
shown in the latest balance sheet included in the Offering Circular
except in each case for changes, increases or decreases which the
Offering Circular discloses have occurred or may occur or which are
described in such letter; and
(C) for the period from the date of the latest financial
statements included in the Offering Circular to the specified date
referred to in Clause (B) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the Purchasers, or
any increases in any items specified by the Purchasers, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the Purchasers,
except in each case for decreases or increases which the Offering
Circular discloses have occurred or may occur or which are described
in such letter; and
(iv) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph (iii)
above, they have carried out certain specified procedures, not constituting
an audit in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified
by the Purchasers, which are derived from the general accounting records
II-1
<PAGE>
of the Company and its subsidiaries, which appear in the Offering Circular,
and have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its subsidiaries
and have found them to be in agreement.
II-2
<PAGE>
EXHIBIT 10.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$250,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
PINNACLE TOWERS INC.
AND
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE LENDER
AND
GOLDMAN SACHS CREDIT PARTNERS L.P.,
AS SYNDICATION AGENT
AND
LENDERS
DATED AS OF FEBRUARY 26, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PINNACLE TOWERS INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I. DEFINITIONS
<S> <C>
1.01. Definitions....................................... 2
1.02. Accounting and Other Terms........................ 25
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. The Advances...................................... 25
2.02. Making Advances................................... 25
2.03. Evidence of Debt for Borrowed Money............... 27
2.04. Optional Prepayments.............................. 27
2.05. Mandatory Prepayments............................. 28
2.06. Repayment......................................... 29
2.07. Interest.......................................... 30
2.08. Default Interest.................................. 31
2.09. Continuation and Conversion Elections............. 31
2.10. Fees.............................................. 32
2.11. Reduction of Available Commitment................. 33
2.12. Funding Losses.................................... 33
2.13. Computations and Manner of Payments............... 33
2.14. Yield Protection; Changed Circumstances........... 34
2.15. Use of Proceeds................................... 37
2.16. Collateral and Collateral Call.................... 37
2.17. Replacement of a Lender........................... 38
2.18. Conditions Precedent to the Increase of the
Available Commitment.............................. 38
ARTICLE III. LETTERS OF CREDIT
3.01. Issuance of Letters of Credit..................... 40
3.02. Letters of Credit Fee............................. 40
3.03. Reimbursement Obligations......................... 41
3.04. Lenders' Obligations.............................. 42
3.05. Administrative Lender's Obligations............... 43
ARTICLE IV. CONDITIONS PRECEDENT
4.01. Conditions Precedent to Closing and the Initial
Advance........................................... 43
4.02. Conditions Precedent to All Advances and Letters
of Credit......................................... 45
4.03. Conditions Precedent to Advances for Permitted
Acquisitions...................................... 46
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.01. Representations and Warranties.................... 46
5.02. Survival of Representations and Warranties........ 54
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VI. GENERAL COVENANTS
<S> <C>
6.01. Preservation of Existence and Similar Matters.... 55
6.02. Business; Compliance with Applicable Law and
Material Agreements.............................. 55
6.03. Maintenance of Properties........................ 55
6.04. Accounting Methods and Financial Records......... 55
6.05. Insurance........................................ 55
6.06. Payment of Taxes and Claims...................... 56
6.07. Visits and Inspections........................... 56
6.08. Payment of Debt for Borrowed Money............... 56
6.09. Use of Proceeds.................................. 56
6.10. Indemnity........................................ 56
6.11. Environmental Law Compliance..................... 57
6.12. Interest Rate Protection Agreements.............. 58
6.13. Issuance and Pledge of Capital Stock of the
Borrower......................................... 58
6.14. Continued Status as a Real Estate Investment
Trust; Prohibited Transactions................... 58
6.15. Tenant Leases, Ground Leases and Fee Owned
Property......................................... 59
6.16. Acquisitions, Generally.......................... 60
ARTICLE VII. INFORMATION COVENANTS
7.01. Quarterly Financial Statements and Information... 60
7.02. Annual Financial Statements and Information;
Certificate of No Default........................ 61
7.03. Compliance Certificates.......................... 61
7.04. Copies of Other Reports and Notices.............. 61
7.05. Notice of Litigation, Default and Other Matters.. 63
7.06. ERISA Reporting Requirements..................... 63
7.07. Fee Owned Property, Ground Leases, Tenant
Leases........................................... 64
ARTICLE VIII. NEGATIVE COVENANTS
8.01. Financial Covenants.............................. 65
8.02. Debt for Borrowed Money.......................... 68
8.03. Liens............................................ 69
8.04. Investments...................................... 69
8.05. Amendment and Waiver............................. 70
8.06. Liquidation, Disposition or Acquisition of
Assets, Merger, New Subsidiaries................. 71
8.07. Guaranties; Contingent Liabilities............... 72
8.08. Restricted Payments.............................. 72
8.09. Affiliate Transactions........................... 74
8.10. Compliance with ERISA............................ 74
8.11. Capital Stock.................................... 74
8.12. Sale and Leaseback............................... 75
8.13. Sale or Discount of Receivables.................. 75
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE IX. EVENTS OF DEFAULT
<S> <C>
9.01. Events of Default................................ 75
9.02. Remedies upon Default............................ 79
9.03. Cumulative Rights................................ 79
9.04. Waivers.......................................... 79
9.05. Performance by Administrative Lender or any
Lender........................................... 80
9.06. Expenditures..................................... 80
9.07. Control.......................................... 80
ARTICLE X. THE ADMINISTRATIVE LENDER
10.01. Authorization and Action........................ 80
10.02. Administrative Lender's Reliance, Etc........... 81
10.03. NationsBank of Texas, National Association and
Affiliates...................................... 81
10.04. Lender Credit Decision.......................... 81
10.05. Indemnification by Lenders...................... 82
10.06. Successor Administrative Lender................. 82
ARTICLE XI. MISCELLANEOUS
11.01. Amendments and Waivers.......................... 83
11.02. Notices......................................... 83
11.03. Parties in Interest............................. 85
11.04. Assignments and Participations.................. 85
11.05. Sharing of Payments............................. 86
11.06. Right of Set-off................................ 86
11.07. Costs, Expenses, and Taxes...................... 87
11.08. Rate Provision.................................. 88
11.09. Severability.................................... 88
11.10. Exceptions to Covenants......................... 88
11.11. Counterparts.................................... 89
11.12. GOVERNING LAW; WAIVER OF JURY TRIAL............. 89
11.13. ENTIRE AGREEMENT................................ 89
</TABLE>
TABLE OF SCHEDULES AND EXHIBITS
SCHEDULES
---------
Schedule 2.16 - Items required with respect to each
Ground Lease and Each Fee Owned Real
Property of the Borrower and its
Subsidiaries
Schedule 5.01(a) - Jurisdictions of Qualification,
Ownership and Capital Structure -
Borrower
Schedule 5.01(f) - FAA Non-Compliance as of the Closing
Date
Schedule 5.01(h) - Existing Litigation
iii
<PAGE>
Schedule 5.01(w) - Tenant Leases in existence on the
Closing Date
Schedule 5.01(x) - Ground Leases in existence on the
Closing Date
Schedule 5.01(y) - Owned Real Property in existence on
the Closing Date
Schedule 8.02 - Existing Debt and Liabilities
Schedule 8.03 - Existing Liens
Schedule 8.04 - Existing Investments
Schedule 8.09 - Existing Affiliate Transactions
Schedule 11.02 - Lender Addresses
EXHIBITS
--------
Exhibit A - Form of Note
Exhibit B - Form of Security Agreement (Borrower)
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Borrowing Notice
Exhibit E - Form of Conversion/Continuation Notice
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Form of Guaranty of Subsidiaries
Exhibit H - Form of Security Agreement (Subsidiary)
Exhibit I - Form of Subordination Agreement
Exhibit J - Form of Borrower Pledge Agreement
Exhibit K - Form of Certain Ground Lease Provisions
Exhibit L - Form of Guaranty of Parent
Exhibit M - Form of Parent Pledge Agreement
Exhibit N - Form of Capital Contribution Agreement
Exhibit O - Form of Estoppel and Attornment Language
iv
<PAGE>
$250,000,000
- --------------------------------------------------------------------------------
PINNACLE TOWERS INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as of February
26, 1998, among Pinnacle Towers Inc., a Delaware corporation (the "Borrower"),
the Lenders (as defined below), NationsBank of Texas, National Association, as a
Lender and Administrative Lender (the "Administrative Lender"), and Goldman
Sachs Credit Partners L.P., as Syndication Agent.
BACKGROUND.
WHEREAS, Borrower entered into that certain Credit Agreement with
Administrative Lender, dated as of September 1, 1995 (the "Original Credit
Agreement") which provided for (a) a reducing revolving line of credit/letter of
credit facility in the combined maximum aggregate amount of $5,000,000 and (b) a
revolver/term loan in the maximum aggregate amount of $20,000,000.
WHEREAS, Borrower and Administrative Lender agreed to restructure, extend,
renew and restate such indebtedness under the Original Credit Agreement to
provide for one revolver/term loan in the amount of $100,000,000, to add certain
lenders as parties thereto and to make certain other agreed to changes, pursuant
to a Credit Agreement, dated as of September 10, 1996 (the "Restated Credit
Agreement"), between the Borrower, the Administrative Lender and other lenders
from time to time party to the Credit Agreement.
WHEREAS, Borrower and Administrative Lender agreed to restructure, extend,
renew and restate such indebtedness under the Restated Credit Agreement to
provide for one revolver/term loan in the amount of $100,000,000, which may be
increased to $175,000,000 pursuant to a First Amended and Restated Credit
Agreement, dated as of June 11, 1997 (the "First Restated Credit Agreement"),
between the Borrower, the Administrative Lender and other lenders from time to
time party to the Credit Agreement.
WHEREAS, Borrower and Administrative Lender have further agreed to
restructure, increase, extend, renew and restate such indebtedness under the
First Restated Credit Agreement as set forth herein to provide for one
revolver/term loan in the initial amount of $200,000,000 which may be increased
to $250,000,000 (as provided herein), to add certain lenders as parties thereto
and to make certain other agreed to changes.
<PAGE>
AGREEMENT.
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
hereto agree as follows:
All obligations under the First Restated Credit Agreement, as modified
herein, shall after the Closing Date, be evidenced by the Notes, this Agreement,
and the Loan Papers, and shall be secured by (except as expressly provided
herein or in any other Loan Paper), among other things, the original collateral
as granted Borrower pursuant to the Loan Papers executed and delivered pursuant
to the Original Credit Agreement, the Restated Credit Agreement, and the First
Restated Credit Agreement, as amended from time to time.
ARTICLE I. DEFINITIONS
1.01. Definitions. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):
"ABRY" means ABRY Broadcast Partners II, L.P., a Delaware limited
partnership.
"Advance" means an advance made by a Lender to the Borrower pursuant to
Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled By or is Under Common Control with
another Person.
"Administrative Lender" means NationsBank of Texas, National Association,
in its capacity as Administrative Lender hereunder, or any successor
Administrative Lender appointed pursuant to Section 10.06 hereof.
"Aggregate Commitment" means, from time to time, the sum of the Available
Commitment and the Unavailable Commitment, as reduced from time to time.
"Agreement" means this Credit Agreement, as hereafter amended, modified,
increased, extended, restated or supplemented from time to time.
"Annualized EBITDA" means, (a) with respect to Compliance Certificates
delivered in connection with Section 7.03 hereof, the product of (i) EBITDA for
the Parent, the Borrower and its Subsidiaries on a consolidated basis, for the
most recently completed month immediately preceding the date of determination
times (ii) twelve, and (b) with respect to pro-forma Compliance Certificates
delivered in connection with Permitted Acquisitions delivered pursuant to
Section 6.16 hereof, the product of (i) EBITDA for the Parent, the Borrower and
its Subsidiaries on a
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consolidated basis, for the most recently completed month immediately preceding
the date of determination with respect to which the Borrower has financial
statements prepared, times (ii) twelve.
"Applicable Law" means (a) in respect of any Person, all provisions of Laws
applicable to such Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a party
and (b) in respect of contracts made or performed in the State of Texas,
"Applicable Law" shall also mean the laws of the United States of America,
including, without limiting the foregoing, 12 USC Sections 85 and 86, as amended
to the date hereof and as the same may be amended at any time and from time to
time hereafter, and any other statute of the United States of America now or at
any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the State of Texas, including, without
limitations, Articles 5069-1H, Title 79, Revised Civil Statutes of Texas, 1925,
as amended ("Art. 1H"), if applicable, and if Art. 1H is not applicable, Article
5069-1D, Title 79, Revised Civil Statutes of Texas, 1925 ("Art. 1D"), as
amended, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit, provided however, that pursuant to Article 5069-15.10(b), Title 79,
Revised Civil Statutes of Texas, 1925, as amended, the Borrower agrees that the
provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, shall not apply to the Advances hereunder.
"Applicable Margin" means, (a) with respect to LIBOR Advances, 2.750% per
annum, and (b) with respect to Base Advances, 1.750% per annum provided that, if
there exists no Default or Event of Default, then the Applicable Margin will be
the following per annum percentages applicable in the following situations:
<TABLE>
<CAPTION>
Base Advance LIBOR Advance
Applicability Percentage
- ------------- ----------
Percentage
- ----------
<S> <C> <C>
(i) If the 1.750% 2.750%
Leverage Ratio is equal to or
greater than 7.00 to 1.00
(ii) If the 1.500% 2.500%
Leverage Ratio is equal to or
greater than 6.50 to 1.00
but is less than 7.00 to 1.00
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
(iii) If the 1.375% 2.375%
Leverage Ratio is equal to or
greater than 6.00 to 1.00
but is less than 6.50 to 1.00
(iv) If the 1.125% 2.125%
Leverage Ratio is equal to or
greater than 5.50 to 1.00
but is less than 6.00 to 1.00
(v) If the 1.000% 2.000%
Leverage Ratio is equal to or
greater than 5.00 to 1.00
but is less than
5.50 to 1.00
(vi) If the .750% 1.750%
Leverage Ratio is equal to or
greater than 4.50 to 1.00
but is less than
5.00 to 1.00
(vii) If the .500% 1.500%
Leverage Ratio is equal to or
greater than 4.00 to 1.00
but is less than
4.50 to 1.00
(viii) If the 0.250% 1.250%
Leverage Ratio is less
than 4.00 to 1.00
</TABLE>
The Applicable Margin payable by the Borrower shall be subject to reduction or
increase, as applicable and as set forth in the table above, on a quarterly
basis according to the performance of the Parent, Borrower and Subsidiaries of
Borrower as tested by the Leverage Ratio, and shall be subject to further
increase as set forth in Section 6.15(c) hereof. Except as set forth in the
last sentence hereof, any such increase or reduction in the Applicable Margin
provided for herein shall be effective three Business Days after receipt by
Administrative Lender of the applicable financial statements and corresponding
Compliance Certificate. If financial statements and a Compliance Certificate of
the Borrower setting forth the Leverage Ratio are not received by the
Administrative Lender by the date required pursuant to Article VII hereof, the
Applicable Margin shall be determined as if the Leverage Ratio exceeds 7.00 to
1.00 until such time as such financial statements and Compliance Certificate are
received. For the final quarter of any fiscal year of the Borrower, the
Borrower may provide the unaudited financial statements of the Borrower, subject
only to year-end adjustments, for the purpose of adjusting the Applicable
Margin.
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<PAGE>
"Application" means any stand-by letter of credit application delivered to
Administrative Lender for or in connection with any stand-by Letter of Credit
pursuant to Article III hereof, in Administrative Lender's standard form for
stand-by letters of credit.
"Art. 1.04" has the meaning specified in the definition of "Applicable
Law".
"Art. 1D" has the meaning specified in the definition herein of "Applicable
Law".
"Art. 1H" has the meaning specified in the definition herein of "Applicable
Law".
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an Eligible Assignee, and accepted by Administrative Lender, in
the form of Exhibit F hereto.
"Auditor" means Price Waterhouse L.L.P., or other independent certified
public accountants selected by the Borrower and acceptable to Administrative
Lender.
"Authorized Officer" means, with respect to the Borrower and its
Subsidiaries, the President, Chief Executive Officer, Chief Financial Officer or
the Controller of the Borrower.
"Available Commitment" means $200,000,000, as the same may be increased
prior to the Conversion Date in accordance with the terms of Section 2.18
hereof, and as the same may be reduced from time to time or terminated pursuant
to Sections 2.04, 2.11 or 9.02 hereof.
"Bank Affiliate" means the holding company of any Lender, or any wholly-
owned direct or indirect subsidiary of such holding company or of such Lender.
"Base Advance" means an Advance bearing interest at the Base Rate.
"Base Rate" means a per annum interest rate equal to the lesser of (a) the
Highest Lawful Rate, and (b) the sum of the Applicable Margin plus the higher of
(i) a fluctuating rate per annum as shall be in effect from time to time
announced or published by NationsBank of Texas, National Association as its
prime rate, and which may not necessarily be the lowest interest rate charged by
NationsBank of Texas, National Association, and (ii) the Federal Funds Rate in
effect at such time plus .50%.
"Borrower Pledge Agreement" means the Pledge Agreement of even date
herewith, executed by the Borrower, granting a Lien on 100% of the Capital Stock
of each of the Borrower's Subsidiaries constituting Pledged Stock as security
for the Obligations,
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<PAGE>
substantially in the form of Exhibit J hereto, as such agreement may be amended,
modified, renewed or extended from time to time.
"Borrowing" means a borrowing of the same Type made on the same day.
"Borrowing Notice" has the meaning set forth in Section 2.02(a) hereof.
"Business Day" means a day of the year on which banks are not required or
authorized to close in Dallas, Texas or Sarasota, Florida, or, if with respect
to any notice, payment or calculation related to a LIBOR Advance, in New York,
New York, Dallas, Texas, Sarasota, Florida or London, England.
"Capital Contribution Agreement" means that certain Capital Contribution
Agreement, dated as of ____________, 1998, among ABRY, the Parent, the Borrower
and the Administrative Lender on behalf of Lenders, substantially in the form of
Exhibit N hereto.
"Capital Expenditures" means capital expenditures, as defined in accordance
with GAAP.
"Capital Leases" means capital leases and subleases, as defined in
accordance with GAAP.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person that is a corporation and each class of partnership interests
(including without limitation, general, limited and preference units) in any
Person that is a partnership.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
reference to any provision of the Code shall include all successor provisions
thereto.
"Collateral" has the meaning ascribed thereto in Section 2.16 hereof.
"Commitment Fee" means the fee described in Section 2.10(b).
"Communications Act" means, collectively, the Communications Act of 1934
and the rules and regulations promulgated thereunder, as from time to time in
effect.
"Compliance Certificate" means a certificate of an Authorized Officer in
the form of Exhibit C hereto, (a) certifying that such individual has no
knowledge that a Default or Event of Default has occurred and is continuing, or
if a Default or Event of Default has
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<PAGE>
occurred and is continuing, a statement as to the nature thereof and the action
being taken or proposed to be taken with respect thereto, (b) setting forth
detailed calculations with respect to the covenants described in Section 8.01
hereof and (c) certifying to the appropriate Applicable Margin.
"Consequential Loss" with respect to (a) the Borrower's payment of all or
any portion of the then-outstanding principal amount of a LIBOR Advance on a day
other than the last day of the related Interest Period, including, without
limitation, payments made as a result of the acceleration of the maturity of a
Note, (b) subject to Administrative Lenders' prior consent, a LIBOR Advance made
on a date other than the date on which the Advance is to be made according to
Section 2.02(a) or Section 2.09 hereof to the extent such Advance is made on
such other date at the request of the Borrower, or (c) any of the circumstances
specified in Section 2.04 hereof on which a Consequential Loss may be incurred,
means any loss, cost or expense incurred by any Lender as a result of the timing
of the payment or Advance or in liquidating, redepositing, redeploying or
reinvesting the principal amount so paid or affected by the timing of the
Advance or the circumstances described in Section 2.04 hereof, which amount
shall be the sum of (i) the interest that, but for the payment or timing of
Advance, such Lender would have earned in respect of that principal amount,
reduced, if such Lender is able to redeposit, redeploy, or reinvest the
principal amount, by the interest earned by such Lender as a result of
redepositing, redeploying or reinvesting the principal amount plus (ii) any
expense or penalty incurred by such Lender by reason of liquidating,
redepositing, redeploying or reinvesting the principal amount. Each
determination by each Lender of any Consequential Loss is, in the absence of
manifest error, presumptive evidence of the validity of such claim.
"Contingent Liability" means, as to any Person, any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt or obligation of any other Person in any manner, whether
directly or indirectly, including without limitation any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt, (b)
to purchase Property or services for the purpose of assuring the owner of such
Debt of its payment, or (c) to maintain the solvency, working capital, equity,
cash flow, fixed charge or other coverage ratio, or any other financial
condition of the primary obligor so as to enable the primary obligor to pay any
Debt or to comply with any agreement relating to any Debt or obligation, but
excluding endorsement of checks, drafts and other instruments in the ordinary
course of business.
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<PAGE>
"Continue," "Continuation" and "Continued" each refer to the continuation
pursuant to Section 2.09 hereof of a LIBOR Advance from one Interest Period to
the next Interest Period.
"Control" or "Controlled By" or "Under Common Control" mean possession,
direct or indirect, of power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract or
otherwise); provided that, in any event (a) any Person which beneficially owns
--------
(i) 10% or more (in number of votes) of the securities having ordinary voting
power for the election of directors of a corporation shall be conclusively
presumed to control such corporation and (ii) 10% or more of the interest in
capital or profits of a partnership shall be conclusively presumed to control
such partnership, and (b) no Person shall be deemed to be an Affiliate of a
corporation solely by reason of his being an officer or director of such
corporation.
"Controlled Group" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
which are under common control with such Person and which, together with such
Person, are treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.
"Conversion Date" means March 31, 2000.
"Conversion or Continuance Notice" has the meaning set forth in Section
2.09(b) hereof.
"Debt" means all obligations, contingent or otherwise, which in accordance
with GAAP are required to be classified on the balance sheet as liabilities, and
in any event including (without duplication) (a) Capital Leases, (b) Contingent
Liabilities that are required to be disclosed and quantified in notes to
consolidated financial statements in accordance with GAAP, and (c) liabilities
secured by any Lien on any Property, regardless of whether such secured
liability is with or without recourse.
"Debt for Borrowed Money" means, as to any Person, at any date, without
duplication, (a) all obligations of such Person for borrowed money, letters of
credit (or applications for letters of credit) or other similar instruments, (b)
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, and, with respect to the Parent, the Borrower
and its Subsidiaries, including any accrued but unpaid Earn-Out Liability, but
excluding any unaccrued Earn-Out Liability, and (d) liabilities under Synthetic
Leases. For purposes of this Agreement, the principal amount of Debt of a Person
deemed to be outstanding under (a) Synthetic Leases to which a Person is a party
shall be the aggregate net present value (calculated at a discount rate of ten
percent of the
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<PAGE>
future Rental Obligations which will become due and payable by such Person over
the remaining term of all Synthetic Leases) to which such Person is a party.
"Debtor Relief Laws" means applicable bankruptcy, reorganization,
moratorium, or similar Laws, or principles of equity affecting the enforcement
of creditors' rights generally.
"Default" means any event specified in Section 9.01 hereof, whether or not
any requirement in connection with such event for the giving of notice, lapse of
time, or happening of any further condition has been satisfied.
"Distribution" means, as to any Person, (a) any declaration or payment of
any distribution or dividend (other than a stock dividend) on, or the making of
any pro rata distribution, loan, advance, or investment to or in any holder of,
any partnership interest or shares of capital stock or other equity interest of
such Person (or the establishment of a sinking fund or otherwise setting aside
of funds for any such purpose), or (b) any purchase, redemption, or other
acquisition or retirement for value of any shares of partnership interest or
capital stock or other equity interest of such Person (or the establishment of a
sinking fund or otherwise setting aside of funds for any such purpose).
"Earn-Out Liability" means, with respect to the Borrower and its
Subsidiaries, any unsecured contingent liability of the Borrower or any
Subsidiary of the Borrower incurred in connection with any Permitted
Acquisition, which such contingent liability (a) constitutes a portion of the
purchase price for the property acquired but is not an amount certain, (b) is
only payable based on the performance of the acquired property and in an amount
based only on the performance of the acquired property or (c) is not subject to
any acceleration right.
"EBITDA" means, for the Parent, the Borrower and its Subsidiaries, for any
period of determination, the sum of (a) net income for such period, plus (b)
amortization and depreciation for such period, plus (c) non-cash charges (minus
extraordinary non-cash income) and other extraordinary items for such period,
plus (d) Interest Expense for such period, including Rental Obligations under
Synthetic Leases (whether or not treated as Interest Expense), plus (e) General
and Administrative Expense for such period which are reimbursable by ABRY
pursuant to the terms of the Capital Contribution Agreement, plus (f) Income Tax
Expense for the Parent, the Borrower and its Subsidiaries for such period, plus
(g) an adjustment to net income for such period to account for the effect of
treating all acquisitions completed in such period as if such acquisitions had
been completed on the first day of such period, plus (h) an adjustment to net
income for such period to record an increase in revenue related to all new
leases executed in
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<PAGE>
the period as if such leases were effective as of the beginning of such period.
"Eligible Assignee" means any Bank Affiliate and any (a) commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $1,000,000,000; (b) savings and loan association or
savings bank organized under the laws of the United States, or any state
thereof, having total assets in excess of $1,000,000,000, and not in
receivership or conservatorship; (c) commercial bank organized under the laws of
any other country which is a member of the Organization for Economic Cooperation
and Development, or a political subdivision of any such country, and having
total assets in excess of $1,000,000,000, provided that such bank is acting
through a branch or agency located in the country in which it is organized or
another country which is described in this clause; and (d) central bank of any
country which is a member of the Organization for Economic Cooperation and
Development.
"Environmental Claim" means any written notice by any Tribunal alleging
liability for damage to the environment, or by any Person alleging liability for
personal injury (including sickness, disease or death), resulting from or based
upon (a) the presence or release (including sudden or non-sudden, accidental or
non-accidental, leaks or spills) of any Hazardous Material at, in or from
property, whether or not owned by the Parent, the Borrower or any of its
Subsidiaries, or (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. (S)9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. (S)1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C (S)6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. (S)1251 et seq.), the Clean Air Act (42 U.S.C.
(S)7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S)2601 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. (S)651 et seq.) ("OSHA"),
as such laws have been or hereafter may be amended or supplemented, and any and
all analogous future federal, or present or future state or local, Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"ERISA Affiliate" means any Person that for purposes of Title IV of ERISA
is a member of the controlled group of the Borrower or any Obligor, or is under
common control with Borrower or any Obligor, within the meaning of Section
414(c) of the Code, and the regulations and rulings issued thereunder.
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"ERISA Event" means (a) a reportable event, within the meaning of Section
4043 of ERISA, unless the 30-day notice requirement with respect thereto has
been waived by the PBGC, (b) the issuance by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA), (c) the withdrawal by the Parent, the Borrower, any
Subsidiary of the Borrower, or an ERISA Affiliate from a Multiple Employer Plan
during a Plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA, (d) the failure by the Borrower, any Subsidiary of
the Borrower, or any ERISA Affiliate to make a payment to a Plan required under
Section 302 of ERISA, (e) the adoption of an amendment to a Plan requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA, or (f) the
institution by the PBGC of proceedings to terminate a Plan, pursuant to Section
4042 of ERISA, or the occurrence of any event or condition that constitutes
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, a Plan.
"Estoppel and Attornment Language" means estoppel and attornment language
substantially in the form of Exhibit O hereto, or such other language as may be
approved in writing by Administrative Lender.
"Event of Default" means any of the events specified in Section 9.01 of
this Agreement, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition.
"Excess Cash Flow" means, for any fiscal year of the Borrower, EBITDA for
such year minus the sum of (a)Income Tax Expense for such year, plus (b) Fixed
Charges for such year (excluding interest paid or payable, at the option of the
Borrower, in-kind), plus (c) (without duplication) all voluntary principal
prepayments on the Obligations pursuant to Section 2.04 hereof during such
period, plus (d) all General and Administrative Expense paid during such period.
"FAA" means the Federal Aviation Administration, or any governmental agency
succeeding to the functions thereof.
"FCC" means the Federal Communications Commission, or any governmental
agency succeeding to the functions thereof.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of Dallas, or, if such rate is not so
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<PAGE>
published for any day which is a Business Day, the average of the quotations for
such date on such transactions received by Administrative Lender from three
federal funds brokers of recognized standing selected by it.
"Fee Letter" means that certain Fee Letter, dated the Closing Date, between
the Borrower and the Administrative Lender, as such letter may be amended,
modified, substituted, replaced, or increased from time to time.
"Fixed Charges" means, for any specified period for the Parent, the
Borrower and its Subsidiaries on a consolidated basis, the sum of (a) required
or scheduled principal and interest payments with respect to Debt for Borrowed
Money for such period, excluding until the Conversion Date (x) required or
scheduled principal payments with respect to seller notes executed by the
Borrower in connection with Permitted Acquisitions to the extent permitted by
Section 8.02 hereof and (y) accrued or paid Earn-Out Liabilities, plus (b)
required or scheduled payments with respect to Capital Leases for such period,
plus (c) cash distributions made by the Borrower and the Parent in accordance
with the terms of Section 8.08(b)(iii) hereof during such period (without
duplication), plus (d) Capital Expenditures (other than those Capital
Expenditures for Permitted Acquisitions) for such period.
"First Restated Credit Agreement" has the meaning ascribed thereto in the
preamble hereof.
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board and other changes in accounting methods permitted by generally accepted
accounting principles.
"General and Administrative Expense" means, for any respective period,
Borrower's general and administrative expenses, as determined on a consolidated
basis in accordance with GAAP.
"Ground Lease" means those certain leases for real property or rooftops
entered into or acquired by the Borrower or any Subsidiary of the Borrower, for
the lease of real property (including rooftops) which constitute a Tower or upon
which is located a Tower (or which will constitute a Tower or upon which will be
located a Tower) for the purpose of maintaining Tenant Leases, including,
without limitation, those Ground Leases described on Schedule 5.01(x) hereto.
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"Guarantors" means the Parent and each Subsidiary of the Borrower existing
on the Closing Date or formed or acquired from time to time thereafter.
"Guaranty" means a guaranty executed by any Person of the obligations of
another Person, or any agreement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment of,
or otherwise becomes liable upon, the obligation of any other Person, or agrees
to maintain the net worth or working capital or other financial condition of any
other Person, or otherwise assures any creditor or such other Person against
loss, including, without limitation, any comfort letter, or take-or-pay contract
and shall include without limitation, the contingent liability of such Person in
connection with any application for a letter of credit.
"Hazardous Materials" means all materials subject to any Environmental Law,
including without limitation materials listed in 49 C.F.R. (S) 172.101,
Hazardous Substances, explosive or radioactive materials, hazardous or toxic
wastes or substances, petroleum or petroleum distillates, asbestos, or material
containing asbestos.
"Hazardous Substances" means hazardous waste as defined in the Clean Water
Act, 33 U.S.C. (S) 1251 et seq., the Comprehensive Environmental Response
Compensation and Liability Act as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. (S) 9601 et seq., the Resource Conservation
Recovery Act, 42 U.S.C. (S) 6901 et seq., and the Toxic Substances Control Act,
15 U.S.C. (S) 2601 et seq.
"Highest Lawful Rate" means at the particular time in question the maximum
rate of interest which, under Applicable Law, Administrative Agent is then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, such Lender is permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower. For purposes of determining the Highest Lawful Rate under
Applicable Law, the applicable rate ceiling shall be (a) the indicated rate
ceiling described in and computed in accordance with the provisions of Art. lH;
or (b) either the annualized ceiling or quarterly ceiling computed pursuant to
.008 of Art. 1D; provided, however, that at any time the indicated rate ceiling,
-------- -------
the annualized ceiling or the quarterly ceiling, as applicable, shall be less
than 18% per annum or more than 24% per annum, the provisions of Sections
.009(a) and .009(b) of said Art. lD shall control for purposes of such
determination, as applicable.
"Income Tax Expense" means the aggregate Taxes accrued by the Parent, the
Borrower and its Subsidiaries for the relevant period
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of determination, plus any cash Distributions made by the Borrower for the
purposes of satisfying any Tax liabilities in accordance with Section 8.08
hereof.
"Insufficiency" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities within the meaning of Section 4001(a)(18) of ERISA.
"Interest Expense" means, for the Parent, the Borrower and its Subsidiaries
on a consolidated basis, all interest expense and commitment fees incurred with
respect to Total Debt whether accrued or paid, all fees or expenses with respect
to letters of credit, bankers' acceptances or similar facilities, excluding
interest actually paid-in-kind.
"Interest Period" means, with respect to any LIBOR Advance, the period
beginning on the date the Advance is made or continued as a LIBOR Advance and
ending one, two, three or six months thereafter (as the Borrower shall select),
provided, however, that:
- -------- -------
(a) the Borrower may not select any Interest Period that ends after
any principal repayment date unless, after giving effect to such selection,
the aggregate principal amount of LIBOR Advances having Interest Periods
that end on or prior to such principal repayment date, shall be at least
equal to the principal amount of Advances due and payable on and prior to
such date;
(b) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided,
--------
however, that if such extension would cause the last day of such Interest
-------
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day; and
(c) whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding
day in the calendar month that succeeds such initial calendar month by the
number of months equal to the number of months in such Interest Period,
such Interest Period shall end on the last Business Day of such succeeding
calendar month.
"Interest Rate Protection Agreement" means an interest rate swap, cap,
collar or similar interest rate protection agreement between the Borrower and
any Lender.
"Investment" means any acquisition of all or substantially all of the
assets of any Person, or any direct or indirect purchase or other acquisition
of, or a beneficial interest in, capital stock or
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other securities of any other Person, or any direct or indirect loan, advance
(other than (i) advances to employees for moving and travel expenses, (ii)
drawing accounts, (iii) deposits and advances made to contractors, vendors and
others in the ordinary course of business, (iv) earnest money deposits, good
faith deposits and similar deposits made in connection with Permitted
Acquisitions, and (v) similar expenditures in the ordinary course of business),
or capital contribution to or investment in any other Person, including without
limitation the incurrence or sufferance of Debt or accounts receivable of any
other Person that are not current assets or do not arise from sales to that
other Person in the ordinary course of business.
"Law" means any constitution, statute, law, ordinance, regulation, rule,
order, writ, injunction, or decree of any Tribunal.
"Lenders" means the lenders listed on the signature pages of this
Agreement, and each Eligible Assignee which hereafter becomes a party to this
Agreement pursuant to Section 11.04 hereof or pursuant to an amendment to this
Agreement.
"Lending Office" means, with respect to each Lender, its branch or
affiliate, (a) initially, the office of each Lender, branch or affiliate
identified as such on Schedule 11.02 hereto, and (b) subsequently, such other
office of each Lender, branch or affiliate as each Lender may designate to the
Borrower and Administrative Lender as the office from which the Advances of each
Lender will be made and maintained and for the account of which all payments of
principal and interest on the Advances and the Commitment Fee will thereafter be
made. Lenders may have more than one Lending Office for the purpose of making
Base Advances and LIBOR Advances.
"Letter of Credit Commitment" means an amount equal to (a) until February
15, 1998, the lesser of (i) $30,000,000 and (ii) the Available Commitment, and
(b) from and after February 15, 1998, the lesser of (i) $20,000,000 and (ii) the
Available Commitment.
"Letters of Credit" means the irrevocable standby letters of credit issued
by Administrative Lender under and pursuant to Article III hereof, as each may
be amended, modified, substituted, increased, replaced, renewed or extended from
time to time.
"Leverage Ratio" means the ratio, at the end of the accounting period with
respect to which such determination is made, of (a) the remainder of Total Debt
of the Parent, the Borrower and its Subsidiaries (exclusive of Debt owed to each
other), minus the sum of (x) Debt for Borrowed Money owed pursuant to the Term
Loan Agreement and (y) Subordinated Debt outstanding which is (i) permitted to
be incurred under Sections 8.02(h) and 8.02(j) hereof
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<PAGE>
and (ii) (without duplication) owed to ABRY, to (b) Annualized EBITDA.
"LIBOR Advance" means an Advance bearing interest at the LIBOR Rate.
"LIBOR Lending Office" means, with respect to each Lender, the office
designated as its "LIBOR Lending Office" below its name on Schedule 11.02
hereto, or such other office of Lender or any of its affiliates hereafter
designated by notice to the Borrower and Administrative Lender.
"LIBOR Rate" means a simple per annum interest rate equal to the lesser of
(a) the Highest Lawful Rate, and (b) sum of the Applicable Margin plus the LIBOR
Rate Basis. The LIBOR Rate shall, with respect to LIBOR Advances subject to
reserve or deposit requirements under any Law, be subject to premiums assessed
therefor by each Lender, which are payable directly to each Lender in an amount
sufficient to compensate such Lender for any increased cost or reduced rate of
return attributable to such reserve deposit requirements. Any calculation by a
Lender of such increased cost or reduced rate of return which is in reasonable
detail and submitted to Borrower shall, in the absence of manifest error, be
presumptive evidence of the validity of such claim. Once determined for any
LIBOR Advance, the LIBOR Rate shall remain unchanged during the applicable
Interest Period.
"LIBOR Rate Basis" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 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 "LIBOR Rate Basis" shall mean, for any LIBOR
Advance for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO 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; 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.
"License" means, as to the Parent, the Borrower, or any Subsidiary of the
Borrower, any license, permit, consent, certificate of need, authorization,
certification, accreditation, franchise, approval, or grant of rights by, or any
filing or registration with, any Tribunal or third Person (including without
limitation the FCC and the FAA) necessary for such Person to own, build,
maintain, or operate its business or Property.
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"Lien" means any mortgage, pledge, security interest, encumbrance, lien, or
charge of any kind, including without limitation any agreement to give or not to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under the
Laws of any jurisdiction (except for the filing of a financing statement or
notice in connection with an (a) operating lease or (b) the true consignment of
goods to the Borrower or any Subsidiary of the Borrower as consignee).
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted by or before any Tribunal or arbitrator, including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Law, or under or pursuant to any
contract, agreement, or other instrument.
"Loan Papers" means this Agreement, the Notes, the Security Agreements,
Borrower Pledge Agreement, the Subsidiary Guaranties, the Parent Guaranty, the
Capital Contribution Agreement, the Parent Pledge Agreement, the Fee Letter,
financing statements, mortgages, deeds of trust, any Interest Rate Protection
Agreement and related documents entered into by the Borrower with any Lender or
Bank Affiliate, all Letters of Credit, all Applications and all other agreements
between the Borrower, the Parent or any Subsidiary of the Borrower and the
Administrative Lender related to any Letter of Credit, assignment of leases,
other fee letters, Assignment and Acceptances, post-closing letters, and all
other documents, instruments, agreements, or certificates executed or delivered
from time to time by any Person in connection with this Agreement or as security
for the Obligations hereunder, granting Collateral or otherwise, as each such
agreement may be amended, modified, substituted, replaced or extended from time
to time.
"Majority Lenders" means any combination of Lenders having at least 66.67%
of the aggregate amount of outstanding Advances hereunder, provided, however,
-------- -------
that if no Advances are outstanding, such term means any combination of Lenders
having Specified Percentages equal to at least 66.67%.
"Material Adverse Change" means any circumstance or event that is or would
reasonably be expected to (a) be material and adverse to the financial
condition, business operations, prospects, or Properties of the Parent, the
Borrower and its Subsidiaries on a consolidated basis, (b) materially and
adversely affect the validity or enforceability of (i) any Note, (ii) this
Agreement or (iii) any material Loan Paper or Loan Papers which in the aggregate
are material, or (c) cause a Default or Event of Default.
17
<PAGE>
"Maturity Date" means December 31, 2005, or such earlier date on which the
total amount of outstanding Obligations are due and payable (including, without
limitation, whether by acceleration, scheduled reduction of the Available
Commitment to zero, or mandatory or voluntary commitment reduction of the
Available Commitment to zero).
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, a Lender is permitted to charge on the Obligations.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower, any Subsidiary of the Borrower, or
any ERISA Affiliate is making or accruing an obligation to make contributions,
or has within any of the preceding five plan years made or accrued an obligation
to make contributions, such plan being maintained pursuant to one or more
collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower, any Subsidiary of the Borrower, or any ERISA Affiliate and at least
one Person other than the Borrower, any Subsidiary of the Borrower, and any
ERISA Affiliate, or (b) was so maintained and in respect of which the Borrower,
any Subsidiary of the Borrower, or any ERISA Affiliate could have liability
under Section 4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.
"Net Proceeds" means the gross cash proceeds received by the Parent, the
Borrower or any Subsidiary of the Borrower in connection with or as a result of
(a) any asset sale not in the ordinary course of business, minus (so long as
each of the following are estimated in good faith by the management of the
Borrower and certified to the Lenders in reasonable detail by an Authorized
Officer) (i) distributions to be made, if any, by the Borrower to the Parent and
by the Parent to the Shareholders, each as permitted by Section 8.08 hereof,
plus to the extent the Borrower or such Subsidiary has any actual Tax liability,
actual Taxes payable with respect to such asset sale in an amount equal to the
Tax liability of the Parent, the Borrower or any Subsidiary of the Borrower in
respect of such sale (taking into account the distribution to the Parent and by
the Parent to the Shareholders, and all Tax benefits of each of the parties),
(ii) reasonable and customary transaction costs payable by the Parent, the
Borrower or any Subsidiary of the Borrower related to such sale and (iii) Debt
secured by the assets sold that is immediately repaid as a consequence of such
sale, and (b) any additional equity or permitted Debt for Borrowed Money, except
such Debt for Borrowed Money that is specifically permitted to be incurred under
the terms of Section 8.02 hereof, minus (so long as it is estimated in good
faith by the management of the Borrower or such Subsidiary and
18
<PAGE>
certified to the Lenders in reasonable detail by an Authorized Officer),
reasonable and customary transaction costs (including reasonable and customary
broker's fees), payable by the Parent, the Borrower or any Subsidiary of the
Borrower related to such transaction.
"Non-Conforming Ground Leases" means those Ground Leases with respect to
which any item required by Schedule 2.16 hereof or any provision set forth in
the Estoppel and Attornment Language in substantially similar form to the
Estoppel and Attornment Language is not delivered to the Administrative Lender
in form and substance satisfactory to the Administrative Lender within (a) 90
days after the Closing Date, for all Ground Leases listed on Schedule 5.01(x)
hereto, and (b) within 90 days after the date of any acquisition or creation of
any Ground Lease for all Ground Leases not listed on Schedule 5.01(x).
"Note" means each Note of the Borrower evidencing Advances hereunder,
substantially in the form of Exhibit A hereto, together with any extension,
renewal or amendment thereof, or substitution therefor.
"Obligations" means all present and future obligations, indebtedness and
liabilities, and all renewals and extensions of all or any part thereof, of the
Borrower and each Obligor to Lenders and Administrative Lender arising from, by
virtue of, or pursuant to this Agreement, any of the other Loan Papers and any
and all renewals and extensions thereof or any part thereof, or future
amendments thereto, all interest accruing on all or any part thereof and
reasonable attorneys' fees incurred by the Administrative Lender for the
preparation of this Agreement and consummation of this credit facility,
execution of waivers, amendments and consents, and in connection with the
enforcement or the collection of all or any part thereof, and reasonable
attorneys' fees incurred by the Lenders in connection with the enforcement or
the collection of all or any part of the Obligations during the continuance of
an Event of Default, in each case whether such obligations, indebtedness and
liabilities are direct, indirect, fixed, contingent, joint, several or joint and
several. Without limiting the generality of the foregoing, "Obligations"
includes all amounts which would be owed by the Borrower, each other Obligor and
any other Person (other than Administrative Lender or Lenders) to Administrative
Lender or Lenders under any Loan Paper, but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower, any other Obligor
or any other Person (including all such amounts which would become due or would
be secured but for the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding of the Borrower, any other
Obligor or any other Person under any Debtor Relief Law).
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<PAGE>
"Obligor" means (a) the Borrower, (b) the Parent, (c) each Subsidiary of
the Borrower, (d) each other Person liable for performance of any of the
Obligations and (e) each other Person the Property of which secures the
performance of any of the Obligations. Notwithstanding the foregoing, ABRY
shall not be considered an Obligor for purposes of Sections 9.01(g), (h), (k)
and (l) hereof.
"Operating Cash Flow" means, for the Borrower and its Subsidiaries on a
consolidated basis for the most recently completed calendar month, the sum of
(a) pre-tax income or deficit, as the case may be (excluding extraordinary items
and income from the sale of assets) for such month, plus (b) interest expense on
Debt for Borrowed Money of the Borrower and its Subsidiaries on a consolidated
basis for such month, plus (c) depreciation and amortization expense for such
month, plus (d) general and administrative expenses for such month.
"Original Credit Agreement" has the meaning ascribed thereto in the
preamble hereof.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"Parasite Transaction" means the acquisition by the Borrower of certain
assets described in the Purchase and Sale Agreement and the Exchange Agreement
between Southern Communications Services, Inc. and the Borrower, dated January
9, 1998.
"Parent" means Pinnacle Holdings Inc., a Delaware corporation.
"Parent Guaranty" means any Guaranty executed by the Parent guarantying
payment and performance of the Obligations, substantially in the form of Exhibit
L attached hereto, as such agreement may be amended, modified, renewed or
extended from time to time.
"Parent Pledge Agreement" means the Pledge Agreement executed by the
Parent, granting a Lien on 100% of the Capital Stock of the Borrower owned by
the Parent which such Capital Stock will constitute Pledged Stock securing the
Obligations, substantially in the form of Exhibit M hereto, as such agreement
may be amended, modified, renewed or extended from time to time.
"Permitted Acquisition" means (i) the development, construction or
acquisition of towers or rooftop space, or (ii) acquisitions of 100% of the
Capital Stock of any Person owning or leasing towers or rooftop space, or (iii)
acquisition of leasehold rights on Towers for the purpose of subleasing, in each
case by the Borrower or any Subsidiary of the Borrower, including without
limitation, the Parasite Transaction, which, after giving effect to
20
<PAGE>
the proposed acquisition and any equity investments and borrowings related
thereto, would not cause a Default or Event of Default under Section 8.01(a)
hereof or any other term or provision of this Agreement and the Loan Papers;
provided that, the calculation of the Leverage Ratio shall exclude revenues or
charges attributable to Properties of the Borrower and its Subsidiaries sold
during the calculation period as if such sale occurred on the first day of such
period and shall include revenues and charges attributable to Properties of the
Borrower and its Subsidiaries purchased during such period as if such purchase
occurred on the first day of such period.
"Permitted Liens" means, as applied to any Person:
(a) any Lien in favor of the Lenders to secure the Obligations hereunder;
(b) (i) Liens on real estate for real estate Taxes not yet delinquent, (ii)
Liens created by lease agreements, statute or common law to secure the payments
of rental amounts and other sums not yet due thereunder, (iii) Liens on
leasehold interests created by the lessor in favor of any mortgagee of the
leased premises, and (iv) Liens for Taxes, assessments, governmental charges,
levies or claims that are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on such Person's books, but only so long as no foreclosure, restraint,
sale or similar proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers and materialmen
and other similar Liens incurred in the ordinary course of business for sums not
yet due or being contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(e) Easements, right-of-way, restrictions and other similar encumbrances on
the use of real property which do not interfere with the ordinary conduct of the
business of such Person;
(f) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been secured,
provided that (i) such Person shall have established adequate reserves for such
judgments or awards, (ii) such judgments or awards shall be fully insured and
the insurer shall not have denied coverage, or (iii) such judgments or awards
shall have been bonded to the satisfaction of the Majority Lenders;
21
<PAGE>
(g) Any Liens existing on the Closing Date which are described on Schedule
8.03 hereto, and Liens resulting from the refinancing of the related Debt for
Borrowed Money, provided that the Debt for Borrowed Money secured thereby shall
not be increased and the Liens shall not cover additional assets of the
Borrower, the Parent or any such Subsidiary; and
(h) Any Liens which secure the Debt for Borrowed Money permitted under
Section 8.02(e) hereof.
"Person" means an individual, partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization, and government, or any department,
agency, or political subdivision thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledged Stock" means all of the Capital Stock of the Subsidiaries of the
Borrower and all of the Capital Stock of the Borrower.
"Restated Credit Agreement" has the meaning ascribed thereto in the
preamble hereof.
"Primary Non-Conforming Tenant Leases" means those Tenant Leases which are
oral and not subject to any written agreement, except those Tenant Leases that
are Secondary Non-Conforming Tenant Leases.
"Pro Forma Debt Service" means, on any date of determination, for the
Parent, the Borrower and its Subsidiaries, the sum of (a) cash Interest Expense
minus (without duplication) interest that is payable in-kind at the option of
the Borrower, the Parent or any Subsidiary of the Borrower, plus (b) required or
scheduled principal payments with respect to Debt for Borrowed Money, each for
the twelve calendar months immediately succeeding any date of determination,
provided that, with respect to any Debt for Borrowed Money subject to a floating
interest rate, the rate of interest on such Debt for Borrowed Money for the four
fiscal quarters immediately succeeding any such date of determination shall be
deemed to be the weighted average interest rate applicable to the Obligations on
the date of calculation of Pro Forma Debt Service.
"Prohibited Transaction" has the meaning specified in Section 4975 of the
Code or Section 406 of Title I of ERISA.
"Property" means all types of real, personal, tangible, intangible, or
mixed property, whether owned or hereafter acquired in fee simple or leased by
the Parent, the Borrower and its Subsidiaries, including for the Borrower and
its Subsidiaries without limitation, the Tenant Leases.
22
<PAGE>
"Pro Rata" means, as to any Lender, in accordance with its percentage of
the aggregate amount of outstanding Advances; provided, however, that if no
-------- -------
Advances are outstanding, such term means in accordance with such Lender's
Specified Percentage.
"Qualified REIT Subsidiaries" means the Borrower and any Subsidiary of the
Borrower, so long as such entity meets the qualifications set forth in Section
856(i)(2) of the Code.
"Quarterly Date" means the last day of each March, June, September and
December during the term of this Agreement.
"Ratable" means, as to any Lender, in accordance with its Specified
Percentage.
"Refinancing Advance" means any Advance which is used to pay the principal
amount (or any portion thereof) of an Advance at the end of its Interest Period
and which, after giving effect to such application, does not result in an
increase in the aggregate amount of outstanding Advances.
"REIT Status" means, with respect to any Person, such Person's status as a
real estate investment trust, as defined in Section 856(a) of the Code, that
satisfies the conditions and limitations set forth in Sections 856(b) and 856(c)
of the Code.
"Release Date" means the date on which the Notes have been paid, all other
Obligations due and owing have been paid and performed in full, and the
Available Commitment has been terminated.
"Rental Obligations" means amounts payable by a lessee under a lease
including, without limitation, amounts payable under any renewal or purchase
option in favor of the lessee which, if not paid, will result in a material
forfeiture of rights, interest or property available to such lessee (i.e. a
forfeiture of rights, interest or property with a fair market value materially
greater than the cost of exercising such renewal or purchase option.)
"Restricted Payments" means (a) any direct or indirect Distribution,
dividend or other payment on account of any equity interest in, or shares of
capital stock or other securities of, the Borrower or the Parent (or the
establishment of any sinking fund or otherwise the setting aside of any funds
with respect thereto); (b) any management, consulting or other similar fees, or
any interest thereon, payable by the Parent, the Borrower or any of its
Subsidiaries to any Affiliate of the Parent, the Borrower, or to any other
Person other than an unrelated third party (or the establishment of any sinking
fund or otherwise the setting aside of any funds with respect thereto); and (c)
any cash payment of interest, principal, fees or penalties, on any Subordinated
Debt,
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<PAGE>
or the establishment of any sinking fund or otherwise the setting aside of any
funds with respect thereto.
"Rights" means rights, remedies, powers, and privileges.
"Secondary Non-Conforming Tenant Leases" means, on any date of
determination, each such Tenant Lease (a) which is oral and not subject to any
written agreement, or (b) with respect to which any Lien of the Administrative
Lender or any foreclosure and/or operation of the Tower on which such Tenant
Lease is located by the Lenders is prohibited, unenforceable or null and void,
whether by contractual provision, operation of law or otherwise, or (c) which
has any provision preventing, hindering or prohibiting the Administrative Lender
from directly receiving the rents, receivables or other Tenant Lease Revenues
from the lessee (or which is prevented, hindered or prohibited by the operation
of Law), provided that no Tenant Lease shall be a Secondary Non-Conforming
Tenant Lease unless (A) the Borrower is at all times diligently and in good
faith pursuing either a written agreement or eliminating the problems described
in (b) or (c) above (a "Curing Action") with respect to such Tenant Lease, (B)
negotiations regarding such Curing Action have not been terminated and are
proceeding toward consummation, (C) the lessee under each such Tenant Lease is
current under its monetary obligations to the Borrower in accordance with past
and current practice generally, (D) the FCC database regarding such Tenant Lease
shows (I) that the lessee under such Tenant Lease has been licensed to use the
applicable Tower and (II) does not indicate that the lessee has filed for
approval to remove or transfer from such Tower, (E) the Borrower is not aware
and has not received notice that any such lessee is moving from the Tower within
the next six months, and (F) such Curing Action with respect to such Tenant
Lease shall have been consummated within (x) six months after the Closing Date,
for each Tenant Lease listed on Schedule 5.01(w) hereto, and (y) within six
months after the date of any acquisition or creation of any Tenant Lease for
each Tenant Lease not listed Schedule 5.01(w) hereto, provided that, if the
Borrower can demonstrate to the satisfaction of the Administrative Lender that
any Curing Action with respect to any Tenant Lease is still probable after the
expiration of the six month period, any such Tenant Lease will be included in
the definition of Secondary Non-Conforming Tenant Lease for an additional six
month period.
"Security Agreements" means (a) the Security Agreement, duly executed by
the Borrower and Parent in substantially the form of Exhibit B hereto,
appropriately completed, and (b) each Security Agreement, duly executed by each
of the Borrower's Subsidiaries, in substantially the form of Exhibit H hereto,
appropriately completed, in each case as amended, modified, substituted,
replaced or extended from time to time.
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"Shareholder" or "Shareholders" means, on any date of determination, the
shareholders of the Parent.
"Single Employer Plan" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, other than a Multiple Employer Plan of the Borrower.
"Solvent" means, with respect to any Person, that on such date (a) the fair
value of the Property of such Person is greater than the total amount of
liabilities, including without limitation Contingent Liabilities of such Person,
(b) the present fair salable value of the assets of such Person on a going
concern basis is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature, and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's Property would constitute an unreasonably small capital.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll, P.C.,
Dallas, Texas, or such other individual or firm acting as special counsel to
Administrative Lender, as designated by Administrative Lender from time to time.
"Specified Percentage" means, as to any Lender, the percentage indicated
beside its name on the signature pages hereof, or as adjusted or specified in
any Assignment and Acceptance.
"Stockholders Agreement" has the meaning ascribed thereto in Section
8.08(b)(vi) hereto.
"Subordinated Debt" means Debt for Borrowed Money of the Borrower, any
Subsidiary of the Borrower or the Parent, including without limitation, Debt for
Borrowed Money of the Parent incurred pursuant to the Term Loan Agreement, that
is subordinated to the Obligations hereunder in accordance with the terms and
provisions of the Subordination Agreement substantially in the form of Exhibit I
attached hereto.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) 50% or more of:
(a) the outstanding capital stock having voting power to elect a
majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency),
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<PAGE>
(b) the interest in the capital or profits of such partnership or
joint venture, or
(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such Person
and one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"Subsidiary Guaranty" means the Guaranty, executed by each Subsidiary of
the Borrower, guarantying payment and performance of the Obligations,
substantially in the form of Exhibit G attached hereto, as such agreement may be
amended, modified, renewed or extended from time to time.
"SuperMajority Lenders" means any combination of Lenders having at least
73% of the aggregate amount of outstanding Advances hereunder, provided,
--------
however, that if no Advances are outstanding, such term means any combination of
- -------
Lenders having Specified Percentages equal to at least 73%.
"Synthetic Lease" means any lease entered into in connection with the lease
or acquisition of fixed assets which is treated under GAAP as an operating lease
but for Tax purposes as a capital lease.
"Taxes" means all taxes, assessments, imposts, fees, or other charges at
any time imposed by any Laws or Tribunal.
"Tenant Lease Revenue" means, with respect to each Tenant Lease for the
most recently completed calendar month, all revenues generated by such Tenant
Lease for such month.
"Tenant Leases" means each of the leases of space on any Tower of the
Borrower or any Subsidiary of the Borrower now existing or hereafter created or
acquired, including, without limitation, those leases listed on Schedule 5.01(w)
hereto.
"Term Loan Agreement" means the Term Loan Agreement, dated as of September
22, 1997 between Parent, Goldman Sachs Credit Partners, L.P., and NationsBridge,
L.L.C., as amended, restated or otherwise modified from time to time, as may be
refinanced on substantially similar terms acceptable in form and substance to
the Administrative Lender and the SuperMajority Lenders (including without
limitation, subordination terms) as, the Term Loan Agreement.
"Total Debt" means all Debt for Borrowed Money of a Person which would be
shown on a balance sheet in accordance with GAAP, including, without limitation,
(a) Capital Lease obligations, (b) obligations to pay the deferred purchase
price of property and services (but excluding trade payables that are less than
90 days
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<PAGE>
old and any thereof that are being contested in good faith), (c) Debt of any
other Person secured by a Lien on the property of the Borrower and the Parent or
any Subsidiary of the Borrower and the Parent, (d) Contingent Liabilities, and
(e) Withdrawal Liability.
"Tower" means each tower owned or managed by the Borrower or any Subsidiary
of the Borrower, and each rooftop or other site owned or managed by the Borrower
or any Subsidiary of the Borrower in the ordinary course of business.
"Tower Cash Flow" means, with respect to each Tower for the most recently
completed calendar month, the remainder of (a) the aggregate amount of all
Tenant Lease Revenues generated by all Tenant Leases relating to such Tower for
such month, plus (b) all newly executed leases as if such leases were effective
as of the beginning of such calendar month minus (c) Tower level cash operating
expenses for such Tower for such month.
"Tower Construction Advances" means those Advances used by the Borrower
solely for the construction or refurbishment of Towers and designated as a Tower
Construction Advance in the monthly certification required by Section 7.07(a)
hereof, in an aggregate amount outstanding on any date of determination not to
exceed the amount permitted by Section 8.01(e) hereof. Notwithstanding anything
herein to the contrary (a) no Advance may be a Tower Construction Advance if
twelve consecutive months have passed after the date such Tower Construction
Advance was made or designated as a Tower Construction Advance, and (b) any
particular Advance designated as a Tower Construction Advance may only be
designated once as a Tower Construction Advance.
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental body.
"Type" refers to the distinction between Advances bearing interest at the
Base Rate and LIBOR Rate.
"UCC" means the Uniform Commercial Code as adopted in the State of Texas on
the Closing Date.
"Unavailable Commitment" means, prior to the Conversion Date, $50,000,000
(as such amount may be reduced from time to time as a result of the reallocation
of any portion of the Unavailable Commitment to the Available Commitment in
accordance with the terms of Section 2.18 hereof), and after the Conversion
Date, $0.00.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
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1.02. Accounting and Other Terms. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP on a consolidated basis for the Parent, the Borrower and
its Subsidiaries, unless otherwise expressly stated herein. References herein
to one gender shall be deemed to include all other genders. Except where the
context otherwise requires, (a) definitions imparting the singular shall include
the plural and vice versa and (b) all references to time are deemed to refer to
Dallas time.
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. The Advances. Each Lender severally agrees, on the terms and
subject to the conditions hereinafter set forth, to make Advances to the
Borrower on a Business Day during the period from the Closing Date to the
Maturity Date, in an aggregate principal amount not to exceed at any time
outstanding such Lender's Specified Percentage of the Available Commitment, and
after the Conversion Date, there shall be no increase in principal amount of
Advances. Subject to the terms and conditions of this Agreement, the Borrower
may borrow, repay and reborrow the Advances; provided, however, that (a) all
-------- -------
reborrowings of Advances after the Conversion Date shall be Refinancing
Advances, and (b) at no time shall the sum of all outstanding Advances plus the
face amount of all outstanding Letters of Credit plus reimbursement obligations
under Article III ever exceed the Available Commitment.
2.02. Making Advances.
(a) Each Borrowing of Advances shall be made upon the written notice of the
Borrower, received by Administrative Lender not later than (i) 10:00 a.m. three
Business Days prior to the date of the proposed Borrowing, in the case of LIBOR
Advances and (ii) 10:00 a.m. on the date of such Borrowing, in the case of Base
Advances. Each such notice of a Borrowing (a "Borrowing Notice") shall be by
telecopy or telephone, promptly confirmed by letter, in substantially the form
of Exhibit D hereto specifying therein:
(i) the date of such proposed Borrowing, which shall be a
Business Day;
(ii) the Type of Advances of which the Borrowing is to be
comprised;
(iii) the amount of such proposed Borrowing which, (A) in the
case of Advances, shall not exceed the unused portion of the Available
Commitment, (B) shall, in the case of a Borrowing of Base Advances, be in
an amount of not less than $100,000 or an integral multiple of $50,000 in
excess thereof (or any lesser amount if such amount is the remaining
undrawn portion under the Available Commitment) and (C) shall, in the
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case of a Borrowing of LIBOR Advances, be in an amount of not less than
$500,000 or an integral multiple of $100,000 in excess thereof; and
(iv) if the Borrowing is to be comprised of LIBOR Advances, the
duration of the initial Interest Period applicable to such Advances.
If the Borrowing Notice fails to specify the duration of the initial
Interest Period for any Borrowing comprised of LIBOR Advances, such Interest
Period shall be three months. Administrative Lender shall promptly notify
Lenders of each such notice. Each Lender shall, before 1:00 p.m. on the date of
each Advance hereunder (other than a Refinancing Advance), make available to
Administrative Lender, at its office at NationsBank Plaza, 901 Main Street,
Dallas, Texas 75202, such Lender's Specified Percentage of the aggregate
Advances to be made on that day in immediately available funds.
(b) Unless any applicable condition specified in Article IV has not been
satisfied, Administrative Lender will make the funds promptly available to the
Borrower (other than with respect to a Refinancing Advance) by wiring such
amounts pursuant to any wiring instructions specified by the Borrower to the
Administrative Lender in writing.
(c) After giving effect to any Borrowing, (i) there shall not be more than
five different Interest Periods in effect and (ii) the aggregate principal
amount of outstanding Advances, Letters of Credit, and reimbursement obligations
under Article III shall not exceed the Available Commitment.
(d) No Interest Period applicable to any Advance shall extend beyond the
Maturity Date.
(e) Unless a Lender shall have notified Administrative Lender prior to the
date of any Advance that it will not make available its Specified Percentage of
any Advance, Administrative Lender may assume that such Lender has made the
appropriate amount available in accordance with Section 2.02(a) hereof, and
Administrative Lender may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If and to the extent any Lender shall not
have made such amount available to Administrative Lender, such Lender and the
Borrower severally agree to repay to Administrative Lender immediately on demand
such corresponding amount together with interest thereon, from the date such
amount is made available to the Borrower until the date such amount is repaid to
Administrative Lender, at (i) in the case of the Borrower, the Base Rate, and
(ii) in the case of such Lender, the Federal Funds Rate.
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(f) The failure by any Lender to make available its Specified Percentage of
any Advance hereunder shall not relieve any other Lender of its obligation, if
any, to make available its Specified Percentage of any Advance. In no event,
however, shall any Lender be responsible for the failure of any other Lender to
make available any portion of any Advance.
(g) The Borrower shall indemnify each Lender against any Consequential Loss
incurred by each Lender as a result of (i) any failure to fulfill, on or before
the date specified for the Advance, the conditions to the Advance set forth
herein or (ii) the Borrower's requesting that an Advance not be made on the date
specified in the Borrowing Notice.
2.03. Evidence of Debt for Borrowed Money.
(a) The Advances made by each Lender shall be evidenced by a Note in the
amount of such Lender's Specified Percentage of the Aggregate Commitment in
effect on the Closing Date (as the same may be modified pursuant to Section
11.04 hereof).
(b) Administrative Lender's and each Lender's records shall be presumptive
evidence as to amounts owed Administrative Lender and such Lender under the
Notes and this Agreement.
2.04. Optional Prepayments.
(a) The Borrower may, upon at least two Business Days prior written notice
to Administrative Lender stating the proposed date and aggregate principal
amount of the prepayment, prepay the outstanding principal amount of any
Advances in whole or in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid without premium or penalty other than
any Consequential Loss; provided, however, that in the case of a prepayment of a
-------- -------
Base Advance, the notice of prepayment may be given by telephone by 10:00 a.m.
on the date of prepayment. Each partial prepayment shall, in the case of Base
Advances, be in an aggregate principal amount of not less than $100,000 or a
larger integral multiple of $50,000 in excess thereof and, in the case of LIBOR
Advances, be in an aggregate principal amount of not less than $500,000 or a
larger integral multiple of $100,000 in excess thereof. If any notice of
prepayment is given, the principal amount stated therein, together with accrued
interest on the amount prepaid and the amount, if any, due under Section 2.12
and Section 2.14 hereof, shall be due and payable on the date specified in such
notice unless the Borrower revokes its notice, provided that, if the Borrower
revokes its notice of prepayment prior to such date specified, the Borrower
shall reimburse the Administrative Lender for the account of all Lenders for all
Consequential Losses suffered by each Lender as a result of the Borrower's
failure to prepay. A certificate of each Lender claiming compensation under
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<PAGE>
this Section 2.04(a), setting forth in reasonable detail the calculation of the
additional amount or amounts to be paid to it hereunder shall be presumptive
evidence of the validity of such claim.
(b) No prepayments of Advances made prior to the Conversion Date solely
pursuant to this Section 2.04 shall cause the Available Commitment to be
reduced. Each prepayment of Advances on or after the Conversion Date made
pursuant to this Section 2.04 shall permanently reduce the Available Commitment
by the amount of such prepayment as of the date of such prepayment, and shall be
applied to installments due and owing under Section 2.06(b) hereof in the
inverse order of maturity.
2.05. Mandatory Prepayments.
(a) Excess Cash Flow. Within 130 days after the end of each fiscal year
of Borrower ending on or after the Conversion Date, the Borrower shall pay to
Administrative Lender for the Ratable account of Lenders an amount equal to (i)
50% of Excess Cash Flow for the preceding fiscal year if the Leverage Ratio
calculated at the end of the same period is less than 5.00 to 1.00, or (b) 100%
of Excess Cash Flow for the preceding fiscal year if the Leverage Ratio
calculated at the end of the same period is greater than or equal to 5.00 to
1.00. All prepayments made pursuant to this Section 2.05(a) shall be applied to
reduce outstanding Advances (which amounts may not be reborrowed), applied to
installments due under Section 2.06(b) hereof in the inverse order of maturity.
Notwithstanding anything herein to the contrary, no Advance constituting a Tower
Construction Advance will be included in the Total Debt calculation to determine
the Leverage Ratio in order to determine compliance with this Section 2.05(a),
but only so long as (A) such Advance remains a Tower Construction Advance, and
(B) there is not included in the calculation of EBITDA for the purposes of this
Section 2.05(a) only, revenue attributable to any new Tower being constructed
with the proceeds of any such Tower Construction Advance for so long as any such
Tower Construction Advance remains designated as a Tower Construction Advance,
it being understood by the parties hereto that, notwithstanding the use of Tower
Construction Advances to refurbish or replace any existing Tower, revenue
attributable to such refurbished or replacement Tower may not be included in the
calculation of EBITDA in order to determine Leverage Ratio in order to determine
compliance with this Section 2.05(a).
(b) Additional Equity and Allowed Debt. To the extent that the Borrower
or any of its Subsidiaries issues any public or private indebtedness (except
that permitted to be incurred under Section 8.02 hereof) or equity securities
(except debt and equity described in Section 8.02(c) hereof or pursuant to the
Capital Contribution Agreement) (this provision shall not in and of itself
permit the Borrower to consummate any of the above described transactions), then
unless the Net Proceeds therefrom are used,
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within 180 days thereafter, for Permitted Acquisitions or for Capital
Expenditures relating to Towers, the Borrower and its Subsidiaries shall
immediately after the expiration of such 180-day period use the Net Proceeds of
any such transaction to repay Advances hereunder. All prepayments made pursuant
to this Section 2.05(b) shall be applied to reduce outstanding Advances, and, if
such payment is made after the Conversion Date, applied to installments due
under Section 2.06(b) hereof in the inverse order of maturity (which such
amounts may not be reborrowed if made after the Conversion Date). For so long
as any obligations under the Term Loan Agreement remain outstanding, upon the
occurrence of a "Change of Control" as that term is defined in the Term Loan
Agreement, the Borrower will repay Advances hereunder.
(c) Asset Sales. To the extent that the Borrower or any of its
Subsidiaries consummates any sale of any asset or any of its Properties other
than in the ordinary course of business, then unless the Net Proceeds therefrom
are used, within 180 days thereafter, for Permitted Acquisitions or for Capital
Expenditures relating to Towers, the Borrower and its Subsidiaries shall
immediately after the expiration of the 180-day period use the Net Proceeds of
any such transaction to repay Advances hereunder. All prepayments made pursuant
to this Section 2.05(c) shall be applied to reduce outstanding Advances and, if
such payment is made after the Conversion Date, applied to installments due
under Section 2.06(b) hereof in the inverse order of maturity (which such
amounts may not be reborrowed if made after the Conversion Date).
(d) Mandatory Prepayments, Generally. Any prepayments made pursuant to
this Section 2.05 shall be first applied to Base Advances and then to LIBOR
Advances, without premium or penalty, except the Borrower must pay together with
any such prepayments, any Consequential Losses.
2.06. Repayment.
(a) Installment Payments. The Borrower shall repay the Advances to
Administrative Lender for the Ratable account of Lenders on each Quarterly Date
in an amount on each such date equal to the percentage set forth below of the
aggregate amount of Advances outstanding on the Conversion Date opposite each
such Quarterly Date, the first of such payments to be due and payable on the
first Quarterly Date after the Conversion Date. The unpaid principal balance of
all Advances is due and payable on the Maturity Date.
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Percentage of Aggregate
Advances
outstanding on the
Date of Payment Conversion Date
--------------- ---------------
June 30, 2000 3.000%
September 30, 2000 3.000%
December 31, 2000 3.000%
March 31, 2001 3.250%
June 30, 2001 3.250%
September 30, 2001 3.250%
December 31, 2001 3.250%
March 31, 2002 3.875%
June 30, 2002 3.875%
September 30, 2002 3.875%
December 31, 2002 3.875%
March 31, 2003 4.625%
June 30, 2003 4.625%
September 30, 2003 4.625%
December 31, 2003 4.625%
March 31, 2004 4.750%
June 30, 2004 4.750%
September 30, 2004 4.750%
December 31, 2004 4.750%
March 31, 2005 6.250%
June 30, 2005 6.250%
September 30, 2005 6.250%
December 31, 2005 6.250%
(b) LIBOR Advances. The principal amount of each LIBOR Advance is due and
payable on the last day of the applicable Interest Period, which principal
payment may be made by means of a Refinancing Advance (subject to the other
provisions of this Agreement).
(c) Available Commitment Reduction. On the date of a reduction of the
Available Commitment pursuant to Section 2.11 hereof, the aggregate amount of
the applicable Advances outstanding on the date of reduction in excess of such
Available Commitment as reduced shall be due and payable, which principal
payment may not be made by means of a Refinancing Advance.
(e) Repayments, Generally. Any repayments made pursuant to this Section
2.06 shall be first applied to Base Advances and then to LIBOR Advances in the
order of maturity, without premium or penalty, except the Borrower must pay
together with any such prepayments, any Consequential Losses.
2.07. Interest. Subject to Section 2.07 and Section 11.08 hereof, the
Borrower shall pay interest on the unpaid principal amount of each Advance from
the date of such Advance until such principal shall be paid in full, at the
following rates per annum:
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(a) Base Advances. Base Advances shall bear interest at a rate per
annum equal to the Base Rate as in effect from time to time. If the amount
of interest payable in respect of any interest computation period is
reduced to the Highest Lawful Rate and the amount of interest payable in
respect of any subsequent interest computation period would be less than
Maximum Amount, then the amount of interest payable in respect of such
subsequent interest computation period shall be automatically increased to
the Maximum Amount; provided that at no time shall the aggregate amount by
--------
which interest paid has been increased pursuant to this sentence exceed the
aggregate amount by which interest has been reduced pursuant to this
sentence.
(b) LIBOR Advances. LIBOR Advances shall bear interest at the rate
per annum equal to the LIBOR Rate applicable to such Advance.
(c) Payment Dates. Accrued and unpaid interest on Base Advances shall
be paid quarterly in arrears on each Quarterly Date and on the Maturity
Date. Accrued and unpaid interest in respect of each LIBOR Advance shall
be paid on the last day of the appropriate Interest Period and on the date
of any prepayment or repayment of such Advance; provided, however, that if
-------- -------
any Interest Period for a LIBOR Advance exceeds three months, interest
shall also be paid on the date which falls three months after the beginning
of such Interest Period.
2.08. Default Interest. During the continuation of any Event of
Default, the Borrower shall pay, on demand, interest (after as well as before
judgment to the extent permitted by Law) on the principal amount of all Advances
outstanding and on all other Obligations due and unpaid hereunder at a per annum
rate equal to the lesser of the (a) the Highest Lawful Rate and (b) (i) to the
extent any such Advance outstanding at such time is bearing interest at the
LIBOR Rate, then the applicable LIBOR Rate plus 3.00% to the end of its Interest
Period, and (ii) for all other outstanding Advances, the Base Rate plus 2%.
LIBOR Advances shall not be available for selection by the Borrower during the
continuance of an Event of Default.
2.09. Continuation and Conversion Elections.
(a) The Borrower may upon irrevocable written notice to Administrative
Lender and subject to the terms of this Agreement:
(i) elect to convert, on any Business Day, all or any portion
of outstanding Base Advances (in an aggregate amount not less than $500,000
or an integral multiple of $100,000 in excess thereof) into LIBOR Advances;
or
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(ii) elect to convert at the end of any Interest Period
therefor, all or any portion of outstanding LIBOR Advances comprised in the
same Borrowing (in an aggregate amount not less than $100,000 or an
integral multiple of $50,000 in excess thereof) into Base Advances; or
(iii) elect to continue, at the end of any Interest Period
therefor, any LIBOR Advances;
provided, however, that if the aggregate amount of outstanding LIBOR
-------- -------
Advances comprised in the same Borrowing shall have been reduced as a result of
any payment, prepayment or conversion of part thereof to an amount less than
$500,000, the LIBOR Advances comprised in such Borrowing shall automatically
convert into Base Advances at the end of each respective Interest Period.
(b) The Borrower shall deliver a notice of conversion or continuation (a
"Conversion or Continuation Notice"), in substantially the form of Exhibit E
hereto, to Administrative Lender not later than 10:00 a.m. (i) three Business
Days prior to the proposed date of conversion or continuation, if the Advances
or any portion thereof are to be converted into or continued as LIBOR Advances;
and (ii) on the Business Day of the proposed conversion, if the Advances or any
portion thereof are to be converted into Base Advances.
Each such Conversion or Continuation Notice shall be by telecopy or
telephone, promptly confirmed by letter, specifying therein:
(i) the proposed date of conversion or continuation;
(ii) the aggregate amount of Advances to be converted or
continued;
(iii) the nature of the proposed conversion or continuation; and
(iv) the duration of the applicable Interest Period.
(c) If, upon the expiration of any Interest Period applicable to LIBOR
Advances, the Borrower shall have failed to select a new Interest Period to be
applicable to such LIBOR Advances or if an Event of Default shall then have
occurred and be continuing, the Borrower shall be deemed to have elected to
convert such LIBOR Advances into Base Advances effective as of the expiration
date of such current Interest Period.
(d) Notwithstanding any other provision contained in this Agreement, after
giving effect to any conversion or continuation of
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any Advances, there shall not be outstanding Advances with more than five
different Interest Periods.
2.10. Fees.
(a) Facility Fee. Subject to Section 11.08 hereof, the Borrower shall pay
to Administrative Lender for the account of each of the Lenders an origination
and facility fee as set forth in the Fee Letter dated the Closing Date between
Administrative Lender and the Borrower.
(b) Commitment Fee. Subject to Section 11.08 hereof, the Borrower shall
pay to Administrative Lender for the Ratable account of Lenders a commitment fee
on the average daily amount of the difference between (A) the Available
Commitment and (B) the sum of all Advances outstanding and the face amount of
all outstanding Letters of Credit .50% per annum, payable in arrears on each
Quarterly Date and on the Conversion Date, commencing with the first Quarterly
Date after the Closing Date, and continuing until the Conversion Date.
2.11. Reduction of Available Commitment.
(a) Mandatory Termination of the Available Commitment. The Available
Commitment terminates on the Conversion Date.
(b) Reduction of the Available Commitment. The Available Commitment shall
be permanently reduced in accordance (i) with the terms of Section 8.01(a)
hereof and the Capital Contribution Agreement and (ii) after the Conversion
Date, with a mandatory principal repayment pursuant to Section 2.05 in the
amount of such payment.
(c) Voluntary Available Commitment Reductions. The Borrower may from time
to time, upon notice to Administrative Lender not later than 1:00 p.m., five
Business Days in advance, terminate in whole or reduce in part the Available
Commitment, as designated by the Borrower; provided, however, that the Borrower
-------- -------
shall pay the accrued interest and the applicable Commitment Fee on the amount
of such reduction and all amounts due, and any partial reduction shall be in an
aggregate amount which is an integral multiple of $1,000,000.
(d) Available Commitment Reductions, Generally. To the extent outstanding
Advances exceed the applicable Available Commitment after any reduction thereof,
the Borrower shall repay, on the date of such reduction, any such excess amount
and all accrued interest thereon, the applicable Commitment Fee on the amount of
such reduction and all amounts due. Once reduced or terminated, the Available
Commitment may not be increased or reinstated, except in accordance with Section
2.18 hereof.
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2.12. Funding Losses. The Borrower may prepay the outstanding
principal balance of any Advance, in full at any time or in part from time to
time in accordance with the terms of Section 2.04 hereof, provided, that as a
--------
condition precedent to the Borrower's right to make, and any Lender's obligation
to accept, any such prepayment, each such prepayment shall be in the amount of
100% of the principal amount to be prepaid, plus accrued unpaid interest thereon
to the date of prepayment, plus any other sums which have become due to
Administrative Lender and Lenders under the Loan Papers on or before the
prepayment date but have not been paid, plus (subject to Section 11.08 hereof)
any Consequential Loss.
The Borrower agrees that each Lender is not obligated to actually reinvest
the amount prepaid in any specific obligation as a condition to receiving any
Consequential Loss, or otherwise.
2.13. Computations and Manner of Payments.
(a) The Borrower shall make each payment hereunder and under the other Loan
Papers not later than 1:00 p.m. on the day when due in same day funds to
Administrative Lender, for the Ratable account of Lenders unless otherwise
specifically provided herein, at Administrative Lender's office at NationsBank
Plaza, 901 Main Street, Dallas, Texas 75202, for further credit to the account
of Pinnacle Towers Inc. No later than the end of each day when each payment
hereunder is made, the Borrower shall notify Ms. Linda Brown (214) 508-3044, or
such other Person as Administrative Lender may from time to time specify.
(b) Unless Administrative Lender shall have received notice from the
Borrower prior to the date on which any payment is due hereunder that the
Borrower will not make payment in full, Administrative Lender may assume that
such payment is so made on such date and may, in reliance upon such assumption,
make distributions to Lenders. If and to the extent the Borrower shall not have
made such payment in full, each Lender shall repay to Administrative Lender
forthwith on demand the applicable amount distributed, together with interest
thereon at the Federal Funds Rate, from the date of distribution until the date
of repayment. The Borrower hereby authorizes each Lender, if and to the extent
payment is not made when due hereunder, to charge the amount so due against any
account of the Borrower with such Lender.
(c) Subject to Section 11.08 hereof, interest on LIBOR Advances under the
Loan Papers shall be calculated on the basis of actual days elapsed but computed
as if each year consisted of 360 days. Subject to Section 11.08 hereof,
interest on Base Advances, the Commitment Fee and other amounts due under the
Loan Papers shall be calculated on the basis of actual days elapsed but computed
as if each year consisted of 365 or 366 days, as applicable. Such computations
shall be made including the first
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<PAGE>
day but excluding the last day occurring in the period for which such interest,
payment or Commitment Fee is payable. Each determination by Administrative
Lender or a Lender of an interest rate, fee or commission hereunder shall be
presumptive evidence of the validity of such claim. All payments under the Loan
Papers shall be made in United States dollars, and without setoff, counterclaim,
or other defense.
(d) Whenever any payment to be made hereunder or under any other Loan
Papers shall be stated to 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 the computation of interest or fees, if applicable;
provided, however, if such extension would cause payment of interest on or
- -------- -------
principal of LIBOR Advances to be made in the next following calendar month,
such payment shall be made on the next preceding Business Day.
(e) Reference to any particular index or reference rate for determining any
applicable interest rate under this Agreement is for purposes of calculating the
interest due and is not intended as and shall not be construed as requiring any
Lender to actually obtain funds for any Advance at any particular index or
reference rate.
2.14. Yield Protection; Changed Circumstances.
(a) If any Lender determines that either (i) the adoption, after the date
hereof, of any Applicable Law, rule, regulation or guideline regarding capital
adequacy and applicable to commercial banks or financial institutions generally
or any change therein, or any change, after the date hereof, in the
interpretation or administration thereof by any Tribunal, central bank or
comparable agency charged with the interpretation or administration thereof, or
(ii) compliance by any Lender (or Lending Office of any Lender) with any request
or directive made after the date hereof applicable to commercial banks or
financial institutions generally regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency has the effect of reducing the rate of return on such Lender's capital as
a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount reasonably deemed by such Lender to be material, then from time to
time, within fifteen days after demand by such Lender, the Borrower shall pay to
such Lender such additional amount or amounts as will adequately compensate such
Lender for such reduction. Each Lender will notify the Borrower of any event
occurring after the date of this Agreement which will entitle such Lender to
compensation pursuant to this Section 2.14(a) as promptly as practicable after
such Lender obtains actual knowledge of such event; provided, no Lender shall be
--------
liable for its failure or the failure of any other Lender
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to provide such notification. A certificate of such Lender claiming
compensation under this Section 2.14(a), setting forth in reasonable detail the
calculation of the additional amount or amounts to be paid to it hereunder and
certifying that such claim is consistent with such Lender's treatment of similar
customers having similar provisions generally in their agreements with such
Lender shall be presumptive evidence of the validity of such claim. Each Lender
shall use reasonable efforts to mitigate the effect upon the Borrower of any
such increased costs payable to such Lender under this Section 2.14(a).
(b) If, after the date hereof, any Tribunal, central bank or other
comparable authority, at any time imposes, modifies or deems applicable any
reserve (including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the amount of, or credit extended by, any
Lender, or imposes on any Lender any other condition affecting a LIBOR Advance,
the Notes, or its obligation to make a LIBOR Advance, or imposes on any Lender
any other condition affecting a Letter of Credit; and the result of any of the
foregoing is to increase the cost to such Lender of making or maintaining its
Letter of Credit, LIBOR Advances, or to reduce the amount of any sum received or
receivable by such Lender under this Agreement or under the Notes, the Letters
of Credit or reimbursement obligations by an amount deemed by such Lender, to be
material, then, within five days after demand by such Lender, the Borrower shall
----
pay to such Lender such additional amount or amounts as will compensate such
Lender for such increased cost or reduction. Each Lender will (i) notify the
Borrower of any event occurring after the date of this Agreement that entitles
such Lender to compensation pursuant to this Section 2.14(b), as promptly as
practicable after such Lender obtains actual knowledge of the event; provided,
--------
no Lender shall be liable for its failure or the failure of any other Lender to
provide such notification and (ii) use good faith and reasonable efforts to
designate a different Lending Office for LIBOR Advances, of such Lender if the
designation will avoid the need for, or reduce the amount of, the compensation
and will not, in the sole opinion of such Lender, be disadvantageous to such
Lender. A certificate of such Lender claiming compensation under this Section
2.14(b), setting forth in reasonable detail the computation of the additional
amount or amounts to be paid to it hereunder and certifying that such claim is
consistent with such Lender's treatment of similar customers having similar
provisions generally in their agreements with such Lender shall be presumptive
evidence of the validity of such claim. If such Lender demands compensation
under this Section 2.14(b), the Borrower may at any time, on at least five
Business Days' prior notice to such Lender (i) repay in full the then
outstanding principal amount of LIBOR Advances, of such Lender, together with
accrued interest thereon, or (ii) convert the LIBOR Advances to Base Advances in
accordance with the provisions of this Agreement;
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provided, however, that the Borrower shall be liable for the Consequential Loss
- -------- -------
arising pursuant to those actions.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other Tribunal shall
assert that it is unlawful, for a Lender to perform its obligations hereunder to
issue or maintain Letters of Credit, make LIBOR Advances or to continue to fund
or maintain LIBOR Advances hereunder, then, on notice thereof and demand
therefor by such Lender to the Borrower, (i) each LIBOR Advance will
automatically, upon such demand, convert into a Base Advance, (ii) the
obligation of such Lender to make, or to convert Advances into, LIBOR Advances
shall be suspended until such Lender notifies Administrative Lender and the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist, and (iii) the obligation of such Lender to make or
maintain Letters of Credit shall be suspended until such Lender notifies
Administrative Lender and the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist.
(d) Upon the occurrence and during the continuance of any Default or Event
of Default, (i) each LIBOR Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Advance and (ii) the
obligation of each Lender to make, or to convert Advances into, LIBOR Advances
shall be suspended.
(e) If any Lender notifies Administrative Lender that the LIBOR Rate for
any Interest Period for any LIBOR Advances will not adequately reflect the cost
to such Lender of making, funding or maintaining LIBOR Advances for such
Interest Period, Administrative Lender shall promptly so notify the Borrower,
whereupon (i) each such LIBOR Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Advance and (ii) the
obligation of such Lender to make, or to convert Advances into, LIBOR Advances
shall be suspended until such Lender notifies Administrative Lender that such
Lender has determined that the circumstances causing such suspension no longer
exist and Administrative Lender notifies the Borrower of such fact.
(f) Failure on the part of any Lender to demand compensation for any
increased costs, increased capital or reduction in amounts received or
receivable or reduction in return on capital pursuant to this Section 2.14 with
respect to any period shall not constitute a waiver of any Lender's right to
demand compensation with respect to such period or any other period, subject,
however, to the limitations set forth in this Section 2.14.
(g) The obligations of the Borrower under this Section 2.14 shall survive
any termination of this Agreement, provided that, in
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no event shall the Borrower be required to make a payment under this Section
2.14 with respect to any event of which the Lender making such claim had
knowledge more than twelve months prior to demand for such payment.
(h) Determinations by Lenders for purposes of this Section 2.14 shall be
presumptively correct. Any certificate delivered to the Borrower by a Lender
pursuant to this Section 2.14 shall include in reasonable detail the basis for
such Lender's demand for additional compensation and a certification that the
claim for compensation is consistent with such Lender's treatment of similar
customers having similar provisions generally in their agreements with such
Lender.
(i) Notwithstanding any other provision of this Agreement, no Lender not
organized under the Laws of the United States or any State (or which has a Bank
Affiliate not organized under the Laws of the United States or any State) shall
be entitled to compensation pursuant to this Section 2.14 with respect to any
amount which would otherwise be due under this Section 2.14 but which is the
result of an act of a Tribunal of the country in which such Lender or Bank
Affiliate is organized.
2.15. Use of Proceeds. The proceeds of the Advances shall be available
----- ---------------
(and the Borrower shall use such proceeds) solely (a) on the Closing Date, to
refinance existing indebtedness of the Borrower, (b) for Permitted Acquisitions,
(c) for Capital Expenditures permitted under the terms of this Agreement, (d)
for working capital and (e) for other lawful corporate purposes.
2.16. Collateral and Collateral Call.
(a) Collateral. Payment of the Obligations will be secured by (i) a first
----------
perfected security interest in 100% of the Capital Stock of the Subsidiaries of
the Borrower and 100% of the Capital Stock of the Borrower, (ii) subject to
Permitted Liens and Section 6.15 hereof, a first perfected security interest in
all of the existing and future accounts (including without limitation, the
Tenant Leases), equipment, inventory and general intangibles (including all
existing and future Tenant Leases, and excluding any Interest Rate Protection
Agreement to which any Lender is a party, motor vehicles, bank accounts,
intellectual property and chattel paper) of the Borrower and its Subsidiaries,
(iii) Guaranties of the Obligations by each Guarantor, (iv) in accordance with
Section 6.15 hereof, deeds of trust and/or mortgages on all real property owned
by the Borrower and each Subsidiary of the Borrower, (v) in accordance with
Section 6.15 hereof, leasehold deeds of trust and/or mortgages on Borrower's
leasehold interest under each Ground Lease (collectively, together with all
other Properties or assets of the Borrower, Subsidiaries and other Persons
securing the Obligations from time to time, the "Collateral"). The Borrower
agrees that it will, and will cause its Subsidiaries and the Parent
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to, execute and deliver, or cause to be executed and delivered, such documents
as the Administrative Lender may from time to time reasonably request to create
and perfect a first Lien for the benefit of the Administrative Lender and the
Lenders in the Collateral.
(b) Collateral Call. The Borrower agrees: (i) upon the creation,
---------------
formation or acquisition of any direct or indirect Subsidiary of the Borrower,
to immediately pledge 100% of the Capital Stock of any such Subsidiary to secure
the Obligations, pursuant to a pledge agreement substantially in the form of
Exhibit J hereto, and to promptly deliver to the Administrative Lender all
certificates or other documentation evidencing 100% of such Capital Stock and,
if such Capital Stock is stock of a corporation, together with stock powers
executed in blank and (ii) to, and agrees to cause the Subsidiaries of the
Borrower to, grant the Administrative Lender and the Lenders from time to time
at the request of the Lenders a Lien on any of the Property of the Borrower or
any Subsidiary of the Borrower that is not already subject to a perfected Lien.
In that regard, the Borrower shall, and shall cause the Subsidiaries of the
Borrower to, provide all items on Schedule 2.16 attached hereto with respect to
each leasehold property acquired by the Borrower or any Subsidiary of the
Borrower, and use best efforts to assist the Administrative Lender and the
Lenders in creating and perfecting a first Lien, subject to Permitted Liens, for
the benefit of Administrative Lender and Lenders securing the Obligations in any
other Property of the Borrower and its Subsidiaries, including, without
limitation, providing the Administrative Lender with UCC-1's, new security
agreements, mortgages, deeds of trust, appraisals, surveys, Estoppel and
Attornment Language, hazard insurance, UCC-11 searches, Tax and Lien searches,
intellectual property documentation and registration and other similar types of
documents, consents, authorizations, Licenses, instruments and agreements
relating to all Property of the Borrower and its Subsidiaries as reasonably
requested by the Administrative Lender from time to time. Notwithstanding
anything in this Section 2.16(b) to the contrary, the Borrower shall only be
obligated to grant collateral to the extent necessary to remain in compliance
with Section 6.15 hereof.
2.17. Replacement of a Lender. If any Lender has requested
compensation or reimbursement in accordance with the terms of Section 2.14
hereof or in accordance with the terms of Section 11.07 hereof and (a) such
request is not the result of any uniform changes in the statutes or regulations
for capital adequacy, (b) there exists no Default or Event of Default hereunder,
and (c) the Borrower and such Lender are unable to reach a written agreement
regarding such request within 30 days following written notice by such Lender to
the Borrower and the Administrative Lender of such request, then after the
expiration of 30 days following the delivery of the notice under Section 2.14 or
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Section 11.07 hereof, the Borrower may replace such Lender in whole with another
Eligible Assignee reasonably acceptable to Administrative Lender pursuant to an
Assignment and Acceptance and in accordance with Section 11.04 hereof. Until
such time as any Lender is replaced by the Borrower, the Borrower shall
reimburse or compensate such Lender in accordance with the terms of Section 2.14
hereof and Section 11.07 hereof.
2.18. Conditions Precedent to the Increase of the Available Commitment.
Prior to the Conversion Date, upon written request by the Borrower to each
Lender fourteen Business Days prior to the proposed effective date of the
proposed increase, and only so long as any Lender determines in its sole
discretion in writing by notice to the Administrative Lender at least fourteen
Business Days prior to the proposed effective date of the proposed increase to
make such increase available to the Borrower, the Available Commitment shall,
subject to the further terms and conditions set forth below, increase to a
maximum of $250,000,000 in the manner set forth below:
(a) On any date of proposed increase, the representations and
warranties contained in Article V hereof are true and correct on such date,
as though made on and as of such date, except to the extent expressly made
only as of a prior date; and
(b) On any date of proposed increase, no Default or Event of Default
shall exist on any such date, and no Default or Event of Default would
result from the such increase in the Available Commitment and the
subsequent Advance to the Borrower up to the amount of the Available
Commitment; and
(c) On any date of proposed increase, there shall have occurred no
material adverse change in the Borrower's business, assets or financial
condition since December 31, 1997; and
(d) On any date of proposed increase, the sum of (i) all Advances
outstanding, plus (ii) the aggregate face amount of all outstanding Letters
of Credit (after giving effect to the proposed Letter of Credit to be made
on such date), plus (iii) (without duplication) the sum of the aggregate
reimbursement obligations, shall not exceed the Available Commitment; and
(e) The proposed increase shall occur prior to the Conversion Date and
shall not be in excess of the sum of the Available Commitment prior to such
increase plus the Unavailable Commitment prior to such increase; and
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(f) The Administrative Lender shall have received a pro-forma
Compliance Certificate in form and substance acceptable to the Lenders and
demonstrating compliance with the terms of this Agreement and the Loan
Papers for one full year after the date of such proposed increase; and
(g) The Administrative Lender shall have received financial
projections in form and substance acceptable to the Lenders and
demonstrating compliance with the financial covenants set forth in Section
8.01 hereof throughout the term of this Agreement; and
(h) The Available Commitment shall (i) never exceed the amount of the
Aggregate Commitment, as reduced in accordance with Section 2.11 hereof and
the other terms of this Agreement, and (ii) never increase except to the
extent, and not to exceed such amount, that the Unavailable Commitment is
in excess of zero; and
(i) The Unavailable Commitment shall be reduced in accordance with
this Section 2.18 dollar for dollar for each increase in the Available
Commitment; and
(j) The Administrative Lender on behalf of each Lender shall have
received new Notes providing for such increase as well as all amendments to
deeds of trust and mortgages as the Administrative Lender shall deem
necessary to maintain its valid and perfected Lien.
Notwithstanding anything contained herein to the contrary, the limitations
placed upon assignments set forth in Section 11.04 hereof shall not apply to
proposed increases pursuant to this Section.
ARTICLE III. LETTERS OF CREDIT
3.01. Issuance of Letters of Credit. The Borrower shall give the
Administrative Lender not less than five Business Days prior written notice of a
request for the issuance of a Letter of Credit, and the Administrative Lender
shall promptly notify each Lender of such request. Upon receipt of the
Borrower's properly completed and duly executed Applications, and subject to the
terms of such Applications and to the terms of this Agreement, the
Administrative Lender agrees to issue Letters of Credit on behalf of the
Borrower in an aggregate face amount not in excess of the lesser of (a) Letter
of Credit Commitment and (b) the remainder of the Available Commitment minus the
sum of all outstanding Advances plus the aggregate face amount of all
outstanding Letters of Credit. No Letter of Credit shall have a maturity
extending beyond the earliest of (i) the Maturity Date, or (ii) one year from
the date of its issuance, or (iii) such earlier date as may be required to
enable the Borrower to satisfy its repayment obligations under
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Section 2.06 hereof. Subject to such maturity limitations and so long as no
Default or Event of Default has occurred and is continuing or would result from
the renewal of a Letter of Credit, the Letters of Credit may be renewed by the
Administrative Lender in its discretion. The Lenders shall participate ratably
in any liability under the Letters of Credit and in any unpaid reimbursement
obligations of the Borrower with respect to any Letter of Credit in their
Specified Percentages. The amount of the Letters of Credit issued and
outstanding and the unpaid reimbursement obligations of the Borrower for such
Letters of Credit shall reduce the amount of Available Commitment available, so
that at no time shall the sum of (i) all outstanding Advances in the aggregate,
plus (ii) the aggregate face amount of all outstanding Letters of Credit, plus
(iii) (without duplication) all outstanding reimbursement obligations related to
Letters of Credit, exceed the Available Commitment, and at no time shall the sum
of all Advances by any Lender made plus its ratable share of amounts available
to be drawn under the Letters of Credit and the unpaid reimbursement obligations
of the Borrower in respect of such Letters of Credit exceed its Specified
Percentage of the Available Commitment.
3.02. Letters of Credit Fee. In consideration for the issuance of each
Letter of Credit, the Borrower shall pay to (a) the Administrative Lender for
its own account, an application and processing fee in the amount of $350.00 on
each Letter of Credit, due and payable on the date of issuance of each Letter of
Credit, and (b) the Administrative Lender for the account of the Administrative
Lender and the Lenders in accordance with their Specified Percentages, a per
annum fee for each Letter of Credit equal to (i) the product of 1/8 of 1 percent
multiplied by the face amount of each such Letter of Credit, plus (ii) the
product of the Applicable Margin for LIBOR Advances on the date of issuance
multiplied by the face amount of each such Letter of Credit. Each fee for each
Letter of Credit under subsection (b) above shall be due and payable to the
Administrative Lender quarterly as it accrues on each Quarterly Date during the
term of the Letter of Credit and on the expiration or renewal and/or extension
of each such Letter of Credit, beginning with the first such Quarterly Date
after the issuance of each Letter of Credit and ending on the expiration date of
each such Letter of Credit or the renewal and/or extension of each such Letter
of Credit.
3.03. Reimbursement Obligations.
(a) The Borrower hereby agrees to reimburse Administrative Lender
immediately upon demand by Administrative Lender, and in immediately available
funds, for any payment or disbursement made by Administrative Lender under any
Letter of Credit. Payment shall be made by the Borrower with interest on the
amount so paid or disbursed by Administrative Lender from and including the date
payment is made under any Letter of Credit to and including the
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date of payment, at the lesser of (i) the Highest Lawful Rate, and (ii) the sum
of the Base Rate in effect from time to time plus two percent (2%) per annum;
provided, however, that if the Borrower would be permitted under the terms of
- -------- -------
Section 2.01, Section 2.02 and Section 4.02 to borrow Advances in amounts at
least equal to their reimbursement obligation for a drawing under any Letter of
Credit, a Base Advance by each Lender, in an amount equal to such Lender's
Specified Percentage, shall automatically be deemed made on the date of any such
payment or disbursement made by Administrative Lender in the amount of such
obligation and subject to the terms of this Agreement.
(b) The Borrower hereby also agrees to pay to Administrative Lender
immediately upon demand by Administrative Lender and in immediately available
funds, as security for their reimbursement obligations in respect of the Letters
of Credit under Section 3.03(a) hereof and any other amounts payable hereunder
and under the Notes, an amount equal to the aggregate amount available to be
drawn under Letters of Credit then outstanding, irrespective of whether the
Letters of Credit have been drawn upon, upon an Event of Default. Any such
payments shall be deposited in a separate account designated "Pinnacle Special
Account" or such other designation as Administrative Lender shall elect. All
such amounts deposited with Administrative Lender shall be and shall remain
funds of the Borrower on deposit with Administrative Lender and may be invested
by Administrative Lender as Administrative Lender shall determine. Such amounts
may not be used by Administrative Lender to pay the drawings under the Letters
of Credit; however, such amounts may be used by Administrative Lender as
reimbursement for Letter of Credit drawings which Administrative Lender has
paid. If any amounts in the Pinnacle Special Account shall have been deposited
upon the occurrence of an Event of Default only and such Event of Default shall
have been subsequently cured or waived and no other Event of Default exists, the
Borrower shall be relieved of its obligations under this Section 3.03(b) until
an Event of Default once again occurs. During the existence of an Event of
Default but after the expiration of any Letter of Credit that was not drawn
upon, the Borrower may direct the Administrative Lender to use any cash
collateral for any such expired Letter of Credit, if any, to reduce the amount
of the Obligations. Any amounts remaining in the Pinnacle Special Account,
after the date of the expiration of all Letters of Credit and after all
Obligations have been paid in full, shall be repaid to the Borrower promptly
after such expiration and such payment in full.
(c) The obligations of the Borrower under this Section 3.03 will continue
until all Letters of Credit have expired and all reimbursement obligations with
respect thereto have been paid in full by the Borrower and until all other
Obligations shall have been paid in full.
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(d) The Borrower shall be obligated to reimburse Administrative Lender
upon demand for all amounts paid under the Letters of Credit as set forth in
Section 3.03(a) hereof; provided, however, if the Borrower for any reason fails
to reimburse Administrative Lender in full upon demand, whether by borrowing
Advances to pay such reimbursement obligations or otherwise, the Lenders shall
reimburse Administrative Lender in accordance with each Lender's Specified
Percentage for amounts due and unpaid from the Borrower as set forth in Section
3.04 hereof; provided, however, that no such reimbursement made by the Lenders
shall discharge the Borrower's obligations to reimburse Administrative Lender.
(e) The Borrower shall indemnify and hold Administrative Lender or any
Lender, its officers, directors, representatives and employees harmless from
loss for any claim, demand or liability which may be asserted against
Administrative Lender or such indemnified party in connection with actions taken
under the Letters of Credit or in connection therewith (INCLUDING LOSSES
RESULTING FROM THE NEGLIGENCE OF ADMINISTRATIVE LENDER OR SUCH INDEMNIFIED
PARTY), and shall pay Administrative Lender for reasonable fees of attorneys
(who may be employees of Administrative Lender) and legal costs paid or incurred
by Administrative Lender in connection with any matter related to the Letters of
Credit, except for losses and liabilities incurred as a direct result of the
gross negligence or wilful misconduct of Administrative Lender or such
indemnified party. If the Borrower for any reason fails to indemnify or pay
Administrative Lender or such indemnified party as set forth herein in full, the
Lenders shall indemnify and pay Administrative Lender upon demand, in accordance
with each Lender's Specified Percentage of such amounts due and unpaid from the
Borrower. The provisions of this Section 3.03(e) shall survive the termination
of this Agreement.
3.04. Lenders' Obligations. Each Lender agrees, unconditionally and
irrevocably to reimburse Administrative Lender (to the extent Administrative
Lender is not otherwise reimbursed by the Borrower in accordance with Section
3.03(a) hereof) on demand for such Lender's Specified Percentage of each draw
paid by Administrative Lender under any Letter of Credit. All amounts payable
by any Lender under this subsection shall include interest thereon at the
Federal Funds Rate, from the date of the applicable draw to the date of
reimbursement by such Lender. No Lender shall be liable for the performance or
nonperformance of the obligations of any other Lender under this Section. The
obligations of the Lenders under this Section shall continue after the Maturity
Date and shall survive termination of any Loan Papers.
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3.05. Administrative Lender's Obligations.
(a) Administrative Lender makes no representation or warranty, and assumes
no responsibility with respect to the validity, legality, sufficiency or
enforceability of any Application or any document relative thereto or to the
collectibility thereunder. Administrative Lender assumes no responsibility for
the financial condition of the Borrower and its Subsidiaries or for the
performance of any obligation of the Borrower. Administrative Lender may use
its discretion with respect to exercising or refraining from exercising any
rights, or taking or refraining from taking any action which may be vested in it
or which it may be entitled to take or assert with respect to any Letter of
Credit or any Application.
(b) Except as set forth in subsection (c) below, Administrative Lender
shall be under no liability to any Lender, with respect to anything the
Administrative Lender may do or refrain from doing in the exercise of its
judgment, the sole liability and responsibility of Administrative Lender being
to handle each Lender's share on as favorable a basis as Administrative Lender
handles its own share and to promptly remit to each Lender its share of any sums
received by Administrative Lender under any Application. Administrative Lender
shall have no duties or responsibilities except those expressly set forth herein
and those duties and liabilities shall be subject to the limitations and
qualifications set forth herein.
(c) Neither Administrative Lender nor any of its directors, officers, or
employees shall be liable for any action taken or omitted (whether or not such
action taken or omitted is expressly set forth herein) under or in connection
herewith or any other instrument or document in connection herewith, except for
gross negligence or willful misconduct, and no Lender waives its right to
institute legal action against Administrative Lender for wrongful payment of any
Letter of Credit due to Administrative Lender's gross negligence or willful
misconduct. Administrative Lender shall incur no liability to any Lender, the
Borrower or any Affiliate of the Borrower or Lender in acting upon any notice,
document, order, consent, certificate, warrant or other instrument reasonably
believed by Administrative Lender to be genuine or authentic and to be signed by
the proper party.
ARTICLE IV. CONDITIONS PRECEDENT
4.01. Conditions Precedent to Closing and the Initial Advance. The
obligation of each Lender to sign this Agreement and to make the initial Advance
is subject to receipt by the Administrative Lender of each of the following, in
form and substance satisfactory to the Administrative Lender, with a copy
(except for the Notes) for each Lender:
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(a) A loan certificate of the Borrower and the Parent certifying as to the
accuracy of their representations and warranties in the Loan Papers, certifying
that no Default has occurred, and including a certificate of incumbency with
respect to each Authorized Officer, and including (i) a copy of the Articles of
Incorporation of the Borrower and the Parent, certified to be true, complete and
correct by the secretary of state of its state of incorporation, (ii) a copy of
the By-Laws of the Borrower and the Parent, as in effect on the Closing Date,
(iii) a copy of the resolutions of the Borrower and the Parent authorizing them
to execute, deliver and perform this Agreement, the Notes and the other Loan
Papers to which each of them is a party, and (iv) a copy of a certificate of
good standing and a certificate of existence for the Borrower's and the Parent's
state of incorporation and each state in which they are or should be qualified
to do business;
(b) duly executed Notes, payable to the order of each Lender and in an
amount for each Lender equal to its Specified Percentage of the Aggregate
Commitment;
(c) duly executed and completed confirmation agreement confirming
obligations under (i) pledge agreements by the Parent; (ii) the Guaranty of the
Obligations executed by the Parent; (iii) Security Agreement by the Borrower and
the Parent granting the Lenders a lien and security interest in all assets owned
by the Borrower and the Parent; and (iv) all other Loan Papers, including
without limitation, all mortgages, deeds of trust, and deeds to secure debt duly
filed in all required locations and each item required to be delivered on
Schedule 2.16 hereto, except those Loan Papers specifically agreed to in Section
6.15;
(d) copies of all financing statements filed against the Borrower or
Parent, as debtor;
(e) opinions of counsel to the Borrower and the Parent addressed to the
Lenders and in form and substance satisfactory to the Lenders, dated the Closing
Date;
(f) copies of insurance binders or certificates covering the assets of the
Borrower and the Parent, and meeting the requirements of Section 6.05 hereof;
(g) reimbursement for Administrative Lender of its reasonable fees and
expenses and for Special Counsel's reasonable fees and expenses rendered through
the date hereof;
(h) evidence that all corporate proceedings of the Borrower and the Parent
taken in connection with the transactions contemplated by this Agreement and the
other Loan Papers shall be reasonably satisfactory in form and substance to the
Lenders and Special Counsel; and the Lenders shall have received copies of all
documents or other evidence which the Administrative Lender,
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Special Counsel or any Lender may reasonably request in connection with such
transactions;
(i) copies of the following financial statements for the Borrower (and as
applicable, the Parent), as of and for the period ended December 31, 1997; (i)
balance sheets of the Borrower and the Parent as of the end of such period, and
(ii) statements of income and changes in cash for such period; all in reasonable
detail and certified by an Authorized Officer to the best of his knowledge to
present fairly in all material respects the consolidated financial position of
the Borrower and the results of operations for the period then ended and, except
as noted therein, to be in accordance with GAAP (other than footnotes thereto);
(j) evidence on the Closing Date that ABRY has funded since December 31,
1997 capital contributions of at least $20,000,000 to be used by the Borrower to
consummate Permitted Acquisitions (which $20,000,000 includes $12,500,000 in
Subordinated Debt owed by the Parent to ABRY), that Borrower has received a
minimum of $10,000,000 in unfunded committed capital from ABRY and executed copy
of the Capital Contribution Agreement in the form of Exhibit N hereto;
(k) evidence that the Parasite Transaction has closed;
(l) a duly completed Compliance Certificate evidencing no Default or Event
of Default as of the Closing Date; and
(l) in form and substance satisfactory to the Lenders and Special Counsel,
such other documents, instruments and certificates as the Administrative Lender
or any Lender may reasonably require in connection with the transactions
contemplated hereby, including without limitation the status, organization or
authority of the Borrower, and the enforceability of and security for the
Obligations.
4.02. Conditions Precedent to All Advances and Letters of Credit. The
obligation of each Lender to make each Advance hereunder and the obligation of
the Administrative Lender to issue any Letter of Credit shall be subject to the
further conditions precedent that on the date of such Advance or such issuance
of such Letter of Credit:
(a) All of the representations and warranties of the Borrower under this
Agreement shall be true and correct at such time in all material respects, both
before and after giving effect to the application of the proceeds of the Advance
or the issuance of the Letter of Credit, except those representations and
warranties that specifically speak as of a particular date;
(b) The incumbency of the Authorized Officers shall be as stated in the
certificate of incumbency delivered in the Borrower's
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loan certificate pursuant to Section 4.01(a) or as subsequently modified and
reflected in a certificate of incumbency delivered to the Administrative Lender.
The Lenders may, without waiving this condition, consider it fulfilled and a
representation by the Borrower made to such effect if no written notice to the
contrary, dated on or before the date of such Advance or the issuance of such
Letter of Credit, is received by the Administrative Lender from the Borrower
prior to the making of such Advance or such Letter of Credit;
(c) There shall not exist a Default hereunder or an Event of Default
hereunder and none shall exist as a result of making any such Advance or such
Letter of Credit, and the Administrative Lender shall have received written or
telephonic certification thereof by an Authorized Officer (which certification,
if telephonic, shall be followed promptly by written certification);
(d) There shall have occurred no Material Adverse Change since September
30, 1997;
(e) In the case of each Letter of Credit, Borrower shall have delivered to
the Administrative Lender a duly executed and complete Application acceptable to
Administrative Lender; and
(f) The aggregate outstanding Advances, after giving effect to such
proposed Advance, plus the sum of the face amount of all outstanding Letters of
Credit, shall not exceed the Available Commitment.
4.03. Conditions Precedent to Advances for Permitted Acquisitions. The
obligation of each Lender to make each Advance (including the initial Advance)
where any proceeds of such Advance will be used for a Permitted Acquisition,
including without limitation, the Parasite Transaction, shall be subject to the
further conditions precedent that the Borrower has complied with all terms and
provisions of Sections 6.15(c) and 6.16 hereof.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.01. Representations and Warranties. The Borrower hereby represents
and warrants to each Lender as follows:
(a) The respective jurisdictions of incorporation and percentage ownership
of the Subsidiaries of the Parent by the Parent and the Borrower on the Closing
Date and listed on Schedule 5.01(a) hereto are true and correct. Each of the
Parent, the Borrower and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its state of
organization. Each of the Parent, the Borrower and its Subsidiaries has the
corporate power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted. Each of the Parent, the
Borrower and its
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Subsidiaries is duly qualified, in good standing and authorized to do business
in each jurisdiction in which the character of its Properties or the nature of
its business requires such qualification or authorization, except where the
failure to so qualify would not cause a Material Adverse Change.
(b) The Borrower has corporate power and has taken all necessary corporate
action to authorize it to borrow hereunder. Each of the Parent, the Borrower
and its Subsidiaries has corporate power and has taken all necessary corporate
action to execute, deliver and perform the Loan Papers to which it is party in
accordance with the terms thereof, and to consummate the transactions
contemplated thereby. Each Loan Paper has been duly executed and delivered by
the Parent, the Borrower or such Subsidiary executing it. Each of the Loan
Papers to which the Parent, the Borrower, and its Subsidiaries are party is a
legal, valid and binding respective obligation of the Parent, the Borrower or
such Subsidiary, as applicable, enforceable in accordance with its terms,
subject, to enforcement of remedies, to the following qualifications: (i)
equitable principles generally, and (ii) bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Parent, the Borrower or any Subsidiary of the
Borrower).
(c) The execution, delivery and performance by the Parent, the Borrower and
its Subsidiaries of the other Loan Papers to which they are respectively a
party, and the consummation of the transactions contemplated thereby, do not and
will not (i) require any consent or approval not already obtained, (ii) violate
any Applicable Law, (iii) conflict with, result in a breach of, or constitute a
default under the articles of incorporation or by-laws of the Parent, the
Borrower or any Subsidiary of the Borrower, or under any material License,
indenture, agreement or other instrument, to which the Parent, the Borrower or
any Subsidiary of the Borrower is a party or beneficiary of, or by which they or
their respective Properties may be bound, or (iv) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by the Parent, the Borrower or any Subsidiary of the
Borrower, except Permitted Liens.
(d) The Parent, the Borrower and its Subsidiaries are primarily engaged in
the operation of leasing and subleasing towers and tower sites, and pursuing
activities related thereto.
(e) All material Licenses have been duly authorized and obtained, and are
in full force and effect. The Parent, the Borrower and its Subsidiaries are and
will continue to be in compliance in all material respects with all provisions
thereof. On the Closing Date, no material License is the subject of any pending
or, to the best of the Borrower's knowledge, threatened challenge or revocation.
After the Closing Date, no material
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License is the subject of any pending or, to the best of the Borrower's
knowledge, threatened challenge or revocation, which such event could cause a
Material Adverse Change. The Parent, the Borrower and its Subsidiaries are not
required to obtain any material License that has not already been obtained from,
or effect any material filing or registration that has not already been effected
with, the FCC, the FAA or any other federal, state or local regulatory authority
in connection with the execution and delivery of this Agreement or any other
Loan Paper, or the performance thereof (other than any enforcement of remedies
by the Administrative Lender on behalf of the Lenders), in accordance with their
respective terms, including any borrowings hereunder.
(f) The Parent, the Borrower and its Subsidiaries are in compliance in all
material respects with all Applicable Laws. The Parent, the Borrower and its
Subsidiaries have duly and timely filed all reports, statements and filings that
are required to be filed by any of them under the Communications Act, and are in
all material respects in compliance therewith, including without limitation the
rules and regulations of the FCC and FAA. Except as set forth on Schedule
5.01(f) hereto, as of the Closing Date, the Borrower is not aware of any event
or circumstance constituting noncompliance (or any Person alleging
noncompliance) with any rule or regulation of the FAA. After the Closing Date,
the Borrower is not aware of any event or circumstance constituting
noncompliance (or any Person alleging noncompliance) with any rule or regulation
of the FAA, which such event or circumstance could cause a Material Adverse
Change.
(g) The Parent, the Borrower and its Subsidiaries have good and
indefeasible title to, or a valid leasehold interest in, all of their material
assets. None of their assets are subject to any Liens, except Permitted Liens.
As of the Closing Date, no financing statement or other Lien filing authorized
by the Parent, the Borrower or any Subsidiary of the Borrower (except relating
to Permitted Liens) is on file in any state or jurisdiction that names the
Parent, the Borrower or any of its Subsidiaries as debtor or covers (or purports
to cover) any assets of the Parent, the Borrower or any of its Subsidiaries.
After the Closing Date, no financing statement or other Lien filing authorized
by the Parent, the Borrower or any Subsidiary of the Borrower (except relating
to Permitted Liens) is on file in any state or jurisdiction that names the
Parent, the Borrower or any of its Subsidiaries as debtor or covers (or purports
to cover) any assets of the Parent, the Borrower or any of its Subsidiaries,
which such financing statement or other Lien filing could cause a Material
Adverse Change. The Parent, the Borrower and its Subsidiaries have not signed
any such financing statement or filing, nor any security agreement authorizing
any Person to file any such financing statement or filing.
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(h) On the Closing Date, except as reflected on Schedule 5.01(h) hereto,
there is no action, suit, proceeding or any other Litigation pending against,
or, to the best of the Borrower's knowledge, threatened against the Parent, the
Borrower or any of its Subsidiaries, or in any other manner relating directly
and materially adversely to the Parent, the Borrower, any of its Subsidiaries,
or any of their material Properties, in any court or before any arbitrator of
any kind or before or by any governmental body. On each date after the Closing
Date on which this representation is deemed to be made, there is no action,
suit, proceeding or any other Litigation pending against, or, to the best of the
Borrower's knowledge, threatened against the Parent, the Borrower or any of its
Subsidiaries, or in any other manner relating to the Parent, the Borrower, any
of its Subsidiaries, or any of their Properties, in any court or before any
arbitrator of any kind or before or by any governmental body, which could
reasonably be expected to cause a Material Adverse Change.
(i) All federal, state and other Tax returns of the Parent, the Borrower
and its Subsidiaries required by law to be filed have been duly filed and all
federal, state and other Taxes, assessments and other governmental charges or
levies upon the Parent, the Borrower, its Subsidiaries or any of their
Properties, income, profits and assets, which are due and payable, have been
paid, except those that are diligently contested in good faith by the Borrower
and for which a reserve has been established in accordance with GAAP, and no
Lien (other than a Permitted Lien) has attached and no foreclosure, distraint,
sale or similar proceedings have been commenced.
(j) The Borrower has furnished or caused to be furnished to the Lenders
copies of its financial statements at December 31, 1996 and unaudited financial
statements at December 31, 1997, which are prepared in good faith and complete
in all material respects and present fairly in all material respects and in
accordance with GAAP (except, with respect to the financial statements delivered
prior to the Closing Date, as noted therein), the financial position of the
Parent, the Borrower and its Subsidiaries as at such dates and the results of
operations for the periods then ended. The Parent, the Borrower and its
Subsidiaries have no material liabilities, contingent or otherwise, nor material
losses, except as disclosed in writing to the Lenders prior to the Closing Date
or as disclosed on any subsequent financial statements. On the Closing Date
after giving effect to the Advances made on such date, each of the Parent, the
Borrower and its Subsidiaries is Solvent.
(k) Since the date of the most recent financial statements delivered to the
Lenders, no event or circumstances have occurred or arisen that could constitute
a Material Adverse Change.
(l) None of the Borrower or its Controlled Group maintains or contributes
to any Plan other than those disclosed to the
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Administrative Lender in writing. Each such Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code, and any
other applicable Federal or state law, rule or regulation. With respect to each
Plan of the Borrower and each member of its Controlled Group (other than a
Multiemployer Plan), all reports required under ERISA or any other Applicable
Law to be filed with any governmental authority, the failure of which to file
could reasonably result in liability of the Borrower or any member of its
Controlled Group in excess of $100,000, have been duly filed. All such reports
are true and correct in all material respects as of the date given. No such
Plan of the Borrower or any member of its Controlled Group has any accumulated
funding deficiency (as defined in Section 412(a) of the Code) (without regard to
any waiver granted under Section 412 of the Code), nor has any funding waiver
from the Internal Revenue Service been received or requested. None of the
Borrower or any member of its Controlled Group has failed to make any
contribution or pay any amount due or owing as required by Section 412 of the
Code or Section 302 of ERISA or the terms of any such Plan prior to the due date
under Section 412 of the Code and Section 302 of ERISA. There has been no ERISA
Event or any event requiring disclosure under Section 4041(c)(3)(C), 4068(f),
4063(a) or 4043(b) of ERISA with respect to any Plan or trust of the Borrower or
any member of its Controlled Group since the effective date of ERISA. The value
of the assets of each Plan (other than a Multiemployer Plan) of the Borrower and
each member of its Controlled Group equaled or exceeded the present value of the
benefit liabilities, as defined in Title IV of ERISA, of each such Plan as of
the most recent valuation date using Plan actuarial assumptions at such date.
There are no pending or, to the best of the Borrower's knowledge, threatened
claims, lawsuits or actions (other than routine claims for benefits in the
ordinary course) asserted or instituted against, and neither the Borrower nor
any member of its Controlled Group has knowledge of any threatened Litigation or
claims against, (i) the assets of any Plan or trust or against any fiduciary of
a Plan with respect to the operation of such Plan, or (ii) the assets of any
employee welfare benefit plan within the meaning of Section 3(1) or ERISA, or
against any fiduciary thereof with respect to the operation of any such plan.
None of the Borrower or any member of its Controlled Group has engaged in any
prohibited transactions, within the meaning of Section 406 of ERISA or Section
4975 of the Code, in connection with any Plan. None of the Borrower or any
member of its Controlled Group, nor has incurred or reasonably expects to incur
(A) any liability under Title IV of ERISA (other than premiums due under Section
4007 of ERISA to the PBGC), (B) any withdrawal liability (and no event has
occurred which with the giving of notice under Section 4219 of ERISA would
result in such liability) under Section 4201 of ERISA as a result of a complete
or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from
a Multiemployer Plan, or (C) any liability under Section 4062 of ERISA to the
PBGC or to a trustee appointed under Section 4042 of ERISA. None of the
Borrower, any member of its
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Controlled Group, or any organization to which the Borrower or any member of its
Controlled Group is a successor or parent corporation within the meaning of
ERISA Section 4069(b), has engaged in a transaction within the meaning of ERISA
Section 4069. None of the Borrower or any member of its Controlled Group
maintains or has established any welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides for continuing benefits or coverage for any
participant or any beneficiary of any participant after such participant's
termination of employment except as may be required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA") and the regulations
thereunder, and at the expense of the participant or the beneficiary of the
participant, or retiree medical liabilities. Each of the Borrower and its
Controlled Group which maintains a welfare benefit plan within the meaning of
Section 3(1) of ERISA has complied in all material respects with any applicable
notice and continuation requirements of COBRA and the regulations thereunder.
(m) The Borrower is not engaged principally or as one of its important
activities in the business of extending credit for the purpose of purchasing or
carrying any margin stock within the meaning of Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System, and no part of the proceeds of
the Advances will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock. No
assets of the Parent, the Borrower and its Subsidiaries are margin stock, and
none of the Pledged Stock is margin stock. None of the Parent, the Borrower and
its Subsidiaries, nor any agent acting on their behalf, have taken or will
knowingly take any action which might cause this Agreement or any Loan Papers to
violate any regulation of the Board of Governors of the Federal Reserve System
or to violate the Securities Exchange Act of 1934, in each case as in effect now
or as the same may hereafter be in effect.
(n) As of the Closing Date, the Parent, the Borrower and its Subsidiaries
are in compliance in all material respects with all of the provisions of their
articles of incorporation and by-laws, and no event has occurred or failed to
occur, which has not been remedied or waived, the occurrence or non-occurrence
of which constitutes, or which with the passage of time or giving of notice or
both would constitute, (i) an Event of Default or (ii) a default by the Parent,
the Borrower or any of its Subsidiaries under any material indenture, agreement
or other instrument, or any judgment, decree or order to which the Parent, the
Borrower or any of its Subsidiaries is a party or by which they or any of their
material Properties is bound. After the Closing Date, the Parent, the Borrower
and its Subsidiaries are in compliance in all material respects with all of the
provisions of their articles of incorporation and by-laws, and no event has
occurred or failed to occur, which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, or which with the passage of
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time or giving of notice or both would constitute, (i) an Event of Default or
(ii) a default by the Parent, the Borrower or any of its Subsidiaries under any
material indenture, agreement or other instrument, or any judgment, decree or
order to which the Parent, the Borrower or any of its Subsidiaries is a party or
by which they or any of their material Properties is bound, that could
reasonably be expected to cause a Material Adverse Change.
(o) The Borrower is not required to register under the provisions of the
Investment Company Act of 1940, as amended. Neither the entering into or
performance by the Borrower of this Agreement nor the issuance of the Notes
violates any provision of such act or requires any consent, approval, or
authorization of, or registration with, the Securities and Exchange Commission
or any other governmental or public body of authority pursuant to any provisions
of such act.
(p) On the Closing Date, none of the Borrower nor any Subsidiary of the
Borrower has any actual knowledge or reason to believe that any substance deemed
hazardous by any applicable Environmental Law, has been installed on any real
property now owned by the Parent, the Borrower or any of its Subsidiaries,
except (i) for hazardous substances the presence of which is not in violation of
law and (ii) as disclosed to the Lenders. After the Closing Date, none of the
Parent, the Borrower nor any Subsidiary of the Borrower has any actual knowledge
or reason to believe that any substance deemed hazardous by any applicable
Environmental Law, has been installed in violation of law on any real property
now owned by the Parent, the Borrower or any of its Subsidiaries except as
disclosed to the Lenders and which would not, in the reasonable judgment of the
Borrower, cause a Material Adverse Change. As of the Closing Date, the Borrower
and its Subsidiaries are not in violation of or subject to any existing, pending
or, to the best of the Borrower's knowledge, threatened investigation or inquiry
by any governmental authority or to any material remedial obligations under any
applicable Environmental Laws, and this representation and warranty would
continue to be true and correct following disclosure to the applicable
governmental authorities of all relevant facts, conditions and circumstances, if
any, pertaining to any real property of the Parent, the Borrower and its
Subsidiaries. After the Closing Date, the Parent, the Borrower and its
Subsidiaries are not in violation of or subject to any existing, pending or, to
the best of the Borrower's knowledge, threatened investigation or inquiry by any
governmental authority or to any material remedial obligations under any
applicable Environmental Laws which could cause a Material Adverse Change, and
this representation and warranty would continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to any real property of the
Parent, the Borrower and its Subsidiaries. The Parent, the Borrower and its
Subsidiaries are not required to obtain any permits, Licenses or similar
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authorizations to construct, occupy, operate or use any buildings, improvements,
fixtures, and equipment forming a part of any real property of the Parent, the
Borrower or any Subsidiary of the Borrower by reason of any applicable
Environmental Laws, except those that have been obtained. As of the Closing
Date, the Borrower and its Subsidiaries have no actual knowledge or reason to
believe, after reasonable investigation, that any hazardous substances or solid
wastes have been disposed of or otherwise released on or to the real property of
the Parent, the Borrower or any of its Subsidiaries in violation of any
applicable Environmental Law. After the Closing Date, the Parent, the Borrower
and its Subsidiaries have no actual knowledge or reason to believe, that any
hazardous substances or solid wastes have been disposed of or otherwise released
on or to the real property of the Parent, the Borrower or any of its
Subsidiaries, within the meaning of the applicable Environmental Laws, except as
disclosed to the Lenders and which such disposal or release would not cause a
Material Adverse Change.
(q) The agreements evidencing obligations with respect to Capital Leases
have been duly authorized, executed and delivered by the Parent, Borrower or its
Subsidiaries, as applicable, and (to the best of the Borrower's knowledge) the
other parties thereto. Except as disclosed to each Lender, there is no
Litigation, or, to the best of the Borrower's knowledge, threatened Litigation
or pending or threatened claim of breach or default, with respect to any such
Capital Lease obligations that could be expected to adversely affect any such
lease or contract. There is no Litigation, or, to the best of the Borrower's
knowledge, threatened Litigation or pending or threatened claim of breach or
default, with respect to any loan agreement or document evidencing any Debt for
Borrowed Money of the Parent, the Borrower, or their Subsidiaries that has not
been disclosed to Lenders. The Borrower has no knowledge of any default by any
tenant or tenants under any Tenant Leases which aggregate five percent or more
of the revenues of the Borrower and its Subsidiaries, except as disclosed to the
Lenders. The Borrower has no notice of or belief that any party to any material
Capital Lease is contemplating a breach, default or termination for any reason
of such contract or lease, except as disclosed to the Lenders. As of the
Closing Date, the Borrower has provided, or caused to be provided, to the
Administrative Lender complete and correct copies of or access to the Capital
Leases, all as amended, together with all exhibits and schedules thereto.
(r) All Pledged Stock has been duly authorized and validly issued, and is
fully paid and nonassessable. The Capital Stock described on Exhibit A to
Borrower Pledge Agreement constitutes all the issued and outstanding Capital
Stock of the Subsidiaries of the Borrower or the Subsidiaries of another
Subsidiary, except such shares that have been issued after the Closing Date,
pledged to the Administrative Lender to secure the Obligations and delivered to
the Administrative Lender together with stock powers executed in
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blank. All Capital Stock of the Borrower is pledged to the Administrative
Lender on behalf of Lenders to secure the Obligations. No Person has conversion
rights with respect to, or any subscription rights, calls, commitments or claims
of any character for, or any repurchase or redemption options relating to, the
Pledged Stock, other than those that have waived. The Pledged Stock, when
issued or sold, was either (i) registered or qualified under applicable federal
or state securities laws, or (ii) exempt therefrom.
(s) No broker's, finder's or other fee or commission will be payable by the
Borrower (other than to the Lenders hereunder) with respect to the making of the
Available Commitment or the Advances hereunder. The Borrower agrees to
indemnify and hold harmless the Administrative Lender and each Lender from and
against any claims, demand, liability, proceedings, costs or expenses asserted
with respect to or arising in connection with any such fees or commissions.
(t) No event has occurred which permits (or with the passage of time would
permit) the revocation or termination of any material License, or which could
result in the imposition of any restriction thereon of such a nature that could
reasonably be expected to constitute a Material Adverse Change.
(u) The Parent, the Borrower and its Subsidiaries have obtained all
material patents, trademarks, service-marks, trade names, copyrights, Licenses
and other rights, free from burdensome restrictions, that are necessary for the
operation of their business as presently conducted and as proposed to be
conducted. Nothing has come to the attention of the Borrower or any of its
Subsidiaries to the effect that (i) any process, method, part or other material
presently contemplated to be employed by the Parent, Borrower or any Subsidiary
of the Borrower may infringe any patent, trademark, service-mark, trade name,
copyright, License or other right owned by any other Person, or (ii) there is
pending or overtly threatened any claim or Litigation against or affecting the
Borrower or any Subsidiary of the Borrower contesting its right to sell or use
any such process, method, part or other material, which could reasonably be
expected to cause a Material Adverse Change.
(v) Neither this Agreement nor any other document, certificate or statement
which has been furnished to any Lender by or on behalf of the Parent, the
Borrower or any Subsidiary of the Borrower in connection herewith contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statement contained herein and therein not
misleading at the time it was furnished. On the Closing Date, there is no fact
known to the Borrower and not known to the public generally that could
reasonably be expected to cause a Material Adverse Change, which has not been
set forth in this Agreement or in the documents, certificates and statements
furnished to the
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Lenders by or on behalf of the Borrower prior to the date hereof in connection
with the transaction contemplated hereby. On each date after the Closing Date
on which this representation is deemed to be made, there is no fact known to the
Borrower and not known to the public generally that could reasonably be expected
to cause a Material Adverse Change, which has not been disclosed to the Lenders
in writing.
(w) There exists no breach or default by any party under any Tenant Lease,
except (i) those disclosed to the Administrative Lender in writing, and (ii)
breaches of any Tenant Lease, or all breaches of Tenant Leases in the aggregate,
that could not cause a Material Adverse Change. All Tenant Leases in existence
on the Closing Date are listed on Schedule 5.01(w) hereto, together with the
lease rate for each such Tenant Lease, the date of termination of each such
Tenant Lease, and whether such Tenant Lease is a Primary Non-Conforming Tenant
Lease or a Secondary Non-Conforming Tenant Lease. No Tenant Lease is a Primary
Non-Conforming Tenant Lease or a Secondary Non-Conforming Tenant Lease, except,
if the Borrower is in compliance with Section 6.15(c) below, the Borrower may
have Primary Non-Conforming Tenant Leases and Secondary Non-Conforming Tenant
Leases that are disclosed to the Lenders in connection with Section 7.07 below
and accurately included in all calculations pursuant to Sections 6.15(a) and (c)
below.
(x) All Ground Leases are in full force and effect, and, as of the Closing
Date, there exists no breach or default by any party under any Ground Lease,
except those disclosed to the Administrative Lender in writing. All Ground
Leases in existence on the Closing Date are listed on Schedule 5.01(x) hereto,
together with the lease rate for each such Ground Lease, the date of termination
of each such Ground Lease and the Tower Cash Flow generated from the Tower on
each such Ground Lease, in each case, as of the Closing Date. No Ground Lease
is a Non-Conforming Ground Lease except, if the Borrower is in compliance with
Section 6.15(c) below, the Borrower may have Non-Conforming Ground Leases that
are disclosed to the Lenders in connection with Section 7.07 below and
accurately included in all calculations pursuant to Sections 6.15(b) and (c)
below.
(y) Each piece of owned real property in existence on the Closing Date is
listed on Schedule 5.01(y) hereto, together with the Tower Cash Flow related to
such piece of real property. After the expiration of 90 days after the Closing
Date, all real property owned by the Borrower or any Subsidiary for more than 90
days is subject to a mortgage and/or deed of trust and otherwise complies with
all requirements set forth with respect to owned real property in Section 6.15
hereof.
(z) Parent (i) qualifies as a real estate investment trust, as defined in
Section 856(a) of the Code, and satisfies the conditions and limitations set
forth in Sections 856(b) and 856(c)
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of the Code, (ii) has not engaged in any "prohibited transactions" as defined in
Section 857(b)(6)(B)(iii) and (C) of the Code and (iii) for its current "tax
year" (as defined in the Code) is and for all prior tax years subsequent to its
election to be a real estate investment trust has been entitled to a dividends
paid deduction under the requirements of Section 857 of the Code. Borrower and
each of the Subsidiaries of Borrower is a Qualified REIT Subsidiary.
(aa) On each date after the Closing Date on which this representation is
deemed to be made, no event has occurred and no circumstance exists, which by
itself or aggregated together with all other such events or circumstances is
likely to (i) reduce Tower Cash Flow in the aggregate for all Towers by five
percent or more for a period in excess of three months, or (ii) otherwise cause
a Material Adverse Change.
5.02. Survival of Representations and Warranties. All representations
and warranties made under this Agreement and the other Loan Papers shall be
deemed to be made at and as of the Closing Date and at and as of the date of
each Advance, and each shall be true and correct in all material respects when
made. All such representations and warranties shall survive, and not be waived
by, the execution hereof by any Lender, any investigation or inquiry by any
Lender, or by the making of any Advance under this Agreement.
ARTICLE VI. GENERAL COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Available Commitment or any Letter of Credit is outstanding (whether or not the
conditions to borrowing have been or can be fulfilled):
6.01. Preservation of Existence and Similar Matters. The Borrower
shall, and shall cause each Subsidiary of the Borrower and the Parent to:
(a) preserve and maintain, or timely obtain and thereafter preserve and
maintain, its existence and material rights, franchises, authorizations,
consents, privileges and all other material Licenses from federal, state and
local governmental bodies and any Tribunal (regulatory or otherwise); and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its Properties or the nature of its
business requires such qualification or authorization, except where the failure
to do so would not cause a Material Adverse Change.
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6.02. Business; Compliance with Applicable Law and Material Agreements.
The Parent, the Borrower and its Subsidiaries shall (a) engage primarily in the
acquisition and operation of towers, and leasing and subleasing towers and tower
sites, and activities related thereto, and (b) comply in all material respects
with the requirements of all Applicable Law and all material agreement to which
each is a party.
6.03. Maintenance of Properties. The Borrower shall, and shall cause
the Parent and each Subsidiary of the Borrower to, maintain or cause to be
maintained all its material Properties necessary to the conduct of its business
(whether owned or held under lease) in reasonably good repair, working order and
condition, taken as a whole, and from time to time make or cause to be made all
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
6.04. Accounting Methods and Financial Records. The Borrower shall,
and shall cause the Parent and each Subsidiary of the Borrower to, maintain a
system of accounting established and administered in accordance with GAAP, keep
adequate records and books of account in which complete entries will be made and
all transactions reflected in accordance with GAAP, and keep accurate and
complete records of its respective assets. The Borrower and each of its
Subsidiaries shall maintain a fiscal year ending on December 31.
6.05. Insurance. The Borrower shall, and shall cause the Parent and
each Subsidiary of the Borrower to, maintain insurance from responsible
companies in such amounts and against such risks as shall be customary and usual
in the industry for companies of similar size and capability, but in no event
less than the amount and types insured as of the Closing Date, provided that,
the Borrower is permitted to self insure the replacement value of Towers having
in the aggregate at any one time insurable values not more than 5% of the
aggregate insurable values for all Towers. Each insurance policy shall provide
for at least 30 days' prior notice to the Administrative Lender of any proposed
termination or cancellation of such policy, whether on account of default or
otherwise and all property insurance shall name the Administrative Lender as
loss payee or additional insured, as appropriate.
6.06. Payment of Taxes and Claims. The Borrower shall, and shall cause
the Parent and each Subsidiary of the Borrower to, pay and discharge all Taxes,
assessments and governmental charges or levies imposed upon it or its income or
Properties prior to the date on which penalties attach thereto, and all lawful
material claims for labor, materials and supplies which, if unpaid, might become
a Lien upon any of their Properties, except those Taxes, assessments and charges
contested by the Borrower diligently in good faith, and for which adequate
reserves have been established in accordance with GAAP. The Borrower shall, and
shall cause the
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Parent and each Subsidiary of the Borrower to, timely file all information
returns required by federal, state or local Tax authorities.
6.07. Visits and Inspections. The Borrower shall, and shall cause each
Subsidiary of the Borrower and the Parent to, promptly permit representatives of
the Administrative Lender or any Lender from time to time to (a) visit and
inspect the Properties of the Parent, the Borrower and each Subsidiary of the
Borrower as often as the Administrative Lender or any Lender shall deem
advisable, (b) inspect and make extracts from and copies of the Borrower's, the
Parent's and each Subsidiary of the Borrower's books and records, and (c)
discuss with the Parent's, the Borrower's and each Subsidiary's directors,
officers, employees and, after notice to the Borrower, the auditors of Borrower
and the Parent, its business, assets, liabilities, financial positions, results
of operations and business prospects.
6.08. Payment of Debt for Borrowed Money. The Borrower shall, and
shall cause the Parent and each Subsidiary of the Borrower to, pay its Debt for
Borrowed Money when and as the same becomes due.
6.09. Use of Proceeds. The Borrower shall use the proceeds of Advances
solely (a) on the Closing Date, to refinance existing indebtedness of the
Borrower, (b) for Permitted Acquisitions, (c) for Capital Expenditures permitted
under the terms of this Agreement, (d) for working capital and (e) for other
lawful corporate purposes.
6.10. Indemnity.
(a) The Borrower agrees to defend, protect, indemnify and hold harmless the
Administrative Lender, each Lender, each of their respective Affiliates, and
each of their respective (including such Affiliates') officers, directors,
employees, agents, attorneys, shareholders and consultants (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth herein) of each of the foregoing
(collectively, "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees (whether
direct, indirect or consequential and whether based on any federal, state, or
local laws and regulations, under common law or at equitable cause, or on
contract, tort or otherwise, arising from or connected with the past, present or
future operations of the Borrower or its
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predecessors in interest, in any manner relating to or arising out of this
Agreement, the Loan Papers, or any act, event or transaction or alleged act,
event or transaction relating or attendant thereto, the making of any
participations in the Advances and the management of the Advances, including in
connection with, or as a result, in whole or in part, of any negligence of
Administrative Lender or any Lender (other than those matters raised exclusively
by a participant against the Administrative Lender or any Lender and not the
Borrower), or the use or intended use of the proceeds of the Advances hereunder,
or in connection with any investigation of any potential matter covered hereby,
but excluding any claim or liability that arises as the result of the gross
negligence or willful misconduct of any Indemnitee, as finally judicially
determined by a court of competent jurisdiction (collectively, the "Indemnified
Matters").
(b) In addition, the Borrower shall periodically, upon request, reimburse
each Indemnitee for its reasonable legal and other actual expenses (including
the cost of any investigation and preparation) incurred in connection with any
Indemnified Matter. If for any reason the foregoing indemnification is
unavailable to any Indemnitee or insufficient to hold any Indemnitee harmless
with respect to Indemnified Matters, then the Borrower shall contribute to the
amount paid or payable by such Indemnitee as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the Borrower and the Borrower's stockholders on
the one hand and such Indemnitee on the other hand but also the relative fault
of the Borrower and such Indemnitee, as well as any other relevant equitable
considerations. The reimbursement, indemnity and contribution obligations under
this Section shall be in addition to any liability which the Borrower may
otherwise have, shall extend upon the same terms and conditions to each
Indemnitee, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Borrower, the
Administrative Lender, the Lenders and all other Indemnitees. This Section
shall survive any termination of this Agreement and payment of the Obligations.
6.11. Environmental Law Compliance. The use which the Parent, the
Borrower or any Subsidiary of the Borrower intends to make of any real Property
owned by it will not result in the disposal or other release of any hazardous
substance or solid waste on or to such real Property in violation of any
Environmental Law. As used herein, the terms "hazardous substance" and
"release" as used in this Section shall have the meanings specified in CERCLA
(as defined in the definition of applicable Environmental Laws), and the terms
"solid waste" and "disposal" shall have the meanings specified in RCRA (as
defined in the definition of applicable Environmental Laws); provided, however,
that if CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date
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of such amendment; and provided further, to the extent that any other law
applicable to the Parent, the Borrower, any Subsidiary of the Borrower or any of
their Properties establishes a meaning for "hazardous substance," "release,"
"solid waste," or "disposal" which is broader than that specified in either
CERCLA or RCRA, such broader meaning shall apply. The Borrower agrees to
indemnify and hold the Administrative Lender and each Lender harmless from and
against, and to reimburse them with respect to, any and all claims, demands,
causes of action, loss, damage, liabilities, costs and expenses (including
attorneys' fees and courts costs) of any kind or character, known or unknown,
fixed or contingent, asserted against or incurred by any of them at any time and
from time to time by reason of or arising out of (a) the failure of the Parent,
the Borrower or any Subsidiary of the Borrower to perform any obligation
hereunder regarding asbestos or applicable Environmental Laws, (b) any violation
on or before the Release Date of any applicable Environmental Law in effect on
or before the Release Date, and (c) any act, omission, event or circumstance
existing or occurring on or prior to the Release Date (including without
limitation the presence on such real Property or release from such real Property
of hazardous substances or solid wastes disposed of or otherwise released on or
prior to the Release Date), resulting from or in connection with the ownership
of the real Property, regardless of whether the act, omission, event or
circumstance constituted a violation of any applicable Environmental Law at the
time of its existence or occurrence, or whether the act, omission, event or
circumstance is caused by or relates to the negligence of any indemnified
Person; provided that, the Borrower shall not be under any obligation to
indemnify the Administrative Lender or any Lender to the extent that any such
liability arises as the result of the gross negligence or willful misconduct of
such Person, as finally judicially determined by a court of competent
jurisdiction, or for any event which is both not caused by the Parent, the
Borrower or any Subsidiary of the Borrower and occurs after any foreclosure by
the Lenders on any specific Property. The provisions of this paragraph shall
survive the Release Date and shall continue thereafter in full force and effect.
6.12. Interest Rate Protection Agreements. By no later than May 1,
1998, the Borrower will enter into an Interest Rate Protection Agreement on
terms acceptable to the Administrative Lender providing for interest rate
protection for one year for 50% of the principal of the Obligations outstanding
on May 1, 1998, and the Borrower shall thereafter, until the third anniversary
of the Closing Date, maintain an Interest Rate Protection Agreement in effect at
all times on terms acceptable to the Administrative Lender and providing for an
interest rate protection for not less than 50% of the entire principal of the
Obligations.
6.13. Issuance and Pledge of Capital Stock of the Borrower. Prior to
or simultaneous with the issuance by the Borrower of any Capital Stock to any
Person, the Borrower shall,
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and shall cause the Parent to, cause such Capital Stock to be pledged to the
Administrative Lender on behalf of Lenders to secure the Obligations in
accordance with documentation substantially in the form of Exhibit M hereto.
6.14. Continued Status as a Real Estate Investment Trust; Prohibited
Transactions. Parent (a) will continue to be qualified as a real estate
investment trust as defined in Section 856 of the Code, (b) will not engage in
any "prohibited transactions" as defined in Section 857(b)(6)(B)(iii) or (C) of
the Code, (c) will continue to satisfy the conditions and limitations set forth
in Sections 856(b) and 856(c) of the Code and (d) will do all acts necessary to
continue to be entitled to a dividend paid deduction under Section 857 of the
Code and (d) each of Borrower and each of its Subsidiaries will continue to be a
Qualified REIT Subsidiary.
6.15. Tenant Leases, Ground Leases and Fee Owned Property.
(a) Tenant Leases. The Borrower and each Subsidiary of the Borrower shall,
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after the Closing Date, only enter into new Tenant Leases, acquire new Tenant
Leases or become party to any Tenant Leases which are not Primary Non-Conforming
Tenant Leases or Secondary Non-Conforming Tenant Leases, provided that, the
Borrower is permitted to have (i) Primary Non-Conforming Tenant Leases so long
as the sum of the aggregate Tenant Lease Revenues from all Primary Non-
Conforming Tenant Leases, at no time after the 90th day after the Closing Date
exceeds fifteen percent of the total revenues of the Borrower and its
Subsidiaries for the most recently completed calendar month during the term of
this Agreement, and (ii) Secondary Non-Conforming Tenant Leases, so long as the
sum of the aggregate Tenant Lease Revenues from all Secondary Non-Conforming
Tenant Leases in any calendar month does not exceed twenty percent of the total
revenues of the Borrower and its Subsidiaries for such completed calendar month.
(b) Ground Leases and Fee Owned Real Property. The Borrower and each
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Subsidiary of the Borrower shall, after the Closing Date, use its best efforts
to only enter into new Ground Leases which include provisions substantially
similar to the provisions set forth on Exhibit K hereto, or such other
provisions as are approved by the Administrative Lender in writing. The
Borrower shall use its best efforts to immediately provide the Lenders with each
item for each piece of real Property (whether leased or owned) required on
Schedule 2.16 hereto in accordance with the terms thereon prior to and
immediately after the Closing Date and prior to and immediately after each
Permitted Acquisition or other creation or acquisition of any real Property by
the Borrower or any Subsidiary of the Borrower. The Borrower shall not permit
to exist Non-Conforming Ground Leases which have aggregate Tower Cash Flow from
all Towers located on Non-Conforming Ground Leases in excess of thirty percent
of Operating Cash Flow at any time (on any date of determination) during the
term of this Agreement.
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(c) Breach of Section 6.15(a) and (b). In the event any provision of
---------------------------------
Section 6.15(a) or (b) above is breached, subject to the last sentence of this
Section 6.15(c), the Applicable Margin shall increase by .25% per annum,
effective the date of such breach under Section 6.15(a) or (b) above, and shall
increase every 30 days thereafter (effective each 31st date following the
preceding increase) by .25% per annum (but in no event shall the interest rate
increase under this Section 6.15(c) by more than .25% per annum per 30 day
period) until the earlier of (i) compliance with this Section 6.15, or (ii) such
time as the per annum interest rate is equal to the Highest Lawful Rate (where
the interest rate will remain until the Borrower is in compliance). If, on the
date six months after the date of any breach, such breach is still in effect,
then (A) with respect to a breach under Section 6.15(a) hereof, all Tenant Lease
Revenues from any Primary Non-Conforming Tenant Lease or Secondary Non-
Conforming Tenant Lease, as applicable, in excess of the applicable percent
limitation, will be excluded from revenues for the purpose of determining EBITDA
in connection with any determination of (I) the Leverage Ratio (with respect to
Section 8.01(a) and with respect to the Applicable Margin) and the debt service
coverage ratio set forth in Section 8.01(c) hereof, and (B) with respect to a
breach under Section 6.15(b) hereof, all Tower Cash Flow from any Tower located
on a Non-Conforming Ground Lease in excess of the thirty percent limitation will
be excluded from revenues for the purpose of determining EBITDA in connection
with any determination of (I) the Leverage Ratio (with respect to Section
8.01(a) and with respect to the Applicable Margin) and the debt service coverage
ratio set forth in Section 8.01(c) hereof, and, in each case, such exclusion
from EBITDA for such purposes will continue until five Business Days after the
date the Borrower delivers to the Administrative Lender a certificate of an
Authorized Officer certifying that there exists no breach under Section 6.15(a)
and/or (b) above, in detail satisfactory to the Administrative Lender. If there
exists no Default or Event of Default upon giving effect to any exclusion from
EBITDA in accordance with the provisions set forth above, the interest rate
shall be calculated without giving effect to any increase in the Applicable
Margin set forth in this Section 6.15(c).
6.16. Acquisitions, Generally. In connection with any acquisition made
by the Borrower during the term of this Agreement, the Borrower shall with
respect to individual Permitted Acquisitions in excess of $2,000,000 and all
Permitted Acquisitions which in the aggregate exceed $10,000,000, (a) not less
than ten Business Days prior to the proposed acquisition date, deliver to
Administrative Lender (i) a detailed written description of the proposed
Permitted Acquisition in form reasonably acceptable to the Administrative
Lender, a description and location of all fee owned real property, all leasehold
property, all Towers and all other assets (together with all legal descriptions
of all real property (leasehold and fee owned) available at such time), (ii) the
address
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of any office acquired and (iii) a copy of the purchase agreement, schedules
thereto and all related documentation (unless such schedules or documentation is
to be delivered by the seller, in which case the Borrower shall deliver drafts
and originals of such schedules and documentation promptly upon receipt by the
Borrower if later than 10 days prior to closing), and (b) prior to the
consummation of the acquisition a statement certified by an Authorized Officer
that (i) the proposed transaction complies with the definition of Permitted
Acquisition set forth in Article I hereof, and (ii) no Default or Event of
Default exists prior to or after giving effect to any requested Advance or the
consummation of such acquisition, or will exist upon consummation of the
proposed acquisition and related borrowings and transactions, together with a
Compliance Certificate computed after giving effect to such acquisition and
borrowings (provided that, in such Compliance Certificate, the Borrower may
certify as to Sections 8.01(a) and 8.01(c) hereof only, and not Sections
8.01(b), 8.01(d) and 8.01(e) hereof).
ARTICLE VII. INFORMATION COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Available Commitment or any Letter of Credit is outstanding (whether or not the
conditions to borrowing have been or can be fulfilled), the Borrower shall
furnish or cause to be furnished to each Lender:
7.01. Quarterly Financial Statements and Information. Within 45 days
after the end of each fiscal quarter, consolidated and consolidating balance
sheets of Parent, the Borrower and its Subsidiaries as at the end of such
quarter and the related consolidated and consolidating statements of income and
consolidated statements of changes in cash for such quarter and for the elapsed
portion of the year ended with the last day of such quarter, all of which shall
be certified by an Authorized Officer, to, in his or her opinion, present fairly
in all material respects, in accordance with GAAP, the financial position and
results of operations of the Parent, the Borrower and its Subsidiaries as at the
end of and for such period, and for the elapsed portion of the year ended with
the last day of such period.
7.02. Annual Financial Statements and Information; Certificate of No
Default.
(a) Within 120 days after the end of each fiscal year, a copy of (i) the
consolidated balance sheet of the Parent, the Borrower and its Subsidiaries, as
of the end of the current and prior fiscal years and (ii) consolidated
statements of earnings, statements of changes in shareholders' equity, and
statements of changes in cash as of and through the end of such fiscal year, all
of which are prepared in accordance with GAAP, and certified by independent
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certified public accountants acceptable to the Lenders, whose opinion shall be
in scope and substance in accordance with generally accepted auditing standards
and shall be unqualified.
(b) As soon as available, but in any event within 60 days following the
end of each fiscal year, a copy of the annual consolidated operating budget of
the Borrower, the Parent, and its Subsidiaries for the succeeding fiscal year.
7.03. Compliance Certificates. At the time financial statements are
furnished pursuant to Section 7.01 and Section 7.02, a Compliance Certificate.
7.04. Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, a copy of (i) all material
reports or letters submitted to the Parent, the Borrower or any Subsidiary of
the Borrower by accountants in connection with any annual, interim or special
audit, including without limitation any report prepared in connection with the
annual audit referred to in Section 7.03 hereof, and any other comment letter
submitted to management in connection with any such audit, (ii) each financial
statement, report, notice or proxy statement sent by the Parent, the Borrower or
any Subsidiary of the Borrower to stockholders generally, (iii) each regular or
periodic report and any registration statement or prospectus (or material
written communication in respect of any thereof) filed by the Parent, the
Borrower or any Subsidiary of the Borrower with any securities exchange, with
the Securities and Exchange Commission or any successor agency, and (iv) all
press releases concerning material financial aspects of the Parent, the Borrower
or any Subsidiary of the Borrower;
(b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of indebtedness or other security of the Parent, the Borrower or
any Subsidiary of the Borrower in excess of $250,000 in the aggregate has given
notice or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder, (ii) any party to any material Capital
Lease of the Borrower or any Subsidiary of the Borrower has given notice or
taken any action with respect to a breach, failure to perform, claimed default
or event of default thereunder, (iii) any occurrence or non-occurrence of any
event which constitutes or which with the passage of time or giving of notice or
both could constitute a material breach by the Parent, the Borrower or any
Subsidiary of the Borrower under any material agreement or instrument other than
this Agreement to which the Parent, the Borrower or any Subsidiary of the
Borrower is a party or by which any of their Properties may be bound, or (iv)
any event, circumstance or condition which could reasonably be expected to
constitute a Material Adverse Change, a written notice specifying the details
thereof (or the nature of any claimed
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default or event of default) and what action is being taken or is proposed to be
taken with respect thereto;
(c) Promptly upon receipt thereof, information with respect to and copies
of any notices received from the FCC, the FAA or any other federal, state or
local regulatory agencies or any tribunal relating to any order, ruling, law,
information or policy that relates to a breach of or noncompliance with the
Communications Act, or might result in the payment of money by the Parent, the
Borrower or any Subsidiary of the Borrower in an amount of $250,000 or more in
the aggregate, or otherwise constitute a Material Adverse Change, or result in
the loss or suspension of any material License;
(d) Promptly upon receipt from any governmental agency, or any government,
political subdivision or other entity, any material notice, correspondence,
hearing, proceeding or order regarding or affecting the Parent, the Borrower,
any Subsidiary of the Borrower, or any of their Properties or businesses not in
the ordinary course of business, a copy of such notice, correspondence, hearing,
proceeding or order;
(e) Promptly upon and in any event within forty-eight hours after the
Borrower first has knowledge of (i) the Parent failing to (A) continue to
qualify as a real estate investment trust as defined in Section 856 of the Code
or (B) maintain its REIT Status, (ii) any act by the Parent causing the election
by the Parent or the Borrower, as applicable, to be taxed as a real estate
investment trust to be terminated, (iii) any act causing the Parent to be
subject to the taxes imposed by Section 857(b)(6) of the Code, (iv) the Parent
failing to be entitled to a dividends paid deduction under Section 857 of the
Code, (v) the Parent failing to satisfy any condition or limitation set forth in
Section 856(b) or 856(c) of the Code, (vi) any challenge by the Internal Revenue
Service to the Parent's REIT Status, (vii) the Borrower or any Subsidiary of
Borrower failing to be a Qualified REIT Subsidiary, or (viii) any challenge by
the Internal Revenue Service to the status of Borrower or any Subsidiary of
Borrower as a Qualified REIT Subsidiary, notice of any such occurrence or
circumstance; and
(f) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of the Parent, the Borrower and its
Subsidiaries that is within the Borrower's control, as the Administrative Lender
or any Lender may reasonably request.
7.05. Notice of Litigation, Default and Other Matters. Prompt notice
of the following events after the Borrower has knowledge or notice thereof:
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(a) The commencement of all proceedings and investigations by or before the
FCC, the FAA or any other governmental body, and all other actions and
proceedings in any court or before any arbitrator involving claims for damages
(including punitive damages) in excess of $250,000 in the aggregate (after
deducting the amount with respect to the Parent, the Borrower or any Subsidiary
of the Borrower is insured), against or in any other way relating directly to
the Parent, the Borrower, any Subsidiary of the Borrower, or any of their
Properties or businesses;
(b) Promptly upon the happening of any condition or event which constitutes
a Default, a written notice specifying the nature and period of existence
thereof and what action is being taken or is proposed to be taken with respect
thereto; and
(c) Any Material Adverse Change with respect to the business, assets,
liabilities, financial position, results of operations or prospective business
of the Parent, the Borrower or any Subsidiary of the Borrower.
7.06. ERISA Reporting Requirements.
(a) Promptly and in any event (i) within 30 days after the Borrower or any
member of its Controlled Group knows or has reason to know that any ERISA Event
described in clause (a) of the definition of ERISA Event or any event described
in Section 4063(a) of ERISA with respect to any Plan of the Borrower or any
member of its Controlled Group has occurred, and (ii) within 10 days after the
Borrower or any member of its Controlled Group knows or has reason to know that
any other ERISA Event with respect to any Plan of the Borrower or any member of
its Controlled Group has occurred or a request for a minimum funding waiver
under Section 412 of the Code with respect to any Plan of the Borrower or any
member of its Controlled Group, a written notice describing such event and
describing what action is being taken or is proposed to be taken with respect
thereto, together with a copy of any notice of event that is given to the PBGC;
(b) Promptly and in any event within two Business Days after receipt
thereof by the Borrower or any member of its Controlled Group from the PBGC,
copies of each notice received by the Borrower or any member of its Controlled
Group of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing thereof by
the Borrower or any member of its Controlled Group with the United States
Department of Labor, the Internal Revenue Service or the PBGC, copies of each
annual and other report (including Schedule B thereto) with respect to each
Plan;
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(d) Promptly and in any event within 30 days after receipt thereof, a copy
of any notice, determination letter, ruling or opinion the Borrower or any
member of its Controlled Group receives from the PBGC, the United States
Department of Labor or the Internal Revenue Service with respect to any Plan;
(e) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of the Borrower or such member of its Controlled Group setting
forth details as to the events giving rise to such potential withdrawal
liability and the action which the Borrower or such member of its Controlled
Group is taking or proposes to take with respect thereto;
(f) Notification within 30 days of any material increases in the benefits
of any existing Plan which is not a Multiemployer Plan, or the establishment of
any new Plans, or the commencement of contributions to any Plan to which the
Borrower or any member of its Controlled Group was not previously contributing;
(g) Notification within three Business Days after the Borrower or any
member of its Controlled Group knows or has reason to know that the Borrower or
any such member of its Controlled Group has or intends to file a notice of
intent to terminate any Plan under a distress termination within the meaning of
Section 4041(c) of ERISA and a copy of such notice; and
(h) Promptly after receipt of written notice of commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower or any member of its Controlled Group with
respect to any Plan.
7.07. Fee Owned Property, Ground Leases, Tenant Leases and Tower
Construction Advances.
(a) Monthly Compliance Certificate. Within 20 days after the end of each
------------------------------
month during the term of this Agreement, the Borrower shall provide the
Administrative Lender and each Lender with compliance certificates certified by
an Authorized Officer regarding (i) compliance by the Borrower with Section 6.15
hereof and (ii) designation of Tower Construction Advances and the related
Towers, the aggregate outstanding amount of Tower Construction Advances and
compliance with Section 8.01(e) hereof, each for the most recently completed
month, substantially in the form of Exhibit C hereto, in sufficient detail, form
---------
and substance reasonably acceptable to the Administrative Lender.
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(b) Quarterly Information Regarding Fee Owned Real Property, Ground Leases
----------------------------------------------------------------------
and Tenant Leases. The Borrower shall provide the Administrative Lender and
- -----------------
each Lender, with quarterly updates delivered with the Compliance Certificate as
required in Section 7.03 hereof, certifying as to (i) all existing Ground Leases
and fee owned real property of the Borrower and the Subsidiaries of the
Borrower, (ii) the annual charges paid in connection with fee owned real
Property (if any) and Ground Leases of the Borrower and the Subsidiaries of the
Borrower, and the annual revenues generated by each Tower on each Ground Lease
and each fee owned real property, (iii) the termination date for each such
Ground Lease, (iv) whether there exists a material breach or default by any
party to any such Ground Lease (or alleged breach or default), (v) a list of all
Non-Conforming Ground Leases on such date (detailing the reason for non-
compliance), together with a detail of all Tower Cash Flow generated by any
Tower on all Non-Conforming Ground Leases, and any non-compliance with respect
to any requirement set forth in Section 6.15 hereof or set forth on Schedule
2.16 hereof for any fee owned real Property of the Borrower and each Subsidiary
of the Borrower, and (vi) a list of all Primary Non-Conforming Tenant Leases and
Secondary Non-Conforming Tenant Leases (detailing the reason for non-compliance)
and all Tenant Lease Revenues generated by such Primary Non-Conforming Tenant
Leases and Secondary Non-Conforming Tenant Leases, all in form and substance
acceptable to the Administrative Lender. Each such quarterly update certificate
shall be certified by an Authorized Officer that there exists no breach of
Section 6.15 hereof and that there exists no Default or Event of Default under
Section 9.01(t) hereof.
(c) Annual Information Regarding Tenant Leases. The Borrower shall provide
------------------------------------------
the Administrative Lender and each Lender, with annual updates as to all
existing Tenant Leases delivered with the annual information required by Section
7.02 hereof, such information to show the Tenant Lease Revenues with respect to
each Tenant Lease, the termination date for each such Tenant Lease, whether such
Tenant Lease is a Primary Non-Conforming Tenant Lease or a Secondary Non-
Conforming Tenant Lease (and the reason therefor), and whether there exists a
material breach or default by any party to a (i) material Tenant Lease or (ii)
group of Tenant Leases which is material, all in form and substance acceptable
to the Administrative Lender.
ARTICLE VIII. NEGATIVE COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Available Commitment or any Letter of Credit is outstanding (whether or not the
conditions to borrowing have been or can be fulfilled):
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8.01. Financial Covenants.
(a) LEVERAGE RATIO. The Borrower shall not permit the Leverage Ratio
to be more than the following ratios at the end of any fiscal quarter of
the Borrower during the following time periods:
Period Ratio
------ -----
From the Closing Date
through June 30, 1998 8.00 to 1.00
From July 1, 1998
through December 31, 1998 6.50 to 1.00
From January 1, 1999
through June 30, 1999 6.00 to 1.00
From July 1, 1999
through December 31, 1999 5.50 to 1.00
From January 1, 2000
through December 31, 2000 5.00 to 1.00
From January 1, 2001
and thereafter 4.50 to 1.00
provided however,
(i) that in the event of a failure to meet the ratios required by this
Section 8.01(a), so long as no other Default or Event of Default exists
hereunder, ABRY may, through the Parent, not more than two times during the
term of this Agreement (in addition to those instances in which ABRY may be
required to make such a contribution pursuant to Section 2(b) of the
Capital Contribution Agreement), prior to the delivery by the Borrowe of
its Compliance Certificate in accordance with Section 7.03 hereof
evidencing such breach, make a capital contribution to enable the Borrower
to reduce the outstanding principal amount of Advances hereunder in an
amount sufficient to cure the breach under this Section 8.01(a). In the
event that the ABRY makes such capital contribution, the Borrower must
reduce the outstanding Advances hereunder by such amount, and the Borrower
may demonstrate its compliance with the financial covenant in this Section
8.01(a) by calculating such covenant (A) after such contribution has been
made, and (B) after the Obligation has been reduced by such contribution.
Notwithstanding anything in this Agreement to the contrary, the second time
that ABRY makes any capital contribution to cure any Event of Default as a
result of a violation of this Section 8.01(a) as permitted above, any such
capital contribution shall be applied in accordance with the terms of
Section 2.05(b) hereof, but shall permanently reduce the outstanding
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Obligations either by a reduction in the Available Commitment or
application to the installments due hereunder in the inverse order of
maturity (if such payment is made after the Conversion Date); and
(ii) notwithstanding anything herein to the contrary, no Advance
constituting a Tower Construction Advance will be included in the Total
Debt calculation to determine compliance with this Section 8.01(a), but
only so long as (A) such Advance remains a Tower Construction Advance, and
(B) there is not included in the calculation of EBITDA for the purposes of
this Section 8.01(a) only, revenue attributable to any new Tower being
constructed with the proceeds of any such Tower Construction Advance for
so long as any such Tower Construction Advance remains designated as a
Tower Construction Advance, it being understood by the parties hereto
that, notwithstanding the use of Tower Construction Advances to refurbish
or replace any existing Tower, revenue attributable to such refurbished or
replacement Tower may not be included in the calculation of EBITDA to
determine compliance with this Section 8.01(a).
(b) INTEREST COVERAGE RATIO. The Borrower shall not permit at the end of
any fiscal quarter of the Borrower the ratio of (a) EBITDA for the
preceding twelve month period to (b) the difference between (i) Interest
Expense for the preceding twelve month period minus (ii) accrued interest
expense to be paid in-kind by the Borrower, the Parent or any Subsidiary
of the Borrower, to be less than the following ratios during the following
time periods:
Period Ratio
------ -----
From the Closing Date
to December 31, 1998 1.75 to 1.00
From January 1, 1999
and thereafter 2.00 to 1.00
(c) DEBT SERVICE COVERAGE RATIO. The Borrower shall not permit at the end
of any fiscal quarter of the Borrower the ratio of (a) Annualized EBITDA to
(b) Pro Forma Debt Service to be less than 1.25 to 1.00.
(d) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit at the end
of any fiscal quarter of the Borrower, the ratio of (a) EBITDA for the most
recently completed twelve month period to (b) Fixed Charges for the most
recently completed twelve month period, to be less than 1.10 to 1.00.
(e) CAPITAL EXPENDITURES FOR TOWER CONSTRUCTION. On any date of
determination, the Borrower shall not permit the aggregate
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outstanding Tower Construction Advances to exceed the lesser of $20,000,000
or 10% of the sum of the outstanding Advances on such date of determination
plus the outstanding Letters of Credit on such date of determination.
Proceeds of all Tower Construction Advances used for preconstruction and
preacquisition expenses of the Borrower, including without limitation,
survey fees, environmental audit fees, and other expenses typically expended
by a buyer in connection with the acquisition of telecommunications towers,
shall not exceed $1,000,000 in the aggregate. Proceeds of all other Tower
Construction Advances shall be used for acquisition costs, hard costs of
construction, and any other expenses of the Borrower associated with
constructing a tower.
8.02. Debt for Borrowed Money. The Borrower shall not, and shall not
permit the Parent or any Subsidiary of the Borrower to, create, assume, incur or
otherwise become or remain obligated in respect of, or permit to be outstanding,
or suffer to exist any Debt for Borrowed Money, except:
(a) with respect to the Borrower and its Subsidiaries, Debt for Borrowed
Money under the Loan Papers;
(b) with respect to the Borrower, Debt for Borrowed Money described on
Schedule 8.02 hereto attached hereto in the principal amounts and as such Debt
for Borrowed Money exists as of the Closing Date;
(c) provided that no Default or Event of Default exists or would result
from the incurrence thereof, with respect to the Parent, Subordinated Debt owed
to ABRY up to a maximum aggregate amount of $12,500,000, which may be refinanced
(provided no Default or Event of Default exists or would result from the
incurrence thereof) with proceeds of one or more issuances (and refinances
thereof) of subordinated debt or equity which is on terms and conditions and
pursuant to documentation satisfactory to the SuperMajority Lenders);
(d) provided that no Default or Event of Default exists or would result
from the incurrence thereof, with respect to the Borrower and the Parent,
unsecured Debt for Borrowed Money up to the maximum aggregate amount at any one
time outstanding of $250,000 for both the Borrower and the Parent, which Debt
may not be subject to an interest rate in excess of 13% per annum;
(e) provided that no Default or Event of Default exists or would result
from the incurrence thereof, with respect to the Borrower and the Parent,
secured Debt for Borrowed Money not to exceed $350,000 in the aggregate for the
Borrower and the Parent throughout the term of this Agreement;
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(f) provided that no Default or Event of Default exists or would result
from the incurrence thereof, with respect to the Borrower, accrued but unpaid
Earn-Out Liabilities;
(g) provided that no Default or Event of Default exists or would result
from the incurrence thereof, with respect to the Parent, the Borrower and the
Subsidiaries of the Borrower, Debt owed to each other; provided that all Debt
owed by the Borrower or any of its Subsidiaries to the Parent shall be
Subordinated Debt;
(h) provided that no Default or Event of Default exists or would result
from the incurrence thereof, in addition to the Subordinated Debt the Parent is
entitled to incur in accordance with the terms of Section 8.02(c) above, the
Parent may incur Subordinated Debt to the Shareholders, such Subordinated Debt
not to exceed in principal face amount in the aggregate for any taxable year,
the amount necessary to enable the Borrower to obtain the maximum possible
deduction for dividends paid, as defined in Section 561 of the Code and further
described in Section 857 of the Code for such year, taking into account the sum
of all distributions previously made to Shareholders permitted by Section
8.08(b)(iii) hereof for such fiscal year, provided that, any determination under
Section 857 of the Code shall take into consideration for such purpose the
necessity of increasing the aggregate amounts distributed to reflect the fact
that distributions in redemption of any preferred return on any class of stock
will be treated as being made partly from earnings and profits and partly from
capital; and
(i) provided that no Default or Event of Default exists or would result
from the incurrence thereof, Debt for Borrowed Money incurred by the Borrower to
sellers in connection with Permitted Acquisitions, the amount of such Debt which
shall not exceed, together with the amount of seller Debt described on Schedule
8.02 hereto, the aggregate amount of Letters of Credit which are issued
hereunder in connection with such Permitted Acquisitions.
(j) provided that, no Default or Event of Default exists or would result
from the incurrence thereof, Debt for Borrowed Money incurred pursuant to the
Term Loan Agreement, which may be refinanced (provided no Default or Event of
Default exists or would result from the incurrence thereof) with proceeds of one
or more issuances (and refinances thereof) of (x) subordinated debt which is on
terms and conditions and pursuant to documentation satisfactory to the
Administrative Lender and the SuperMajority Lenders or (y) Subordinated Debt.
8.03. Liens. The Borrower shall not, and shall not permit the Parent or
any Subsidiary of the Borrower to, create, assume, incur, permit or suffer to
exist, directly or indirectly, any Lien
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on any of its assets or Properties, whether now owned or hereafter acquired,
except Permitted Liens. The Borrower shall not, and shall not permit Parent or
any Subsidiary of the Borrower to, agree with any other Person that it shall not
create, assume, incur, permit or suffer to exist or to be created, assumed,
incurred or permitted to exist, directly or indirectly, any Lien on any of its
assets or Properties.
8.04. Investments. The Borrower shall not, and shall not permit the
Parent or any Subsidiary of the Borrower to, make any Investment, except that
the Borrower may purchase or otherwise acquire and own:
(a) Marketable, direct obligations of, or guaranteed by, the United States
of America and maturing within 365 days of the date of purchase;
(b) Commercial paper issued by U.S. corporations that have a rating of A-
1/P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group, a Division of McGraw-Hill, Inc.;
(c) Certificates of deposit of domestic banks maturing within 365 days of
the date of purchase, which banks' debt obligations have one of the two highest
ratings obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc.;
(d) Securities issued by U.S. corporations that have one of the two highest
ratings obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc.;
(e) Investments in newly-formed or existing, wholly-owned Subsidiaries of
the Borrower (i) that are subject to the provisions hereof, (ii) that are or
immediately become party to the Subsidiary Guaranty and any security documents
required by the Administrative Lender, (iii) whose stock is pledged to the
Lenders to secure the Obligations pursuant to a pledge agreement substantially
identical in form and substance to the Borrower Pledge Agreement and (iv) that
are Qualified REIT Subsidiaries;
(f) Accounts receivable that arise in the ordinary course of business and
are payable on standard terms;
(g) Investments in existence on the Closing Date which are described on
Schedule 8.04 hereto;
(h) Investments constituting Permitted Acquisitions permitted by Section
8.06(b) hereof;
(i) So long as there exists no Default or Event of Default at the time such
Investment is made, Investments not in excess of
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$200,000 at any one time outstanding made by the Borrower in the form of
advances to executive employees for the purchase by any such employees of
residential property, but only to the extent that ABRY has made a capital
contribution to the Parent, and the Parent has made a capital contribution to
the Borrower, each in the form of equity, and provided further that no such
capital contribution may be used by the Borrower in connection with required
capital contributions for Permitted Acquisitions, General and Administrative
Expenses and curing Defaults and Event of Defaults under this Agreement and the
Loan Papers; and
(j) Certificates of deposit and Eurodollar time deposits with maturities of
one year or less from the date of acquisition, overnight bank deposits and
repurchase obligations having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States government
or any agency thereof, in each case, of either an Eligible Assignee or Brown
Brothers Harriman & Co., provided that such Investments do not exceed
$20,000,000 in the aggregate at any time outstanding.
8.05. Amendment and Waiver. The Borrower shall not, and shall not
permit the Parent or any Subsidiary of the Borrower to, enter into any amendment
of any term or provision, or accept any consent or waiver with respect to any
such provision, of (a) its articles of incorporation or by-laws in any manner
material and adverse to the Lenders, (b) any material provision of any material
Capital Lease in any manner material and adverse to the Lenders, (c) the Capital
Contribution Agreement, (d) any provision in any Ground Lease provision that is
set forth on Exhibit K hereto, (e) any material provision of the Stockholders
Agreement in any manner material and adverse to the Lenders or which would
result in a breach of any provision of the Loan Papers, or (f) the Term Loan
Agreement.. The Borrower shall not, nor shall it permit the Parent or any
Subsidiary of the Borrower to, amend or change (or take any action or fail to
take any action the result of which is an effective amendment or change) or
accept any waiver or consent with respect to, the Subordinated Debt that would
result in (a) an increase in any principal, interest, fees, or other amounts
payable under the Subordinated Debt (including without limitation a waiver or
action that results in the waiver of any payment default under the Subordinated
Debt), (b) a change in any date fixed for any payment of principal, interest,
fees, or other amounts payable under the Subordinated Debt (including, without
limitation, as a result of any redemption) to a date earlier than January 31,
2005, (c) a change in any financial covenant in the Subordinated Debt to a more
restrictive provision for the Borrower, the Parent or any Subsidiary of the
Borrower, (d) an increase in any remedy or right (or any change that broadens
the rights or remedies) of the holders of the Subordinated Debt, (e) a change in
any covenant, term or provision in the Subordinated Debt which would result in
such term or provision being more restrictive than the terms of this Agreement
and the Loan Papers, or (f) a change in any term or
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provision of the Subordinated Debt, or other document or instrument in
connection therewith that could have, in any material respect, an adverse effect
on the interests of the Lenders.
8.06. Liquidation, Disposition or Acquisition of Assets, Merger, New
Subsidiaries. The Borrower shall not, and shall not permit the Parent or any
Subsidiary of the Borrower to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or dissolution)
or otherwise wind up; or sell, lease, abandon, transfer or otherwise dispose of
all or any part of its assets, Properties or business (other than in the
ordinary course of business and other than assets that are damaged or obsolete),
provided that, (i) any Subsidiary of the Borrower can be dissolved so long as
the Borrower or a wholly-owned Subsidiary of the Borrower acquires all such
Subsidiary's assets; and (ii) so long as there exists no Default or Event of
Default both before and after giving effect to such sale and the Borrower
complies fully with Section 2.05(c) hereof, Borrower may consummate the sale of
Towers (but not all or any substantial portion of Towers).
(b) acquire any assets, Property or business of any other Person except (i)
the Borrower and the Subsidiaries of the Borrower may acquire assets and
Property acquired in the ordinary course of business and (ii) provided no
Default or Event of Default exists or would result therefrom, the Borrower may
consummate transactions constituting Permitted Acquisitions;
(c) enter into any merger or consolidation, except that, so long as there
exists no Default or Event of Default and none is caused thereby, (i) any
Subsidiary of the Borrower can merge or consolidate into any other Subsidiary of
the Borrower, or so long as such transaction is in connection with a Permitted
Acquisition, into another Person, so long as a Subsidiary of the Borrower is a
survivor, or into the Borrower so long as the Borrower is the surviving
corporation, and (ii) another Person may be merged into the Borrower or any
Subsidiary of the Borrower in connection with a Permitted Acquisition, so long
as the Borrower or such Subsidiary is the surviving corporation; or
(d) create or acquire any Subsidiary, except as permitted by Section 8.04(e)
hereof.
In connection with any asset sale permitted by this Section 8.06 or otherwise
consented to by the Lenders in accordance with the terms of this Agreement, the
Administrative Lender is hereby authorized by each Lender to (i) execute any and
all releases deemed appropriate by it to release such assets of the Borrower and
the Subsidiaries of the Borrower constituting Collateral from all Liens and
security interests securing all or any portion of the Obligations, (ii) return
to the Borrower any such Collateral in the
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possession of the Administrative Lender, and (iii) take such other action as the
Administrative Lender deems necessary or appropriate in connection with such
transaction and in furtherance of the effectuation thereof.
8.07. Guaranties; Contingent Liabilities. The Borrower shall not, and
shall not permit the Parent or any Subsidiary of the Borrower to, at any time
make or issue any Guaranty, or assume, be obligated with respect to, or permit
to be outstanding any Contingent Liabilities, except pursuant to the Loan
Papers.
8.08. Restricted Payments. The Borrower shall not, and shall not
permit the Parent or any Subsidiary of the Borrower to, directly or indirectly
declare, make or pay any Restricted Payment; provided, however
(a) any Subsidiary of the Borrower may declare and pay a Distribution to the
Borrower, and
(b) so long as there exists no Default or Event of Default immediately
before and after giving effect to any such transaction,
(i) the Borrower may pay ABRY a management fee in an amount not to
exceed in the aggregate for any fiscal year of the Borrower, $75,000,
(ii) (A) the Borrower and the Parent may each make payments in kind
on its Subordinated Debt (but only in kind payments and no cash payments).
(iii) the Borrower may annually make not more than two cash
distributions to the Parent, who must use such cash distributions to make
distributions to the Shareholders, each such distribution in an aggregate
amount per taxable year equal to (A) the amount of gross income actually
includible by the Shareholders on their Tax returns with respect to such
taxable year solely as a result of the operations of the Parent, the
Borrower and its Subsidiaries, multiplied by (B) the sum of the highest
marginal Federal and highest marginal State income tax rates applicable to
one or more of the Shareholders,
(iv) Borrower may make one or more distributions with respect to any
taxable year constituting Subordinated Debt to the Parent, who, to the
extent such distribution is made by the Borrower may make one or more
distributions with respect to any taxable year constituting Subordinated
Debt to the Shareholders, each such distribution constituting Subordinated
Debt not to exceed in the aggregate an amount necessary to enable the Parent
to obtain the maximum possible deduction for dividends paid, as defined in
Section 561 of the Code and further described in Section 857 of the Code for
such year, taking into account the sum of all distributions previously
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paid to Shareholders in accordance with the terms of Section 8.08(b)(iii)
above, provided that, in connection with any such distribution, the Parent
shall take into consideration for such purpose the necessity of increasing
the aggregate amounts distributed to reflect the fact that distributions in
redemption of any preferred return on any class of stock will be treated as
being made partly from earnings and profits and partly from capital,
(v) the Borrower may make a distribution to the Parent to enable the
Parent to repurchase capital stock of the Parent owned by any deceased
Shareholder (and the Parent is hereby permitted to do so) (A) to the extent
that the Borrower was the beneficiary of a key-man life insurance policy on
such Shareholder and (B) in an amount not to exceed net proceeds received by
the Borrower from such key-man life insurance, and
(vi) at such time as the Leverage Ratio is less than 5.00 to 1.00,
the Borrower may make a distribution to the Parent to enable the Parent to
repurchase capital stock of the Parent owned by any Shareholder that was an
officer of the Borrower that has resigned or has been terminated (and the
Parent is hereby permitted to do so) (A) in accordance with the terms of
that certain Second Amended and Restated Subscription and Stockholders
Agreement, among the Parent and the Shareholders, dated as of May 16, 1996
(the "Stockholders Agreement") and (B) in an amount not to exceed any equity
contribution made by ABRY to the Parent and by the Parent to the Borrower
for such purpose;
(vii) the Borrower may make an annual distribution to Parent in an
amount not to exceed $50,000 to reimburse the Parent and ABRY for its
miscellaneous expenses; and
(viii) provided that the Leverage Ratio is at the time of such payment
less than 4.25 to 1.00, after September 19, 2000, the Borrower may make cash
distributions to the Parent to permit the Parent to pay, and the Parent may
use the proceeds of such distributions to pay, accrued interest at the rate
and as provided in the Term Loan Agreement in effect on the Closing Date (as
that term is defined in the Term Loan Agreement), to the extent such
interest is required by the terms of the Term Loan Agreement to be paid in
cash at such time,
(ix) the Parent may use the proceeds of (x) Subordinated Debt owed to
ABRY or (y) other subordinated debt with substantially similar terms
acceptable in form and substance to the Administrative Lender and the
SuperMajority Lenders incurred after such Closing Date to refinance the
principal and interest in respect of Debt for Borrowed Money described in
Section 8.02(j), and
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(x) within 130 days after the end of each fiscal year of Borrower
ending on or after the Conversion Date, to the extent there exists Excess
Cash Flow not required to reduce the Available Commitment pursuant to
Section 2.05(b) of the Credit Agreement, the Borrower may make an annual
distribution to the Parent in the amount of such Excess Cash Flow.
8.09. Affiliate Transactions. The Borrower shall not, and shall not
permit the Parent or any Subsidiary of the Borrower to, at any time engage in
any transaction with an Affiliate, nor make an assignment or other transfer of
any of its assets or Properties to any Affiliate, on terms materially less
advantageous to the Parent, the Borrower or any Subsidiary of the Borrower than
would be the case if such transaction had been effected with a non-Affiliate,
except pursuant to the Capital Contribution Agreement, the agreements listed on
Schedule 8.09 hereto and except for Restricted Payments permitted to be paid
under Section 8.08 hereof, and as expressly permitted in Sections 8.02 and 8.04
hereof.
8.10. Compliance with ERISA. The Borrower shall not, and shall not
permit the Parent or any Subsidiary of the Borrower to, directly or indirectly,
or permit any member of its Controlled Group to directly or indirectly, (a)
terminate any Plan so as to result in any material (in the opinion of the
Majority Lenders) liability to the Borrower or any member of its Controlled
Group, (b) permit to exist any ERISA Event, or any other event or condition
which presents the risk of liability of the Borrower or any member of its
Controlled Group, (c) make a complete or partial withdrawal (within the meaning
of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
liability to the Borrower or any member of its Controlled Group, (d) enter into
any new Plan or modify any existing Plan so as to increase its obligations
thereunder except in the ordinary course of business consistent with past
practice which could result in any liability to the Borrower or any member of
its Controlled Group, or (e) permit the present value of all benefit
liabilities, as defined in Title IV of ERISA, under each Plan of the Borrower or
any member of its Controlled Group (using the actuarial assumptions utilized by
the PBGC upon termination of a plan) to exceed the fair market value of Plan
assets allocable to such benefits all determined as of the most recent valuation
date for each such Plan.
8.11. Capital Stock. The Borrower shall not, and shall not permit the
Parent or any Subsidiary of the Borrower to (a) make or permit any transfer,
assignment, distribution, mortgage, pledge or gift of any shares of Pledged
Stock, and (b) issue any Capital Stock, except as specifically permitted
pursuant to Section 8.02(c) hereof, provided that, if there exists no Default or
Event of Default before and immediately after giving effect to such issuance
(provided that, in accordance with the provisions of Section 8.01(a) hereof, a
Default or Event of Default may exist prior to
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such issuance), the Parent may issue Capital Stock of the Parent to any Person.
8.12. Sale and Leaseback. The Borrower shall not, and shall not permit
the Parent or any Subsidiary of the Borrower to, enter into any arrangement
whereby it sells or transfers any of its assets, and thereafter rents or leases
such assets, except that the Borrower may sell real estate that it owns and
thereafter lease it subject to a Ground Lease, provided that the Borrower
complies with the provisions of Sections 6.15 and 7.07 hereof as if the Borrower
had acquired such leased property.
8.13. Sale or Discount of Receivables. The Borrower shall not, and
shall not permit the Parent or any Subsidiary of the Borrower to, directly or
indirectly sell, with or without recourse, for discount or otherwise, any notes
or accounts receivable.
ARTICLE IX. EVENTS OF DEFAULT
9.01. Events of Default. Any one or more of the following shall be an
"Event of Default" hereunder, if the same shall occur for any reason whatsoever,
whether voluntary or involuntary, by operation of Law, or otherwise:
(a) The Borrower shall fail to pay any (i) principal payable under any Loan
Paper on the date due; or (ii) any interest, fees or other amounts payable
within three days of the date due;
(b) Any representation or warranty made or deemed made by any Obligor (or
any of its officers or representatives) under or in connection with any Loan
Paper shall prove to have been incorrect or misleading in any material respect
when made or deemed made;
(c) The Borrower shall fail to perform or observe any term or covenant
contained in Article VIII hereof;
(d) Any Obligor shall fail to perform or observe any other term or covenant
contained in any Loan Paper, other than those described in Sections 9.01(a), (b)
and (c) above or in Sections 6.15(a) and (b) hereof, and such failure shall not
be remedied within thirty days following the earlier of the Borrower's knowledge
of such failure or notice from any Lender of the occurrence of such failure;
(e) Any of the following shall occur: (i) Any Loan Paper or material
provision thereof shall, for any reason, not be valid and binding on the Obligor
signatory thereto, or not be in full force and effect, or shall be declared to
be null and void; or (ii) the validity or enforceability of any Loan Paper shall
be contested by any Obligor; or (iii) any Obligor shall deny in writing that it
has any or further liability or obligation under its respective Loan
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Papers; or (iv) any default or breach under any provision of any Loan Papers
shall continue after the applicable grace period, if any, specified in such Loan
Paper;
(f) Any of the following shall occur: (i) any Obligor shall make an
assignment for the benefit of creditors or be unable to pay its debts generally
as they become due; (ii) any Obligor shall petition or apply to any Tribunal for
the appointment of a trustee, receiver, or liquidator of it, or of any
substantial part of its assets, or shall commence any proceedings relating to
any Obligor under any Debtor Relief Laws; (iii) any such petition or application
shall be filed, or any such proceedings shall be commenced, against any Obligor,
or an order, judgment or decree shall be entered appointing any such trustee,
receiver, or liquidator, or approving the petition in any such proceedings, and
such petition or application shall be consented to or uncontested by such
Obligor, or if contested by such Obligor, shall not be dismissed within 60 days
following the filing of such petition or application; (iv) any final order,
judgment, or decree shall be entered in any proceedings against any Obligor
decreeing its dissolution; or (v) any final order, judgment, or decree shall be
entered in any proceedings against any Obligor decreeing its split-up which
requires the divestiture of a substantial part of its assets;
(g) Any of the following shall occur: (i) The Borrower or any other Obligor
shall fail to pay any Subordinated Debt, or any Debt or obligations in respect
of Capital Leases (other than Debt under the Loan Papers) in an aggregate amount
of $1,000,000 or more when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or (ii) the Borrower or any other Obligor
shall fail to perform or observe any term or covenant contained in any agreement
or instrument relating to any such Debt, when required to be performed or
observed, and such failure shall continue after the applicable grace period, if
any, specified in such agreement or instrument, and can result in acceleration
of the maturity of such Debt; or (iii) any such Debt shall be declared to be due
and payable, or required to be prepaid, mandatorily redeemed or repurchased
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof;
(h) Any Obligor shall have any final judgment(s) outstanding against it for
the payment of $1,000,000 or more, and such judgment(s) shall remain unstayed,
in effect, and unpaid for the period of time after which the judgment holder may
and may cause the creation of Liens against or seizure of any of its Property;
(i) Any of the following shall have occurred: (i) Any ERISA Event shall
have occurred with respect to a Plan of the Borrower,
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and the sum of the Insufficiency of such Plan and liabilities relating thereto
is equal to or greater than $1,000,000 or (ii) the Borrower or any ERISA
Affiliate of the Borrower shall have committed a failure described in Section
302(f)(l) of ERISA, and the amount determined under Section 302(f)(3) of ERISA
is equal to or greater than $1,000,000;
(j) The Borrower or any ERISA Affiliate of the Borrower shall have been
notified by the sponsor of a Multiemployer Plan that (A) it has incurred
Withdrawal Liability to such Plan in an amount that, exceeds $1,000,000 or
requires payments exceeding $1,000,000 per annum, or (B) such Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result thereof the aggregate annual contributions to all Multiemployer
Plans in reorganization or being terminated is increased over the amounts
contributed to such Plans for the preceding Plan year by an amount exceeding
$1,000,000;
(k) Any Obligor shall be required under any Environmental Law (i) to
implement any remedial, neutralization, or stabilization process or program, the
cost of which would constitute a Material Adverse Change, or (ii) to pay any
penalty, fine, or damages in an aggregate amount which would constitute a
Material Adverse Change;
(l) Any of the following shall have occurred: (i) Any Property (whether
leased or owned), or the operations conducted thereon by any Obligor or any
current or prior owner or operator thereof (in the case of real Property), shall
violate or have violated any applicable Environmental Law, if such violation
would constitute a Material Adverse Change; or (ii) such Obligor shall not
obtain or maintain any License required to be obtained or filed under any
Environmental Law in connection with the use of such Property and assets,
including without limitation past or present treatment, storage, disposal, or
release of Hazardous Materials into the environment, if the failure to obtain or
maintain the same would constitute a Material Adverse Change;
(m) Any of the following shall have occurred: (i) Any Loan Paper shall for
any reason (other than pursuant to the terms thereof) cease to create a valid
and perfected first priority Lien in the Collateral purported to be covered
thereby (except as permitted by the terms of this Agreement or consented to by
the Lenders); or (ii) less than 100% of the Capital Stock of the Borrower shall
be pledged to secure the Obligations;
(n) Any of the following shall have occurred: (i) A final non-appealable
order is issued by any Tribunal, including, but not limited to, the FCC, the FAA
or the United States Justice Department, requiring Borrower to divest a
substantial portion of its assets pursuant to any antitrust, restraint of trade,
unfair competition, industry regulation, or similar Laws, or (ii) any Tribunal
shall condemn, seize, or otherwise appropriate, or take
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custody or control of all or any substantial portion of the assets of Borrower;
(o) Any of the following shall have occurred if the effect thereof is to
cause a Material Adverse Change: (i) Any License whether presently existing or
hereafter granted to or obtained by Borrower or any Subsidiary of the Borrower
shall expire without renewal on or before payment in full of the Notes and all
Obligations hereunder, or be suspended or revoked, or (ii) Borrower or any
Subsidiary of the Borrower shall become subject to any injunction or other order
affecting or which may affect Borrower's or a Subsidiary of the Borrower's
present or proposed operations under any such License;
(p) Any of the following shall have occurred: (i) There shall exist any
breach of the Capital Contribution Agreement after the expiration of any
applicable grace period, or (ii) ABRY or the Parent shall fail at any time to
perform any obligation it has under the Capital Contribution Agreement, after
the expiration of any applicable grace period, or (iii) ABRY, the Parent or the
Borrower denies the validity or enforceability of the Capital Contribution
Agreement or any material provision thereof;
(q) Any of the following shall have occurred: (i) the Shareholders in
existence on the Closing Date shall, at any time, own and control less than 51%
of the outstanding voting stock of the Parent; or (ii) the Parent shall own less
than 100% of the Capital Stock of the Borrower, or the Borrower shall own less
than 100% of its Subsidiaries;
(r) For any taxable year, the Borrower shall have made any Restricted
Payment to the Parent, or the Parent shall have made any Restricted Payment to
any Shareholder in accordance with the terms of Section 8.08(b)(iii) hereof for
the tax liability of any Shareholder for such taxable year, and the Borrower or
the Parent shall also have paid or be subject to any Federal income tax on any
amount in excess of five percent of the Borrower's real estate investment trust
taxable income for such taxable year;
(s) Any civil action, suit or proceeding shall be commenced against
Borrower, the Parent, or any Subsidiary of the Borrower under any federal or
state racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970)("RICO") and such suit shall be
adversely determined by a court of applicable jurisdiction and forfeiture shall
commence against assets in the aggregate having fair market value of $1,000,000
or more, or any criminal action or proceeding shall be commenced against the
Borrower, the Parent, or any Subsidiary of the Borrower under any federal or
state racketeering statute (including, without limitation, RICO);
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(t) With respect to Parent, Borrower or any Subsidiary of the Borrower, (i)
any such entity fails to pay dividends in the amount of taxable income necessary
to maintain Parent's REIT Status, or (ii) Parent shall fail to maintain its REIT
Status or (iii) Borrower or any Subsidiary of Borrower shall fail to maintain
its status as a Qualified REIT Subsidiary; and
(u) Any of the following shall occur: (i) The Borrower or any other Obligor
shall, if Debt for Borrowed Money is outstanding under the Term Loan Agreement
on the third anniversary of the Closing Date (as that term is defined in the
Term Loan Agreement), fail to extend the time for payment under the Term Loan
Agreement until ten years after the Closing Date (as defined in the Term Loan
Agreement) as provided in Section 4.1(b) of the Term Loan Agreement, and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or (ii) the Borrower or any
other Obligor shall fail to perform or observe any term or covenant contained in
any agreement or instrument relating to any such Debt, when required to be
performed or observed, and such failure shall continue after the applicable
grace period, if any, specified in such agreement or instrument, and can result
in acceleration of the maturity of such Debt; or (iii) any such Debt shall be
declared to be due and payable, or required to be prepaid, mandatorily redeemed
or repurchased, prior to the stated maturity thereof; or (iv) if, any
obligations under the Term Loan Agreement remain outstanding, a "Change of
Control" as that term is defined in the Term Loan Agreement shall occur.
9.02. Remedies upon Default. If an Event of Default described in
Section 9.01(f) shall occur with respect to any Obligor, the aggregate unpaid
principal balance of and accrued interest on all Advances shall, to the extent
permitted by applicable Law, thereupon become due and payable concurrently
therewith, without any action by Administrative Lender or any Lender, and
without diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby expressly
waived. Subject to the foregoing sentence, if any Event of Default shall occur
and be continuing, Administrative Lender may at its election, do any one or more
of the following:
(a) Declare the entire unpaid balance of all Advances immediately due and
payable, whereupon it shall be due and payable without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind (except notices specifically provided for under Section 9.01 hereof),
all of which are hereby expressly waived (except to the extent waiver of the
foregoing is not permitted by applicable Law);
(b) Terminate the Available Commitment;
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(c) Reduce any claim of Administrative Lender and Lenders to judgment;
(d) Demand (and the Borrower shall pay to Administrative Lender)
immediately upon demand and in immediately available funds, the amount equal to
the aggregate amount of the Letters of Credit then outstanding, irrespective of
whether such Letters of Credit have been drawn upon, all as set forth and in
accordance with the terms of provisions of Article III hereof. The
Administrative Lender shall promptly advise the Borrower of any such declaration
or demand but failure to do so shall not impair the effect of such declaration
or demand; and
(e) Exercise any Rights afforded under any Loan Papers, by Law, including
but not limited to the UCC, at equity, or otherwise.
9.03. Cumulative Rights. All Rights available to Administrative Lender
and Lenders under the Loan Papers shall be cumulative of and in addition to all
other Rights granted thereto at Law or in equity, whether or not amounts owing
thereunder shall be due and payable, and whether or not Administrative Lender or
any Lender shall have instituted any suit for collection or other action in
connection with the Loan Papers.
9.04. Waivers. The acceptance by Administrative Lender or any Lender at
any time and from time to time of partial payment of any amount owing under any
Loan Papers shall not be deemed to be a waiver of any Default or Event of
Default then existing. No waiver by Administrative Lender or any Lender of any
Default or Event of Default shall be deemed to be a waiver of any Default or
Event of Default other than such Default or Event of Default. No delay or
omission by Administrative Lender or any Lender in exercising any Right under
the Loan Papers shall impair such Right or be construed as a waiver thereof or
an acquiescence therein, nor shall any single or partial exercise of any such
Right preclude other or further exercise thereof, or the exercise of any other
Right under the Loan Papers or otherwise.
9.05. Performance by Administrative Lender or any Lender. Should any
covenant of any Obligor fail to be performed in accordance with the terms of the
Loan Papers, Administrative Lender may, at its option, perform or attempt to
perform such covenant on behalf of such Obligor. Notwithstanding the foregoing,
it is expressly understood that neither Administrative Lender nor any Lender
assumes, and shall not ever have, except by express written consent of
Administrative Lender or such Lender, any liability or responsibility for the
performance of any duties or covenants of any Obligor.
9.06. Expenditures. The Borrower shall reimburse Administrative Lender
and each Lender for any reasonable sums spent by it in connection with the
exercise of any Right under Section
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9.05 hereof. Such sums shall bear interest at the lesser of (a) the Base Rate
(whether or not in effect), plus 2.00% per annum and (b) the Highest Lawful
Rate, from five days after the date any Lender makes demand to the Borrower for
reimbursement of such amount until the date of repayment by the Borrower.
9.07. Control. None of the covenants or other provisions contained in
this Agreement shall, or shall be deemed to, give Administrative Lender or any
Lender any Rights to exercise control over the affairs and/or management of any
Obligor, the power of Administrative Lender and each Lender being limited to the
Rights to exercise the remedies provided in this Article; provided, however,
-------- -------
that if Administrative Lender or any Lender becomes the owner of any
partnership, stock or other equity interest in any Person, whether through
foreclosure or otherwise, it shall be entitled to exercise such legal Rights as
it may have by being an owner of such stock or other equity interest in such
Person.
ARTICLE X. THE ADMINISTRATIVE LENDER
10.01. Authorization and Action. Each Lender hereby appoints and
authorizes Administrative Lender to take such action as Administrative Lender on
its behalf and to exercise such powers under this Agreement and the other Loan
Papers as are delegated to the Administrative Lender by the terms of the Loan
Papers, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement and the other Loan
Papers (including without limitation enforcement or collection of the Notes),
Administrative Lender shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Majority Lenders (or all Lenders, if required under Section 11.01 hereof), and
such instructions shall be binding upon all Lenders; provided, however, that
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Administrative Lender shall not be required to take any action which exposes
Administrative Lender to personal liability or which is contrary to any Loan
Papers or applicable Law. Administrative Lender agrees to give to each Lender
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement, and to distribute to each applicable Lender in like funds all amounts
delivered to Administrative Lender by the Borrower for the Ratable or individual
account of any Lender. Functions of the Administrative Lender are administerial
in nature and in no event shall the Administrative Lender have a fiduciary or
trustee relationship in respect of any Lender by reason of this Agreement or any
Loan Paper.
10.02. Administrative Lender's Reliance, Etc. Neither Administrative
Lender, nor any of its directors, officers, agents, employees, or
representatives shall be liable for any action taken or omitted to be taken by
it or them under or in connection with
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this Agreement or any other Loan Paper, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, Administrative Lender (a) may treat the payee of any Note as the
holder thereof until Administrative Lender receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Administrative Lender; (b) may consult with legal counsel (including counsel for
the Borrower or any of its Subsidiaries), independent public accountants, and
other experts selected by it, and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants, or experts; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
warranties, or representations made in or in connection with this Agreement or
any other Loan Papers; (d) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants, or conditions
of this Agreement or any other Loan Papers on the part of any Obligor or its
Subsidiaries or to inspect the Property (including the books and records) of any
Obligor or its Subsidiaries; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement, any other Loan Papers, or any other instrument or
document furnished pursuant hereto; and (f) shall incur no liability under or in
respect of this Agreement or any other Loan Papers by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties.
10.03. NationsBank of Texas, National Association and Affiliates. With
respect to its Available Commitment, its Advances, and any Loan Papers,
NationsBank of Texas, National Association has the same Rights under this
Agreement as any other Lender and may exercise the same as though it were not
Administrative Lender. NationsBank of Texas, National Association and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, any Obligor,
any Affiliate thereof, and any Person who may do business therewith, all as if
NationsBank of Texas, National Association were not Administrative Lender and
without any duty to account therefor to any Lender.
10.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Lender or any other
Lender, and based on the financial statements referred to in Section 5.01(j),
Article VII hereof and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon Administrative Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions
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in taking or not taking action under this Agreement and the other Loan Papers.
10.05. Indemnification by Lenders. Lenders shall indemnify
Administrative Lender, Pro Rata, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Administrative Lender in any way relating
to or arising out of any Loan Papers or any action taken or omitted by
Administrative Lender thereunder, including any negligence of Administrative
Lender; provided, however, that no Lender shall be liable for any portion of
-------- -------
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements resulting from Administrative Lender's
gross negligence or willful misconduct. Without limitation of the foregoing,
Lenders shall reimburse Administrative Lender, Pro Rata, promptly upon demand
for any out-of-pocket expenses (including reasonable attorneys' fees) incurred
by Administrative Lender in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiation, legal proceedings or otherwise) of, or legal and other
advice in respect of rights or responsibilities under, the Loan Papers. The
indemnity provided in this Section 10.05 shall survive the termination of this
Agreement.
10.06. Successor Administrative Lender. Administrative Lender may resign
at any time by giving written notice thereof to Lenders and the Borrower, and
may be removed at any time with or without cause by the action of all Lenders
(other than Administrative Lender, if it is a Lender). Upon any such
resignation, Majority Lenders shall have the right to appoint a successor
Administrative Lender. If no successor Administrative Lender shall have been so
appointed and shall have accepted such appointment within thirty days after the
retiring Administrative Lender's giving of notice of resignation, then the
retiring Administrative Lender may, on behalf of Lenders, appoint a successor
Administrative Lender, which shall be a commercial bank organized under the Laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Administrative Lender hereunder by a successor Administrative
Lender, such successor Administrative Lender shall thereupon succeed to and
become vested with all the Rights and duties of the retiring Administrative
Lender, and the retiring Administrative Lender shall be discharged from its
duties and obligations under the Loan Papers, provided that if the retiring or
removed Administrative Lender is unable to appoint a successor Administrative
Lender, Administrative Lender shall, after the expiration of a sixty day period
from the date of notice, be relieved of all obligations as Administrative Lender
hereunder. Notwithstanding any Administrative Lender's resignation or removal
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hereunder, the provisions of this Article shall continue to inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Lender under this Agreement.
ARTICLE XI. MISCELLANEOUS
11.01. Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Papers, nor consent to any departure by the
Borrower or any Obligor therefrom, shall be effective unless the same shall be
in writing and signed by the Borrower and the Administrative Lender with the
consent of the Majority Lenders, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver, or consent shall (and the
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result of action or failure to take action shall not) unless in writing and
signed by all of Lenders and Administrative Lender, (a) increase the Available
Commitment, (b) reduce any principal, interest, fees, or other amounts payable
hereunder, or waive or result in the waiver of any Event of Default under
Section 9.01(a) hereof, (c) postpone any date fixed for any payment of
principal, interest, fees, or other amounts payable hereunder, (d) release any
Collateral or guaranties securing any Obligor's obligations hereunder, other
than releases contemplated hereby and by the Loan Papers, (e) change the meaning
of "Specified Percentage" or the number of Lenders required to take any action
hereunder, change the definitions of "Available Commitment", "Unavailable
Commitment", "Aggregate Commitment", "Conversion Date", "Maturity Date",
"Majority Lenders", or "Letter of Credit Commitment", (f) amend Section 2 of the
Capital Contribution Agreement, (g) amend Section 2.06(a), 2.18(e), (h), and
(i), 2.11(a) and (b), the last sentence of 8.01(a)(i), and this Section 11.01.
No amendment, waiver, or consent shall affect the Rights or duties of
Administrative Lender under any Loan Papers, unless it is in writing and signed
by Administrative Lender in addition to the requisite number of Lenders.
11.02. Notices.
(a) Manner of Delivery. All notices communications and other materials to
be given or delivered under the Loan Papers shall, except in those cases where
giving notice by telephone is expressly permitted, be given or delivered in
writing. All written notices, communications and materials shall be sent by
registered or certified mail, postage prepaid, return receipt requested, by
telecopier, or delivered by hand. In the event of a discrepancy between any
telephonic notice and any written confirmation thereof, such written
confirmation shall be deemed the effective notice except to the extent
Administrative Lender, any Lender or the Borrower has acted in reliance on such
telephonic notice.
(b) Addresses. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or
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delivered at the following respective addresses and telecopier and telephone
numbers and to the attention of the following individuals or departments:
(i) If to the Borrower:
Pinnacle Towers Inc.
1549 Ringling Boulevard
3rd Floor
Sarasota, Florida 34236
Telephone No.: (941) 364-8886
Telecopier No.: (941) 364-8761
Attention: Mr. Steve Day
(ii) If to Administrative Lender:
NationsBank of Texas, National Association
NationsBank Plaza
901 Main Street, 64th Floor
Dallas, Texas 75202
Telephone No.: (214) 508-0988
Telecopier No.: (214) 508-9390
Attention: Ms. Roselyn Reid
Vice President
With a copy to:
Donohoe, Jameson & Carroll, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Telephone No.: (214) 698-3814
Telecopier No.: (214) 744-0231
Attention: Melissa Ruman Stewart
(iii) If to any Lender, to its address shown on Schedule 11.02 hereto or
on any Assignment and Acceptance.
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(d) Effectiveness. Each notice, communication and any material to be given
or delivered to any party pursuant to this Agreement shall be effective or
deemed delivered or furnished (i) if sent by mail, on the fifth day after such
notice, communication or material is deposited in the mail, addressed as above
provided, (ii) if sent by telecopier, when such notice, communication or
material is transmitted to the appropriate number determined as above provided
in this Section 11.02 and the appropriate receipt is
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received or otherwise acknowledged, (iii) if sent by hand delivery or overnight
courier, when left at the address of the addressee addressed as above provided,
and (iv) if given by telephone, when communicated to the individual or any
member of the department specified as the individual or department to whose
attention notices, communications and materials are to be given or delivered
except that notices of a change of address, telecopier or telephone number or
individual or department to whose attention notices, communications and
materials are to be given or delivered shall not be effective until received;
provided, however, that notices to Administrative Lender pursuant to Article II
- -------- -------
shall be effective when received. The Borrower agrees that Administrative
Lender shall have no duty or obligation to verify or otherwise confirm
telephonic notices given pursuant to Article II, and agrees to indemnify and
hold harmless Administrative Lender and Lenders for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, and expenses resulting, directly or indirectly, from acting upon any such
notice.
11.03. Parties in Interest. All covenants and agreements contained in
this Agreement and all other Loan Papers shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto. Each Lender may
from time to time assign or transfer its interests hereunder pursuant to Section
11.04 hereof. The Borrower may not assign or transfer its Rights or obligations
hereunder without the prior written consent of Administrative Lender.
11.04. Assignments and Participations.
(a) Each Lender (an "Assignor") may assign its Rights and obligations as a
Lender under the Loan Papers to one or more Eligible Assignees pursuant to an
Assignment and Acceptance, so long as (i) each assignment shall be of a
constant, and not a varying percentage of all Rights and obligations thereunder,
(ii) each Assignor shall obtain in each case the prior written consent of
Administrative Lender and the Borrower, in each case such consent not to be
unreasonably withheld or delayed, provided that, in the event there exists a
Default or Event of Default, any such consent of the Borrower shall not be
required, (iii) each Assignor shall in each case pay a $3,500 processing fee to
Administrative Lender and (iv) no such assignment is for an amount less than
$5,000,000 (and, if such assignment is a partial assignment, no Lender shall
hold less than $5,000,000 immediately after giving effect to any assignment).
Assignments and other transfers (except participations) with respect to each
Lender's participation in a given Letter of Credit may only be made with the
prior written consent of the Administrative Lender. Within five Business Days
after Administrative Lender receives notice of any such assignment, the Borrower
shall execute and deliver to Administrative Lender, in exchange for the Notes
issued to Assignor, new Notes to the order of such Assignor and its assignee in
amounts equal to their
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<PAGE>
respective Specified Percentages of the Available Commitment. Such new Notes
shall be dated the effective date of the assignment. It is specifically
acknowledged and agreed that on and after the effective date of each assignment,
the assignee shall be a party hereto and shall have the Rights and obligations
of a Lender under the Loan Papers.
(b) Each Lender may sell participations to one or more Persons in all or any
of its Rights and obligations under the Loan Papers; provided, however, that (i)
-------- -------
such Lender's obligations under the Loan Papers shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
its Notes for all purposes of the Loan Papers, (iv) the participant shall be
granted the Right to vote on or consent to only those matters described in
Sections 11.01(a), (b), (c) and (d) hereof, (v) Obligor, Administrative Lender,
and other Lenders shall continue to deal solely and directly with such Lender in
connection with its Rights and obligations under the Loan Papers and (vi) no
such participation is for an amount less than $5,000,000.
(c) Any Lender may, in connection with any assignment or participation, or
proposed assignment or participation, disclose to the assignee or participant,
or proposed assignee or participant, any information relating to any Obligor
furnished to such Lender by or on behalf of any Obligor.
(d) Notwithstanding any other provision set forth in this Agreement, (i) any
Lender may at any time create a security interest in all or any portion of its
Rights under this Agreement (including, without limitation, the Advances owing
to it and the Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System, (ii) no participant of any Lender may further assign or participate any
of its interest in the Loan Papers to any Person (except as may be required by
Law or a Tribunal having authority over such participant), and (iii) no Lender
(other than NationsBank of Texas, N.A.) may assign any of its interest in the
Loan Papers to any Person (except as may be required by Law or a Tribunal having
authority over NationsBank of Texas, N.A.) except as specifically provided in
Section 11.04 hereof.
11.05. Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any Right of set-off,
or otherwise) on account of its Advances in excess of its Pro Rata share of
payments made by the Borrower, such Lender shall forthwith purchase
participations in Advances made by the other Lenders as shall be necessary to
share the excess payment Pro Rata with each of them; provided, however, that if
-------- -------
any of such excess payment is thereafter recovered from the purchasing Lender,
its purchase from each Lender shall be rescinded and each Lender
96
<PAGE>
shall repay the purchase price to the extent of such recovery together with a
Pro Rata share of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Borrower agrees that
any Lender so purchasing a participation from another Lender pursuant to this
Section 11.05 may, to the fullest extent permitted by Law, exercise all its
Rights of payment (including the Right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
11.06. Right of Set-off. Upon the occurrence and during the continuance
of any Event of Default, each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by Law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement and the other
Loan Papers, whether or not Administrative Lender or any Lender shall have made
any demand under this Agreement or the other Loan Papers, and even if such
obligations are unmatured. Each Lender shall promptly notify the Borrower after
any such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The Rights of
each Lender under this Section 11.06 are in addition to other Rights (including,
without limitation, other Rights of set-off) which such Lender may have.
11.07. Costs, Expenses, and Taxes.
(a) The Borrower agrees to pay on demand (i) all costs and expenses of
Administrative Lender in connection with the preparation and negotiation of all
Loan Papers, including without limitation the reasonable fees and out-of-pocket
expenses of Special Counsel, (ii) all costs and expenses (including reasonable
attorneys' fees and expenses) of Administrative Lender in connection with any
interpretation, grant and perfection of any Lien, modification, amendment,
waiver, release of any Loan Papers, restructuring or work-out and (iii) all
costs and expenses (including reasonable attorneys' fees and expenses) of
Administrative Lender and each Lender in connection with any collection of any
portion of the Obligations or the enforcement of any Loan Papers during the
continuance of an Event of Default.
(b) In addition, the Borrower shall pay any and all stamp, debt, and other
Taxes payable or determined to be payable in connection with any payment
hereunder (other than Taxes on the overall net income of Administrative Lender
or any Lender or franchise Taxes or Taxes on capital or capital receipts of
Administrative Lender or any Lender), or the execution, delivery, or recordation
of any Loan Papers, and agrees to save Administrative Lender and each Lender
harmless from and against any
97
<PAGE>
and all liabilities with respect to, or resulting from any delay in paying or
omission to pay any Taxes in accordance with this Section 11.07, including any
penalty, interest, and expenses relating thereto. All payments by the Borrower
or any Subsidiary of the Borrower under any Loan Papers shall be made free and
clear of and without deduction for any present or future Taxes (other than Taxes
on the overall net income of Administrative Lender or any Lender of any nature
now or hereafter existing, levied, or withheld, or franchise Taxes or Taxes on
capital or capital receipts of Administrative Lender or any Lender), including
all interest, penalties, or similar liabilities relating thereto. If the
Borrower shall be required by Law to deduct or to withhold any Taxes from or in
respect of any amount payable hereunder (i) the amount so payable shall be
increased to the extent necessary so that, after making all required deductions
and withholdings (including Taxes on amounts payable to Administrative Lender or
any Lender pursuant to this sentence), Administrative Lender or any Lender
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 or withheld to the relevant taxing authority in accordance with
applicable Law. Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 11.07 shall survive the execution of this Agreement, termination of
the Available Commitment, repayment of the Obligations, satisfaction of each
agreement securing or assuring the Obligations and termination of this Agreement
and each other Loan Paper.
11.08. Rate Provision. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall any Obligor or any other Person be
obligated to pay any amount in excess of the Maximum Amount. If Administrative
Lender or any Lender ever receives, collects or applies, as interest, any such
excess, such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Borrower or the other Person
entitled thereto. In determining whether or not the interest paid or payable,
under any specific contingency, exceeds the Maximum Amount, each Obligor,
Administrative Lender and each Lender shall, to the maximum extent permitted
under Applicable Laws, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effect thereof, and (c) amortize, prorate, allocate and spread in equal
parts, the total amount of interest throughout the entire contemplated term of
the Obligations so that the interest rate is uniform throughout the entire term
of the Obligations; provided that if the Obligations are paid and performed in
--------
full prior to the end of the full contemplated term thereof, and if the interest
received for the
98
<PAGE>
actual period of existence thereof exceeds the Maximum Amount, Administrative
Lender or Lenders, as appropriate, shall refund to the Borrower the amount of
such excess or credit the amount of such excess against the total principal
amount owing, and, in such event, neither Administrative Lender nor any Lender
shall be subject to any penalties provided by any Laws for contracting for,
charging or receiving interest in excess of the Maximum Amount. This Section
11.08 shall control every other provision of all agreements among the parties to
the Loan Papers pertaining to the transactions contemplated by or contained in
the Loan Papers.
11.09. Severability. If any provision of any Loan Papers is held to be
illegal, invalid, or unenforceable under present or future Laws during the term
thereof, such provision shall be fully severable, the appropriate Loan Paper
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part thereof, and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance therefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable provision there
shall be added automatically as a part of such Loan Paper a legal, valid, and
enforceable provision as similar in terms to the illegal, invalid, or
unenforceable provision as may be possible.
11.10. Exceptions to Covenants. No Obligor shall be deemed to be
permitted to take any action or to fail to take any action that is permitted as
an exception to any covenant in any Loan Papers, or that is within the
permissible limits of any covenant, if such action or omission would result in a
violation of any other covenant in any Loan Papers.
11.11. Counterparts. This Agreement and the other Loan Papers may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
11.12. GOVERNING LAW; WAIVER OF JURY TRIAL.
(A) THIS AGREEMENT AND ALL OTHER LOAN PAPERS SHALL BE DEEMED TO BE CONTRACTS
MADE IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS) AND
THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE
BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS, WILL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH. TO THE
MAXIMUM EXTENT PERMITTED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT THAT IT
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT,
EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER
99
<PAGE>
LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
(B) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL PROCESS UPON
IT. THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS
ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL.
NOTHING IN THIS SECTION 11.12 SHALL AFFECT THE RIGHT OF ADMINISTRATIVE LENDER OR
ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
11.13. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
100
<PAGE>
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
THE BORROWER:
PINNACLE TOWERS INC.
By: ________________________________________
Its:
ADMINISTRATIVE LENDER:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, as
Administrative Lender
____________________________________________
By: Roselyn Reid
Its: Vice President
101
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS, L.P., as
Syndication Agent
________________________________________
By: ____________________________________
________________________________________
Its:____________________________________
________________________________________
LENDERS:
Specified Percentage: 70.000%
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
individually as a Lender
Address:
901 Main Street
64th Floor
Dallas, Texas 75202
________________________________________
By: Roselyn Reid
Its: Vice President
Attn.: Roselyn Reid
Telephone: (214) 508-0988
Telecopy: (214) 508-9390
Specified Percentage: 30.000%
GOLDMAN SACHS CREDIT PARTNERS L.P.
Address:
85 Broadstreet
17th Floor
New York, New York 10001
________________________________________
By: ____________________________________
Its:____________________________________
Attn.: Rich Katz
Telephone: (212) 902-5492
Telecopy: (212) 357-4451
102
<PAGE>
EXHIBIT 10.3
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
- ---------------------------------------------------------------
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT is
dated as of the 17th day of March, 1998 (this "First Amendment"), and entered
into among PINNACLE TOWERS INC., a Delaware corporation (the "Borrower"), the
Lenders signatory hereto, NATIONSBANK OF TEXAS, N.A., a national banking
association, individually and as Administrative Lender (in such latter capacity,
the "Administrative Lender"), and GOLDMAN SACHS CREDIT PARTNERS L.P., as
Syndication Agent (the "Syndication Agent").
WITNESSETH:
----------
WHEREAS, the Borrower, the Administrative Lender, the Syndication Agent,
and Lenders entered into a Second Amended and Restated Credit Agreement, dated
as of February 26, 1998 (as amended, restated, or otherwise modified from time
to time, the "Credit Agreement");
WHEREAS, the Lenders, the Borrower, the Administrative Lender, and the
Syndication Agent have agreed to amend the Credit Agreement to make certain
changes to the terms therein upon the terms and conditions set forth below;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
Borrower, the Lenders, the Administrative Lender, and the Syndication Agent
agree as follows:
SECTION 1. Definitions. Unless specifically defined or redefined below,
-----------
capitalized terms used herein shall have the meanings ascribed thereto in the
Credit Agreement.
SECTION 2. Amendment to Article I. The definition of "Senior Notes" shall
----------------------
be added between the definitions of "Security Agreement" and "Shareholders", and
shall read in its entirety as follows:
"Senior Notes" means the $325,000,000 Senior Discount Notes due 2008 of the
Parent, to be issued pursuant to the Indenture dated as of March 20, 1998
between the Parent and The Bank of New York, as the Trustee.
SECTION 3. Amendment to Article 2.11. Section 2.11(b) is amended by
-------------------------
adding a sentence which shall read in its entirety as follows:
<PAGE>
The Available Commitment shall be permanently reduced on March 20, 1998 to
$150,000,000 upon the issuance of the Senior Notes.
SECTION 4. Amendment to Article 8.01(a). Section 8.01(a) is amended by
----------------------------
(a) deleting Period and Ratio and all periods and ratios listed thereunder and
------ -----
adding the following:
Period Ratio
------ -----
From March 20, 1998
through May 31, 1998 5.25 to 1.00
From June 1, 1998 and
thereafter 3.00 to 1.00
and by (b) adding a subparagraph (iii) which shall read in its entirety as
follows:
(iii) for purposes of this Section 8.01(a) only, "Leverage Ratio" shall not
include the Senior Notes or any other Debt for Borrowed Money of the Parent.
SECTION 5. Amendment to Article 8.02. Section 8.02 is amended by adding a
-------------------------
subparagraph (k) which shall read in its entirety as follows:
(k) the Senior Notes provided that part of the net proceeds from the sale
of such Senior Notes shall be used to (i) prepay the outstanding Obligations and
permanently reduce the Available Commitment hereunder to $150,000,000, (ii)
notwithstanding the restrictions contained in Section 8.08, repay the
$12,500,000 Subordinated Debt owed by the Parent to ABRY permitted under Section
8.02(c) hereof, and (iii) notwithstanding the restrictions contained in Section
8.08, repay the Debt for Borrowed Money incurred pursuant to the Term Loan
Agreement permitted under Section 8.02(j) hereof.
SECTION 6. Amendment to Article 8.05. Section 8.05 is amended in its
-------------------------
entirety as follows:
8.05. Amendment and Waiver. The Borrower shall not, and shall not permit
the Parent or any Subsidiary of the Borrower to, enter into any amendment of any
term or provision, or accept any consent or waiver with respect to any such
provision, of (a) its articles of incorporation or by-laws in any manner
material and adverse to the Lenders, (b) any material provision of any material
Capital Lease in any manner material and adverse to the Lenders, (c) the Capital
Contribution Agreement, (d) any provision in any Ground Lease provision that is
set forth on Exhibit K hereto, (e) any material provision of the Stockholders
Agreement in any manner material and adverse to the Lenders or which would
result in a breach of any provision of the Loan Papers, or (f) the Senior
2
<PAGE>
Notes. The Borrower shall not, nor shall it permit the Parent or any Subsidiary
of the Borrower to, amend or change (or take any action or fail to take any
action the result of which is an effective amendment or change) or accept any
waiver or consent with respect to, the Subordinated Debt or the Senior Notes
that would result in (a) an increase in any principal, interest, fees, or other
amounts payable under the Senior Notes or the Subordinated Debt (including
without limitation a waiver or action that results in the waiver of any payment
default under the Senior Notes or the Subordinated Debt), (b) a change in any
date fixed for any payment of principal, interest, fees, or other amounts
payable under the Senior Notes or Subordinated Debt (including, without
limitation, as a result of any redemption) to a date earlier than September 15,
2003, (c) a change in any financial covenant in the Senior Notes or the
Subordinated Debt to a more restrictive provision for the Borrower, the Parent
or any Subsidiary of the Borrower, (d) an increase in any remedy or right (or
any change that broadens the rights or remedies) of the holders of the Senior
Notes or Subordinated Debt, (e) a change in any covenant, term or provision in
the Senior Notes or Subordinated Debt which would result in such term or
provision being more restrictive than the terms of this Agreement and the Loan
Papers, or (f) a change in any term or provision of the Senior Notes
Subordinated Debt, or other document or instrument in connection therewith that
could have, in any material respect, an adverse effect on the interests of the
Lenders.
SECTION 7. Amendment to Article 8.08. Section 8.08 is amended by adding a
-------------------------
subparagraph (b)(xi) which shall read in its entirety as follows:
(xi) the Parent may make a one-time distribution of $412,888 of the
proceeds of the Senior Notes to its Class B shareholders.
SECTION 8. Amendment to Article 9.01. Section 9.01(g) is amended in its
-------------------------
entirety as follows:
(g) Any of the following shall occur: (i) The Borrower or any other
Obligor shall fail to pay any Senior Notes or Subordinated Debt, or any Debt or
obligations in respect of Capital Leases (other than Debt under the Loan Papers)
in an aggregate amount of $1,000,000 or more when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or (ii) the Borrower or any
other Obligor shall fail to perform or observe any term or covenant contained in
any agreement or instrument relating to any such Debt, when required to be
performed or observed, and such failure shall continue after the applicable
grace period, if any, specified in such agreement or instrument, and can result
in acceleration of the maturity of such Debt; or (iii) any such Debt shall be
declared to be due and
3
<PAGE>
payable, or required to be prepaid, mandatorily redeemed or repurchased (other
than by a regularly scheduled required prepayment), prior to the stated maturity
thereof;
SECTION 9. Conditions Precedent. This First Amendment shall not be
--------------------
effective until all proceedings of the Borrower taken in connection with this
First Amendment and the transactions contemplated hereby shall be satisfactory
in form and substance to the Administrative Lender and Lenders, and the
Administrative Lender and Lenders shall have each received the following:
(a) a loan certificate of the Borrower certifying (i) as to the
accuracy of its representations and warranties set forth in Article V of
the Credit Agreement, the other Loan Papers and in this First Amendment,
(ii) that there exists no Default or Event of Default both before and after
giving effect to this First Amendment, and the execution, delivery and
performance of this First Amendment will not cause a Default or Event of
Default, (iii) that it has complied with all agreements and conditions to
be complied with by it under the Credit Agreement, the other Loan Papers
and this First Amendment by the date hereof, and (iv) that no notice of the
execution of this First Amendment is required under the terms of any other
agreement of the Borrower and no consent is required under the terms of any
agreement of the Borrower in connection with this First Amendment;
(b) copies of resolutions of the Borrower authorizing the execution,
delivery and performance of this First Amendment in form acceptable to the
Administrative Lender;
(c) a fee letter and commitment letter for permanent credit facility
in form and substance satisfactory to the Administrative Lender which
permanent credit facility will refinance the Obligations under the Credit
Agreement;
(d) such other documents, instruments, and certificates, in form and
substance satisfactory to the Lenders, as the Lenders shall deem necessary
or appropriate in connection with this First Amendment and the transactions
contemplated hereby.
SECTION 10. Representations and Warranties. The Borrower represents and
------------------------------
warrants to the Lenders and the Administrative Lender that (a) this First
Amendment constitutes its legal, valid, and binding obligations, enforceable in
accordance with the terms hereof (subject as to enforcement of remedies to any
applicable bankruptcy, reorganization, moratorium, or other laws or principles
of equity affecting the enforcement of creditors' rights generally), (b) there
exists no Event of Default or Default under the Credit Agreement both before and
after giving effect to this First Amendment, (c) its representations and
warranties set forth in the Credit Agreement and other Loan Papers are true and
correct
4
<PAGE>
on the date hereof both before and after giving effect to this First Amendment,
(d) it has complied with all agreements and conditions to be complied with by it
under the Credit Agreement and the other Loan Papers by the date hereof, (e) the
Credit Agreement, as amended hereby, and the other Loan Papers remain in full
force and effect, and (f) no notice to, or consent of, any Person is required
under the terms of any agreement of the Borrower in connection with the
execution of this First Amendment.
SECTION 11. Further Assurances. The Borrower shall execute and deliver
------------------
such further agreements, documents, instruments, and certificates in form and
substance satisfactory to the Administrative Lender, as the Administrative
Lender or any Lender may deem necessary or appropriate in connection with this
First Amendment.
SECTION 12. Counterparts. This First Amendment and the other Loan Papers
------------
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
SECTION 13. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
----------------
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 14. GOVERNING LAW. (A) THIS AGREEMENT AND ALL LOAN PAPERS SHALL
-------------
BE DEEMED CONTRACTS MADE UNDER THE LAWS OF TEXAS AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF TEXAS, EXCEPT TO THE
EXTENT (A) FEDERAL LAWS GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF ALL OR ANY PART OF THIS AGREEMENT AND ALL LOAN PAPERS OR (B)
STATE LAW GOVERNS UCC COLLATERAL INTERESTS FOR PROPERTIES OF THE BORROWER AND
THE SUBSIDIARIES OUTSIDE THE STATE OF TEXAS. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, THE BORROWER AND EACH SUBSIDIARY AGREES THAT THE COURTS OF TEXAS
WILL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH.
(B) THE BORROWER AND EACH SUBSIDIARY HEREBY WAIVES PERSONAL SERVICE OF ANY
LEGAL PROCESS UPON IT. IN ADDITION, THE BORROWER AND EACH SUBSIDIARY AGREES
THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO THE BORROWER AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER
THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON RECEIPT
BY THE BORROWER. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE LENDER OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
5
<PAGE>
SECTION 15. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
--------------------
THE BORROWER, EACH SUBSIDIARY AND EACH LENDER HEREBY WAIVES ANY RIGHT THAT IT
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT,
EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER
LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
================================================================================
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
================================================================================
6
<PAGE>
IN WITNESS WHEREOF, this First Amendment to Second Amended and Restated
Credit Agreement is executed as of the date first set forth above.
THE BORROWER:
PINNACLE TOWERS INC.
______________________________________
By: _________________________________
Its: _________________________________
ADMINISTRATIVE LENDER:
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION, as Administrative Lender
______________________________________
By: _________________________________
Its: _________________________________
SYNDICATION AGENT:
GOLDMAN SACHS CREDIT PARTNERS L.P., as
Syndication Agent
______________________________________
By: _________________________________
Its: _________________________________
LENDERS:
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION, individually as a Lender
______________________________________
By: _________________________________
Its: _________________________________
7
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS L.P.,
individually as a Lender
______________________________________
By: _________________________________
Its: _________________________________
8
<PAGE>
EXHIBIT 10.4
PURCHASE AND SALE AGREEMENT
INVOLVING
SOUTHERN COMMUNICATIONS SERVICES, INC.
AS "SELLER"
AND
PINNACLE TOWERS INC.
AS "PURCHASER"
DATED: JANUARY __, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Purchase and Sale........................................ 1
-----------------
2. Earnest Money............................................ 2
-------------
3. Purchase Price........................................... 3
--------------
4. Title to Property........................................ 3
-----------------
5. Inspection............................................... 5
----------
6. Protest as to or Election not to Purchase or Sell Sites.. 6
-------------------------------------------------------
7. Covenants of Seller...................................... 7
-------------------
8. Leases on Sites.......................................... 7
---------------
9. Closing; Closing Date; Documents......................... 7
--------------------------------
10. Closing Expenses; Prorations............................ 8
----------------------------
11. Destruction............................................. 9
-----------
12. Defaults................................................ 9
--------
13. Files and Records....................................... 10
-----------------
14. Option to Construct Additional Towers................... 11
-------------------------------------
15. Publicity............................................... 11
---------
16. Brokers and Agents; Indemnity........................... 11
-----------------------------
17. Notice.................................................. 11
------
18. Assignment.............................................. 12
----------
19. Time of Essence......................................... 12
---------------
20. Successors and Assigns.................................. 13
----------------------
21. Multiple Counterparts................................... 13
---------------------
22. Governing Law........................................... 13
-------------
23. Survival................................................ 13
--------
24. Sole and Entire Agreement............................... 13
-------------------------
25. Prohibition Against Recording........................... 13
-----------------------------
26. Board Approval by Seller................................ 13
------------------------
27. Authority of Parties.................................... 13
--------------------
28. Cross-Default........................................... 14
-------------
29. Offer to Seller......................................... 14
---------------
</TABLE>
Exhibit "A" - Owned Sites
Exhibit "B" - Leasehold Sites
Exhibit "C" - General Exceptions to Title
Exhibit "D" - Specific Disclosures as to Sites
Exhibit "E" - Site Values
Exhibit "F-1" - Form of Lease
Exhibit "F-2" - Form of Lease - OPCO
Exhibit "G" - Option Agreement Form
Exhibit "H" - List of Sites Without Current Legal Descriptions
Exhibit "I-1" - Form of Operating Company Ground Lease
i
<PAGE>
Exhibit "I-2" - Form of Operating Company Ground Lease - Restricted Access
Exhibit "J" - OPCO Sites
ii
<PAGE>
PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), is made and entered
into this ___ day of January, 1998, by and among SOUTHERN COMMUNICATIONS
SERVICES, INC. ("Seller") and PINNACLE TOWERS INC. ("Purchaser"), a corporation
of the State of Delaware.
W I T N E S S E T H:
-------------------
WHEREAS, Seller is the owner of, has a leasehold interest in or otherwise
has certain rights or interests in or with respect to certain communications
tower sites identified on the attached Exhibits "A" and "B", including all fee,
------------ -
ground leasehold interests and easements pertaining to such tower sites
(individually sometimes herein referred to as a "Site", or collectively as the
"Sites"), in the states of Georgia, Alabama, Florida and Mississippi, which
Sites may include, by way of illustration but not limitation, land,
communications towers identified on the attached Exhibits "A" and "B"
------------ ---
(individually a "Tower" or collectively the "Towers") and various other
improvements serving or used in connection with the operation of the towers
(collectively, including without limitation the "Towers", the "Assets"), and as
further described, limited and defined herein.
WHEREAS, Seller desires to sell its right, title and interest in and to
said Assets and Sites and certain other property described herein to Purchaser,
and Purchaser desires to purchase the same from Seller, all subject to and upon
the terms and conditions set forth herein, subject to and limited by certain
rights which Seller intends to retain with respect to such Sites and Assets, as
further described herein.
WHEREAS, Seller's "Southern LINC" wireless communication source is critical
to the needs of affiliated electric utility users, as well as commercial
customers that include state, county and municipal government users and
emergency services users, and Seller itself is and shall be an anchor tenant on
the Assets.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby expressly acknowledged by
Seller and Purchaser, Seller and Purchaser hereby covenant and agree as follows:
1. Purchase and Sale. (a) Seller hereby agrees to sell to Purchaser,
-----------------
and Purchaser hereby agrees to purchase from Seller, subject to and upon the
terms and conditions contained herein, any and all of Seller's right, title and
interest in and to the Assets and Sites, consisting of one hundred seventy-three
(173) such Sites, except as limited herein. If any Asset or Site to which title
or interest is to be conveyed hereunder is currently owned by an affiliate of
Seller, Seller shall acquire the same prior to the "Closing" (as that term is
herein defined). The Assets include, as to the Sites listed on Exhibit "A",
-----------
attached hereto and by this reference incorporated herein, a fee ownership in
the real property associated with such Sites, consisting of ninety-one (91) such
Sites, and as to the Sites listed on Exhibit "B", attached hereto and by this
-----------
reference
<PAGE>
incorporated herein, an assignment of the leasehold interest in and to the Site,
consisting of eighty-two (82) such Sites. In addition to such interest in real
property or leasehold interest, the Assets also include the tower structures,
associated tower lighting equipment, grounding systems and physical improvements
on each Site, along with any tenant leases, easement rights necessary for access
to the tower and for location of the tower and guy wires associated therewith,
security deposits (if any) and the files and records described in Paragraph
13(a)(i) through (iv) herein from tenants, and transferable permits associated
with the tower, (if any), but specifically do not include, and Seller shall keep
and maintain its interest, rights and title to, any communications antennae,
wiring, devices or other communications equipment, or any buildings or other
structures housing such equipment, as more fully described in the exhibits to
the Leases, with respect to such Sites and Assets.
(b) Seller shall reserve as a part of any such conveyance of Sites in
the conveyance documents described in Paragraph 9 herein, an irrevocable, non-
exclusive, perpetual easement for access to such Assets and Sites, for the
purpose of maintaining the Assets and Sites, as contemplated in the "Lease" (as
that term is herein defined), and for the purpose of maintaining certain other
improvements which may serve, or be a part of improvements other than the
Assets, so long as such easement is specifically located in a manner that does
not interfere with Purchaser's or tenants use of the Assets and Sites.
(c) As to the Sites to which Seller has or will have, and will be
conveying to Purchaser at Closing, an assignment of a leasehold interest, and
the lessor thereunder is an affiliate of Seller which is a utility operating
company (an "OPCO"), such leases shall either be in the form attached hereto as
Exhibit "I-1" or Exhibit "I-2", each of which is by this reference incorporated
- ------------- -------------
herein. The lease as shown in Exhibit "I-2" shall be used for those Sites where
-------------
access shall be restricted. If the OPCO in question does not enter into a lease
with Seller on such form, then at Purchaser's option and as Purchaser's sole
remedy therefor, such election of Purchaser to be evidenced by notice to Seller,
the Site in question shall not be conveyed to Purchaser, and the "Purchase
Price" (as herein defined) shall be adjusted as contemplated in Paragraph 6
herein.
2. Earnest Money. Purchaser has previously delivered to Seller under the
-------------
"LOI" (as that term is herein defined) a non-refundable option deposit in the
amount of One Million and No/100 Dollars ($1,000,000.00), in the account of
Seller, at NationsBank Global, Dallas, Texas. Contemporaneously with the
execution of this Agreement by Purchaser, Purchaser shall deliver to Seller by
wire transfer to the same account an additional Two Million and No/100 Dollars
($2,000,000.00). Within two (2) business days after notice to Purchaser of the
approval by Seller's "Board" ( as herein defined), Purchaser shall deliver to
Seller an additional Two Million and No/100 ($2,000,000.00). All of the
aforesaid amounts (which total Five Million and No/100 Dollars ($5,000,000.00))
shall collectively serve and be referred to herein as the "Earnest Money". The
Earnest Money shall be applied to and credited against the "Purchase Price" at
the "Closing" (as those terms are hereinafter defined), or otherwise disbursed
as provided in this Agreement, but shall only be refunded to Purchaser as set
forth in Paragraphs 12 and 26 herein. Seller shall be under no obligation to
segregate the Earnest Money from any other accounts or funds of Seller and
interest earned on said Earnest Money, if any, shall belong to Seller.
2
<PAGE>
3. Purchase Price. The purchase price (the "Purchase Price") to be paid
--------------
by Purchaser to Seller for the conveyance of the Assets and Sites shall be
Seventy-Two Million Three Hundred Sixty-Three Thousand Three Hundred Eighty-
Three and No/100 Dollars ($72,363,383.00) paid in cash by Purchaser to Seller at
Closing, as such amount may be reduced as set forth in Paragraph 6 herein.
4. Title to Property. (a) Purchaser shall have forty (40) days after the
-----------------
date hereof, as to all of the Sites except those Sites identified on Exhibit
-------
"H", by this reference incorporated herein (the "Open Legal Sites"), and with
- ---
respect to each Open Legal Site Purchaser shall have forty (40) days after
Seller delivers to Purchaser a legally sufficient legal description to Purchaser
on those Open Legal Sites, to (i) examine Seller's title to the Sites and
Seller's files related to such Sites and Assets, as such files are described in
Paragraph 13 herein, to determine whether such title is "marketable title", as
that term is herein defined; and (ii) notify Seller of any objections or defects
(collectively, "Defects") to the title thereto which are disclosed by such
examination, other than those matters set forth in Exhibit "C" attached hereto
-----------
and made a part hereof and the item described in Paragraph 4(d) herein, all or
any of which may encumber or affect a particular Site (the "Permitted
Exceptions"), and which are hereby approved by Purchaser; provided, however,
that to the extent any such Defect does not make the title to the Site in
question not "marketable title" (as defined in Paragraph 4(c)) and does not
currently and may not in the future (as determined by Purchaser in Purchaser's
commercially reasonable judgment) materially and adversely affect Purchaser's
ability to use the Asset and Site in question for the purposes of facilitating
or enhancing wireless communications, or for the purposes the Site and Asset are
currently being used for, and does not prevent Purchaser from obtaining title
insurance for such Site, then such shall not be a Defect which will permit
Purchaser, if such Defect is not cured or otherwise removed, to elect not to
purchase the Site and Asset in question. Seller will undertake to provide
copies of the legal descriptions for the Sites that are not Open Legal Sites no
later than January 12, 1998, and if Seller does not do so for any Site, such
Site shall be an Open Legal Site. If Purchaser's survey of any Site reveals the
need for a guy or access easement, or that the Tower pertaining to such Site is
not located within the boundaries of the legal description for such Site, such
Site will also constitute an Open Legal Site. Purchaser acknowledges that the
title or interest in the Site or Sites, and related Assets, may currently be
held by a subsidiary or affiliate of Seller, but that title to such Site or
Sites and related Assets may, at Seller's election, either be (i) conveyed
directly to Purchaser by such affiliate or subsidiary, or (ii) conveyed to
Seller at or prior to the Closing, so that such Site or Sites can in turn be
conveyed to Purchaser. The fact that title to or a leasehold interest in a Site
is not currently held by Seller is not and shall not be a Defect, as long as
title or leasehold interest, as applicable, in such Site is held by Seller or
otherwise is conveyed to Purchaser on or before the Closing. Seller agrees, in
good faith, within ten (10) days after Purchaser's notice to Seller of such
Defects, to attempt to cure such Defects or otherwise provide marketable title
to a particular Site or Sites as identified by Purchaser, on or before the
"Closing Date" (as hereinafter defined), and to pay off or otherwise remove any
lien encumbering a Site which secures a monetary obligation of and incurred by
Seller or any affiliate of Seller. Seller also agrees to undertake to procure
from all ground lessors of Sites under ground lease that are not affiliates of
Seller consent and estoppel certificates and fee mortgagee nondisturbance
agreements in form and substance reasonably satisfactory to Purchaser ("Ground
Lessor Documents"), but failure to obtain such Ground Lessor Documents (other
than a consent to an assignment, where such
3
<PAGE>
consent is required to effectuate such conveyance) shall not permit Purchaser to
elect not to purchase such Site.
(b) If Seller fails or refuses to cure a Defect or obtain a consent to
assignment for any Site referenced on Exhibit "B", where such consent is
-----------
required to effectuate such conveyance, on or before the Closing Date, Purchaser
may, notwithstanding any other provisions of this Agreement to the contrary, as
its sole right and remedy therefor (i) terminate this Agreement as to the Site
in question (but not as to any other Sites) by giving written notice thereof to
Seller in which event, except as expressly provided herein to the contrary, this
Agreement shall be of no further force or effect as to the Site in question (but
not as to any other Sites) and Purchaser and Seller shall have no further
rights, liabilities, duties or obligations hereunder, or (ii) waive such Defects
as to the Site in question in which event such Defects shall be included in the
"Permitted Exceptions" and the Site in question shall be conveyed by Seller to
Purchaser "subject to" such Defects as otherwise provided herein, and the
acceptance by Purchaser of such conveyance shall constitute full satisfaction of
Seller's obligations to convey the Site to Purchaser.
(c) As used herein "marketable title" shall mean marketable title to all
fee and ground leasehold interests and all necessary guy and access easements,
as defined by the law of the state in which the Sites or Assets in question are
located, and any Defects may be cured by Seller in the manner set forth therein,
or by Seller's obtaining the commitment of a title insurance company doing
business in Atlanta, Georgia, to issue on Purchaser's behalf, an owner's title
insurance policy without exception for any such Defect, at no cost to Purchaser
in excess of the "Standard" premium normally charged by such title insurance
company for coverage in the amount of the Purchase Price. Such title insurance
policy may include (and not have deleted or excluded) any standard or pre-
printed exceptions to title.
(d) Attached hereto as Exhibit "D", and by this reference incorporated
-----------
herein, is a list of specific disclosures by Seller as to certain aspects of or
conditions which exist with respect to certain of the Sites and Assets,
including existing leases to third-parties which maintain communications
equipment on the Asset (which leases Seller will assign to Purchaser at Closing,
without warranty or recourse). Purchaser acknowledges and agrees to the
conditions as set forth on said Exhibit "D", and Purchaser shall have no claims
-----------
in connection therewith, and no rights to elect not to buy such Site under
Paragraph 6 herein arising out of any such matters or conditions.
(e) Certain of the Sites and Assets in the State of Georgia shall also be
conveyed subject to that certain Indenture dated as of March 1, 1941, as amended
and supplemented, executed by Grantor to The New York Trust Company, as Trustee
(on September 8, 1959, The New York Trust Company merged into Chemical Corn
Exchange Bank, the name of which became Chemical Bank New York Trust Company at
the time of said merger, and said Chemical Bank New York Trust Company merged
into Chemical Bank on February 17, 1969, and said Chemical Bank merged into The
Chase Manhattan Bank on July 15, 1996) or of any substitute or replacement
thereof, if any. Certain of the Sites and Assets in Alabama shall also be
conveyed subject to that certain Indenture dated as of January 1, 1942, between
Alabama Power Company and The Chase Manhattan Bank, as successor trustee, as
supplemented by various supplemental indentures from time to time. Certain of
the Sites and Assets in Florida shall also be conveyed subject to that certain
Indenture dated as of September 1, 1941, between Gulf Power Company and The
Chase Manhattan Bank, as successor trustee, as supplemented by various
supplemental
4
<PAGE>
indentures from time to time. Certain of the Sites and Assets in Mississippi
shall also be conveyed subject to that certain Indenture dated as of September
1, 1941, between Mississippi Power Company and Bankers Trust Company, as
successor trustee, as supplemented by various supplemental indentures from time
to time. All of the aforesaid instruments are herein sometimes collectively
referred to as the "Indenture". As a condition to Purchaser's obligation to
purchase any such Site for which fee title is being conveyed (but not as to any
Site for which an assignment of lease is being conveyed), Purchaser must be
provided a title insurance commitment without exception for such Indenture, or
affirmative coverage over such Indenture. Seller agrees to have the Sites and
Assets encumbered by the Indenture for which fee title is being conveyed
released from the lien of the Indenture within one hundred eighty (180) days
after the date of the Closing. If Purchaser incurs any loss, cost, or damages
arising out of the existence of the Indenture or Seller's failure to cause the
release of such Indenture within the time period set forth above, then Seller
shall indemnify Purchaser and hold Purchaser harmless against any and all such
loss, cost, damage or expense, including, but not limited to, court costs and
attorneys fees, arising by virtue of the Indenture or otherwise out of such
failure by Seller; provided, however, that Purchaser shall first notify Seller
and provide Seller ten (10) days to attempt to cure such failure, before
Purchaser incurs or suffers any costs for which indemnity would be sought,
claimed or be available hereunder.
(f) The Sites as listed on Exhibit "J", by this reference incorporated
-----------
herein (the "OPCO Sites") must be subdivided. Any such Site so created must
contain at least 5,000 square feet, unless Seller, in its reasonable judgment,
cannot provide that amount, in which event Seller shall provide as much real
property as it reasonably is able. Seller and Purchaser shall use all
reasonable efforts to meet on or before January 16, 1998, to determine an
appropriate subdivision of such Sites, and each shall be reasonable in the
creation of the Sites, as subdivided. Each of Seller and Purchaser shall also
agree on such cross-easements for access as are appropriate or necessary for
such Sites.
5. Inspection. (a) Seller hereby grants Purchaser and its agents the
----------
right and privilege to enter upon and inspect the Assets and Sites for so long
as this Agreement is in full force and effect, such right including, without
limitation, the right to make soil tests, soil test borings, surveys and other
examinations that Purchaser desires to make in planning for its ownership of the
Assets and Sites, all at Purchaser's sole cost and expense; provided however,
that Purchaser shall give Seller at least two (2) business days prior notice of
Purchaser's desire to inspect an individual Site, and Seller may, at its option,
accompany Purchaser on any such inspection. Access to certain Sites may be
limited or impacted by Seller's or Seller's affiliates' adjacent property and
improvements, which may include electrical sub-stations, transmission lines and
the like, and Purchaser shall take such precautions as Seller advises in
inspecting such Sites. All such work and tests performed by or at the request
of Purchaser shall be non-destructive, with all efforts made by Purchaser not to
disrupt or damage any improvements, and Purchaser shall, immediately upon any
request of Seller, restore the Assets and Sites to the condition thereof
existing immediately prior to any such work or tests.
(b) Purchaser shall be completely responsible and liable for its own
safety and the safety of its agents, and for all acts and omissions of itself
and its agents in exercising such right and privilege of inspection granted in
this Paragraph 5, and Purchaser hereby indemnifies Seller and holds Seller free
and harmless from and against any and all losses, costs, damages and
5
<PAGE>
expenses (including, without limitation, attorney's fees, costs of litigation
and the cost of removing or bonding any liens affecting the Assets and Sites)
ever suffered or incurred by Seller by reason of or in connection with the
exercise of the rights and privileges granted to Purchaser in this Paragraph 5
or the breach of Purchaser's covenant to restore contained herein. The indemnity
contained in the immediately preceding sentence shall expressly survive the
Closing or any termination of this Agreement.
(c) The right of inspection granted by Seller to Purchaser in this
Paragraph 5 is solely an accommodation by Seller to enable Purchaser to plan for
its ownership of the Assets and Sites, and the terms and provisions of this
Paragraph 5 shall not, under any circumstances, be construed or interpreted to
mean that Purchaser has any right to approve the condition of the Assets and
Sites or to terminate this Agreement if Purchaser is not satisfied with the
condition of the Assets and Sites or any other matter related to the Assets and
Sites, except as expressly set forth in Paragraph 4(a) or 6 herein. Purchaser
shall keep all information it obtains in connection with or as a part of such
Site inspections in the strictest confidence, and Purchaser shall not disclose
the results of any such inspections to third-parties, other than its lenders and
investors and Purchaser's and their respective advisors, provided that Purchaser
shall be liable for any disclosure by such persons. Purchaser shall not be
liable for the disclosure of information that (i) is otherwise available to the
general public, or (ii) is required to be disclosed by law. Such inspections
shall also be subject to and governed by the confidentiality agreement
contemplated under Paragraph 13 herein.
(d) Purchaser has fully examined and inspected or will have been given,
prior to the Closing, the opportunity to fully examine and inspect the Assets
and Sites, as provided in Paragraphs 5 and 13 herein. Purchaser is willing to
and shall purchase the Assets and Sites "as is, where is" on the Closing Date,
and, except for the limited warranties of title to be contained in the deed,
Seller has not and shall not make any representations or warranties regarding
the Assets and Sites whatsoever, expressly including, by way of illustration but
not limitation, any representations or warranties as to environmental conditions
or status on or about the Sites, the zoning status or classification of the
Sites, the status or validity of any permitting or other entitlements related to
the Sites, access to the Sites, or, as to the Assets, any implied warranties of
habitability or fitness thereof or the soundness or condition of the structure.
Purchaser is relying solely and exclusively upon Seller's agreements herein and
Purchaser's aforesaid inspection of the Assets and Sites and the files described
in Paragraph 13 herein, in its purchase of the Assets and Sites.
6. Protest as to or Election not to Purchase or Sell Sites. Purchaser or
-------------------------------------------------------
Seller shall have the right, as to any individual Site, not to purchase or
convey such Site as a part of this Agreement, by notice given to the other of
the specific Site or Sites not to be purchased or conveyed hereunder, subject to
and conditioned upon the following terms and conditions:
(a) If there is a casualty to the physical improvements on such Site,
as described in Paragraph 11 herein, and Purchaser elects not to purchase such
Site;
(b) If there is a Defect in the title to such Site, as described in
Paragraph 4 herein, and Purchaser elects not to purchase such Site;
6
<PAGE>
(c) If a Site owned by an OPCO for which an assignment of lease is
being provided is not on the form of lease attached as Exhibit "I";
-----------
(d) If Seller, in its sole reasonable discretion, elects not to
convey a Site to Purchaser (but Seller may not designate such a Site after
Purchaser has given the notice for Closing as contemplated in Paragraph 9
herein) and Seller may not designate more than fifteen (15) such Sites. Seller
shall, if Seller does so elect not to convey a Site, pay Purchaser all of
Purchaser's out-of-pocket costs which are actually incurred and which are
directly attributable to any such Site.
The Purchase Price set forth in Paragraph 3 herein shall be adjusted to
reflect the number of Sites which Purchaser intended to purchase, but which, in
accordance with this Paragraph 6, are not conveyed by Seller. Such Purchase
Price shall be reduced by multiplying such number of Sites not conveyed by the
value attributed to such Site, as such value is set forth on Exhibit "E",
-----------
attached hereto and by this reference incorporated herein.
7. Covenants of Seller. (a) Neither Seller nor an affiliate of Seller
-------------------
shall, until the termination of this Agreement, or the Closing, sell any Sites
or Assets to any third party without the consent of Purchaser, which consent may
be withheld for any reason by Purchaser. Notwithstanding the above, Seller
shall be entitled to enter into a lease with a third-party for space on the
tower on any particular Site, so long as the rent thereon is not materially less
than the amounts Seller is receiving as rent on the Asset in question for
facilities of a similar nature as the one which is the subject of the lease in
question.
(b) Neither Seller nor an affiliate of Seller shall negotiate with
any party other than Purchaser for the sale of any of the Assets or Sites as
long as this Agreement is in force and effect.
8. Leases on Sites. In connection with and as a part of the Closing,
---------------
Seller shall lease from Purchaser, and Purchaser shall lease to Seller, as to
each Site, certain rights to keep, use, repair, maintain and enhance certain
existing communications equipment and related facilities and structures on the
Sites and other related facilities, either for Seller's own benefit or for the
benefit of any affiliate or subsidiary of Seller, as Seller may designate prior
to Closing. The form of lease for such Sites shall be as set forth in Exhibit
-------
"F-1", as to leases in which Seller is the tenant thereunder, and Exhibit "F-2",
- ----- -------------
as to leases in which an OPCO is the tenant thereunder, each of which is
attached hereto and by this reference incorporated herein (the "Lease", or
collectively the "Leases"). The Leases shall be on the terms and conditions as
set forth in the forms on Exhibits "F-1" and "F-2", respectively.
-------------- -----
9. Closing; Closing Date; Documents. (a) The consummation of the
--------------------------------
purchase and sale of the Assets and Sites (the "Closing") shall occur at the
offices of Troutman, Sanders, LLP, at a specific time and date (the "Closing
Date") designated by Purchaser by written notice thereof to Seller at least ten
(10) days prior to the Closing Date specified in such notice; provided, however,
-------- -------
in no event whatsoever shall the Closing Date be any time and date later than
10:00 a.m. on March 9, 1998. However, if, as to any of the Open Legal Sites,
either the time period for Seller to examine title to such Open Legal Sites or
the time period for Purchaser to attempt to correct Defects thereto has not
expired by March 9, 1998, then the Closing Date as to such Open
7
<PAGE>
Legal Sites only (and not as to any other Sites being conveyed hereunder) shall
be extended to a date which is ten (10) days after the last date Seller has to
attempt to correct the Defects thereon, as identified by Purchaser in accordance
with Paragraph 4(a) herein. If Seller does not cure the Defects, then Purchaser
shall have the rights as to such Sites and Assets as set forth in Paragraph 4(b)
hereof.
(b) At the Closing, Purchaser shall pay the Purchase Price to Seller,
or Seller's designee, as such Purchase Price is set forth in Paragraph 3 hereof,
and Seller shall execute and deliver to Purchaser a deed with only a limited
warranty of title (or its local equivalent), conveying Seller's right, title and
interest in and to the Assets and Sites described on Exhibit "A" to Purchaser,
-----------
and by a limited assignment of lease (limited only to claims arising by or
through Seller, but not otherwise) as to the Sites described on Exhibit "B", all
-----------
"as is, where is," with no representations or warranties whatsoever except for a
limited warranty of title. Seller shall also at Closing assign to Purchaser,
without warranty or recourse, any and all licenses or other such entitlements
obtained or issued with respect to such Sites and Assets, and any and all
warranties related to the Assets (collectively the "Permits"). Seller shall
also provide to Purchaser with and duly execute and deliver a limited warranty
bill of sale as to any non-real estate Assets to be conveyed at Closing. Seller
shall also execute and deliver an owners affidavit with respect to Sites, on the
title company's standard form of affidavit. Seller and Purchaser shall also
execute and deliver such other documents at Closing as are required or
contemplated herein.
(c) Seller will cooperate reasonably, at no out-of-pocket cost to
Seller, with Purchaser and will make accessible to Purchaser and Purchaser's
accountants, on a reasonable basis, Sellers' financial books and records
regarding the Assets, related to payments made by third-party lessees which
occupy space on the Sites or Assets, in connection with any audits of Purchaser
or its business pertaining to financing done by Purchaser after the Closing.
This right, however, shall be subject to such customary confidentiality
agreements or arrangements as Seller would normally require in such event.
10. Closing Expenses; Prorations. At the Closing, the 1998 ad valorem
----------------------------
taxes affecting the Sites and personal property tax affecting the non-real-
estate Assets, shall be prorated on a daily basis, which proration shall be
based upon the most recent available tax bill for the Sites as of the Closing
Date and shall be conclusive between Seller and Purchaser for all purposes. All
other items of income and expense affecting the Sites and the Assets shall be
prorated as of the Closing Date on a daily basis between Seller and Purchaser at
the Closing. Seller shall pay the transfer tax, if any, due with respect to the
particular state in which the Site is located, payable in connection with the
conveyance of the Sites from Seller to Purchaser. Purchaser shall be
responsible for other taxes arising in connection with the sale of the Assets,
excluding taxes on Seller's income. Purchaser shall pay the costs and expenses
connected with recording costs, any surveys, audits ordered or requested by
Purchaser, engineering studies ordered or requested by Purchaser, Purchaser's
attorneys' fees and the title search costs and title insurance premiums for all
title insurance policies obtained by Purchaser. Purchaser and Seller shall
allocate between them any costs of Closing not specified above on the basis of
how custom and practice in the State in which such cost is incurred would
normally allocate such costs, but in no event shall one party hereto be required
to pay the other party hereto's legal fees.
8
<PAGE>
11. Destruction. If any substantial portion of any Asset is damaged or
-----------
destroyed by fire or any other casualty prior to the Closing Date such that the
Asset in question at a particular Site cannot be used in any manner for the
purposes intended, Seller shall notify Purchaser thereof and Seller shall have
the right, but not the obligation, to undertake the repair or restoration of the
Asset so damaged or destroyed. If Seller gives Purchaser notice of such
undertaking, such undertaking shall be an obligation of Seller hereunder, and
the purchase and sale of the Asset in question shall be consummated in
accordance with the terms and provisions of this Agreement with no adjustment in
the Purchase Price and Seller shall receive any insurance proceeds payable by
reason of such damage or destruction. If the repair or restoration is not
completed by the scheduled Closing Date, then the Closing Date as to such Asset
and Site (but not as to any other Sites or Assets) shall occur ten (10) days
after Seller has completed such repairs and has provided notice Purchaser of
such completion. If Seller notifies Purchaser that it does not elect to
undertake such repair or restoration, Purchaser may, at its election either (a)
terminate this Agreement as to the Site on which the Asset in question is
located (but not as to any other Sites or Assets) by giving written notice
thereof to Seller, in which event, except as expressly provided herein to the
contrary, this Agreement shall be of no further force or effect as to the Site
on which the Asset in question is located (but not as to any other Sites or
Assets) and Purchaser and Seller shall have no further rights, liabilities,
duties or obligations hereunder as to the Asset in question (but not as to any
other Sites or Assets), or (b) Purchaser may require Seller to (i) convey the
Asset and Site in question or the remaining portion thereof as provided herein
for the Purchase Price set forth in Paragraph 3 hereof, and (ii) transfer and
assign all of Seller's right, title and interest in and to any and all insurance
proceeds paid (but not yet expended), payable or to be paid in connection with
such damage or destruction, and the transaction contemplated herein shall
otherwise be consummated as provided in this Agreement. If Seller so notifies
Purchaser that it does not undertake to so repair or restore the Asset and Site
in question, Purchaser shall notify Seller in writing of its election pursuant
to the immediate preceding sentence within five (5) days after such notice from
Seller, and if Purchaser fails to so notify Seller within said five (5) day
period, Purchaser shall be deemed to have elected to purchase the Asset and Site
in question pursuant to (b) immediately above.
12. Defaults. If before Closing Seller breaches or fails to perform or
--------
comply with any of its covenants, duties, agreements, or obligations as set
forth in this Agreement, Purchaser shall elect as its sole rights and remedies
therefore, pursue any one or more of the following remedies (a) terminate this
Agreement by giving written notice thereof to Seller, in which event Seller
shall deliver the Earnest Money to Purchaser and, except as expressly set forth
herein to the contrary, this Agreement shall be of no further force or effect,
and Seller and Purchaser shall not have any further rights, liabilities, duties
or obligations hereunder, (b) seek and obtain specific performance by Seller of
its covenants, agreements and obligations to sell the Sites and Assets to
Purchaser as expressly set forth in this Agreement, or (c) sue Seller for
Purchaser's actual damages arising out of such failure of Seller up to, but not
in excess of, Five Million and No/100 Dollars ($5,000,000.00). If before
Closing Purchaser breaches or fails to perform or comply with any of its
covenants, duties, agreements, or obligations as set forth in this Agreement,
Seller's obligation to sell the Sites and Assets hereunder and Purchaser's right
to purchase the Property hereunder shall, at the option of Seller and upon
notice thereof to Purchaser, immediately terminate, and Seller shall be entitled
to (i) retain the Earnest Money as liquidated damages therefor whereupon, except
as expressly provided to the contrary herein, this Agreement shall be
9
<PAGE>
of no further force or effect, and Seller and Purchaser shall not have any
further rights, liabilities, duties or obligations hereunder, or (ii) pursue any
and all rights and remedies therefor to which Seller may be entitled in equity,
including, without limitation, specific performance of the covenants and
agreements of Purchaser contained herein. Seller and Purchaser expressly agree
that the actual damages for any such breach or default by Purchaser are now and
probably in the future will be impossible to ascertain with certainty, and the
foregoing liquidated damages provision represents a reasonable estimate of the
probable extent of such damages and is not intended as a penalty.
Notwithstanding any of the foregoing provisions of this Paragraph 12 to the
contrary, nothing contained in this Agreement shall in any manner limit the
liability of an indemnifying party or any of an indemnified party's rights and
remedies at law or in equity against an indemnifying party arising by reason of
any express indemnification provided herein.
13. Files and Records. (a) Seller has made and will continue to make
-----------------
available to Purchaser, and Purchaser shall to Purchaser's satisfaction, review,
at the offices of Troutman Sanders LLP, 600 Peachtree Street, NE, Suite 5200,
Atlanta, Georgia 30308-2216, with respect to the Sites and Assets certain
material, including the following:
(i) Files as to Seller's title to or interest in the Sites;
(ii) Files as to any warranties which exist as to the Assets on
or a part of the Sites;
(iii) Files as to any Permits issued with respect to or in
connection with the Sites;
(iv) Files as to the engineering data, drawings and
specifications with respect to the Assets on the Sites; and
(v) Files as to the environmental conditions on or related to
the Sites.
(b) These files are being made available in connection with
Purchaser's inspection rights under Paragraph 5 herein. Purchaser shall keep all
information obtained in connection with or as a part of such review of files in
strict confidence until the Closing, as set forth in Paragraph 5(c). Purchaser
shall, at Seller's option, execute and cause any agents acting on behalf of
Purchaser to execute a confidentiality agreement with respect to such files.
Purchaser shall have the right to make copies of any such files, at Purchaser's
cost and expense, subject to Seller's right to prohibit such copying for any
matters or items which Seller believes, in its reasonable judgment, to be
confidential, proprietary or not appropriate for public dissemination. After the
Closing, Purchaser shall no longer be obligated to keep such material
confidential, except for those items which Seller in good faith has marked as
"confidential" (or the equivalent).
(c) Seller makes no representations or warranties as to the
completeness of such files. Seller shall, to the extent reasonable, assist
Purchaser in Purchaser's due diligence efforts and in acquiring additional
information on Sites, on the basis of such written requests as Purchaser shall
from time to time deliver to Seller.
10
<PAGE>
14. Option to Construct Additional Towers. Seller and Purchaser shall,
-------------------------------------
with the consummation of the Closing, duly enter into and deliver an agreement
in the form as set forth on Exhibit "G", by this reference incorporated herein
-----------
(the "Option Agreement"), related to Seller's option to cause Purchaser to
construct certain additional towers on certain sites determined and selected, or
to be determined and selected, by Seller, in Seller's sole discretion, all as
further described in and subject to the Option Agreement.
15. Publicity. The parties acknowledge that neither Seller nor Purchaser
---------
desires to publicize or advertise this transaction. Neither party shall have
the right to publicize or otherwise make public statements or press releases
concerning this transaction or the Closing, or advertise the consummation of
this transaction or the Closing, without the express prior, written consent of
the other, which consent may be withheld for any or no reason.
16. Brokers and Agents; Indemnity. Seller represents and warrants that
-----------------------------
Seller has not employed or engaged any real estate brokers or agents in
connection with this Agreement or the purchase and sale of the Assets and Sites
contemplated herein. Purchaser represents and warrants to Seller that Purchaser
has not employed or engaged any real estate brokers or agents in connection with
this Agreement or the purchase and sale of the Assets and Sites contemplated
herein. Purchaser hereby indemnifies Seller and agrees to hold Seller free and
harmless from and against any and all loss, cost, damages and expenses
(including, without limitation, attorneys' fees and costs of litigation) ever
suffered or incurred by Seller by reason of any claim or demand by any broker or
agent for any commissions, fees or other compensation in connection with this
Agreement or the purchase and sale of the Assets and Sites. Seller hereby
indemnifies Purchaser and agrees to hold Purchaser free and harmless from and
against any and all losses, costs, damages and expenses (including, without
limitation, attorneys' fees and costs of litigation) ever suffered or incurred
by Purchaser by reason of any claim or demand by any broker or agent for any
commissions, fees or other compensation in connection with this Agreement or the
purchase and sale of the Assets and Sites. The express indemnities contained in
this Paragraph 16 shall expressly survive the Closing or any termination of this
Agreement.
17. Notice. All notices and other communications permitted or required
------
hereunder shall be in writing and shall be personally delivered by a recognized
overnight delivery service (such as, by way of illustration but not limitation,
United Parcel Service), to Seller at the following address:
Mr. Robert Dawson
Southern Communications Services, Inc.
64 Perimeter Center East
1/st/ Floor - Bin #049A
Atlanta, GA 30346
with a copy to:
Southern Company Services, Inc.
270 Peachtree Street, N.W.
Suite 1900
Atlanta, GA 30303
11
<PAGE>
Attention: Mr. Jeffrey Altman
and a copy to:
Robert Williams, Esq.
Troutman Sanders, LLP
600 Peachtree Street, N.E.
Suite 5200
Atlanta, GA 30308-2206
and to Purchaser at:
Pinnacle Towers Inc.
1549 Ringling Boulevard-Third Floor
Sarasota, Florida 34236
Attention: Mr. Robert J. Wolsey
with a copy to:
Trey Baldy, Esq.
Holland & Knight, LLP
400 North Ashley Drive, Suite 2300
Tampa, Florida 33602-4300
or to such other addresses as the parties hereto may designate to the others by
notice as set forth herein. All such notices and other communications shall be
deemed received and effective on the first (1/st/) business day after the
sending thereof.
18. Assignment. (a) Purchaser shall not transfer, assign or delegate any
----------
of its rights, duties, obligations, covenants, or agreements hereunder, except
as contemplated in Paragraph 18(b) below. Any such transfer, assignment or
delegation by Purchaser shall, at the option of Seller, be null and void ab
--
initio and no such transfer, assignment or delegation shall relieve or discharge
- ------
Purchaser from any of its covenants, agreements, duties, obligations or
liabilities hereunder.
(b) Purchaser has collaterally assigned its interest under this
Agreement to NationsBank, in connection with Purchaser's general credit
facility. If for any reason Purchaser defaults under any general credit
facility of Purchaser, such that NationsBank (or any successor or replacement
creditor) is the "Purchaser" hereunder, then Seller shall have no obligation to
convey the Assets or Sites to such party, and Seller may, without penalty or
premium, elect, in Seller's sole discretion, by a notice to such party, elect
not to consummate the Closing, in which event Seller shall retain the Earnest
Money as Seller's sole remedy.
19. Time of Essence. Time is of the essence in this Agreement, and
---------------
whenever a date or time is set forth in this Agreement, the same has entered
into and formed a part of the consideration for this Agreement.
12
<PAGE>
20. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of Seller and Purchaser and their respective heirs, legal
representatives, successors and permitted assigns.
21. Multiple Counterparts. This Agreement may be executed in multiple
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same agreement; the signature of any party to any
counterpart shall be deemed to be a signature of, and may be appended to, any
other counterpart hereof.
22. Governing Law. This Agreement shall be governed by, construed under
-------------
and interpreted and enforced in accordance with the laws of the State of
Georgia, and whose laws shall prevail in the event of any conflict of laws.
23. Survival. The express indemnities contained in this Agreement shall
--------
survive the consummation of the subject transaction and any termination of this
Agreement. All other provisions of this Agreement shall not survive the Closing
and shall merge into the conveyances of the Assets and Sites from Seller to
Purchaser. Seller and Purchaser agree to ratify and affirm the survival of such
indemnities in writing at the Closing.
24. Sole and Entire Agreement. This Agreement (including the exhibits
-------------------------
hereto), and the "Other Agreement" (as that term is herein defined) constitutes
the sole and entire agreement of Seller and Purchaser regarding the purchase and
sale of the Assets and Sites. This Agreement supersedes all prior discussions,
negotiations, representations and agreements between Purchaser and Seller with
respect to the purchase and sale of the Assets and Sites and all other matters
related thereto, including, without limitation, the letter of intent between
Seller and Purchaser dated December 23, 1997 (the "LOI"). This Agreement may
not be modified or amended unless such modification or amendment is set forth in
writing and properly signed by Seller and Purchaser.
25. Prohibition Against Recording. Purchaser shall not record this
-----------------------------
Agreement or any version, summary or memorandum hereof in any real estate public
records.
26. Board Approval by Seller. Seller's obligations under this Agreement
------------------------
shall in all events and under all circumstances be subject to approval by the
Board of Directors of Seller (the "Board"), at a 1998 meeting of the Board, to
be held on or before February 4, 1998. If the Board does not approve such sale,
then, and only then (except for a default by Seller under Paragraph 12
hereunder), Seller shall refund to Purchaser the Earnest Money set forth in
Paragraph 2 herein, and the parties hereto shall have no further rights
hereunder, except for those rights which expressly survive termination.
27. Authority of Parties.
--------------------
(a) Purchaser represents and warrants to Seller that Purchaser has
the full power and authority to execute, deliver and perform the terms and
conditions of this Agreement and has taken all necessary action to do so. This
Agreement and all documents to be executed by Purchaser hereto constitute the
legal, valid and binding obligations of Purchaser, enforceable in accordance
with their respective terms.
13
<PAGE>
(b) Seller represents and warrants to Purchaser that upon the
approval of the Board as contemplated above, Seller has the full power and
authority to execute, deliver and perform the terms and conditions of this
Agreement and has taken all necessary action to do so. This Agreement and all
documents to be executed by Seller hereto constitute the legal, valid and
binding obligations of Seller, enforceable in accordance with their respective
terms.
28. Cross-Default. Seller and Purchaser are, as of the date hereof,
-------------
entering into an Exchange Agreement (the "Other Agreement"), related to certain
other agreements involving Assets and Sites. Any default by either party under
the Other Agreement shall be a default hereunder, which shall permit the non-
defaulting party to, at its sole option, exercise all rights under Paragraph 12
hereunder as if a default had occurred hereunder.
29. Offer to Seller. This Agreement has been executed first by Purchaser
---------------
in four (4) counterparts, as an offer to Seller, which offer shall remain open
for acceptance by Seller until 5:00 P.M. on January 9, 1998, and if such offer
is not accepted by Seller (as evidenced by the delivery of two (2) fully and
properly executed and dated counterparts of this Agreement by Seller, before
5:00 P.M. on January 9, 1998), this offer shall automatically terminate without
any notice whatsoever being required from Purchaser and this Agreement shall be
of no force or effect whatsoever and Seller and Purchaser shall have no rights,
liabilities, duties or obligations hereunder. The date of this Agreement shall,
for all purposes, be the date Seller executes this Agreement, which date shall
be inserted in the caption hereof at the time of such execution.
14
<PAGE>
IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to be
properly executed by duly authorized representatives, under seal, as of the day
and year first above written.
"SELLER"
Southern Communications Services, Inc.
By:___________________________________
Its:_______________________________
Attest:_______________________________
Its:_______________________________
(CORPORATE SEAL)
"PURCHASER"
Pinnacle Towers Inc., a Delaware
corporation
By:___________________________________
Its:_______________________________
Attest:_______________________________
Its:_______________________________
(CORPORATE SEAL)
15
<PAGE>
EXHIBIT "A"
-----------
OWNED SITES
-----------
[TO BE SUPPLIED BY SELLER]
<PAGE>
EXHIBIT "B"
-----------
LEASEHOLD SITES
---------------
[TO BE SUPPLIED BY SELLER]
<PAGE>
EXHIBIT "C"
-----------
PERMITTED EXCEPTIONS
--------------------
1. Real estate ad valorem taxes for 1998 and subsequent years.
2. General utility, roadway and other such easements serving the Sites
and Assets.
3. Riparian rights of owners adjoining the Sites and Assets.
4. Rights of Tower tenants under written leases.
5. Agricultural leases terminable on not less than sixty (60) days
notice.
6. Rights of OPCO's to attached facilities to the Assets under written
agreements.
7. Subject to the rights of Purchaser under Paragraph 4 of the Agreement,
as to Sites where an interest in a ground lease is being assigned to
Purchaser, the terms of the relevant ground lease.
<PAGE>
EXHIBIT "D"
-----------
SPECIFIC DISCLOSURES AS TO SITES
--------------------------------
NONE
<PAGE>
EXHIBIT "E"
-----------
SITE VALUES
-----------
OWNED SITES $436,802 per Site
LEASEHOLD SITES $397,736 per Site
<PAGE>
EXHIBIT "F"
-----------
FORM OF LEASE
-------------
[TO BE SUPPLIED BY SELLER]
<PAGE>
EXHIBIT "G"
-----------
OPTION AGREEMENT FORM
---------------------
[TO BE SUPPLIED BY SELLER]
<PAGE>
EXHIBIT 10.5
SOUTHERN COMMUNICATIONS
MASTER ANTENNA SITE LEASE AGREEMENT
-----------------------------------
This Southern Communications Master Antenna Site Lease Agreement ("Lease")
is entered into this _____ day of __________, 1998, between Pinnacle Towers Inc.
("Lessor"), and Southern Communications Services, Inc. ("Lessee").
Now, Therefore, in consideration of the following representations,
warranties, covenants and agreements, the parties hereto agree as follows:
Preamble. This Lease is intended to operate as a master set of terms and
--------
and conditions governing the relationship between Lessor and Lessee as to
multiple telecommunications towers and related parcels of real property, each of
which is identified separately in the several Exhibits A and B hereto, and as to
each of which this Lease is intended to operate separately unless a contrary
intent is expressly stated with respect to a particular provision hereof.
1. Lease and Easement
------------------
A. Lessor is the owner of a telecommunications tower (the "Tower")
located on a parcel of land (the "Land") which is [ALTERNATIVE 1] leased by
Lessor pursuant to that certain Lease Agreement (the "Underlying Lease") by and
between Lessor and the owner or other landlord of such Land (the "Master
Lessor"). Such Land is as described on Exhibit "A" annexed hereto. (The Tower
-----------
and the Land are collectively the "Property"). Lessor subleases to Lessee space
on the Land, which Land includes adequate space thereon for Lessee to install
its equipment shelter, gas tank and other equipment and space upon the Tower
(collectively, the "Premises") in such amounts and in such locations as
described on Exhibit "B" annexed hereto, subject to the terms and conditions of
-----------
this Lease. The Premises are leased together with a non-exclusive easement from
the public right-of-way nearest to the Land, for the Term, over, upon and across
the Land for the purpose of parking, pedestrian and vehicular access to and from
the Premises twenty-four (24) hours a day seven (7) days per week and a non-
exclusive easement for the Term, over, upon, under and across the Land (so long
as such easement is specifically located in a manner that does not interfere
with Lessor's or its tenants' use of the Land and the Tower) for the purpose of
the installation, construction, maintenance and operation of utility lines
including, but not limited to, co-axial cables, fiber optic cables, electrical
wires and other lines used for communications. [ALTERNATIVE 2] owned in fee by
Lessor as such Land is more particularly described on Exhibit "A" annexed
-----------
hereto. (The Tower and the Land are collectively the "Property"). Lessor
leases to Lessee space on the Land, which Land includes adequate space thereon
for Lessee to install its equipment shelter, gas tank and other equipment and
space upon the Tower (collectively, the "Premises") in such amounts and in such
locations as are more particularly described on Exhibit "B" annexed hereto,
-----------
subject to the terms and conditions of this Lease. The Premises are leased,
together with a non-exclusive easement from the public right-of-way nearest to
the Land, for the Term, over, upon and across the Land (so long as such easement
is specifically located in a manner
<PAGE>
that does not interfere with Lessor's or its tenants' use of the Land and the
Tower) for the purpose of parking, pedestrian and vehicular access to and from
the Premises twenty-four (24) hours a day seven (7) days per week and a non-
exclusive easement for the Term, over, upon, under and across the Land for the
purpose of the installation, construction, maintenance and operation of utility
lines including but not limited to co-axial cables, fiber optic cables,
electrical wires and other lines used for communications.
B. Lessor hereby covenants and agrees to maintain, at Lessor's sole
cost and expense, in good order and repair in accordance with Lessee's past
practice, any and all roadways, driveways or access roads on the Land
(collectively the "Roads") which are used to service or otherwise provide access
to the Premises.
2. Term. For each Premises, this Lease shall be for a period of ten (10)
-----
years, commencing on the effective date set forth in Exhibit B (the "Effective
Date") and terminating at midnight ten (10) years thereafter (the "Initial
Term"). Lessee shall have the absolute and unconditional right to extend the
Initial Term for five (5) successive periods of five (5) years each (each a
"Renewal Term") on the terms and conditions set forth herein. This Lease shall
automatically be extended unless Lessee notifies Lessor not less than thirty
(30) days prior to the expiration date of the Initial Term or the then-current
Renewal Term of Lessee's intention to so terminate this Lease. In no event shall
the Initial Term together with any Renewal Term extend beyond the term of the
Underlying Lease, as the term of such Underlying Lease shall be extended by
Lessor to accommodate and permit use by Lessee of the full Term of this Lease
(including Renewal Terms). In addition, Lessee shall not have the right to
exercise any Renewal Term in the event that there has occurred any default by
Lessee which has not been cured within any applicable notice and cure period, or
which cure Lessee is not diligently pursuing to completion. (The Initial Term
and each Renewal Term are sometimes collectively referred to herein as the
"Term").
3. Use. The Premises shall be used by Lessee for the installation,
----
construction, repair, maintenance, operation, removal, replacement,
modification, upgrade and enhancement on the Premises of the "Lessee Facilities"
(as defined in Paragraph 8 and Exhibit "C" herein), for the transmission and
-----------
reception of communication signals on various frequencies and for the
construction, maintenance and operation of necessary facilities, including,
without limitation, antennas and an equipment shelter.
4. Rent; Utilities.
----------------
A. Commencing on the date hereof (the "Rent Commencement Date") and
continuing thereafter during the Term (expressly including Renewal Terms, if
any), Lessee shall pay Lessor as rent One Thousand Five Hundred and No/100
Dollars ($1,500.00) [NOTE: $2,100.00 FOR THE FIRST YEAR OF THE TERM FOR THOSE
PREMISES LEASED AT CLOSING OF THE PURCHASE AND SALE AGREEMENT] per month for
each Premises, exclusive of electricity (the "Rent"). Rent shall be payable on
the first day of each month in advance at the address set forth in Paragraph 18
herein.
2
<PAGE>
B. Lessee shall be responsible for, shall cause to be separately
metered, and shall promptly pay in full for all utilities (including, but not
limited to, electricity) consumed by Lessee at the Premises. Upon request by
Lessee, Lessor shall promptly enter into such easements with utility companies
which are required in order to provide service to Lessee Facilities located on
the Premises. Lessor reserves the right to designate reasonable locations for
such easements. In the event Lessor fails promptly to enter into such
easements, Lessor hereby consents to the execution of such easements by Lessee
on Lessor's behalf. Lessor shall, however, reimburse Lessee for the costs on
the Property for electricity and an emergency power generator (gas, diesel or
otherwise) used to monitor, support and operate "Tower Lights" (as defined and
described in Paragraph 16 herein).
C. If this Lease is terminated prior to its expiration, Rent and all
other amounts due from Lessee hereunder shall be prorated for any partial month
as of the date of termination, and any Rent already paid by Lessee for a portion
of the Term which was cancelled shall immediately be returned to Lessee.
5. Assignment.
-----------
A. Lessee may assign this Lease and its rights hereunder at any time
upon notice to, but without the need for the consent or approval of, Lessor, if
such assignment is made to an affiliate of Lessee or as part of the transfer of
all or substantially all of Lessee's assets. Lessee may assign this Lease and
its rights hereunder, or sublease its interest in the Property, to any assignee
or subtenant upon the prior written consent of Lessor, such consent not to be
unreasonably withheld. Lessor may assign this Lease and its rights hereunder at
any time upon notice to, but without the need for the consent or approval of,
Lessee, if such assignment is made as part of the transfer of all or
substantially all of Lessor's assets to a transferee other than another wireless
communications service provider or affiliate thereof. Lessor may assign this
lease and its rights hereunder to any assignee upon the prior written approval
of Lessee, such consent not to be unreasonably withheld. Lessee shall be
released from liability hereunder arising subsequent to the date of such an
assignment, if such assignment is to an affiliate of Lessee, or provided that
Lessor approves of the financial condition of such assignee, which approval
shall not be unreasonably withheld or delayed following Lessor's review of
financial information with respect to such assignee, as reasonably requested by
Lessor.
B. Each party shall have the further right, at its sole option, at
any time, to pledge, hypothecate or otherwise assign its rights hereunder in
connection with or as a part of a financing transaction entered into by such
party in which its interest under this Lease is pledged or conveyed as
collateral, with no prior consent required by the other party; provided,
however, that any recipient of such pledge, hypothecation or assignment shall
take subject to the non-assigning party's rights hereunder.
6. Tower Maintenance, Marking and Lighting Requirements.
----------------------------------------------------
A. Lessor acknowledges that it, and not Lessee, shall be responsible
for compliance with all tower marking and lighting requirements of the Federal
Aviation
3
<PAGE>
Administration ("FAA") or the Federal Communications Commission ("FCC"). Lessor
shall provide Lessee with a copy of the FCC Form 854R as evidenced by Exhibit
-------
"D" annexed hereto. Lessor shall indemnify and hold Lessee harmless from any
- ---
fines, penalties, claims, causes of action, suits, costs and expenses (including
without limitation reasonable attorneys' fees and courts costs) caused by or
resulting from Lessor's failure to comply with such requirements. Lessee shall
cooperate with Lessor to obtain or transfer FCC tower registrations.
B. Lessor shall maintain the Tower, Land and Premises, except for
that which is under the express terms hereof to be maintained by Lessee, in
good order and repair, and at least in accordance with the standards set forth
in Exhibit E. Further, Lessor shall comply with all local, city, county, state
and federal laws, rules, ordinances, statutes and regulations materially
affecting Lessee's right to use the Premises hereunder. Notwithstanding the
foregoing, Lessor shall not be in default hereunder for failing to comply with
any such rule, ordinance, statute or regulation the validity of which is
challenged by Lessor or others, until such challenge has been finally
adjudicated or otherwise resolved.
C. Lessor shall permit Lessee to have access to the Property at all
times in connection with and as a part of Lessee's rights hereunder. If Lessor
controls entry to the Property in any manner, then Lessor shall provide Lessee
the means to gain entry thereon, either by card access, key, code, or otherwise,
as applicable. If, for any reason, Lessee requires access to the Property but
is not able to gain such access promptly after an "Emergency Notice" (as that
term is defined herein) has been provided to Lessor, Lessee may take whatever
actions are necessary or appropriate to gain such access, which actions may
include the neutralization or removal of the means of limiting access to the
Property, without cost to or claim against Lessee.
7. Interference With Lessee Facilities and Operations.
--------------------------------------------------
A. Lessor shall ensure that no facilities on the Property interfere
with or otherwise impact upon the Lessee Facilities in any manner.
B. If Lessor enters into lease or license agreements with others for
or upon the Property, Lessor agrees such leases or license agreements shall
include the following provisions:
(i) That the party contracting to use the Property (the
"User") will install equipment of types and frequencies that will not cause
interference to the Lessee Facilities or any communications operations of Lessee
being conducted from the Premises;
(ii) that if such User interferes with or impairs the Lessee
Facilities or with Lessee's operations, then such User shall take all steps
necessary to correct and eliminate the interference or impairment;
(iii) that if such interference or impairment is not eliminated
within forty-eight (48) hours after such User's receipt of notice of the
existence of interference or impairment, then such User shall disconnect the
electric power and shut down such User's equipment (except for intermittent
operation for the purpose of testing, after performing maintenance, repair,
4
<PAGE>
modification, replacement, or other action taken for the purpose of correcting
such interference or impairment) until such interference or impairment is
corrected and eliminated; and
(iv) that if such interference or impairment is not completely
corrected and eliminated within thirty (30) days after such User's receipt of
such notice, then such User shall remove such User's antennas and equipment from
the Property.
C. If Lessor, or any party acting by, through or under Lessor,
installs, upgrades, enhances or relocates buildings or structures upon the Land
or equipment upon the Tower the same shall not interfere with or impair the
Lessee Facilities or any communications operations being conducted by Lessee
from the Premises. If Lessee notifies Lessor of such interference or
impairment, Lessor shall take all necessary steps to eliminate the interference
or impairment. If such interference or impairment cannot be eliminated within
forty-eight (48) hours after notice, Lessor shall cause the interfering or
impairing party to shut down the interfering or impairing operation (except for
intermittent operation for the purpose of testing, after performing maintenance,
repair, modification, replacement, or other action taken for the purpose of
correcting such interference or impairment) until such interference or
impairment is corrected or eliminated. If the same cannot be completely
corrected and eliminated within thirty (30) days after the notice, Lessor shall
remove the interfering building, structures or equipment from the Property.
D. Lessee shall have the right to, at any time or from time to time,
move the Lessee Facilities higher or lower upon the Tower, and to attach and re-
attach such Lessee Facilities as a part of such relocation, without the
obligation to pay any additional Rent or other charges, upon notice to Lessor.
To the extent Lessee so desires to relocate Lessee Facilities in a manner such
that another antenna located on the Tower must be moved, then Lessor shall use
reasonable efforts to assist in obtaining any consent necessary for such
relocation at Lessee's expense. Lessee shall pay all costs directly related to
the physical relocation of such Lessee Facilities or other antenna on the Tower.
However, Lessee may at Lessee's sole cost and expense, at any time and from time
to time, with notice to but without the need for the consent of Lessor, convert
or replace such Lessee Facilities with a sectored site on the Tower, with no
additional Rent due from Lessee. If Lessor has received an offer from a third
party for the space to which Lessee desires to relocate such that the provisions
of Paragraph 17.B would apply, then the provisions of Paragraph 17.B shall
govern.
E. Lessee's buildings or structures upon the Land or equipment upon
the Tower shall not interfere with or impair the facilities or any
communications operations being conducted by other tenants on the Tower to the
extent such operations preceded the operation of Lessee causing such
interference or impairment. If Lessor notifies Lessee of such interference or
impairment, Lessee shall take all necessary steps to eliminate the interference
or impairment. If such interference or impairment cannot be eliminated within
forty-eight (48) hours after notice, Lessee shall shut down the interfering or
impairing operation (except for intermittent operation for the purpose of
testing, after performing maintenance, repair, modification, replacement, or
other action taken for the purpose of correcting such interference or
impairment) until such interference or impairment is corrected or eliminated.
If the same cannot be completely corrected and
5
<PAGE>
eliminated within thirty (30) days after the notice, Lessee shall remove the
interfering building, structures or equipment from the Property.
8. Improvements; Liability.
------------------------
A. Lessee has the right to install, construct, repair, maintain,
operate, remove, replace, upgrade, modify and enhance on the Premises
communications facilities as the same are more particularly described on Exhibit
-------
"C" annexed hereto ("Lessee Facilities"), including, but not limited to, an
- ---
equipment shelter, transmitters and receivers and all related equipment, radio
transmitting and receiving antennas and supporting structures thereto. In
connection therewith, Lessee has the right to do all work necessary to prepare,
maintain and alter the Premises for Lessee's business operations and to install
transmission lines, connecting the antennas to the transmitters and receivers.
All of Lessee's construction and installation work ("Lessee's Work") shall be
performed at Lessee's sole cost and expense and in a good and workmanlike manner
in accordance with Lessee's specifications, which specifications shall not be
inconsistent with the standards set forth in Exhibit E. Title to the Lessee
Facilities shall be in Lessee. Lessee has the right to remove all Lessee
Facilities at its sole expense before the expiration or earlier termination of
the Term, provided Lessee repairs any damage to the Premises caused by such
removal. Upon expiration or earlier termination of the Term, Lessee shall remove
all Lessee Facilities, with the exception of foundations, at its sole expense
and shall repair all damage to the Premises caused by such removal, all within
sixty (60) days after such expiration or termination.
B. Subject to the provisions of Paragraph 8.A, Lessee has the right
to improve the present utilities on the Premises and to install new utilities,
including the right, at Lessee's sole option, to install an emergency or
supporting generator to serve the Lessee Facilities.
C. If Lessor permits any other parties to attach to be located on or
otherwise use the Tower, then Lessor shall provide Lessee either (i) copies of
the engineering drawings, or (ii) a letter from a certified, licensed structural
engineer, stating that the additional facilities are within the load-bearing
capabilities of the Tower (and in any event at least comply with the most
current EIA/TIA RS 222 standards, with a 1/2 inch radial ice load), and will
not in any manner interfere with Lessee's use of the Lessee Facilities. The
attachment or location of such other facilities shall generally be subject to
the terms of Paragraph 15 herein.
9. A. Defaults By Lessee. The occurrence of any of the following
-------------------
instances shall be considered to be a default of this Lease by Lessee:
(i) any failure of Lessee to pay any installment of Rent or
any other charge for which Lessee has the responsibility of payment under
this Lease within ten (10) days of the date notice is given to Lessee that
such payment has not been made on a timely basis;
(ii) any failure of Lessee to perform or observe any term,
covenant, provision or condition of this Lease which failure is not
corrected or cured by Lessee immediately upon notice for circumstances to
which Paragraph 7.E applies, and
6
<PAGE>
otherwise within thirty (30) days of receipt by Lessee of written notice by
Licensee from Lessor of the existence of such a default; except such thirty
(30) day cure period shall be extended as reasonably necessary to permit
Lessee to complete a cure so long as Lessee commences the cure within such
thirty (30) day cure period and thereafter continuously and diligently
pursues and completes such cure;
B. Lessor's Remedies. If there occurs an event of default by Lessee
-----------------
pursuant to this Paragraph 9, Lessor's remedies shall be either or both of
the following:
(i) Lessor, with or without terminating this Lease, may
perform, correct or repair any condition which shall constitute a failure on
Lessee's part to keep, observe, perform, satisfy, or abide by any term,
condition, covenant, agreement, or obligation of this Lease, and Lessor may
reenter the Premises for such purposes, and Lessee shall fully reimburse and
compensate Lessor on demand for all costs and expenses incurred by Lessor in
such performance, correction or repair.
(ii) Lessor may immediately or at any time thereafter terminate
this Lease upon ten (10) business days' written notice to Lessee, whereupon this
Lease shall be deemed to have been terminated. If Lessor elects to terminate
this Lease, then Lessor may recover from Lessee Lessor's actual direct damages
including, without limitation:
(a) The unpaid Rent which had been earned at the time of such
termination; plus
(b) Any other amount incurred by Lessor for its reasonable
expenses (including reasonable attorneys' fees) incurred in connection
with re-entering, repossession, and repairing the Premises.
C. Default By Lessor. (i) Any failure of Lessor to perform or
------------------
observe any term, covenant, provision or condition of this Lease, which failure
is not corrected or cured by Lessor immediately upon notice for circumstances to
which Paragraphs 6(C) and/or 7(C) apply, and otherwise within thirty (30) days
of receipt by Lessor of written notice by Licensor from Lessee of the existence
of such a failure, shall be considered to be a default of this Lease by Lessor.
Such thirty (30) day cure period, if applicable, shall be extended as reasonably
necessary to permit Lessor to complete a cure so long as Lessor commences the
cure promptly within such thirty (30) day cure period and thereafter
continuously and diligently pursues and completes such cure.
(ii) Notwithstanding anything to the contrary contained herein, if Lessor
fails to comply with the terms of Paragraphs 1(B), 6, 7 or 12(B) hereunder and
does not cure such failure within the time expressly allowed, if any, then,
Lessee may, at Lessee's option, cure or cause to be cured such failure by Lessor
and charge Lessor (payable by Lessor within ten (10) days after demand therefor)
the cost incurred by Lessee in effectuating such cure, pursue any equitable
remedy available to it or terminate this Lease by giving written notice to
Lessor, stating the date upon which such termination shall be effective in such
notice in which latter event Lessee may recover from Lessor Lessee's actual
direct damages.
7
<PAGE>
D. All rights of termination arising under this Paragraph 9 shall
extend only to the Premises that are the subject of the default or defaults
giving rise to such termination.
E. To the extent an affiliate of Lessee is obligated by contract
with Lessor to provide services to Lessor, Lessor shall not be liable to Lessee
by virtue of such affiliate's failure to provide such service to Lessor.
10. Taxes. Lessor shall pay and discharge punctually, as and when the same
------
shall become due and payable, all taxes and other governmental impositions and
charges of every kind and nature whatsoever, extraordinary as well as ordinary
which shall or may during the Term be charged, levied, laid, assessed, imposed,
become due and payable, or liens upon or for or with respect to the Tower or the
Land or any part thereof, or any of Lessor's buildings, appurtenances or
equipment thereon or therein or any part thereof, together with all interest and
penalties thereon, under or by virtue of all present or future laws, ordinances,
requirements, orders, directives, rules or regulations of the federal, state,
and local governments and of all other governmental authorities whatsoever. If
personal property or other (including real property) taxes are increased or
assessed against land owner (if other than Lessor), Lessor's landlord (if
applicable), Lessor, or Lessee due to the installation of Lessee's Facilities at
the Premises, Lessee shall pay such increases in taxes as are directly
attributable to Lessee's Facilities. Lessee shall pay and discharge punctually
all taxes due, if any, in connection with the Lessee Facilities, unless Lessee
in good faith elects to contest such taxes.
11. Insurance.
----------
A. Lessee shall maintain insurance with respect to the Lessee
Facilities and Lessee's activities on the Property in such coverages and with
such limits as Lessee, in its sole, reasonable discretion, elects. In any
event, Lessee shall maintain general liability insurance or programs of self-
insurance to the level of at least $1,000,000 covering Lessee's operations upon
the Property.
B. Lessor shall maintain commercial general liability insurance,
including contractual liability coverage, covering Lessor's operations upon the
Property expressly including the Property, with a reputable insurance company
licensed to do business in the State in which the Property is located, with
combined single limits of not less than $1,000,000 per occurrence for bodily
injury or property damage, naming Lessee as an addition insured. Such insurance
may be provided under a blanket policy so long as coverage for the Property is
not limited or otherwise affected by circumstances or events occurring
elsewhere. Such policies shall be non-cancellable and may not be amended in any
material manner, except with at least thirty (30) days prior notice to Lessor
and Lessee. Lessor shall provide Lessee with copies of any such insurance
policies.
12. Destruction of Premises. A. If the Premises or the Lessee Facilities
------------------------
are destroyed, or damaged so as to have a material adverse effect on Lessee's
use thereof, Lessee may elect to terminate the Lease as of the date of the
damage or destruction by notice given to Lessor no more
8
<PAGE>
than forty-five (45) days following the date of any such damage or destruction.
In such event, Rent and all other amounts due from Lessee hereunder shall be
prorated and paid in full as of the date of said casualty and, thereafter, all
rights and obligations of the parties, except for Paragraph 14 herein, and the
obligation to pay accrued but unpaid Rent and other charges actually due
hereunder, shall cease as of the date of the damage or destruction. If any
portion of the Property is damaged or destroyed and Lessor actually terminates
the Underlying Lease, Lessor shall have the right to terminate this Lease upon
thirty (30) days written notice to Lessee.
B. Lessor shall be required to construct or rebuild a Tower or any
other improvements on the Land if the same are damaged or destroyed as soon as
reasonably possible. Rent shall abate until the Premises are restored.
C. If for any reason Lessor fails to so complete the reconstruction
or restoration of a Tower or improvements on the Land within the time period set
forth in Paragraph 12(B) above, then Lessee shall have the right, at its sole
option and in its sole discretion, either itself or through its designee, to
restore or cause the restoration of such Tower or improvements. If Lessee does
so elect, then any and all costs of any nature or kind whatsoever incurred by
Lessee in connection with or as a part of such restoration shall be reimbursed
to Lessee within thirty (30) days after demand therefor is made. If such amount
is not so paid within such time, then Lessee shall have the right, in addition
to and not in lieu of any other rights, to offset such costs against the Rent
next due under this Lease.
D. In the event the Premises or the Lessee Facilities are damaged or
destroyed, Lessee shall also have the right, in Lessee's sole discretion, to
establish a temporary facility on the Property to provide such service as Lessee
deems necessary or desirable, expressly including, without limitation, a cell on
wheels on the Property.
13. Condemnation. If the whole of the Tower, or such portion of the Tower
-------------
or the Land as will make the Tower unusable, or if the whole of the Premises, or
such portion thereof as will make the Premises unusable for the purposes herein
leased, is condemned by any legally constituted authority, or conveyed to such
authority in lieu of such condemnation, then in any of said events, Lessor shall
immediately provide notice to Lessee of such condemnation action, together with
any and all copies of any correspondence, pleadings, claims or other information
received by Lessor with respect to or in connection with such condemnation. This
Lease shall end on the date when possession thereof is taken by the condemning
authority, and rental shall be accounted for between Lessor and Lessee as of
such date and Lessor shall pay Lessee a refund of any prepaid Rent. If any
portion of the Premises is taken by condemnation or a conveyance in lieu thereof
in any way that will make the Premises unusable for the purposes intended (other
than as set forth in the preceding sentence), at Lessee's option, Lessee may (i)
terminate this Lease, or (ii) elect to continue this Lease and reduce the Rent
in proportion to the portion of the Premises so taken. Nothing in this Paragraph
13 shall be construed to limit or affect Lessee's right to an award of
compensation of any Eminent Domain proceeding for the taking of Lessee's
leasehold interest hereunder, or for the impairment, or the loss of use of any
of the Lessee Facilities.
14. Hold Harmless and Limitation of Damages.
---------------------------------------
9
<PAGE>
A. EXCEPT AS TO INDEMNIFICATION PURSUANT TO PARAGRAPH 14.B, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL, PUNITIVE OR
INCIDENTAL DAMAGES OF ANY KIND WHATSOEVER, INCLUDING LOST PROFITS, REGARDLESS OF
WHETHER OR NOT EITHER SUCH PARTY WAS ADVISED BY THE OTHER PARTY OF THE
POSSIBILITY OF SUCH CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES OR LOST
PROFITS.
B. Lessor and Lessee shall each be responsible for and shall
indemnify and hold harmless the other and its parent and affiliates and their
respective employees, agents and contractors against any and all loss, cost,
damage or expense, including, but not limited to, court costs and attorneys
fees, incurred by the indemnified party as a result of or in connection with any
claim of violation of any environmental law, ordinance or regulation arising on
or in connection with the Premises to the extent caused by the act of the
indemnifying party after the Effective Date. The indemnifying party shall pursue
and effectuate the cure of any claim of such violation in a manner which causes
the least amount of disruption to the Premises.
15. Engineering Standards.
---------------------
A. Any and all work done by, through or under Lessor on the Property
shall conform to the engineering standards and practices for Towers described in
Exhibit "E", by this reference incorporated herein.
- -----------
B. Lessor shall also maintain, at Lessor's sole cost or expense, the
current level of grounding for the Tower, as indicated in drawings provided by
Lessee to Lessor. Lessee shall have the right, at any time, to provide
additional grounding for the Tower, and, in connection therewith, to place,
locate, relocate or replace any lines, equipment or facilities on the Property,
at no additional cost or expense to Lessor.
16. Tower Lights. To the extent the lights on the tower (the "Tower
------------
Lights") are controlled or have power supplied through the Lessee Facilities and
are monitored through Lessee's building meter, then the following provisions
shall be in force and effect:
A. Lessor shall reimburse Lessee, in advance, on or before the first
(1/st/) of each year, for Lessee's costs of power used for Tower Lights, and
Lessee's costs associated with an emergency power generator, if one is present,
that may provide emergency power to said Tower Lights. Such costs shall be, for
the initial Term of the Lease, Three Hundred and No/100 Dollars ($300.00) per
year. Such amount may be increased by Lessee at the time of any renewal of the
Term, by an amount equal to Lessee's increased costs to provide such service.
Notwithstanding the above, Lessee shall under no circumstances have any
responsibility or liability for the actual supply of electricity to the Tower
Lights or any failure thereof.
B. Lessor shall have all responsibility for the operation,
maintenance, replacement, monitoring and reporting of such Tower Lights.
10
<PAGE>
C. Lessee shall have the right at any time or from time to time,
upon not less than ninety (90) days prior notice, to cease to provide the
service contemplated under this Paragraph 16 to or for Lessor. The reimbursement
paid to Lessee as set forth in Paragraph 16(A) above shall cease as of the date
Lessee ceases to provide such service.
17. Rights to Other Space on Tower.
------------------------------
A. Lessee may, at any time, upon notice to Lessor, lease additional
or any other available space on the Tower at any time, at the lower of the Rent
and charges as set forth in Paragraph 4 herein or the rent and charges charged
by Lessor or others for similar space. If Lessee desires to transfer the Lessee
Facilities to another tower of Lessor, Lessor shall cooperate with Lessee in
identifying and making available appropriate space on such tower in the same
manner as set forth in Paragraph 7.D, and in the event such transfer is made
this Lease shall continue in effect as to such new premises in lieu of the
Premises, with appropriate modifications to Exhibits A, B and C to reflect such
transfer.
B. Lessor shall not lease any other unoccupied space on the Tower to
a third-party with first giving Lessee notice of such intent to lease space,
with such notice also including the rent for such location and the other
material economic terms related to such lease. Lessee may, at Lessee's option,
lease such additional space on the Tower at the same rate offered by a third-
party for such space, as evidenced by a bona-fide written offer from a third-
party independent of Lessor, delivered in good faith to Lessor. Lessee shall
have five (5) business days after notice from Lessor of Lessor's intent to lease
such other space on the Tower, to elect whether or not Lessee intends to instead
lease such space on the terms offered. If Lessee elects to lease such space on
such terms, then Lessee shall have leased such space on such terms as stated in
the third party offer, but otherwise subject to the terms of this Lease.
18. Notices.
--------
A. All notices, requests, demands and other communications
hereunder, except for an "Emergency Notice" (as provided below), shall be in
writing and shall be deemed given on the first (1/st/) business day after the
sending hereof if personally delivered by an overnight courier providing proof
of service, to the following addresses:
If to Lessor: Pinnacle Towers Inc.
___________________________
___________________________
___________________________
With a copy to:
___________________________
___________________________
___________________________
___________________________
11
<PAGE>
If to Lessee: Southern Communications Services, Inc.
___________________________
___________________________
___________________________
With a copy to:
Robert Williams, Esq.
Troutman Sanders LLP
600 Peachtree Street
Suite 5200
Atlanta, GA 30308-2216
B. Additionally, any notices which require immediate response or
attention (an "Emergency Notice"), including any notices for the need for repair
to the Tower or the need for access to the Property, may be given by a party
hereto to the other by a telecopy sent immediately afterwards, at the following
telephone or telecopy numbers (with a copy of such notice then sent, for
informational purposes only, in accordance with Paragraph 18(A) above):
If to Lessor: ___________________________
___________________________
___________________________
If to Lessee: ___________________________
___________________________
___________________________
___________________________
Either party hereto may change the notice address for all notices or for
Emergency Notices, by a notice given to the other under the terms of Paragraph
18(A) above.
19. Title and Quiet Enjoyment. Lessor warrants that it has full right,
--------------------------
power, and authority to execute this Lease. Lessor further warrants that,
provided Lessee is not in default, Lessor shall not disturb Lessee's possession
of the Premises, except as is permitted in Paragraph 9 of this Lease.
20. Underlying Lease.
-----------------
A. If Lessor has only a leasehold interest in the Land, Lessee
agrees and acknowledges that (i) Lessor has only a leasehold interest in the
Land; (ii) all of Lessee's rights under this Lease are subject and subordinate
to the Underlying Lease; (iii) Lessee has no rights which are in excess of or
conflict with those rights granted Lessor in the Underlying Lease; and (iv) to
the extent provided in the Underlying Lease, Lessee's rights and Lessor's
obligations under this Lease are contingent upon Master Lessor's approval of
this Lease. If any event of default by Lessor
12
<PAGE>
under this Lease is a direct result of the acts or omissions of Master Lessor,
that Lessee shall have the right to terminate this Lease upon thirty (30) days
prior written notice if such default is not cured within sixty (60) days of
receipt of written notice of default.
B. Lessor agrees to provide Lessee with copies of any notice of
default received by Lessor under the Underlying Lease immediately upon Lessor's
receipt of same. Lessor's failure to provide such notice to Lessee shall be a
default under this Lease by Lessor. Notwithstanding anything contained herein to
the contrary, Lessor agrees to perform all duties and obligations of Lessor
arising under the Underlying Lease. Further, Lessor hereby covenants and agrees
that Lessor shall not modify the terms of the Underlying Lease in any way that
would impair Lessor's ability to perform its obligations under this Lease
without Lessee's prior written consent so long as this Lease shall remain in
force and effect, and Lessor hereby covenants and agrees to extend the term of
any such Underlying Lease as and when the time for such extension is permitted
or required under such Underlying Lease to the extent necessary to enable it to
perform its obligations under this Lease, unless at the time for such extension
this Lease is no longer in force or effect.
C. Lessee shall have the further right, at Lessee's sole option and
in Lessee's sole discretion to cure any default on the part of Lessor under any
Underlying Lease or to extend the term thereof, if Lessor fails to do so, if the
extension thereof is necessary for Lessee to extend the Term of or otherwise
enjoy a Renewal Term under this Lease. In such event, Lessee may deduct any and
all costs therefrom from any Rent otherwise due from Lessee hereunder.
21. Successors and Assigns. This Lease shall run with the Land. This
-----------------------
Lease shall be binding upon and inure to the benefit of the parties, their
respective successors and assigns.
22. Representations and Warranties of the Parties. Each party hereto
----------------------------------------------
hereby represents and warrants to the other party hereto the following:
A. Such party is a corporation or other business entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation and has the corporate or other
power and authority to enter into and perform its obligations under this Lease.
B. This Lease has been duly authorized by all necessary action on
the part of such party, has been duly executed and delivered by a duly
authorized officer or representative of such party and constitutes the legal,
valid and binding obligation of such party enforceable in accordance with its
terms.
23. Miscellaneous.
--------------
A. This Lease constitutes the entire agreement and understanding
between the parties, and supersedes all offers, negotiations and agreements with
respect to the Property. There are no representations or understandings of any
kind not set forth herein. Any amendments to this Lease must be in writing and
executed by both parties.
13
<PAGE>
B. If any provision of this Lease is invalid or unenforceable with
respect to any party, the remainder of this Lease or the application of such
provision to persons other than those as to whom it is held invalid or
unenforceable, shall not be affected and each provision of this Lease shall be
valid and enforceable to the fullest extent permitted by law.
C. This Lease and the performance hereof shall be governed,
interpreted, construed and regulated by and under the laws of the State in which
the Premises are located.
D. If either party institutes any action or proceeding in court to
enforce any provision(s) hereof, or any action for damages by reason of any
alleged breach of any of the provisions hereof, then the prevailing party in any
such action or proceeding shall be entitled to receive from the losing party
such amount as the court may adjudge to be reasonable attorneys' fees for the
services rendered to the prevailing party, together with its other reasonable
litigation costs and expenses.
E. In the event of any act of God, hurricane, tornado, rain, flood,
sink hole, wind, hail, lightning, earthquake, snow or ice, extreme high or low
temperatures, water or gas main break, fire, explosion, riot, terrorist act,
military action, failure to act on the part of a governmental authority, strike,
lockout or other labor problem, transportation delay, unavailability of supplies
or materials or change in or in the interpretation of any law or regulation
resulting in either party's inability to perform the obligations required of
such party hereunder, this Lease shall not terminate but such party's
performance hereunder of the affected obligations shall be excused for a period
equal to such delay and such party shall not be considered to be in default
under this Lease with respect to the obligation, performance of which has thus
been delayed.
F. This Lease is confidential and shall not be disclosed to any
third party without the prior express written consent of Lessor or Lessee.
However, if requested by Lessee, Lessor agrees to promptly execute and deliver
to Lessee a recordable Memorandum of this Lease, expressly referencing, by way
of illustration, but not limitation, the purchase option, refusal rights and
length and extension of the Term, as contained herein. Lessee may, at Lessee's
sole option, record or cause to be recorded such memorandum in the public
records of the County in which the Property is located.
14
<PAGE>
DATED as of the date first above written.
LESSOR:
PINNACLE TOWERS INC.
By:_____________________________________
Its:____________________________
Attest: ________________________________
Its:____________________________
(CORPORATE SEAL)
LESSEE:
SOUTHERN COMMUNICATIONS SERVICES, INC.
By:_____________________________________
Title:__________________________________
Attest:_________________________________
Title:__________________________________
(CORPORATE SEAL)
15
<PAGE>
EXHIBIT "A"
Premises No.:______________
Effective Date:______________
The Land shall consist of the following:
<PAGE>
EXHIBIT "B"
Premises No.:______________
Effective Date:______________
The Premises shall consist of the following:
(a) Ground space area on the Land of approximately _______ +/- _______, as
shown on Exhibit "B-1" annexed hereto, which shall include space for an
equipment building and gas tank.
(b) Space on the Tower antenna mounts at the approximate height of _____ feet
for __________ (___) antenna mounts for the installation, maintenance and
operation of transmitting and receiving antennas and cables.
(c) Together with an easement for the purpose of ingress and egress and the
construction, installation and maintenance of utility lines, pipes and
conduit (including co-axial cable lines or fiber optic lines) over, under,
upon, across and along (i) such portions of the Tower and the land located
below the lower horizontal boundary of the leased tower space as shall be
necessary to provide ingress and egress to the leased tower space and
utility service to the communications equipment located upon the Tower; and
(ii) the Property more particularly described on Exhibit "B-1" hereto.
-------------
<PAGE>
EXHIBIT "C"
The "Lessee Facilities"
The Lessee Facilities currently consist of _____________.
[Note: description should include maximum loading allowances]
<PAGE>
EXHIBIT "D"
The "FCC Form 854R"
<PAGE>
EXHIBIT "E"
-----------
Lessee Engineering Standards and Practices
<PAGE>
EXHIBIT 10.6
OPTION TO DIRECT CONSTRUCTION OR ACQUISITION OF
-----------------------------------------------
ADDITIONAL TOWER FACILITIES
---------------------------
THIS OPTION TO DIRECT CONSTRUCTION OR ACQUISITION OF ADDITIONAL TOWER
FACILITIES (the "Option"), is made this ____ day of January, 1998, by and
between PINNACLE TOWERS INC. (as "Developer/Lessor") and SOUTHERN COMMUNICATIONS
SERVICES, INC. ("SoComm").
W I T N E S S E T H:
--------------------
WHEREAS, SoComm and Developer/Lessor have this day consummated a
transaction pursuant to which SoComm did convey to Developer/Lessor certain
rights and interests in communications tower sites and certain other, related
facilities and improvements in the States of Georgia, Alabama, Mississippi and
Florida;
WHEREAS, as a material element of such agreement for conveyance by
SoComm, without which SoComm would not have consummated a transaction conveying
such tower sites and facilities with Developer/Lessor, Developer/Lessor has
agreed with SoComm to provide certain further services to and for the benefit of
SoComm, related to the possible construction of further tower sites;
WHEREAS, SoComm's "Southern LINC" wireless communication source is
critical to the needs of affiliated electric utility users, as well as
commercial customers that include state, county and municipal government users
and emergency services users, and SoComm itself is and shall be an anchor tenant
on the any of the "Sites" (as herein defined) constructed or acquired under this
Option;
<PAGE>
WHEREAS, SoComm and Developer/Lessor desire to enter into this Option,
to reflect the terms and conditions under which Developer/Lessor may, at the
direction and in the sole discretion of SoComm, perform certain services for
SoComm related to the construction or acquisition of certain telecommunications
tower facilities, as such services and facilities are further described herein.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, and for Ten and No/100 Dollars ($10.00) and other good and
valuable consideration, paid by the parties hereto to one another, the receipt
and sufficiency of which are acknowledged by the parties hereto, the parties
hereto hereby covenant and agree as follows:
1. Term. The term of this Option shall commence on the date hereof
----
and shall expire, unless sooner terminated in accordance with the terms hereof,
ten (10) years after the date hereof.
2. Option to Direct Acquisition and Construction. (a) SoComm shall
---------------------------------------------
have the right at any time and from time to time, at the sole option of SoComm,
by a notice to Developer/Lessor, to direct Developer/Lessor to use
Developer/Lessor's commercially reasonable efforts to construct or cause the
construction or acquisition (as applicable) of up to, but not in excess of,
eighty (80) new towers or existing towers, for the purpose of permitting the
placement thereon of communications antenna and related equipment (individually
a "Tower" and collectively the "Towers") for the benefit of SoComm or its
designees, on any one of the potential tower sites within an area, or "search
ring", (individually a "Site" or collectively the "Sites"), designated or
provided from time to time by SoComm, within the States of Florida, Alabama,
Mississippi or Georgia.
2
<PAGE>
(b) SoComm shall have the right to have notice of and to consent to
any and all contractors and subcontractors Developer/Lessor may use in
connection with or as a part of the fulfillment or achievement of the
obligations of Developer/Lessor hereunder, such consent of SoComm not to be
unreasonably withheld or delayed. Developer/Lessor shall not utilize any
contractor or subcontractor to which SoComm has not previously given its
consent. [PROVIDE PRE-APPROVED LIST OF VENDORS/CONTRACTORS.]
(c) Upon the notice from SoComm as provided in Paragraph 2(a) above,
Developer/Lessor hereby covenants and agrees to use Developer/Lessor's
commercially reasonable efforts to cause the construction or acquisition, as
applicable, of the Towers as contemplated herein; provided, however, that in
attempting to cause such construction or acquisition, Developer/Lessor shall not
be entitled to take into account the commercial viability or profitability of
the Tower, once constructed, as a part of Developer/Lessor's determination of
undertaking commercially reasonable efforts as required herein. As a part of
such Tower construction or acquisition, Developer/Lessor shall and hereby
covenants and agrees to use Developer/Lessor's commercially reasonable efforts
to acquire fee simple title or ground lease to the Site in question, without
encumbrances except for those which would not in any manner adversely impact
upon the use of such Tower by SoComm, as contemplated herein.
Developer/Lessor's site selected may be subject to a mortgage, deed to secure
debt or other such encumbrance, so long as the foreclosure thereof would not
terminate or otherwise adversely affect SoComm's rights under the "Lease" (as
herein defined).
3
<PAGE>
(d) To the extent new Towers are constructed by Developer/Lessor,
Developer/Lessor hereby covenants and agrees to construct such Towers in
accordance with the specifications and guidelines for the construction of such
Towers as currently used by Developer/Lessor.
(e) Developer/Lessor shall cause the Site so designated by SoComm to
be acquired and construction of the Tower on such Site to be commenced within
thirty (30) days after the "Permit" (as herein defined) is issued for the Site
in question. Developer/Lessor shall cause the Site to be acquired and the Tower
to be constructed and completed expediently and as soon as reasonably practical,
once the construction thereof has commenced.
(f) Developer/Lessor shall be responsible for and hereby covenants
and agrees to use its commercially reasonable efforts to obtain, achieve or
otherwise acquire, as quickly as is reasonable, any and all permits, licenses,
approvals (governmental, regulatory and otherwise) or consents (individually a
"Permit", and collectively the "Permits") necessary or appropriate for the
construction, development, use and operation of a Tower, at Developer/Lessor's
sole cost and expense. Developer/Lessor shall provide notice to SoComm of the
time, date and place for any hearings or meetings related to obtaining a Permit
for a Tower, as soon as Developer/Lessor has notice of such hearing or meeting,
and SoComm shall have the right, at the sole option and discretion of SoComm, to
attend such hearing or meeting. Developer/Lessor's delivery to SoComm of
possession of a portion of the Tower for use by SoComm under a Lease shall be
the representation and warranty by Developer/Lessor to SoComm that all such
Permits have, to Developer/Lessor's knowledge, been validly
4
<PAGE>
issued and obtained. Developer/Lessor shall deliver to SoComm a copy of all such
Permits obtained with respect to or in connection with any Tower, upon their
issuance. Developer/Lessor shall not, under any circumstances or for any
purposes, have the right to suggest, indicate or represent as a part of any
efforts, meetings or hearings to obtain a Permit, that Developer/Lessor is
acting on behalf of, at the request of or for SoComm or any of the affiliates or
subsidiaries of SoComm, and Developer/Lessor shall not disclose this
relationship, unless Developer/Lessor has been given the prior, express written
consent by SoComm to do so. A violation by Developer/Lessor shall give SoComm,
in addition to and not in lieu of, any of the remedies available to SoComm at
law or in equity, the right to immediately terminate this Option and all further
rights of the parties hereto under this Option.
3. Self-Help or Alternate Resolution Rights of SoComm. (a) If for
--------------------------------------------------
any reason Developer/Lessor fails to commence the construction or acquisition of
a Tower, or once, commenced, fails to cause the completion of construction of
the Tower, in accordance with and within the time frames set forth on Paragraph
2 above, as a result of Developer/Lessor not using its commercially reasonable
efforts to do so, then SoComm, at its sole option and in its sole discretion,
may acquire the Site in question (if from Developer/Lessor, then at
Developer/Lessor's cost) and then construct such Tower or cause a third-party to
construct the Tower which SoComm has initially directed Developer/Lessor to
construct. In such event, SoComm shall give notice to Developer/Lessor of such
election. If such occurs, Developer/Lessor shall not be entitled to any
reimbursement or compensation of any nature, kind or amount whatsoever, whether
or not Developer/Lessor has commenced construction of the Tower in question.
5
<PAGE>
(b) (i) Any and all costs incurred by SoComm as a part of or in
connection with the acquisition of the Site or the construction of the Tower may
be, at the option of SoComm, off-set against any rents or other costs due under
the Lease, or, if SoComm acquires the Site in its own name such that SoComm owns
the Site and Tower, then no Lease shall be entered into, and SoComm may recover
its costs as contemplated in Paragraph 3(b)(ii) herein. However, no such
election by SoComm shall otherwise limit any rights SoComm has or might have at
law or in equity for Developer/Lessor's failure to comply with the terms of this
Option.
(ii) If the rent due under a Lease is not sufficient to cover
and reimburse SoComm's costs incurred, as described above, within a three (3)
year period, after the costs are first incurred, or if SoComm has not entered
into a Lease because Developer/Lessor does not own the Site in question, then
SoComm may, at SoComm's option and in SoComm's sole discretion, offset the
amounts due SoComm against any other amounts due to Developer/Lessor under any
other agreement or Lease, involving SoComm and Developer/Lessor.
(c) If Developer/Lessor fails to commence the construction of, or,
once commenced, fails to complete the construction of a Tower within the time
frames set forth above more than three (3) times, then SoComm may, at its sole
option and is its sole discretion, upon notice to Developer/Lessor, terminate
this Option upon not less than ten (10) days prior written notice, without
premium or penalty. Upon such termination, neither party shall have any further
rights hereunder, but no such termination shall effect the rights of either
party hereto under any "Lease" (as herein defined).
6
<PAGE>
4. Costs of Construction. Developer/Lessor shall pay for any and all
---------------------
costs of or incurred in connection with the construction of the Tower, or the
acquisition of any land or rights or entitlements associated therewith.
5. Lease. Upon the completion of the Tower, SoComm will enter into a
-----
lease for an antenna facility and related equipment on the Tower (a "Lease"),
the term of lease to commence on the date of completion of the Tower. Such
Lease shall be in the form attached hereto as Exhibit "B", by this reference
-----------
incorporated herein, except that there shall be no rent due from SoComm
thereunder for the period from the Commencement date thereunder until [INSERT
DATE ONE (1) YEAR FROM CLOSING DATE]. This agreement to lease is the only
obligation SoComm shall have with respect to such Tower and any Lease, once duly
executed and delivered by all parties thereto, shall not be terminable if this
Option is terminated or otherwise expires.
6. Notices. All notices required or permitted hereunder shall be in
-------
writing and shall be sent, either by certified mail, return receipt requested,
postage prepaid, or by a recognized overnight national courier service, in
either event addressed as follows:
If to SoComm:
Mr. Robert Dawson
Southern Communications Services, Inc.
64 Perimeter Center East
1/st/ Floor
Atlanta, GA 30346
7
<PAGE>
with a copy to:
Robert Williams, Esq.
Troutman Sanders LLP
600 Peachtree Street, NE
Suite 5200
Atlanta, GA 30308-2216
If to Developer/Lessor:
Pinnacle Towers Inc.
1549 Ringling Blvd. - Third Floor
Sarasota, Florida 34236
Attn: Robert J. Wolsey
with a copy to:
Trey Baldey, Esq.
Holland & Knight, LLP
400 North Ashley Drive
Suite 2300
Tampa, Florida 33602-4300
and a copy to:
John L. Kuehn, Esq.
Kirkland & Ellis
Citicorp Center
153 East 53/rd/ Street
New York, NY 10022-4675
or to such other address as either party hereto may provide to the other, in
accordance with the terms of this Paragraph.
7. Assignability; Limitations on Transfer. Neither party shall have
--------------------------------------
the right to assign its interest under this Option without the prior written
consent of the other party hereto, which such party may withhold or grant in the
sole discretion of such party.
8
<PAGE>
Notwithstanding the above, a party hereto shall have the absolute right to
assign or otherwise convey, in whole or in part, its interest under this Option,
with notice to, but without the need to obtain the prior consent or approval of,
the other party hereto, to any affiliate or subsidiary of such party.
8. Transfers, Successors and Assigns. This Option shall, subject to
---------------------------------
the terms of Article 7 above, inure to the benefit of and be binding upon
SoComm, Developer/Lessor, and their respective transfers, successors and
assigns.
9. Georgia Law. This Option shall be construed and interpreted under
-----------
the laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned have caused this Option to be
executed under seal and delivered, on the day and year first above written.
"SoComm"
Southern Communications Services, Inc.
By:_____________________________________
Its:____________________________________
Attest:_________________________________
Its:____________________________________
(CORPORATE SEAL)
"Developer/Lessor"
Pinnacle Towers, Inc.
By:_____________________________________
Its:____________________________________
Attest:_________________________________
Its:____________________________________
9
<PAGE>
(CORPORATE SEAL)
10
<PAGE>
EXHIBIT 10.7
EXCHANGE AGREEMENT
INVOLVING
SOUTHERN COMMUNICATIONS SERVICES, INC.
AS "SELLER"
AND
PINNACLE TOWERS INC.
AS "PURCHASER"
DATED: JANUARY __, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
1. Purchase and Sale......................................................... 1
-----------------
2. Earnest Money............................................................. 2
-------------
3. Exchange Consideration.................................................... 2
----------------------
4. Title to Property......................................................... 5
-----------------
5. Inspection................................................................ 7
----------
6. Protest as to or Election not to Purchase or Sell Sites................... 8
-------------------------------------------------------
7. Covenants of Seller....................................................... 9
-------------------
8. Leases on Sites........................................................... 9
---------------
9. Closing; Closing Date; Documents.......................................... 9
--------------------------------
10. Closing Expenses; Prorations............................................. 10
----------------------------
11. Destruction.............................................................. 11
-----------
12. Defaults................................................................. 11
--------
13. Files and Records........................................................ 12
-----------------
14. Option to Construct Additional Towers.................................... 13
-------------------------------------
15. Publicity................................................................ 13
---------
16. Brokers and Agents; Indemnity............................................ 13
-----------------------------
17. Notice................................................................... 13
------
18. Assignment............................................................... 14
----------
19. Time of Essence.......................................................... 15
---------------
20. Successors and Assigns................................................... 15
----------------------
21. Multiple Counterparts.................................................... 15
---------------------
22. Governing Law............................................................ 15
-------------
23. Survival................................................................. 15
--------
24. Sole and Entire Agreement................................................ 15
-------------------------
25. Prohibition Against Recording............................................ 15
-----------------------------
26. Board Approval by Seller................................................. 15
------------------------
27. Authority of Parties..................................................... 16
--------------------
28. Cross-Default............................................................ 16
-------------
29. Offer to Seller.......................................................... 16
---------------
</TABLE>
Exhibit "A" - Owned Sites
Exhibit "B" - Leasehold Sites
Exhibit "C" - General Exceptions to Title
Exhibit "D" - Specific Disclosures as to Sites
Exhibit "E" - Site Values
Exhibit "F-1" - Form of Lease
Exhibit "F-2" - Form of Lease - OPCO
Exhibit "G" - Option Agreement Form
Exhibit "H" - List of Sites Without Current Legal Descriptions
Exhibit "I-1" - Form of Operating Company Ground Lease
i
<PAGE>
Exhibit "I-2" - Form of Operating Company Ground Lease - Restricted Access
Exhibit "J" - OPCO Sites
Exhibit "K" - Exchange Property
ii
<PAGE>
EXCHANGE AGREEMENT
------------------
THIS EXCHANGE AGREEMENT (the "Agreement"), is made and entered into this
___ day of January, 1998, by and among SOUTHERN COMMUNICATIONS SERVICES, INC.
("Seller") and PINNACLE TOWERS INC. ("Purchaser"), a corporation of the State of
Delaware.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller is the owner of, has a leasehold interest in or otherwise
has certain rights or interests in or with respect to certain communications
tower sites identified on the attached Exhibits "A" and "B", including all fee,
------------ -
ground leasehold interests and easements pertaining to such tower sites
(individually sometimes herein referred to as a "Site", or collectively as the
"Sites"), in the states of Georgia, Alabama, Florida and Mississippi, which
Sites may include, by way of illustration but not limitation, land,
communications towers identified on the attached Exhibits "A" and "B"
------------ ---
(individually a "Tower" or collectively the "Towers") and various other
improvements serving or used in connection with the operation of the towers
(collectively, including without limitation the "Towers", the "Assets"), and as
further described, limited and defined herein.
WHEREAS, Seller desires to exchange its right, title and interest in and to
said Assets and Sites and certain other property described herein to Purchaser,
and Purchaser desires to purchase the same from Seller, all subject to and upon
the terms and conditions set forth herein, subject to and limited by certain
rights which Seller intends to retain with respect to such Sites and Assets, as
further described herein.
WHEREAS, Seller's "Southern LINC" wireless communication source is critical
to the needs of affiliated electric utility users, as well as commercial
customers that include state, county and municipal government users and
emergency services users, and Seller itself is and shall be an anchor tenant on
the Assets.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby expressly acknowledged by
Seller and Purchaser, Seller and Purchaser hereby covenant and agree as follows:
1. Purchase and Sale. (a) Seller hereby agrees to convey to Purchaser,
-----------------
and Purchaser hereby agrees to acquire from Seller, subject to and upon the
terms and conditions contained herein, any and all of Seller's right, title and
interest in and to the Assets and Sites, consisting of twenty-eight (28) such
Sites, except as limited herein. If any Asset or Site to which title or
interest is to be conveyed hereunder is currently owned by an affiliate of
Seller, Seller shall acquire the same prior to the "Closing" (as that term is
herein defined). The Assets include, as to the Sites listed on Exhibit "A",
-----------
attached hereto and by this reference incorporated herein, a fee ownership in
the real property associated with such Sites, currently consisting of no such
Sites, and as to the Sites listed on Exhibit "B", attached hereto and by this
-----------
reference incorporated
<PAGE>
herein, an assignment of the leasehold interest in and to the Site, consisting
of twenty-eight (28) such Sites. In addition to such interest in real property
or leasehold interest, the Assets also include the tower structures, associated
tower lighting equipment, grounding systems and physical improvements on each
Site, along with any tenant leases, easement rights necessary for access to the
tower and for location of the tower and guy wires associated therewith, security
deposits (if any) and the files and records described in Paragraph 13(a)(i)
through (iv) herein from tenants, and transferable permits associated with the
tower, (if any), but specifically do not include, and Seller shall keep and
maintain its interest, rights and title to, any communications antennae, wiring,
devices or other communications equipment, or any buildings or other structures
housing such equipment, as more fully described in the exhibits to the Leases,
with respect to such Sites and Assets.
(b) Seller shall reserve as a part of any such conveyance of Sites in
the conveyance documents described in Paragraph 9 herein, an irrevocable, non-
exclusive, perpetual easement for access to such Assets and Sites, for the
purpose of maintaining the Assets and Sites, as contemplated in the "Lease" (as
that term is herein defined), and for the purpose of maintaining certain other
improvements which may serve, or be a part of improvements other than the
Assets, so long as such easement is specifically located in a manner that does
not interfere with Purchaser's or tenants use of the Assets and Sites.
(c) As to the Sites to which Seller has or will have, and will be
conveying to Purchaser at Closing, an assignment of a leasehold interest, and
the lessor thereunder is an affiliate of Seller which is a utility operating
company (an "OPCO"), such leases shall either be in the form attached hereto as
Exhibit "I-1" or Exhibit "I-2", each of which is by this reference incorporated
- ------------- -------------
herein. The lease as shown in Exhibit "I-2" shall be used for those Sites where
-------------
access shall be restricted. If the OPCO in question does not enter into a lease
with Seller on such form, then at Purchaser's option and as Purchaser's sole
remedy therefor, such election of Purchaser to be evidenced by notice to Seller,
the Site in question shall not be conveyed to Purchaser, and the "Exchange
Consideration" (as herein defined) shall be adjusted as contemplated in
Paragraph 6 herein.
2. Earnest Money. Contemporaneously with the execution of this Agreement
-------------
by Purchaser, Purchaser shall deliver to Seller by wire transfer to the same
account One Million and No/100 Dollars ($1,000,000.00) (the "Earnest Money").
The Earnest Money shall be applied to and credited against the "Exchange
Consideration" at the "Closing" (as those terms are hereinafter defined), or
otherwise disbursed as provided in this Agreement, but shall only be refunded to
Purchaser as set forth in Paragraphs 12 and 26 herein. Seller shall be under no
obligation to segregate the Earnest Money from any other accounts or funds of
Seller and interest earned on said Earnest Money, if any, shall belong to
Seller.
3. Exchange Consideration. (a) The exchange consideration (the "Exchange
----------------------
Consideration") to be paid by Purchaser to Seller for the conveyance of the
Assets and Sites shall be certain equipment as herein described with a value of
Eleven Million One Hundred Thirty Six Thousand Six Hundred Seventeen and No/100
Dollars ($11,136,617.00) at Closing, as such amount may be reduced as set forth
in Paragraph 6 herein.
2
<PAGE>
(b) Seller desires, and Purchaser is willing, to effectuate the
conveyance of the Assets and Sites by means of an exchange of "like-kind"
property ("Exchange") which will qualify as such under Section 1031 of the
Internal Revenue Code of 1986, as amended (the "IRC") and the regulations
promulgated thereunder. Purchaser shall acquire like-kind property designated by
Seller ("Exchange Property"), and to cause an Exchange of the Exchange Property
as provided in this Section.
(c) For purposes of the like-kind exchange provided for herein,
Seller designates the Exchange Property as shown on Exhibit "K", attached hereto
------------
and by this reference incorporated herein.
(d) At the Closing Seller shall convey the Assets and Sites to
Purchaser, and Purchaser shall acquire the Exchange Property but Purchaser shall
have no obligation to acquire the Exchange Property to the extent Purchaser is
not obligated to acquire the Assets under this Agreement. If the cost of the
Exchange Property exceeds the Exchange Consideration as prorated and adjusted in
accordance with the terms of this Agreement, Seller shall pay the amount of such
excess to Purchaser at the Closing. If Purchaser's credit for all Exchange
Property is less than the Exchange Consideration as prorated and adjusted in
accordance with the terms hereof, Purchaser shall pay the amount of such
deficiency to Seller at the Closing as set forth in this Agreement. Said amount
shall be paid in cash, or by wire transfer, to an account designated by Seller
for that purpose. Alternatively, at the option of Seller, said deficiency shall
be paid as set forth in subparagraph (f) below.
(e) Purchaser shall cause the conveyance of the Exchange Property to
Seller by bill of sale at the Closing, without representation or warranty or any
kind, on an "as is - where is" basis, but Purchaser shall assign any warranties
it receives on the Exchange Property, without recourse.
(f) If Seller fails to designate any of the Exchange Property by the
date of the Closing, Purchaser shall be obligated to pay the Exchange
Consideration set forth in this Agreement on the date of Closing and Seller
shall instruct Purchaser on said date to make payable all or any portion of the
net cash proceeds of the Exchange Consideration in excess of any credit for any
Exchange Property acquired by Purchaser and conveyed to Seller (such funds being
hereinafter called the "Escrow Fund") to an escrow agent acceptable to Seller
and Purchaser (the "Escrow Agent") but Purchaser shall have no such obligation
to the extent Purchaser is not obligated to acquire the Assets under this
Agreement. The Assets will be conveyed by Seller to Purchaser immediately upon
Purchaser's payment of such amount. The Escrow Fund shall be deposited into an
interest bearing escrow account designated for that purpose. All interest on the
Escrow Fund so deposited shall accrue to the benefit of Seller except that all
such accrued interest shall be paid to Purchaser upon Seller's default under
Paragraph 12. The Escrow Fund shall be held by Escrow Agent. Seller shall,
within forty-five (45) days after the date of the Closing, identify Exchange
Property to be acquired by Purchaser and give notice thereof to Purchaser, and
all such notices shall be deemed to be a part of this Agreement for all
purposes. Upon identification of any Exchange Property by Seller, Purchaser
shall use commercially reasonable efforts to enter into a contract or option to
purchase such parcel or parcels of Exchange Property on terms acceptable to
Seller and Purchaser and approved in
3
<PAGE>
writing by Seller and Purchaser prior to execution of any such contract or
option by Purchaser and thereafter to acquire such parcel or parcels of Exchange
Property in accordance with the provisions of this Paragraph. Purchaser shall
not execute a contract to acquire any Exchange Property until Seller has
approved the same. The Escrow Fund shall be disbursed and used to acquire any
Exchange Property so identified by Seller, and Seller shall pay the cost of the
acquisition of any Exchange Property in excess of the amount of the Escrow Fund.
Purchaser shall cause the conveyance of the Exchange Property to Seller
simultaneously with Purchaser's acquisition thereof, in accordance with the
provisions of this Paragraph. Purchaser's obligation to acquire Exchange
Property hereunder shall expire on the earlier of (i) any default by Seller
under this Agreement, (ii) that date which is one hundred eighty (180) days
after the date of the Closing, or (iii) the time for filing of Seller's federal
income tax return(s) for the tax year ending December 31, 1998, and any lawful
extension thereof (the "Exchange Deadline"), upon which date the undisbursed
balance of the Escrow Fund shall be promptly paid to Seller. Purchaser and
Seller shall diligently act to cause any Exchange to close and/or escrow funds
to be disbursed prior to the expiration of the Exchange Deadline and agree to
cooperate fully with each other in that regard.
(g) On receipt of instructions from Purchaser, which have been
approved by Seller, at any time before the Exchange Deadline, the Escrow Agent
shall apply all or any portion of the funds in the Escrow Fund toward the
purchase by Purchaser of Exchange Property. Such disbursements may be made in
one or more payments and to such persons, business entities, title companies, or
otherwise, and as earnest money deposits or cash due at closing or otherwise, as
Purchaser, with Seller's approval, may instruct. In no event shall Seller have
use or control of the funds deposited in the Escrow Fund pursuant to the
provisions hereof prior to the termination of the Escrow Fund except as
elsewhere expressly provided in this Agreement.
(h) Purchaser shall not be responsible for enforcing any contract or
option to purchase any Exchange Property, but Purchaser shall cooperate with
Seller in bringing any such action and shall permit Seller to use Purchaser's
name in connection therewith, as Seller may reasonably request and at Seller's
sole cost and expense. Purchaser shall not be obligated to expend any sum of
money in connection with the acquisition of any Exchange Property prior to the
date of Closing. All contracts for the acquisition of Exchange Property shall
provide that the earnest money deposit thereunder will constitute the liquidated
damages and the exclusive remedy of the seller thereunder in the event of a
default by Purchaser thereunder. If the seller under any contract for the
acquisition of Exchange Property fails or refuses to perform according to the
terms thereof, Purchaser shall notify Seller of such failure and, at Seller's
sole option, Purchaser shall assign such agreement to Seller, without any
further obligation or liability in connection therewith. All such contracts and
options for the acquisition of Exchange Property shall contain a provision
permitting Purchaser to freely assign such contracts and options at any time to
Seller.
(i) If the language of any clause in this Paragraph is deemed to
negate a like-kind transfer, neither party will assert a position other than
that such language should be interpreted and applied in order to comply with the
requirements of the IRC, the regulations promulgated thereunder, and the case
law interpreting same.
4
<PAGE>
(j) Purchaser makes no warranty or representation of any kind
whatsoever that any exchange of property contemplated hereunder will in fact and
law qualify as a like-kind exchange under the IRC. Neither party will assert the
position, however, that failure of any exchange to so qualify will affect the
validity or enforceability of this Agreement for the conveyance of the Assets by
Seller to Purchaser as provided for herein. Seller indemnifies and holds
harmless Purchaser from and against all loss, cost, expense and damages suffered
or incurred by Purchaser at any time by virtue of or arising in connection with
the Seller's use of this Exchange to convey the Assets.
4. Title to Property. (a) Purchaser shall have forty (40) days after the
-----------------
date hereof, as to all of the Sites except those Sites identified on Exhibit
-------
"H", by this reference incorporated herein (the "Open Legal Sites"), and with
- ---
respect to each Open Legal Site Purchaser shall have forty (40) days after
Seller delivers to Purchaser a legally sufficient legal description to Purchaser
on those Open Legal Sites, to (i) examine Seller's title to the Sites and
Seller's files related to such Sites and Assets, as such files are described in
Paragraph 13 herein, to determine whether such title is "marketable title", as
that term is herein defined; and (ii) notify Seller of any objections or defects
(collectively, "Defects") to the title thereto which are disclosed by such
examination, other than those matters set forth in Exhibit "C" attached hereto
-----------
and made a part hereof and the item described in Paragraph 4(d) herein, all or
any of which may encumber or affect a particular Site (the "Permitted
Exceptions"), and which are hereby approved by Purchaser; provided, however,
that to the extent any such Defect does not make the title to the Site in
question not "marketable title" (as defined in Paragraph 4(c)) and does not
currently and may not in the future (as determined by Purchaser in Purchaser's
commercially reasonable judgment) materially and adversely affect Purchaser's
ability to use the Asset and Site in question for the purposes of facilitating
or enhancing wireless communications, or for the purposes the Site and Asset are
currently being used for, and does not prevent Purchaser from obtaining title
insurance for such Site, then such shall not be a Defect which will permit
Purchaser, if such Defect is not cured or otherwise removed, to elect not to
purchase the Site and Asset in question. Seller will undertake to provide
copies of the legal descriptions for the Sites that are not Open Legal Sites no
later than January 12, 1998, and if Seller does not do so for any Site, such
Site shall be an Open Legal Site. If Purchaser's survey of any Site reveals the
need for a guy or access easement, or that the Tower pertaining to such Site is
not located within the boundaries of the legal description for such Site, such
Site will also constitute an Open Legal Site. Purchaser acknowledges that the
title or interest in the Site or Sites, and related Assets, may currently be
held by a subsidiary or affiliate of Seller, but that title to such Site or
Sites and related Assets may, at Seller's election, either be (i) conveyed
directly to Purchaser by such affiliate or subsidiary, or (ii) conveyed to
Seller at or prior to the Closing, so that such Site or Sites can in turn be
conveyed to Purchaser. The fact that title to or a leasehold interest in a Site
is not currently held by Seller is not and shall not be a Defect, as long as
title or leasehold interest, as applicable, in such Site is held by Seller or
otherwise is conveyed to Purchaser on or before the Closing. Seller agrees, in
good faith, within ten (10) days after Purchaser's notice to Seller of such
Defects, to attempt to cure such Defects or otherwise provide marketable title
to a particular Site or Sites as identified by Purchaser, on or before the
"Closing Date" (as hereinafter defined), and to pay off or otherwise remove any
lien encumbering a Site which secures a monetary obligation of and incurred by
Seller or any affiliate of Seller. Seller also agrees to undertake to procure
from all ground lessors of Sites under ground lease that are not affiliates of
Seller
5
<PAGE>
consent and estoppel certificates and fee mortgagee nondisturbance agreements in
form and substance reasonably satisfactory to Purchaser ("Ground Lessor
Documents"), but failure to obtain such Ground Lessor Documents (other than a
consent to an assignment, where such consent is required to effectuate such
conveyance) shall not permit Purchaser to elect not to purchase such Site.
(b) If Seller fails or refuses to cure a Defect or obtain a consent to
assignment for any Site referenced on Exhibit "B", where such consent is
-----------
required to effectuate such conveyance, on or before the Closing Date, Purchaser
may, notwithstanding any other provisions of this Agreement to the contrary, as
its sole right and remedy therefor (i) terminate this Agreement as to the Site
in question (but not as to any other Sites) by giving written notice thereof to
Seller in which event, except as expressly provided herein to the contrary, this
Agreement shall be of no further force or effect as to the Site in question (but
not as to any other Sites) and Purchaser and Seller shall have no further
rights, liabilities, duties or obligations hereunder, or (ii) waive such Defects
as to the Site in question in which event such Defects shall be included in the
"Permitted Exceptions" and the Site in question shall be conveyed by Seller to
Purchaser "subject to" such Defects as otherwise provided herein, and the
acceptance by Purchaser of such conveyance shall constitute full satisfaction of
Seller's obligations to convey the Site to Purchaser.
(c) As used herein "marketable title" shall mean marketable title to all
fee and ground leasehold interests and all necessary guy and access easements,
as defined by the law of the state in which the Sites or Assets in question are
located, and any Defects may be cured by Seller in the manner set forth therein,
or by Seller's obtaining the commitment of a title insurance company doing
business in Atlanta, Georgia, to issue on Purchaser's behalf, an owner's title
insurance policy without exception for any such Defect, at no cost to Purchaser
in excess of the "Standard" premium normally charged by such title insurance
company for coverage in the amount of the Exchange Consideration. Such title
insurance policy may include (and not have deleted or excluded) any standard or
pre-printed exceptions to title.
(d) Attached hereto as Exhibit "D", and by this reference incorporated
-----------
herein, is a list of specific disclosures by Seller as to certain aspects of or
conditions which exist with respect to certain of the Sites and Assets,
including existing leases to third-parties which maintain communications
equipment on the Asset (which leases Seller will assign to Purchaser at Closing,
without warranty or recourse). Purchaser acknowledges and agrees to the
conditions as set forth on said Exhibit "D", and Purchaser shall have no claims
-----------
in connection therewith, and no rights to elect not to buy such Site under
Paragraph 6 herein arising out of any such matters or conditions.
(e) Certain of the Sites and Assets in the State of Georgia shall also be
conveyed subject to that certain Indenture dated as of March 1, 1941, as amended
and supplemented, executed by Grantor to The New York Trust Company, as Trustee
(on September 8, 1959, The New York Trust Company merged into Chemical Corn
Exchange Bank, the name of which became Chemical Bank New York Trust Company at
the time of said merger, and said Chemical Bank New York Trust Company merged
into Chemical Bank on February 17, 1969, and said Chemical Bank merged into The
Chase Manhattan Bank on July 15, 1996) or of any substitute or replacement
thereof, if any. Certain of the Sites and Assets in Alabama shall also be
conveyed subject to that certain Indenture dated as of January 1, 1942, between
Alabama Power Company and The Chase Manhattan Bank, as successor trustee, as
supplemented by various supplemental
6
<PAGE>
indentures from time to time. Certain of the Sites and Assets in Florida shall
also be conveyed subject to that certain Indenture dated as of September 1,
1941, between Gulf Power Company and The Chase Manhattan Bank, as successor
trustee, as supplemented by various supplemental indentures from time to time.
Certain of the Sites and Assets in Mississippi shall also be conveyed subject to
that certain Indenture dated as of September 1, 1941, between Mississippi Power
Company and Bankers Trust Company, as successor trustee, as supplemented by
various supplemental indentures from time to time. All of the aforesaid
instruments are herein sometimes collectively referred to as the "Indenture". As
a condition to Purchaser's obligation to purchase any such Site for which fee
title is being conveyed (but not as to any Site for which an assignment of lease
is being conveyed), Purchaser must be provided a title insurance commitment
without exception for such Indenture, or affirmative coverage over such
Indenture. Seller agrees to have the Sites and Assets encumbered by the
Indenture for which fee title is being conveyed released from the lien of the
Indenture within one hundred eighty (180) days after the date of the Closing. If
Purchaser incurs any loss, cost, or damages arising out of the existence of the
Indenture or Seller's failure to cause the release of such Indenture within the
time period set forth above, then Seller shall indemnify Purchaser and hold
Purchaser harmless against any and all such loss, cost, damage or expense,
including, but not limited to, court costs and attorneys fees, arising by virtue
of the Indenture or otherwise out of such failure by Seller; provided, however,
that Purchaser shall first notify Seller and provide Seller ten (10) days to
attempt to cure such failure, before Purchaser incurs or suffers any costs for
which indemnity would be sought, claimed or be available hereunder.
(f) The Sites as listed on Exhibit "J", by this reference incorporated
-----------
herein (the "OPCO Sites") must be subdivided. Any such Site so created must
contain at least 5,000 square feet, unless Seller, in its reasonable judgment,
cannot provide that amount, in which event Seller shall provide as much real
property as it reasonably is able. Seller and Purchaser shall use all
reasonable efforts to meet on or before January 16, 1998, to determine an
appropriate subdivision of such Sites, and each shall be reasonable in the
creation of the Sites, as subdivided. Each of Seller and Purchaser shall also
agree on such cross-easements for access as are appropriate or necessary for
such Sites.
5. Inspection. (a) Seller hereby grants Purchaser and its agents the
----------
right and privilege to enter upon and inspect the Assets and Sites for so long
as this Agreement is in full force and effect, such right including, without
limitation, the right to make soil tests, soil test borings, surveys and other
examinations that Purchaser desires to make in planning for its ownership of the
Assets and Sites, all at Purchaser's sole cost and expense; provided however,
that Purchaser shall give Seller at least two (2) business days prior notice of
Purchaser's desire to inspect an individual Site, and Seller may, at its option,
accompany Purchaser on any such inspection. Access to certain Sites may be
limited or impacted by Seller's or Seller's affiliates' adjacent property and
improvements, which may include electrical sub-stations, transmission lines and
the like, and Purchaser shall take such precautions as Seller advises in
inspecting such Sites. All such work and tests performed by or at the request
of Purchaser shall be non-destructive, with all efforts made by Purchaser not to
disrupt or damage any improvements, and Purchaser shall, immediately upon any
request of Seller, restore the Assets and Sites to the condition thereof
existing immediately prior to any such work or tests.
7
<PAGE>
(b) Purchaser shall be completely responsible and liable for its own
safety and the safety of its agents, and for all acts and omissions of itself
and its agents in exercising such right and privilege of inspection granted in
this Paragraph 5, and Purchaser hereby indemnifies Seller and holds Seller free
and harmless from and against any and all losses, costs, damages and expenses
(including, without limitation, attorney's fees, costs of litigation and the
cost of re moving or bonding any liens affecting the Assets and Sites) ever
suffered or incurred by Seller by reason of or in connection with the exercise
of the rights and privileges granted to Purchaser in this Paragraph 5 or the
breach of Purchaser's covenant to restore contained herein. The indemnity
contained in the immediately preceding sentence shall expressly survive the
Closing or any termination of this Agreement.
(c) The right of inspection granted by Seller to Purchaser in this
Paragraph 5 is solely an accommodation by Seller to enable Purchaser to plan for
its ownership of the Assets and Sites, and the terms and provisions of this
Paragraph 5 shall not, under any circumstances, be construed or interpreted to
mean that Purchaser has any right to approve the condition of the Assets and
Sites or to terminate this Agreement if Purchaser is not satisfied with the
condition of the Assets and Sites or any other matter related to the Assets and
Sites, except as expressly set forth in Paragraph 4(a) or 6 herein. Purchaser
shall keep all information it obtains in connection with or as a part of such
Site inspections in the strictest confidence, and Purchaser shall not disclose
the results of any such inspections to third-parties, other than its lenders and
investors and Purchaser's and their respective advisors, provided that Purchaser
shall be liable for any disclosure by such persons. Purchaser shall not be
liable for the disclosure of information that (i) is otherwise available to the
general public, or (ii) is required to be disclosed by law. Such inspections
shall also be subject to and governed by the confidentiality agreement
contemplated under Paragraph 13 herein.
(d) Purchaser has fully examined and inspected or will have been given,
prior to the Closing, the opportunity to fully examine and inspect the Assets
and Sites, as provided in Paragraphs 5 and 13 herein. Purchaser is willing to
and shall purchase the Assets and Sites "as is, where is" on the Closing Date,
and, except for the limited warranties of title to be contained in the deed,
Seller has not and shall not make any representations or warranties regarding
the Assets and Sites whatsoever, expressly including, by way of illustration but
not limitation, any representations or warranties as to environmental conditions
or status on or about the Sites, the zoning status or classification of the
Sites, the status or validity of any permitting or other entitlements related to
the Sites, access to the Sites, or, as to the Assets, any implied warranties of
habitability or fitness thereof or the soundness or condition of the structure.
Purchaser is relying solely and exclusively upon Seller's agreements herein and
Purchaser's aforesaid inspection of the Assets and Sites and the files described
in Paragraph 13 herein, in its purchase of the Assets and Sites.
6. Protest as to or Election not to Purchase or Sell Sites. Purchaser or
-------------------------------------------------------
Seller shall have the right, as to any individual Site, not to purchase or
convey such Site as a part of this Agreement, by notice given to the other of
the specific Site or Sites not to be purchased or conveyed hereunder, subject to
and conditioned upon the following terms and conditions:
(a) If there is a casualty to the physical improvements on such Site,
as described in Paragraph 11 herein, and Purchaser elects not to purchase such
Site;
8
<PAGE>
(b) If there is a Defect in the title to such Site, as described in
Paragraph 4 herein, and Purchaser elects not to purchase such Site;
(c) If a Site owned by an OPCO for which an assignment of lease is
being provided is not on the form of lease attached as Exhibit "I";
-----------
(d) If Seller, in its sole reasonable discretion, elects not to
convey a Site to Purchaser (but Seller may not designate such a Site after
Purchaser has given the notice for Closing as contemplated in Paragraph 9
herein) and Seller may not designate more than fifteen (15) such Sites. Seller
shall, if Seller does so elect not to convey a Site, pay Purchaser all of
Purchaser's out-of-pocket costs which are actually incurred and which are
directly attributable to any such Site.
The Exchange Consideration set forth in Paragraph 3 herein shall be
adjusted to reflect the number of Sites which Purchaser intended to purchase,
but which, in accordance with this Paragraph 6, are not conveyed by Seller.
Such Exchange Consideration shall be reduced by multiplying such number of Sites
not conveyed by the value attributed to such Site, as such value is set forth on
Exhibit "E", attached hereto and by this reference incorporated herein.
- -----------
7. Covenants of Seller. (a) Neither Seller nor an affiliate of Seller
-------------------
shall, until the termination of this Agreement, or the Closing, sell any Sites
or Assets to any third party without the consent of Purchaser, which consent may
be withheld for any reason by Purchaser. Notwithstanding the above, Seller
shall be entitled to enter into a lease with a third-party for space on the
tower on any particular Site, so long as the rent thereon is not materially less
than the amounts Seller is receiving as rent on the Asset in question for
facilities of a similar nature as the one which is the subject of the lease in
question.
(b) Neither Seller nor an affiliate of Seller shall negotiate with
any party other than Purchaser for the sale of any of the Assets or Sites as
long as this Agreement is in force and effect.
8. Leases on Sites. In connection with and as a part of the Closing,
---------------
Seller shall lease from Purchaser, and Purchaser shall lease to Seller, as to
each Site, certain rights to keep, use, repair, maintain and enhance certain
existing communications equipment and related facilities and structures on the
Sites and other related facilities, either for Seller's own benefit or for the
benefit of any affiliate or subsidiary of Seller, as Seller may designate prior
to Closing. The form of lease for such Sites shall be as set forth in Exhibit
-------
"F-1", as to leases in which Seller is the tenant thereunder, and Exhibit "F-2",
- ----- -------------
as to leases in which an OPCO is the tenant thereunder, each of which is
attached hereto and by this reference incorporated herein (the "Lease", or
collectively the "Leases"). The Leases shall be on the terms and conditions as
set forth in the forms on Exhibits "F-1" and "F-2", respectively.
-------------- -----
9. Closing; Closing Date; Documents. (a) The consummation of the
--------------------------------
purchase and sale of the Assets and Sites (the "Closing") shall occur at the
offices of Troutman, Sanders, LLP, at a specific time and date (the "Closing
Date") designated by Purchaser by written notice thereof to Seller at least ten
(10) days prior to the Closing Date specified in such notice; provided, however,
-------- -------
in no event whatsoever shall the Closing Date be any time and date later than
10:00
9
<PAGE>
a.m. on March 9, 1998. However, if, as to any of the Open Legal Sites, either
the time period for Seller to examine title to such Open Legal Sites or the time
period for Purchaser to attempt to correct Defects thereto has not expired by
March 9, 1998, then the Closing Date as to such Open Legal Sites only (and not
as to any other Sites being conveyed hereunder) shall be extended to a date
which is ten (10) days after the last date Seller has to attempt to correct the
Defects thereon, as identified by Purchaser in accordance with Paragraph 4(a)
herein. If Seller does not cure the Defects, then Purchaser shall have the
rights as to such Sites and Assets as set forth in Paragraph 4(b) hereof.
(b) At the Closing, Purchaser shall pay the Exchange Consideration,
or convey to Seller the Exchange Property, or Seller's designee, as such
Exchange Consideration, or conveyance to Seller of the Exchange Property, is set
forth in Paragraph 3 hereof, and Seller shall execute and deliver to Purchaser a
deed with only a limited warranty of title (or its local equivalent), conveying
Seller's right, title and interest in and to the Assets and Sites described on
Exhibit "A" to Purchaser, and by a limited assignment of lease (limited only to
- -----------
claims arising by or through Seller, but not otherwise) as to the Sites
described on Exhibit "B", all "as is, where is," with no representations or
-----------
warranties whatsoever except for a limited warranty of title. Seller shall also
at Closing assign to Purchaser, without warranty or recourse, any and all
licenses or other such entitlements obtained or issued with respect to such
Sites and Assets, and any and all warranties related to the Assets (collectively
the "Permits"). Seller shall also provide to Purchaser with and duly execute and
deliver a limited warranty bill of sale as to any non-real estate Assets to be
conveyed at Closing. Seller shall also execute and deliver an owners affidavit
with respect to Sites, on the title company's standard form of affidavit. Seller
and Purchaser shall also execute and deliver such other documents at Closing as
are required or contemplated herein.
(c) Seller will cooperate reasonably, at no out-of-pocket cost to
Seller, with Purchaser and will make accessible to Purchaser and Purchaser's
accountants, on a reasonable basis, Sellers' financial books and records
regarding the Assets, related to payments made by third-party lessees which
occupy space on the Sites or Assets, in connection with any audits of Purchaser
or its business pertaining to financing done by Purchaser after the Closing.
This right, however, shall be subject to such customary confidentiality
agreements or arrangements as Seller would normally require in such event.
10. Closing Expenses; Prorations. At the Closing, the 1998 ad valorem
----------------------------
taxes affecting the Sites and personal property tax affecting the non-real-
estate Assets, shall be prorated on a daily basis, which proration shall be
based upon the most recent available tax bill for the Sites as of the Closing
Date and shall be conclusive between Seller and Purchaser for all purposes. All
other items of income and expense affecting the Sites and the Assets shall be
prorated as of the Closing Date on a daily basis between Seller and Purchaser at
the Closing. Seller shall pay the transfer tax, if any, due with respect to the
particular state in which the Site is located, payable in connection with the
conveyance of the Sites from Seller to Purchaser. Purchaser shall be
responsible for other taxes arising in connection with the sale of the Assets,
excluding taxes on Seller's income. Purchaser shall pay the costs and expenses
connected with recording costs, any surveys, audits ordered or requested by
Purchaser, engineering studies ordered or requested by Purchaser, Purchaser's
attorneys' fees and the title search costs and title insurance premiums for all
title insurance policies obtained by Purchaser. Purchaser and Seller
10
<PAGE>
shall allocate between them any costs of Closing not specified above on the
basis of how custom and practice in the State in which such cost is incurred
would normally allocate such costs, but in no event shall one party hereto be
required to pay the other party hereto's legal fees.
11. Destruction. If any substantial portion of any Asset is damaged or
-----------
destroyed by fire or any other casualty prior to the Closing Date such that the
Asset in question at a particular Site cannot be used in any manner for the
purposes intended, Seller shall notify Purchaser thereof and Seller shall have
the right, but not the obligation, to undertake the repair or restoration of the
Asset so damaged or destroyed. If Seller gives Purchaser notice of such
undertaking, such undertaking shall be an obligation of Seller hereunder, and
the purchase and sale of the Asset in question shall be consummated in
accordance with the terms and provisions of this Agreement with no adjustment in
the Exchange Consideration and Seller shall receive any insurance proceeds
payable by reason of such damage or destruction. If the repair or restoration
is not completed by the scheduled Closing Date, then the Closing Date as to such
Asset and Site (but not as to any other Sites or Assets) shall occur ten (10)
days after Seller has completed such repairs and has provided notice Purchaser
of such completion. If Seller notifies Purchaser that it does not elect to
undertake such repair or restoration, Purchaser may, at its election either (a)
terminate this Agreement as to the Site on which the Asset in question is
located (but not as to any other Sites or Assets) by giving written notice
thereof to Seller, in which event, except as expressly provided herein to the
contrary, this Agreement shall be of no further force or effect as to the Site
on which the Asset in question is located (but not as to any other Sites or
Assets) and Purchaser and Seller shall have no further rights, liabilities,
duties or obligations hereunder as to the Asset in question (but not as to any
other Sites or Assets), or (b) Purchaser may require Seller to (i) convey the
Asset and Site in question or the remaining portion thereof as provided herein
for the Exchange Consideration set forth in Paragraph 3 hereof, and (ii)
transfer and assign all of Seller's right, title and interest in and to any and
all insurance proceeds paid (but not yet expended), payable or to be paid in
connection with such damage or destruction, and the transaction contemplated
herein shall otherwise be consummated as provided in this Agreement. If Seller
so notifies Purchaser that it does not undertake to so repair or restore the
Asset and Site in question, Purchaser shall notify Seller in writing of its
election pursuant to the immediate preceding sentence within five (5) days after
such notice from Seller, and if Purchaser fails to so notify Seller within said
five (5) day period, Purchaser shall be deemed to have elected to purchase the
Asset and Site in question pursuant to (b) immediately above.
12. Defaults. If before Closing Seller breaches or fails to perform or
--------
comply with any of its covenants, duties, agreements, or obligations as set
forth in this Agreement, Purchaser shall elect as its sole rights and remedies
therefore, pursue any one or more of the following remedies (a) terminate this
Agreement by giving written notice thereof to Seller, in which event Seller
shall deliver the Earnest Money to Purchaser and, except as expressly set forth
herein to the contrary, this Agreement shall be of no further force or effect,
and Seller and Purchaser shall not have any further rights, liabilities, duties
or obligations hereunder, (b) seek and obtain specific performance by Seller of
its covenants, agreements and obligations to sell the Sites and Assets to
Purchaser as expressly set forth in this Agreement, or (c) sue Seller for
Purchaser's actual damages arising out of such failure of Seller up to, but not
in excess of, One Million and No/100 Dollars ($1,000,000.00). If before Closing
Purchaser breaches or fails to perform or comply with any of its covenants,
duties, agreements, or obligations as set forth in this Agreement, Seller's
11
<PAGE>
obligation to sell the Sites and Assets hereunder and Purchaser's right to
purchase the Property hereunder shall, at the option of Seller and upon notice
thereof to Purchaser, immediately terminate, and Seller shall be entitled to (i)
retain the Earnest Money as liquidated damages therefor whereupon, except as
expressly provided to the contrary herein, this Agreement shall be of no further
force or effect, and Seller and Purchaser shall not have any further rights,
liabilities, duties or obligations hereunder, or (ii) pursue any and all rights
and remedies therefor to which Seller may be entitled in equity, including,
without limitation, specific performance of the covenants and agreements of
Purchaser contained herein. Seller and Purchaser expressly agree that the actual
damages for any such breach or default by Purchaser are now and probably in the
future will be impossible to ascertain with certainty, and the foregoing
liquidated damages provision represents a reasonable estimate of the probable
extent of such damages and is not intended as a penalty. Notwithstanding any of
the foregoing provisions of this Paragraph 12 to the contrary, nothing contained
in this Agreement shall in any manner limit the liability of an indemnifying
party or any of an indemnified party's rights and remedies at law or in equity
against an indemnifying party arising by reason of any express indemnification
provided herein.
13. Files and Records. (a) Seller has made and will continue to make
-----------------
available to Purchaser, and Purchaser shall to Purchaser's satisfaction, review,
at the offices of Troutman Sanders LLP, 600 Peachtree Street, NE, Suite 5200,
Atlanta, Georgia 30308-2216, with respect to the Sites and Assets certain
material, including the following:
(i) Files as to Seller's title to or interest in the Sites;
(ii) Files as to any warranties which exist as to the Assets on
or a part of the Sites;
(iii) Files as to any Permits issued with respect to or in
connection with the Sites;
(iv) Files as to the engineering data, drawings and
specifications with respect to the Assets on the Sites;
and
(v) Files as to the environmental conditions on or related to
the Sites.
(b) These files are being made available in connection with
Purchaser's inspection rights under Paragraph 5 herein. Purchaser shall keep all
information obtained in connection with or as a part of such review of files in
strict confidence until the Closing, as set forth in Paragraph 5(c). Purchaser
shall, at Seller's option, execute and cause any agents acting on behalf of
Purchaser to execute a confidentiality agreement with respect to such files.
Purchaser shall have the right to make copies of any such files, at Purchaser's
cost and expense, subject to Seller's right to prohibit such copying for any
matters or items which Seller believes, in its reasonable judgment, to be
confidential, proprietary or not appropriate for public dissemination. After the
Closing, Purchaser shall no longer be obligated to keep such material
confidential, except for those items which Seller in good faith has marked as
"confidential" (or the equivalent).
12
<PAGE>
(c) Seller makes no representations or warranties as to the
completeness of such files. Seller shall, to the extent reasonable, assist
Purchaser in Purchaser's due diligence efforts and in acquiring additional
information on Sites, on the basis of such written requests as Purchaser shall
from time to time deliver to Seller.
14. Option to Construct Additional Towers. Seller and Purchaser shall,
-------------------------------------
with the consummation of the Closing, duly enter into and deliver an agreement
in the form as set forth on Exhibit "G", by this reference incorporated herein
-----------
(the "Option Agreement"), related to Seller's option to cause Purchaser to
construct certain additional towers on certain sites determined and selected, or
to be determined and selected, by Seller, in Seller's sole discretion, all as
further described in and subject to the Option Agreement.
15. Publicity. The parties acknowledge that neither Seller nor Purchaser
---------
desires to publicize or advertise this transaction. Neither party shall have the
right to publicize or otherwise make public statements or press releases
concerning this transaction or the Closing, or advertise the consummation of
this transaction or the Closing, without the express prior, written consent of
the other, which consent may be withheld for any or no reason.
16. Brokers and Agents; Indemnity. Seller represents and warrants that
-----------------------------
Seller has not employed or engaged any real estate brokers or agents in
connection with this Agreement or the purchase and sale of the Assets and Sites
contemplated herein. Purchaser represents and warrants to Seller that Purchaser
has not employed or engaged any real estate brokers or agents in connection with
this Agreement or the purchase and sale of the Assets and Sites contemplated
herein. Purchaser hereby indemnifies Seller and agrees to hold Seller free and
harmless from and against any and all loss, cost, damages and expenses
(including, without limitation, attorneys' fees and costs of litigation) ever
suffered or incurred by Seller by reason of any claim or demand by any broker or
agent for any commissions, fees or other compensation in connection with this
Agreement or the purchase and sale of the Assets and Sites. Seller hereby
indemnifies Purchaser and agrees to hold Purchaser free and harmless from and
against any and all losses, costs, damages and expenses (including, without
limitation, attorneys' fees and costs of litigation) ever suffered or incurred
by Purchaser by reason of any claim or demand by any broker or agent for any
commissions, fees or other compensation in connection with this Agreement or the
purchase and sale of the Assets and Sites. The express indemnities contained in
this Paragraph 16 shall expressly survive the Closing or any termination of this
Agreement.
17. Notice. All notices and other communications permitted or required
------
hereunder shall be in writing and shall be personally delivered by a recognized
overnight delivery service (such as, by way of illustration but not limitation,
United Parcel Service), to Seller at the following address:
Mr. Robert Dawson
Southern Communications Services, Inc.
64 Perimeter Center East
1st Floor - Bin #049A
Atlanta, GA 30346
13
<PAGE>
with a copy to:
Southern Company Services, Inc.
270 Peachtree Street, N.W.
Suite 1900
Atlanta, GA 30303
Attention: Mr. Jeffrey Altman
and a copy to:
Robert Williams, Esq.
Troutman Sanders, LLP
600 Peachtree Street, N.E.
Suite 5200
Atlanta, GA 30308-2206
and to Purchaser at:
Pinnacle Towers Inc.
1549 Ringling Boulevard-Third Floor
Sarasota, Florida 34236
Attention: Mr. Robert J. Wolsey
with a copy to:
Trey Baldy, Esq.
Holland & Knight, LLP
400 North Ashley Drive, Suite 2300
Tampa, Florida 33602-4300
or to such other addresses as the parties hereto may designate to the others by
notice as set forth herein. All such notices and other communications shall be
deemed received and effective on the first (1st) business day after the sending
thereof.
18. Assignment. (a) Purchaser shall not transfer, assign or delegate any
----------
of its rights, duties, obligations, covenants, or agreements hereunder, except
as contemplated in Paragraph 18(b) below. Any such transfer, assignment or
delegation by Purchaser shall, at the option of Seller, be null and void ab
--
initio and no such transfer, assignment or delegation shall relieve or discharge
- ------
Purchaser from any of its covenants, agreements, duties, obligations or
liabilities hereunder.
(b) Purchaser has collaterally assigned its interest under this
Agreement to NationsBank, in connection with Purchaser's general credit
facility. If for any reason Purchaser defaults under any general credit
facility of Purchaser, such that NationsBank (or any successor or replacement
creditor) is the "Purchaser" hereunder, then Seller shall have no obligation to
convey the Assets or Sites to such party, and Seller may, without penalty or
premium, elect, in
14
<PAGE>
Seller's sole discretion, by a notice to such party, elect not to consummate the
Closing, in which event Seller shall retain the Earnest Money as Seller's sole
remedy.
19. Time of Essence. Time is of the essence in this Agreement, and
---------------
whenever a date or time is set forth in this Agreement, the same has entered
into and formed a part of the consideration for this Agreement.
20. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of Seller and Purchaser and their respective heirs, legal
representatives, successors and permitted assigns.
21. Multiple Counterparts. This Agreement may be executed in multiple
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same agreement; the signature of any party to any
counterpart shall be deemed to be a signature of, and may be appended to, any
other counterpart hereof.
22. Governing Law. This Agreement shall be governed by, construed under
-------------
and interpreted and enforced in accordance with the laws of the State of
Georgia, and whose laws shall prevail in the event of any conflict of laws.
23. Survival. The express indemnities contained in this Agreement shall
--------
survive the consummation of the subject transaction and any termination of this
Agreement. All other provisions of this Agreement shall not survive the Closing
and shall merge into the conveyances of the Assets and Sites from Seller to
Purchaser. Seller and Purchaser agree to ratify and affirm the survival of such
indemnities in writing at the Closing.
24. Sole and Entire Agreement. This Agreement (including the exhibits
-------------------------
hereto), and the "Other Agreement" (as that term is herein defined) constitutes
the sole and entire agreement of Seller and Purchaser regarding the purchase and
sale of the Assets and Sites. This Agreement supersedes all prior discussions,
negotiations, representations and agreements between Purchaser and Seller with
respect to the purchase and sale of the Assets and Sites and all other matters
related thereto, including, without limitation, the letter of intent between
Seller and Purchaser dated December 23, 1997 (the "LOI"). This Agreement may not
be modified or amended unless such modification or amendment is set forth in
writing and properly signed by Seller and Purchaser.
25. Prohibition Against Recording. Purchaser shall not record this
-----------------------------
Agreement or any version, summary or memorandum hereof in any real estate public
records.
26. Board Approval by Seller. Seller's obligations under this Agreement
------------------------
shall in all events and under all circumstances be subject to approval by the
Board of Directors of Seller (the "Board"), at a 1998 meeting of the Board, to
be held on or before February 4, 1998. If the Board does not approve such sale,
then, and only then (except for a default by Seller under Paragraph 12
hereunder), Seller shall refund to Purchaser the Earnest Money set forth in
Paragraph 2 herein, and the parties hereto shall have no further rights
hereunder, except for those rights which expressly survive termination.
15
<PAGE>
27. Authority of Parties.
--------------------
(a) Purchaser represents and warrants to Seller that Purchaser has
the full power and authority to execute, deliver and perform the terms and
conditions of this Agreement and has taken all necessary action to do so. This
Agreement and all documents to be executed by Purchaser hereto constitute the
legal, valid and binding obligations of Purchaser, enforceable in accordance
with their respective terms.
(b) Seller represents and warrants to Purchaser that upon the
approval of the Board as contemplated above, Seller has the full power and
authority to execute, deliver and perform the terms and conditions of this
Agreement and has taken all necessary action to do so. This Agreement and all
documents to be executed by Seller hereto constitute the legal, valid and
binding obligations of Seller, enforceable in accordance with their respective
terms.
28. Cross-Default. Seller and Purchaser are, as of the date hereof,
-------------
entering into a Purchase and Sale Agreement (the "Other Agreement"), related to
certain other agreements involving Assets and Sites. Any default by either party
under the Other Agreement shall be a default hereunder, which shall permit the
non-defaulting party to, at its sole option, exercise all rights under Paragraph
12 hereunder as if a default had occurred hereunder.
29. Offer to Seller. This Agreement has been executed first by Purchaser
---------------
in four (4) counterparts, as an offer to Seller, which offer shall remain open
for acceptance by Seller until 5:00 P.M. on January 9, 1998, and if such offer
is not accepted by Seller (as evidenced by the delivery of two (2) fully and
properly executed and dated counterparts of this Agreement by Seller, before
5:00 P.M. on January 9, 1998), this offer shall automatically terminate without
any notice whatsoever being required from Purchaser and this Agreement shall be
of no force or effect whatsoever and Seller and Purchaser shall have no rights,
liabilities, duties or obligations hereunder. The date of this Agreement shall,
for all purposes, be the date Seller executes this Agreement, which date shall
be inserted in the caption hereof at the time of such execution.
IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to be
properly executed by duly authorized representatives, under seal, as of the day
and year first above written.
"SELLER"
Southern Communications Services, Inc.
By: ____________________________________
Its: _______________________________
Attest: ________________________________
Its: _______________________________
(CORPORATE SEAL)
16
<PAGE>
"PURCHASER"
Pinnacle Towers Inc., a Delaware
corporation
By: ____________________________________
Its: _______________________________
Attest: ________________________________
Its: _______________________________
(CORPORATE SEAL)
17
<PAGE>
EXHIBIT "A"
-----------
OWNED SITES
-----------
NONE
<PAGE>
EXHIBIT "B"
-----------
LEASEHOLD SITES
---------------
[TO BE SUPPLIED BY SELLER]
<PAGE>
EXHIBIT "C"
-----------
PERMITTED EXCEPTIONS
--------------------
1. Real estate ad valorem taxes for 1998 and subsequent years.
2. General utility, roadway and other such easements serving the Sites
and Assets.
3. Riparian rights of owners adjoining the Sites and Assets.
4. Rights of Tower tenants under written leases.
5. Agricultural leases terminable on not less than sixty (60) days
notice.
6. Rights of OPCO's to attached facilities to the Assets under written
agreements.
7. Subject to the rights of Purchaser under Paragraph 4 of the Agreement,
as to Sites where an interest in a ground lease is being assigned to
Purchaser, the terms of the relevant ground lease.
<PAGE>
EXHIBIT "D"
-----------
SPECIFIC DISCLOSURES AS TO SITES
--------------------------------
NONE
<PAGE>
EXHIBIT "E"
-----------
SITE VALUES
-----------
OWNED SITES $436,802 per Site
LEASEHOLD SITES $397,736 per Site
<PAGE>
EXHIBIT "F"
-----------
FORM OF LEASE
-------------
[TO BE SUPPLIED BY SELLER]
<PAGE>
EXHIBIT "G"
-----------
OPTION AGREEMENT FORM
---------------------
[TO BE SUPPLIED BY SELLER]
<PAGE>
Non-Restricted Premises Form
Site Number:__________________
Latitude:_____________________
Longitude:____________________
Site Name:____________________
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into this ___ day of
_____________ 199__ (the "Effective Date") by and between ____________ POWER
COMPANY, with offices at ______________________ ("OpCo") and
___________________, with offices at _____________________ ("Lessee"). OpCo and
Lessee are sometimes referred to herein individually as a "Party" and
collectively as the "Parties".
W I T N E S S E T H:
WHEREAS, Lessee is in the communications tower construction, operation and
leasing business in various areas, including areas within the State of
___________;
WHEREAS, OpCo is engaged in the business of generating, transmitting and
distributing electricity;
WHEREAS, Lessee desires to locate and operate certain of its radio
transmission towers within, over, and upon certain facilities operated by OpCo;
WHEREAS, OpCo, subject to the terms and conditions hereinafter set forth,
is willing to permit, to the extent that OpCo may do so lawfully, Lessee to
install certain radio transmission facilities upon the property more
particularly identified on Schedule "1" attached hereto and by reference made a
------------
part hereof (the "Premises"), so long as, such use will not interfere with
OpCo's own service requirements, including considerations of economy and safety,
and if OpCo and its Affiliates are protected and indemnified against costs to
them arising from such use of the Premises and the Lessee Radio Facilities;
provided, however, that specifically excluded from the Premises and the Lessee
Radio Facilities are the "OpCo Facilities" and the "Reserved Rights" and the
"Third Party Facilities & Rights" (as those terms are defined in Section 37 of
this Lease);
NOW, THEREFORE, for and in consideration of the foregoing, the mutual
covenants herein contained, the sum of Ten and No/100 Dollars ($10.00) in hand
paid by each Party hereto to the other, and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged by the Parties hereto, the Parties hereto hereby covenant and agree
as follows:
1. Lease of Ground Space.
---------------------
A. Lease. Subject to the terms and conditions set forth herein, OpCo
-----
hereby leases to Lessee the Premises. Lessee may operate, maintain, repair and
reconstruct at the Premises the existing communications tower (such tower being
more particularly described on Schedule "1" attached hereto and by reference
------------
made a part hereof) (collectively, together with any other facilities installed
by Lessee pursuant to this Lease, the "Lessee Radio Facilities"). Nothing herein
shall be
<PAGE>
construed to permit Lessee to install any facilities of any nature on any other
property of OpCo or its Affiliates. Lessee may install equipment buildings,
transmitters, receivers, antennae, conduit, waveguides, and communications
lines, wire and cable on the Premises. Lessee covenants and agrees no additional
tower shall be constructed or installed on the Premises without the prior
written consent of OpCo, which consent shall not be unreasonably withheld. In
the event OpCo grants such consent, then during the course of construction or
installation of such additional tower, Lessee shall not alter, modify or amend
the plans approved by OpCo and shall not permit the construction to progress
other than in accordance with such plans without first obtaining OpCo's written
approval. OpCo shall have the right, during the construction period, to have its
representative monitor construction and report on its progress and compliance
with the approved plans. If such report shows deviations from the approved
plans, Lessee, upon notice, shall take immediate steps, at its expense, to
conform the construction to the previously approved plans. The value or cost of
any improvements constructed by Lessee shall not in any way constitute a
substitute for or a credit against any obligation of Lessee under this Lease to
pay rent or any other sums.
B. Responsibilities of Lessee. Lessee shall be solely responsible at
--------------------------
its own expense for any site modifications that may be necessary or appropriate
on any portion of the Premises in connection with the Lessee Radio Facilities
and Lessee's use thereof (including without limitation, fence relocation,
grading of any required road or the Premises, and graveling newly graded
portions of the Premises), for the selection, installation, maintenance and
repair of the Lessee Radio Facilities (including without limitation, obtaining
any required construction permits or other governmental approvals) and for the
provision of utilities, including without limitation electric power and
telecommunications services, to the Lessee Radio Facilities. Title to and
absolute beneficial ownership of any and all such modifications (excluding any
modifications of Lessee Radio Facilities) shall vest in OpCo or the applicable
Affiliate of OpCo upon installation free of any lien created by any action or
inaction of Lessee.
C. Utility Easements. Subject to the terms and conditions set forth
-----------------
herein, OpCo hereby grants Lessee a non-exclusive easement over, under, across
and upon the Premises in such location or locations as may be designated by OpCo
in writing for the installation, operation, and maintenance of necessary and
appropriate lines and facilities for the provision of utilities, including
without limitation electric power and telecommunications services, to the
Premises and the Lessee Radio Facilities. Any and all upgrades or improvements
to OpCo's and its Affiliates' electric facilities that may be required for the
installation and operation of the Lessee Radio Facilities shall be performed at
the sole expense of Lessee and to the satisfaction of OpCo and its Affiliates.
Title to and absolute beneficial ownership of any and all such upgrades or
improvements (excluding any upgrades or improvements of Lessee Radio Facilities)
shall vest in OpCo or the applicable Affiliate of OpCo upon installation free of
any lien created by any action or inaction of Lessee.
D. Access.
------
(1) General Access. Subject to the requirement of Subsection 1.E
--------------
of this Lease that certain work be performed by or under the direct supervision
of OpCo or its Affiliates or otherwise be consented to by OpCo, Lessee shall
have access on a twenty-four (24) hour per day, seven (7) day per week basis to
any Lessee Radio Facilities. Employees and agents of Lessee shall, while on the
Premises, comply with all OpCo's rules and regulations, including without
limitation
-2-
<PAGE>
security requirements. OpCo and its Affiliates shall have the right to notify
Lessee that certain persons are excluded if, in the reasonable judgment of OpCo
and its Affiliates, the exclusion of such persons is necessary for reasons of
safety or the proper security and maintenance of OpCo's facilities.
(2) Precautions. At all times while on the Premises, Lessee
-----------
shall take appropriate measures and precautions not to disturb, damage, or
disrupt OpCo's and its Affiliates' or any other person's equipment, structures
or other property on the Premises and the Utility Facilities or, OpCo's, its
Affiliates' or any other person's operation thereof. "Affiliate" shall mean any
company, partnership, joint venture, limited liability company, or other entity
controlled by, controlling or under common control with OpCo, together with any
entity which acquires all or substantially all of the assets or issued and
outstanding shares of capital stock of OpCo.
(3) Construction of Fence. OpCo reserves the right at any time
---------------------
and from time to time to require Lessee, by written notice, to construct, at
Lessee's sole cost and expense, either or both of the following:(a) a driveway
providing a separate point of access to the Lessee Radio Facilities from the
right of way adjoining or in close proximity to the Premises over and across the
property specified in such notice, and (b) an appropriate fence or other barrier
physically separating the Premises from the Utility Facilities. Upon Lessee's
receipt of written request from OpCo under the immediately preceding sentence,
Lessee shall cause such driveway or barrier, as the case may be, to be
constructed on or before the date sixty (60) days or as soon as practicable
after such notice, all in accordance with plans approved by OpCo.
E. Performance of Work. OpCo's and its Affiliates' operating
-------------------
policies and procedures require that work performed on or in connection with or
in the vicinity of certain electric facilities be performed by or under the
direct supervision of OpCo or its Affiliates because of considerations of
reliability, safety, and economy in connection with OpCo's and its Affiliates'
operations. Except as otherwise approved by OpCo in writing, OpCo or one of its
Affiliates shall perform or supervise all work required in connection with the
installation, presence, rearrangement, transfer, maintenance, replacement,
repair or removal of Lessee Radio Facilities located (i) within the enclosure
surrounding any Utility Facilities; (ii) on or within twenty (20) feet of any
electric transmission support structure; (iii) within twenty (20) feet of any
energized electric transmission or substation equipment; or (iv) within twenty
(20) feet of any telecommunications tower of OpCo or any Affiliate of OpCo.
Lessee shall pay OpCo or the applicable Affiliate of OpCo for all such work at
OpCo's or its Affiliate's standard time and materials rates that are charged to
persons or entities other than Affiliates for work of a similar nature, as the
same may be changed from time to time in OpCo's or its Affiliates' sole
discretion. As used in this Lease, the term "substation" refers to any area on
the Utility Facilities that is from time to time designated by OpCo as a
substation area and all equipment, structures and energized electric facilities
contained therein.
F. Signage. Lessee shall not place or allow to be placed any signage
-------
on the Premises, other than a sign of the type normally used to identify the
Lessee Radio Facilities as the property of Lessee.
-3-
<PAGE>
2. Use of Lessee Radio Facilities.
------------------------------
A. Responsibilities of Lessee. Lessee shall be solely responsible at
--------------------------
its own expense for the selection, installation, maintenance and repair of the
Lessee Radio Facilities (including without limitation, obtaining any required
construction permits or other governmental approvals).
B. Operating Frequency. Unless otherwise agreed in writing by OpCo,
-------------------
the Lessee Radio Facilities shall not be operated at the frequency for which the
communications systems of OpCo or any of its Affiliates are currently licensed
to operate by the Federal Communications Commission, or which would interfere
with the operation of such systems.
3. Term; Termination.
-----------------
A. Commencement and Continuation. The Term of this Lease shall
-----------------------------
commence on the Effective Date and ends on the date that is twenty (20) years
after the Effective Date, unless extended pursuant to Section 5 of this Lease.
B. Termination. This Lease may be terminated prior to the end of the
-----------
Term as follows:
(1) For Default. Either Party in its sole discretion may
-----------
terminate this Lease by written notice upon the occurrence of an event of
default by the other Party, and the failure to cure such default as provided in
this Lease.
(2) Lessee also may terminate this Lease upon sixty (60) days
prior written notice to OpCo if Lessee is unable to obtain
or maintain or otherwise suffers a cancellation of any
license, permit or governmental approval necessary for the
operation of the Lessee Radio Facilities or Lessee's
permitted use of the Premises and provided Lessee has
demonstrated to the reasonable satisfaction of OpCo that
Lessee has diligently and in good faith attempted to cure or
remedy any such cancellation.
(3) OpCo also may terminate this Lease in the event the Public
Service Commission of the State within which the Premises
are located or any law, rule or regulation applicable to
OpCo or the Utility Facilities prevents, makes unlawful, or
eliminates OpCo's or its Affiliates' authority to lease the
Premises to Lessee or to allow the Lessee Radio Facilities
to be located on the Premises or requires the removal of the
Lessee Radio Facilities.
(4) As Otherwise Provided. This Lease also may be terminated as
---------------------
expressly provided by any other provision of this Lease.
-4-
<PAGE>
4. Rent, Billing and Payment.
-------------------------
A. Rent. Commencing on the Effective Date, and continuing thereafter
----
on the first day of each subsequent calendar month, as rental for the Premises,
Lessee shall pay to OpCo in advance, in good funds, without deduction, setoff or
invoice, the sum of ________ Thousand ______ Hundred and No/100 Dollars
($________) per month (the "Monthly Rent") during the Term, regardless of
whether Lessee has installed the Lessee Radio Facilities upon the Premises.
B. Charges for Work Performed by OpCo. In the event Lessee fails to
----------------------------------
maintain or remove the Lessee Radio Facilities or other property of Lessee as
required under this Lease, or fails to repair all damages resulting from such
removal, and OpCo performs such duties, OpCo shall invoice Lessee for charges
for work performed and supervision provided by OpCo in connection with the
installation, presence, rearrangement, transfer, maintenance, replacement,
repair or removal of the Lessee Radio Facilities pursuant to this Lease and
Lessee shall pay such invoice within ten (10) days after receipt.
C. Time for Payment. Any amount not paid when due, or within any
----------------
grace period applicable thereto, including, without limitation any disputed
amounts that are ultimately determined to be due, shall bear interest at the
rate of one and one/half percent (1.5%) per month, compounded monthly (or, if
less, the highest rate permitted by applicable law), until paid.
5. Options to Extend. (a) Provided this Lease is then in full force and
-----------------
effect and Lessee is in full compliance with the terms and conditions of this
Lease, OpCo hereby grants to Lessee two (2) options to extend the Term for a
period of five (5) years each (each, an "Extended Term"), at a monthly rental
rate equal to the Monthly Rent. In the event Lessee desires to extend the Term,
Lessee shall notify OpCo at least six (6) months [but not more than seven (7)
months] in advance of the expiration of the Term, or the then applicable
Extended Term, as the case may be.
6. Assignment and Subleasing.
-------------------------
A. By Lessee. Lessee may assign this Lease and its rights hereunder
---------
at any time upon notice to, but without the need for the consent or approval of,
OpCo, if such assignment is made as part of the transfer, to the assignee, of
all or substantially all of Lessor's assets, and such assignee is not a wireless
communications provider or affiliate thereof. Lessee may assign this Lease and
its rights hereunder to any assignee upon the prior written approval of Lessee,
such consent not to be unreasonably withheld.
B. By OpCo. OpCo may assign, transfer or convey all or any portion
-------
of the Premises without the consent of or notice to Lessee, and in the event of
any such transfer, assignment or conveyance, Lessee shall look solely to such
transferee or assignee for the performance of all obligations, covenants,
conditions, and agreements imposed upon OpCo pursuant to the terms of this
Lease.
-5-
<PAGE>
7. Lessee's Compliance With Laws. Lessee shall comply with all local,
-----------------------------
city, county, state and federal laws, rules, ordinances, statutes and
regulations [including but not limited to Federal Aviation Administration
regulations and Federal Communications Commission requirements applicable to the
Premises or the Lessee Radio Facilities (or both), including but not limited to
tower marking and lighting requirements] now in effect or hereafter enacted or
passed as the same may apply to the Lessee Radio Facilities and the use of the
Premises by Lessee, and Lessee shall obtain, at Lessee's sole cost and expense,
any licenses, permits and other approvals required for Lessee's use of the
Premises and the Lessee Radio Facilities. OpCo agrees, provided OpCo incurs no
cost or expense or is reimbursed by Lessee for any costs and expenses incurred
by OpCo, to cooperate with Lessee in obtaining such licenses, permits or
approvals.
8. Lessee's Radio Facilities. The Lessee Radio Facilities shall be
-------------------------
constructed and installed by Lessee at Lessee's sole cost and expense, in a good
and workmanlike manner in accordance with Lessee's specifications, and in such a
manner as not to present a safety or operational hazard to the Utility
Facilities. OpCo and its Affiliates may enter the Premises for any reasonable
purpose and bring and store necessary repair materials without any liability to
Lessee, but OpCo and its Affiliates shall exercise reasonable care to minimize
any interference with Lessee's use and operation of the Lessee Radio Facilities.
OpCo and its Affiliates shall be entitled to obtain access to the Lessee Radio
Facilities during business hours upon prior written notice to Lessee. OpCo and
its Affiliates shall be entitled to obtain access to the Lessee Radio Facilities
if OpCo or its Affiliates in good faith believes that an emergency exists.
9. Title. (a) Title to the Lessee Radio Facilities, and title to any
-----
other improvements constructed by Lessee, shall be in Lessee, but
notwithstanding such title, the terms and conditions of this Lease shall govern
the construction, use, and operation of the Improvements and the exercise of
Lessee's rights with respect thereto. If Lessee is not then in default, upon the
termination or expiration of this Lease, Lessee shall remove the Lessee Radio
Facilities and all such improvements and shall restore all damage to the
Premises caused by or resulting from such removal. If Lessee shall fail or
refuse to remove all of the Lessee Radio Facilities and such other improvements
from the Premises upon the expiration or termination of this Lease for any cause
whatsoever, or upon the Lessee being dispossessed by process of law or
otherwise, such Lessee Radio Facilities and other improvements shall at OpCo's
sole option be deemed conclusively to have been abandoned and may be
appropriated, sold, stored, destroyed or otherwise disposed of by OpCo without
written notice to Lessee or any other party and without obligation to account
for them. Lessee shall pay OpCo on demand any and all expenses incurred by OpCo
in the removal of such property, including, without limitation, the cost of
repairing any damage to the Premises caused by the removal of such property and
storage charges (if OpCo elects to store such property). The covenants and
conditions of this Section 9 shall survive any expiration or termination of this
Lease. The value or cost of the Lessee Radio Facilities or any improvements
constructed by Lessee shall not in any way constitute a substitute for or a
credit against any obligation of Lessee under this Lease to pay rent or other
sums.
(b) Upon any termination of this Lease, Lessee shall peaceably quit and
surrender the Premises to OpCo in good order and condition, ordinary wear and
tear excepted. In no event shall any of the Lessee Radio Facilities be removed
by Lessee unless the same are promptly replaced with comparable or better such
facilities or unless same is damaged and is removed by Lessee pursuant to
Section 28 hereof.
-6-
<PAGE>
10. Radio Frequency Interference.
----------------------------
A. By Lessee. Lessee shall operate and cause to be operated the
---------
Lessee Radio Facilities and the Premises only in strict accordance with all
applicable requirements of the Federal Communications Commission ("FCC") and
shall use its best efforts to avoid creating any radio frequency interference
with any operations of OpCo or of OpCo's Affiliates. In the event that the
operation (whether by Lessee or others) of the Lessee Radio Facilities or the
Premises (or both) interferes with the operation, reliability, or safety of any
of OpCo's or any of its Affiliates' operations, Lessee shall cease such
operation (or shall cause such operation to be ceased) forthwith upon written
notice from OpCo or its Affiliates until such interference has been remedied.
Lessee expressly agrees that should such operation not be so ceased or should
such interference not be remedied, OpCo's and its Affiliates' remedy at law
would be inadequate. Lessee hereby waives any defense that a remedy at law would
be available or adequate to remedy any such failure to cease interference with
the operation, reliability, or safety of OpCo's or its Affiliates' operations
and agrees that OpCo and its Affiliates shall be entitled to temporary,
preliminary and permanent injunctive relief in addition to any other remedy
available at law or in equity for any such continued interference following
written notice from OpCo.
B. By OpCo. OpCo shall make a reasonable effort at the sole expense
-------
of Lessee to avoid creating any radio frequency interference with the operation
of the Lessee Radio Facilities. OpCo agrees to use reasonable efforts to consult
with Lessee prior to any change in OpCo's or its Affiliates' operations on or
near the Premises that may be reasonably likely to cause or to increase
interference with the Lessee Radio Facilities, but nothing herein shall be
construed to require OpCo or its Affiliates to make any change in its operations
or to refrain from any planned change in its operations in order to avoid
interference with the Lessee Radio Facilities or to accommodate Lessee's
operations.
11. Rights of Other Authorized Users.
--------------------------------
A. Subject to Subsection 10.B of this Lease, OpCo reserves to itself
and its Affiliates the right to maintain and operate its electric facilities in
such manner as, in the sole judgment of OpCo and its Affiliates, will best
enable it to fulfill its own service requirements. Nothing herein contained
shall be construed to require OpCo and its Affiliates to maintain any facilities
for the benefit of Lessee.
B. Nothing herein contained shall be construed as affecting the
rights or privileges previously conferred by OpCo and its Affiliates, by
contract or otherwise, to others, not Parties to this Lease, to use the Premises
for purposes related to OpCo's electric utility business; and, subject to
Subsection 10.B of this Lease, OpCo and its Affiliates shall have the right to
continue and extend such rights and privileges. The privileges herein granted
shall at all times be subject to such contracts and arrangements, which shall be
identified for Lessee upon request. Such privileges shall be non-exclusive and
OpCo and its Affiliates shall have the right in their sole discretion to grant
similar privileges of any sort to any person or entity; provided, however, that
OpCo and its Affiliates agree that they shall not permit any person or entity
not previously authorized to use the Premises to install any equipment or
facilities or conduct any operations on the Premises that would be reasonably
likely to interfere with the operation of the Lessee Radio Facilities without
the written consent of Lessee, which shall not be unreasonably withheld,
conditioned, or delayed.
-7-
<PAGE>
C. No use, however extended, of the Premises shall create or vest in
Lessee any ownership or property rights in the Premises, but Lessee's rights
therein shall be and remain a mere leasehold and shall always be subject to
termination as provided herein and may be assigned only as expressly provided
herein.
12. Electricity. Lessee shall be responsible for, shall cause to be
-----------
separately metered, and shall promptly pay in full for all electricity consumed
by Lessee at the Premises.
13. Lender's Continuation Rights. OpCo's right, title and interest herein
----------------------------
and in the Premises shall not be subordinated to the lien, priority and security
title of any encumbrance of this Lease or the interest of Lessee hereunder as
security for any indebtedness Lessee may incur, whether by deed to secure debt,
mortgage, deed of trust or other security instrument (all or any one of which
hereinafter referred to as "Leasehold Mortgage" and the owner or owners or
holder or holders of all or any of which hereinafter referred to as "Leasehold
Mortgagee"), and OpCo's right to receive Monthly Rent and additional rent
hereunder shall have priority over any rights of any Leasehold Mortgagee.
Lessee shall have the right to convey Lessee's interest under this Lease to
a bank, trust or insurance company, pension fund, college or university, or
other institutional lender. No Leasehold Mortgage shall be binding upon OpCo
with respect to the enforcement of the rights and remedies contained herein and
provided by law for the benefit of any Leasehold Mortgagee unless and until an
executed counterpart of such Leasehold Mortgage shall have first been delivered
to OpCo, notwithstanding any other form of notice to OpCo, actual or
constructive.
If OpCo shall have received from Lessee or from a Leasehold Mortgagee,
prior to any event of default by Lessee hereunder, written notice in the manner
provided in Section 23 hereof, specifying the name and address of such Leasehold
Mortgagee and requesting that OpCo give to such Leasehold Mortgagee a copy of
each notice of default by Lessee at the same time as and whenever any such
notice of default shall thereafter be given by OpCo to Lessee, then OpCo shall
comply with such request by giving such notice, addressed to such Leasehold
Mortgagee at the address last furnished to OpCo. OpCo shall accept performance
by any Leasehold Mortgagee or a purchaser of the leasehold rights of any
covenant, condition or agreement on Lessee's part to be performed hereunder with
the same force and effect as though performed by Lessee, if, at the time of such
performance (or prior thereto), OpCo shall be (or shall have been) furnished
with evidence reasonably satisfactory to OpCo of the interest in this Lease
claimed by the Leasehold Mortgagee tendering such performance.
In case of termination of this Lease by reason of the happening of any
event of default by Lessee, OpCo shall give notice thereof to any Leasehold
Mortgagee who shall have notified OpCo of its name and address pursuant to this
Section 13, which notice shall be addressed to such Leasehold Mortgagee at the
address last furnished to OpCo. If within ninety (90) days after the giving of
such notice, such Leasehold Mortgagee shall pay, or assume the payment of, all
Monthly Rent and additional rent and any and all other sums due and payable by
Lessee hereunder, as of the date of such termination, together with an amount of
money equal to the amount which, but for such termination, would have become due
and payable under this Lease, OpCo shall, upon the written request of such
Leasehold Mortgagee made any time within sixty (60) days from the date of notice
given to the Leasehold Mortgagee of such termination,
-8-
<PAGE>
execute and deliver a new lease of the Premises to such Leasehold Mortgagee for
the remainder of the Term, upon the same terms, covenants, conditions,
limitations and agreements herein contained, including without limitation the
covenants for Monthly Rent and additional rent, but subject to the rights, if
any, of parties then in possession (actual or constructive) of all or any part
of the Premises; provided, however, that such Leasehold Mortgagee shall have
paid to OpCo all Monthly Rent, additional rent and other charges due under this
Lease up to and including the date of the commencement of the term of such new
lease, together with all expenses, including attorneys' fees, incident to the
execution and delivery of such new lease, and that nothing contained herein
shall be deemed to impose any obligation on the part of OpCo to deliver physical
possession of the Premises to such Leasehold Mortgagee.
OpCo agrees, for the benefit of any Leasehold Mortgagee who shall become
entitled to notice as provided in this Section 13, that OpCo will not give or
serve any notice of termination of this Lease upon Lessee pursuant to Section
3.B(1) hereof, if within ninety (90) days after the receipt by such Leasehold
Mortgagee of written notice of the particular event of default by Lessee, such
Leasehold Mortgagee shall have served upon OpCo notice of the intention of such
Leasehold Mortgagee either to acquire Lessee's interest in the Premises by
foreclosure of its Leasehold Mortgage and to effect thereby the removal of
Lessee from the Premises in the case of an event of default by Lessee not
susceptible of being cured by such Leasehold Mortgagee, or to secure the
appointment of a receiver or otherwise obtain possession of the Premises and
cure such default in the case of an event of default by Lessee which requires
entry upon the Premises by such Leasehold Mortgagee in order to cure the same;
provided, however, that such Leasehold Mortgagee shall pay all Monthly Rent and
additional rent then due and shall diligently pursue and prosecute the intention
as expressed in such notice to OpCo, and such notice of intention incorporates
an assumption by such Leasehold Mortgagee of all of the obligations of Lessee
under this Lease susceptible of being performed by such Leasehold Mortgagee
during such forbearance, including, but not limited to, the obligation to pay
all Monthly Rent and additional rent and all other charges then due or to become
due during such forbearance, a covenant by such Leasehold Mortgagee that the net
subrental proceeds collected by any receiver or mortgagee in possession shall
inure to the benefit of and be paid to OpCo unless such Leasehold Mortgagee
cures all such defaults, whereupon all such net subrental proceeds shall be paid
to such Leasehold Mortgagee, and an indemnification by such Leasehold Mortgagee
in favor of OpCo which shall hold OpCo harmless from and against any liability,
loss and expense occasioned by or arising out of such forbearance
notwithstanding any notice to OpCo of discontinuance of proceedings or
relinquishment of possession by such Leasehold Mortgagee.
Notwithstanding anything to the contrary in the immediately preceding
paragraph concerning OpCo's forbearance, OpCo shall not be precluded from
exercising any rights or remedies under this Lease with respect to any other
default by Lessee during any such period of forbearance.
No Leasehold Mortgagee or purchaser at foreclosure shall be entitled to
become the owner of Lessee's interest in this Lease unless such Leasehold
Mortgagee or purchaser shall first have delivered to OpCo an assumption
agreement, executed in recordable form, wherein and whereby such Leasehold
Mortgagee or purchaser (i) assumes the performance of all the terms, covenants
and conditions of this Lease during the period it is the owner of Lessee's
interest in this Lease, and expressly confirms that the same are in full force
and effect, and (ii) agrees to operate the Premises for the use of the Lessee
Radio Facilities.
-9-
<PAGE>
14. Manner of Operation. From and after the date of this Lease, Lessee
-------------------
shall not install new equipment on the Premises if such equipment will or does
cause interference with the operations of OpCo or any Affiliate. In the event
any such interference occurs and does not cease promptly, OpCo shall have the
right, in addition to any other rights or remedies under this Lease or at law or
in equity, to terminate this Lease. Lessee shall conduct its operations on the
Premises in such a manner as not to present a safety or operational hazard to
the Utility Facilities.
15. Insurance. Throughout the Term of this Lease and each Extended Term,
---------
Lessee shall maintain, at its expense, a policy or policies of insurance for
each type of coverage and with the minimum limits stated below:
(1) Worker's Compensation insurance covering the legal liability
of Lessee and its contractors under the applicable worker's
compensation or occupational disease laws of the State or
Federal Government for claims for personal injuries and
death resulting therefrom to Lessee's and its contractors'
employees. Lessee shall also obtain a minimum of
$1,000,000.00 of Employers' Liability insurance.
(2) Commercial General Liability insurance covering the legal
liability (including liability assumed contractually,
whether incidental or not) of Lessee and its contractors who
may be present on the Premises, for claims for personal
injuries (including death) and property damage arising out
of this Lease or any access upon the Premises or the Utility
Facilities by Lessee or its contractors or any work to be
performed by Lessee or its contractors, in an amount no less
than $3,000,000.00 for any one occurrence.
Commercial General Liability insurance shall be obtained
which shall include broad form contractual liability
coverage, products/ completed operations and broad form
property damage (if required), and OpCo shall be named as an
additional insured on such Commercial General Liability
policy regarding liability arising out of operations
performed under this Lease.
(3) Automobile Liability insurance covering the legal liability
(including liability assumed contractually, whether
incidental or not) of Lessee and its contractors who may
access the Premises, for claims for personal injuries and
death resulting therefrom and for property belonging to
others than Lessee caused by highway licensed vehicles of or
used by Lessee or its contractors in an amount not less
than:
$3,000,000.00 for any one person
$3,000,000.00 for bodily injury for any one occurrence
$2,000,000.00 for property damage for any one occurrence
-10-
<PAGE>
Automobile Liability insurance shall provide coverage for
owned, hired or non-owned automobile or other automobile
equipment and OpCo shall be named as an additional insured
on such policy.
(4) Insurance against the risks customarily included under "all-
risks" policies with respect to improved properties similar
to the Premises in an amount equal to the "full insurable
value" (which as used herein shall mean the full replacement
value, including the costs of debris removal, which amount
shall be determined annually) of all improvements. Lessee
shall be entitled to carry a deductible of up to $10,000.00
in connection with said coverage. Lessee hereby further
agrees that, to the extent available, Lessee will obtain an
"agreed amount" endorsement with respect to such insurance
so as to prevent either OpCo or Lessee from becoming a co-
insurer of any loss. During construction, reconstruction,
alteration or material remodeling of any improvements on the
Premises such policies shall be in "builder's risk" form if
there would be an exclusion of coverage under Lessee's all-
risks policy as a result of such construction,
reconstruction, alteration or material remodeling.
Lessee's agreements with its contractors shall require such
contractors to obtain insurance meeting the minimum limits and incorporating the
contractual requirements that are prescribed by this Section 15. Lessee, on
behalf of itself and its contractors, does hereby waive and relinquish any right
of subrogation against OpCo and its agents, representatives, employees, and
affiliates they might possess for any policy of insurance provided under this
Section or under any State or Federal Worker's Compensation, or Employer's
Liability Act.
B. All insurance shall be written by insurers with a Best's rating
of no less than A:VII or equivalent which are authorized to do insurance
business in the state where the Premises are located, shall name OpCo as an
additional insured party as to liability and casualty insurance, shall be
reasonably satisfactory to OpCo in all respects and shall expressly provide that
no cancellation, reduction in amount or material change in coverage thereof
shall be effective until at least thirty (30) days after receipt by OpCo of
written notice thereof. A copy of each policy or of an acceptable certificate of
insurance in force, issued by the insurer, shall be delivered to OpCo on or
before the date Lessee is required to obtain the applicable insurance, and with
respect to renewal or replacement policies, not less than thirty (30) days prior
to expiration of the policy being renewed or replaced.
C. Beginning on the Effective Date and thence annually on January 1
of each year thereafter for every year that this Lease is in force, Lessee shall
submit to OpCo Certificates of Insurance evidencing the coverages prescribed by
this Section 15 and certifying that such policies have been endorsed as required
by this Section 15.
D. The provisions requiring Lessee to carry insurance shall not be
construed as waiving, restricting, or limiting any liability imposed upon Lessee
under this Lease, whether or not the same is covered by insurance. It is the
intent of the parties, however, that to the extent there is in force insurance
coverage available to cover the legal and contractually assumed liability of
-11-
<PAGE>
Lessee, any payments due as a result of such liability shall be made first from
the proceeds of such policies to the extent of the coverage limits.
E. The required certificate and all renewal certificates shall be
delivered to OpCo at the address shown below:
Georgia Power Company
BIN _________
241 Ralph McGill Boulevard, N.E.
Atlanta, GA 30308-3374
Attention: Manager, Power Delivery Contracts
FAX: (404) 526-2992
16. Waiver of Subrogation.
---------------------
A. In the event the Premises are located in Georgia, then, to the
fullest extent permitted under O.C.G.A. Section 13-8-2, OpCo and Lessee hereby
waive any claim each may have against the other or any Affiliate by way of
subrogation or otherwise from any and all liability for any loss or damage to
property, whether caused by the negligence or fault of the other party, to the
extent such loss or damage is covered or required to be covered by the fire and
extended coverage policy or so-called all-risk policy with respect to the
Utility Facilities, Premises or the Lessee Radio Facilities, or any plan of
self-insurance with respect to risks which would be insured against under such
policies, notwithstanding the failure to obtain such policies. Each of OpCo and
Lessee shall cause any fire insurance and extended coverage or so-called all-
risk policies which it maintains in respect of the Utility Facilities, Premises
or the Lessee Radio Facilities, to contain a provision whereby the insurer
waives any rights of subrogation against the other party.
B. The provisions of this Section 16.B shall apply in the event the
Premises are located in Georgia. Except as otherwise provided in Section 16.A of
this Lease, the waivers and indemnities in this Lease in favor of OpCo shall not
apply to damages arising out of bodily injury to persons or damage to property
caused by or resulting from the sole negligence of OpCo, its agents or employees
to the extent O.C.G.A. Section 13-8-2 is applicable thereto. Except as otherwise
provided in Section 16.A, the waivers and indemnities in this Lease in favor of
Lessee shall not apply to damages arising out of bodily injury to persons or
damage to property caused by or resulting from the sole negligence of Lessee,
its agents or employees to the extent O.C.G.A. Section 13-8-2 is applicable
thereto.
C. The provisions of this Section 16.C shall apply in the event the
Premises are not located in Georgia. OpCo and Lessee hereby waive any claim each
may have against the other or any Affiliate by way of subrogation or otherwise
from any and all liability for any loss or damage to property, whether caused by
the negligence or fault of the other party, to the extent such loss or damage is
covered or required to be covered by the fire and extended coverage policy or
so-called all-risk policy with respect to the Utility Facilities, Premises or
the Lessee Radio Facilities, or any plan of self-insurance with respect to risks
which would be insured against under such policies, notwithstanding the failure
to obtain such policies. Each of OpCo and Lessee shall cause any fire insurance
and extended coverage or so-called all-risk policies which it maintains in
respect of the Utility Facilities, Premises or the Lessee Radio Facilities, to
contain a provision whereby the insurer waives any rights of subrogation against
the other party.
-12-
<PAGE>
17. Indemnification. Lessee shall, and does hereby agree to, indemnify,
---------------
save harmless and defend OpCo (its Affiliates and their respective directors,
officers, agents, contractors, servants and employees) from any and all claims,
costs (including but not limited to court costs and attorneys' fees), damages
and liabilities (except as set forth in the next sentence) arising from or out
of or the occupancy or use by Lessee of the Premises or the installation, use,
maintenance, repair or removal of the Lessee Radio Facilities, or occasioned
wholly or in part by any negligent act or omission of Lessee, its agents,
contractors, employees, servants, lessees, licensees or concessionaires. OpCo
shall be solely responsible for, and the indemnity contained in the sentence
immediately preceding this sentence shall not apply to, claims, costs, damages
and liabilities to the extent caused by or resulting from the sole negligence or
wilful misconduct of OpCo, OpCo's officers, agents, servants, employees or
contractors. Each Affiliate of OpCo is an intended third party beneficiary of
this Section 17. OpCo shall, and does hereby agree to, indemnify, save harmless
and defend Lessee and its directors, officers, agents, contractors, servants and
employees from any and all claims, costs (including but not limited to court
costs and attorneys' fees), damages and liabilities (except as set forth in the
next sentence) arising from or out of [Alternative 1 - for Georgia, Mississippi,
Florida: use by OpCo] [Alternative 2 - for Alabama: OpCo's negligence or willful
misconduct in its use] of the Premises pursuant to this Lease. Lessee shall be
solely responsible for, and the indemnity contained in the sentence immediately
preceding this sentence shall not apply to, claims costs, damages and
liabilities to the extent caused by or resulting from the sole negligence or
wilful misconduct of Lessee, Lessee's officers, agents, servants, employees or
contractors.
18. Events of Default. The following events shall constitute events of
-----------------
default under this Lease:
A. Lessee's failure to pay any installment of rent when the same
shall be due and payable and the continuance of such failure for a period
of five (5) days after receipt by Lessee of notice in writing from OpCo
specifying such failure, provided, however, such notice and such grace
period shall be required to be provided by OpCo and shall be accorded
Lessee, if necessary, only two (2) times during any twelve (12) consecutive
month period of the Term, and a default by Lessee shall be deemed to have
immediately occurred upon the third (3rd) failure by Lessee to make a
timely payment as aforesaid within any twelve (12) consecutive month period
of the Term; or
B. Lessee's failure to perform any of the other covenants,
conditions and agreements herein contained on Lessee's part to be kept or
performed and the continuance of such failure without the curing of same
for a period of thirty (30) days after receipt by Lessee of notice in
writing from OpCo specifying the nature of such failure [but if any such
failure to comply on the part of Lessee would reasonably require more than
thirty (30) days to cure, no event of default shall occur if Lessee
commences curing such failure within the thirty (30) day notice period and
thereafter promptly, effectively and continuously proceeds with the curing
of the failure to comply on the part of Lessee and, in all such events,
cures such failure to comply on the part of Lessee no later than sixty (60)
days after such notice]; or
C. Lessee shall (i) voluntarily be adjudicated a bankrupt or
insolvent, (ii) seek or consent to the appointment of a receiver or trustee
for itself or for any of portion of the
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<PAGE>
Premises or the Lessee Radio Facilities, (iii) file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, (iv) make a general assignment for the benefit
of creditors, or (v) be unable to pay its debts as they mature; or
D. All or any portion of this Lease or Lessee's interest herein or
Lessee's interest in the Premises or in the Lessee Radio Facilities is
executed upon or attached; or
E. Any attempt by Lessee to make any sale, assignment, mortgage,
pledge, hypothecation or other transfer of all or any portion of this Lease
or any interest of Lessee hereunder or in the Premises or to sublet the
Premises or any portion thereof without full compliance with any and all
requirements therefor set forth in this Lease.
19. Remedies. Upon the occurrence of an event of default, at OpCo's
--------
option:
A. OpCo may terminate this Lease by written notice to Lessee, in
which event Lessee shall remove the Lessee Radio Facilities within five (5)
days after OpCo's termination notice (and Lessee shall repair, at its sole
cost and expense, any damage to the Premises or to any improvements caused
by such removal) and shall surrender the Premises within such five (5) day
period, and if Lessee fails to remove the Lessee Radio Facilities or to
surrender the Premises within such time period, OpCo may, without prejudice
to any other right or remedy which OpCo may have, enter upon and take
possession of the Premises (by force, summary proceedings, ejectment or
otherwise) and remove Lessee and the Lessee Radio Facilities without being
liable for prosecution or any claim for damages therefor, and Lessee hereby
waives its rights to any legal proceedings in connection with such reentry.
B. OpCo may enter upon and take possession of the Premises without
termination of this Lease, and remove Lessee by force, summary proceedings,
ejectment or otherwise, without being liable for prosecution or any claim
for damages therefor, and Lessee hereby waives its rights to any legal
proceedings in connection with such reentry. If OpCo elects, OpCo may take
such action as is necessary to relet the Premises and may so relet the
Premises at such rent and upon such terms and conditions as OpCo may deem
advisable and receive the rent therefor. Upon such reletting, all rentals
received by OpCo from such reletting shall be applied first to the payment
of any expenses of such reletting, including but not limited to brokerage
fees and attorneys' fees and the costs of alterations and repairs, second
to the payment of rental and other charges due and unpaid hereunder, and
the residue, if any, shall be held by OpCo and applied against future rent
and other charges as the same may become due and payable under this Lease.
Lessee shall pay to OpCo, on demand, any deficiency that may from time to
time arise by reason of such reletting and OpCo hereby reserves the right
to bring an action or proceeding for the recovery of any such deficits.
C. Upon any termination of this Lease under this Section 19, whether
by lapse of time or otherwise, OpCo shall be entitled to recover as
damages, all rent, including all abated rent, if any, and any amounts
treated as additional rent under this Lease, and other sums due and payable
by Lessee on the date of termination, plus as liquidated damages and not as
a penalty, an amount equal to the sum of: (a) an amount equal to the then
present
-14-
<PAGE>
value (using a discount rate of 8%) of the rent reserved in this Lease for
the residue of the stated Term of this Lease including any amounts treated
as additional rent under this Lease and all other sums provided in this
Lease to be paid by Lessee, minus the fair rental value of the Premises for
such residue; (b) the value of the time and expense necessary to obtain a
replacement tenant or tenants, and the estimated expenses relating to
recovery of the Premises, preparation for reletting and for reletting
itself; and (c) the cost of performing any other covenants which would have
otherwise been performed by Lessee.
20. Environmental. Lessee covenants that Lessee, its agents, contractors,
-------------
employees, servants, lessees, licensees or concessionaires ("Lessee's Users")
will not generate, store, use, treat, release or dispose of any Hazardous
Substances (as hereinafter defined) in, on, under or at the Premises, except for
the storage and use of such Hazardous Substances as are commonly legally used or
stored and in such quantities as are commonly legally used or stored as a
consequence of using the Premises for the purposes permitted hereunder, but only
so long as the use or storage of such substances does not pose a threat to
public health or to the environment and would not necessitate any governmental
regulation, including but not limited to permitting, notification, reporting, or
response or remedial action, under applicable environmental laws. Additionally,
Lessee's Users will not use the Premises as either a permanent or temporary dump
site for any Hazardous Substances. Lessee shall indemnify and hold harmless
OpCo (its Affiliates and their respective directors, officers, agents and
employees) from and against any and all losses, fines, penalties, liabilities,
strict liability, damages, injuries, expenses, response or remedial costs,
reasonable engineer's, expert's and attorneys' fees and laboratory costs, costs
of any settlement or judgment and claims of any and every kind whatsoever paid,
incurred or suffered by, or asserted against, OpCo (its Affiliates or their
respective directors, officers, agents or employees) by any person or entity or
governmental agency for, with respect to, or as a direct or indirect result of,
the breach of the foregoing covenants or any violation by Lessee's Users of any
environmental laws related to the generation, storage, use, treatment, disposal,
release or threatened release of Hazardous Substances. "Hazardous Substances"
shall mean any material, constituent, substance or waste currently, or at any
time in the future, defined as, classified as or considered toxic, hazardous,
infectious or radioactive by any governmental agency or under applicable
federal, state or local law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, constituent, substance or
material, as now or at any time hereafter in effect, including but not limited
to listed or characteristic hazardous wastes under the Resource Conservation and
Recovery Act, as amended, hazardous substances as defined in Section 101(14) of
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, hazardous substances as defined under the Georgia Hazardous Site
Response Act, [INSERT APPLICABLE REFERENCE FOR ALABAMA, FLORIDA, MISSISSIPPI]
asbestos, and asbestos containing material. The provisions of this Section 20
shall survive cancellation, termination or expiration of this Lease.
21. Taxes. Lessee shall pay and discharge punctually, as and when the same
-----
shall become due and payable, all taxes and other governmental impositions and
charges of every kind and nature whatsoever, extraordinary as well as ordinary
which shall or may during the term of this Lease be charged, levied, laid,
assessed, imposed, become due and payable, or liens upon or for or with respect
to the Premises or any part thereof, or any improvements, buildings,
appurtenances or equipment (including without limitation the Lessee Radio
Facilities) owned by Lessee thereon or therein or any part thereof, together
with all interest and penalties thereon, under or by virtue of all present or
future laws, ordinances, requirements, orders, directives, rules or regulations
of the
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<PAGE>
federal, state and county governments and of all other governmental authorities
whatsoever. If personal property taxes are assessed against the Lessee Radio
Facilities, Lessee shall pay such taxes as are directly attributable to the
Lessee Radio Facilities.
22. Disclaimer of Warranties. OPCO MAKES NO WARRANTIES OF ANY KIND WITH
------------------------
RESPECT TO THE CONDITION OR SUITABILITY OF THE PREMISES FOR THE PURPOSES
INTENDED BY LESSEE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL EXPRESS, IMPLIED OR STATUTORY
WARRANTIES ARE HEREBY DISCLAIMED. NO WARRANTIES ARE MADE OR SHALL BE IMPLIED BY
VIRTUE OF APPROVAL BY OPCO OF ANY ENGINEERING ANALYSIS, DRAWINGS, SITE PLANS,
WORK, INSTALLATIONS, PLANNED CONSTRUCTION OR FINAL CONSTRUCTION. LESSEE HAS MADE
OR SHALL MAKE SUCH INSPECTIONS OF THE PREMISES AS LESSEE DEEMS APPROPRIATE PRIOR
TO ENTERING INTO THIS LEASE OR INSTALLING OR USING ANY OF LESSEE'S RADIO
FACILITIES THEREON OR THEREIN, AND LESSEE EXPRESSLY ACCEPTS THE PREMISES WITHOUT
WARRANTY OF ANY KIND OR NATURE. OPCO DOES NOT REPRESENT OR WARRANT THAT OPCO OR
ANY OF ITS AFFILIATES HOLDS TITLE OF ANY KIND TO THE PREMISES OR ANY FACILITIES
OR IMPROVEMENTS CURRENTLY LOCATED THEREON. Lessee shall obtain at its sole
expense any and all licenses, permits, and other approvals that may be required
for Lessee's use of the Premises and, including, without limitation, any permits
or approvals from other persons claiming an interest in the Premises.
23. Notices. All notices, demands, requests, consents, and approvals
-------
desired, necessary, required or permitted to be given pursuant to the terms of
this Lease shall be in writing and shall be deemed to have been properly given
if personally delivered (including delivery by courier or by Federal Express or
similar overnight delivery service) or sent, postage prepaid, by first class
registered or certified United States mail, return receipt requested, addressed
to each Party at the following address:
To OpCo:
Georgia Power Company
BIN ___________
241 Ralph McGill Boulevard, N.E.
Atlanta, GA 30308-3374
Attention: Manager, Power Delivery Contracts
with an additional copy (which shall not constitute notice) to:
Troutman Sanders
5200 NationsBank Plaza
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Jeffrey F. Hetsko, Esq.
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<PAGE>
To Lessee:
____________________________
____________________________
____________________________
____________________________
with an additional copy (which shall not constitute notice) to:
____________________________
____________________________
____________________________
____________________________
or at such other address in the United States as OpCo or Lessee may from time to
time designate by like notice. Any such notice, demand, request or other
communication shall be considered given or delivered, as the case may be, on the
date of personal delivery or on the date of deposit in the United States mail as
provided above. Rejection or other refusal to accept or inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice, demand, request or other communication.
24. No Liability for Consequential Damages. NEITHER PARTY SHALL BE LIABLE
--------------------------------------
TO THE OTHER PARTY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY KIND
WHATSOEVER, INCLUDING BUT NOT LIMITED TO LOST PROFITS, REGARDLESS OF WHETHER OR
NOT SUCH PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH CONSEQUENTIAL OR
INCIDENTAL DAMAGES OR LOST PROFITS.
25. Severability. In the event any one or more of the provisions contained
------------
in this Lease shall for any reason be held to be invalid, illegal or
unenforceable in any respect, by a court of last resort having jurisdiction in
the Premises, the validity of the remainder of this Lease shall not be affected,
this Lease shall not terminate, and there shall be substituted for such illegal,
invalid or unenforceable provision a like provision which is legal, valid and
enforceable within the limits established by such court's final opinion and
which most nearly accomplishes and reflects the original intention of the
Parties.
26. Entire Agreement. This Lease constitutes the full and complete
----------------
agreement between the Parties and the Parties shall not be bound by any
statement, special condition or agreements not herein expressed. Any alteration
or amendment to this Lease by the Parties shall be in writing, executed by the
Parties and by reference incorporated into this Lease.
27. Governing Law. This Lease shall be governed by the laws of the state
-------------
where the Premises are located.
28. Casualty. In the event that, at any time during the Term, the Lessee
--------
Radio Facilities shall be destroyed or damaged in whole or in part then Lessee
shall, at Lessee's sole cost and expense, cause the same to be repaired,
replaced or rebuilt. Lessee shall commence such repair, replacement or
rebuilding within sixty (60) days after the date of such damage or destruction
and shall thereafter diligently and continuously prosecute such repair,
replacement or rebuilding to
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<PAGE>
completion. In the event the Lessee Radio Facilities are destroyed or damaged in
whole or in part at any time during the last year of the Term of this Lease to
the extent that, in Lessee's reasonable discretion, the Lessee Radio Facilities
are not usable in their damaged condition for the conduct of Lessee's business,
Lessee may, upon written notice to OpCo, terminate this Lease as of the date set
forth in such notice [which shall be not less than ten (10) days after the date
of such notice] and all rentals and other sums shall be accounted for between
OpCo and Lessee as of such date, and Lessee shall immediately remove the Lessee
Radio Facilities; provided, however, that Lessee shall repair, at its sole cost
and expense, any damage to the Premises or to any improvements caused by such
removal. In the event Lessee has not commenced such repair, replacement or
rebuilding within sixty (60) days after the date of such damage or destruction,
OpCo may, upon written notice to Lessee prior to commencement of such repair,
replacement or rebuilding, terminate this Lease as of the date sixty (60) days
after such damage or destruction. In the event Lessee fails to complete such
repair, replacement or rebuilding within one hundred twenty (120) days after the
date of such damage or destruction, OpCo may, upon written notice to Lessee
prior to completion of such repair, replacement or rebuilding, terminate this
Lease as of the date one hundred twenty (120) days after such damage or
destruction, and all rentals and other sums shall be accounted for between OpCo
and Lessee as of such date.
29. Condemnation. If the whole of the Premises, or such portion of the
------------
Premises as will make the Premises unusable for Lessee's use, in OpCo's
reasonable discretion, or if the whole of the Premises, or such portion thereof
as will make the Premises unusable for the purposes herein leased, is condemned
by any legally constituted authority, or conveyed to such authority in lieu of
such condemnation, then in any of said events, the term of this Lease shall end
on the date when possession thereof is taken by the condemning authority, and
rental shall be accounted for between OpCo and Lessee as of such date. In the
event any portion of the Premises is taken by condemnation or a conveyance in
lieu thereof (other than as set forth in the preceding sentence), at Lessee's
option, Lessee may (i) terminate this Lease, or (ii) elect to continue this
Lease. Nothing herein shall be construed to preclude Lessee from prosecuting
any claim directly against the condemning authority for moving expenses, loss of
goodwill, loss of business, and for the unamortized cost of the Lessee Radio
Facilities, provided, however, that no such claim shall diminish or adversely
affect OpCo's award. In no event shall Lessee have or assert a claim for the
value of any unexpired portion of the Term. Subject to the foregoing provisions
of this Section 29, Lessee hereby assigns to OpCo any and all of Lessee's right,
title and interest in or to any compensation awarded or paid as a result of any
such taking.
30. Subordination. Lessee's rights hereunder shall be subject to any
-------------
mortgage, indenture or deed to secure debt which is now, or may hereafter be,
placed upon the Premises by OpCo or any Affiliate of OpCo, but will not be
subject to any such encumbrance if the Premises are conveyed, by themselves and
not as part of a larger transaction, to an entity other than an Affiliate of
OpCo.
31. Time of the Essence. Time is of the essence of this Lease. No remedy
-------------------
conferred upon or reserved to OpCo in this Lease, at law or in equity is
intended to be exclusive of any other available remedies, but each and every
remedy shall be cumulative and shall be in addition to every other remedy given
in this Lease or now or hereafter existing in law or in equity.
32. Confidentiality. This Lease contains confidential information of OpCo,
---------------
and Lessee covenants and agrees not to divulge the contents of this Lease to
anyone without the prior written
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<PAGE>
consent of OpCo, except as may be required by statute, court order or other
legal process. No public announcement (excluding disclosures required by law to
be made) shall be made by Lessee with regard to this Lease or its terms without
the prior written consent of OpCo. Lessee and OpCo hereby agree that this Lease
shall not be recorded in any public records. Upon request of either Party, the
other Party shall execute a Short Form of Lease containing a legal description
of the Premises and the term, and available extensions, setting forth that
Lessee has a leasehold interest pursuant to the Lease and a description of the
non-interference provisions contained herein. Any and all recording costs and
taxes, if any, required in connection with the recording of the Short Form of
Lease shall be at the sole cost and expense of Lessee.
33. Forum for Litigation. In the event that litigation is required in
--------------------
order to resolve any dispute or disagreement connected with this Lease, it is
agreed by and between the Parties hereto that venue and jurisdiction for any
such litigation shall be, unless otherwise required by law, in Fulton County,
Georgia, if the Premises are in Georgia, in Jefferson County, Alabama, if the
Premises are in Alabama, in ________ County, Florida, if the Premises are in
Florida, and in ________ County, Mississippi, if the Premises are in
Mississippi.
34. Headings. The headings in this Lease are included for convenience only
--------
and shall not be taken into consideration in any construction or interpretation
of all or any part of this Lease.
35. Execution. This Lease may be executed in one or more counterparts,
---------
each of which shall be deemed to be an original, but all of which together shall
constitute the same Lease. Any signature page of any such counterpart may be
attached or appended to any other counterpart to complete a fully executed
counterpart of this Lease.
36. Representations and Warranties of the Parties. Each Party hereto
---------------------------------------------
hereby represents and warrants to the other Party hereto the following:
A. Such Party is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to enter into and perform its obligations under
this Lease.
B. This Lease has been duly authorized by all necessary corporate
action on the part of such Party, has been duly executed and delivered by a duly
authorized officer of such Party and constitutes the legal, valid and binding
obligation of such Party enforceable in accordance with its terms, except to the
extent such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, and similar laws affecting creditors' rights generally and
except to the extent that remedies may be limited by applicable principles of
equity.
37. OpCo Facilities, Reserved Rights and Third Party Facilities & Rights.
--------------------------------------------------------------------
"OpCo Facilities" shall mean any and all equipment buildings, equipment, systems
or facilities (other than the existing tower) used for or in connection with
wireless communications (including without limitation radio and microwave
communications), including without limitation, transmitters, receivers,
antennae, multiple address system radios or power line carrier equipment,
conduit, waveguides, fixtures, appliances, communications lines, wire, cable and
equipment, and any other physical connections between OpCo's antennae and OpCo's
equipment (such as but not limited to transmitters and receivers), any building
housing all or any portion thereof, and any permits, licenses or leases relating
to any one or more of the foregoing. "Reserved Rights"
-19-
<PAGE>
shall mean the reservation by OpCo, unto itself, its successors and assigns, for
the benefit of OpCo, its successors, assigns and such others (such as but not
limited to OpCo's agents, contractors, subcontractors, licensees and permittees)
as OpCo shall from time to time designate, the rights, interests and easements
from time to time and at any time, upon, over, across and under the Premises (i)
to construct, install, use, patrol, obtain access to, operate, maintain, repair,
inspect, renew, rebuild, reconstruct, replace, improve, upgrade, enhance and add
onto the OpCo Facilities and (ii) to install, operate, use, obtain access to,
repair, inspect, renew, rebuild and maintain necessary and appropriate lines and
facilities for the provision of utilities (including but not limited to
electricity and data communications) to the OpCo Facilities, provided that such
activity will not unreasonably interfere with Lessee's use of the Lessee Radio
Facilities. "Third Party Facilities & Rights" shall mean the rights and
interests of the third parties (the "Third Parties"), if any, specified on
Schedule 3.1 attached hereto and by reference made a part hereof, under or
- ------------
pursuant to a license, lease or other agreement in effect on the date hereof, in
and to any and all equipment buildings, equipment, systems or facilities
(including but not limited to electric and phone or other data communication
lines) located on or used in connection with the existing tower (including
without limitation any improvements or additions thereto or replacements or
substitutions therefor) or used for or in connection with wireless
communications (including but not limited to radio and microwave
communications), including without limitation, transmitters, receivers,
antennae, multiple address system radios or power line carrier equipment,
conduit, waveguides, fixtures, appliances, communications lines, wire, cable and
equipment, and any other physical connections between the antennae and equipment
of such Third Parties (such as but not limited to transmitters and receivers),
any building or buildings housing all or any portion thereof, and any permits,
licenses or leases relating to any one or more of the foregoing.
38. Safety.
------
A. Compliance with NESC and Georgia Power Company Standards. All Lessee
--------------------------------------------------------
Radio Facilities installed on the Premises shall at all times be installed and
maintained in accordance with:
(i) the applicable requirements and specifications of the National
Electrical Safety Code ("NESC"), as revised;
(ii) Any safety procedures and requirements from time to time
specified by OpCo; and
(iii) all rules and orders now in effect or hereafter issued by any
federal, state or local governmental authority having jurisdiction.
All Work shall be performed by Lessee in a workmanlike manner in accordance with
accepted construction practices and conforming to national, state and local
codes, and conforming to the existing site construction standards and in such a
manner as not to present a safety or operational hazard to the Utility
Facilities. Lessee shall use contractors in possession of all licenses
necessary to perform the Work and use adequate numbers of skilled and, as
applicable, licensed workmen who are thoroughly trained and experienced in the
necessary crafts, and who are completely familiar with the specified
requirements and methods needed for proper performance of the work. "Work"
shall include any and all construction to install the Lessee Radio Facilities,
or any
-20-
<PAGE>
additional facilities or equipment, or the construction required under Section
1.D.(4), and any repair, replacement, maintenance or modification thereto.
B. High Voltage Safety Act. Lessee hereby agrees and covenants not to
-----------------------
use, and will prohibit agents, employees and contractors of Lessee from using,
any tools, equipment or machinery within twenty (20) feet of OpCo's overhead
conductors or energized substation equipment located on or in the vicinity of
the Premises. The following provisions of this Section 38.B shall apply in the
event the Premises are in Georgia. All work required in connection with the
installation, presence, rearrangement, transfer, maintenance, replacement,
repair or removal of the Lessee Radio Facilities or otherwise within twenty (20)
feet of OpCo's overhead conductors or energized substation equipment shall be
performed in strict compliance with all applicable provisions of the High
Voltage Safety Act, O.C.G.A. (S)(S) 46-3-30 et seq. (HIGH VOLTAGE SAFETY ACT),
and the Rules and Regulations of the State of Georgia Section 300-3-7.01 et seq.
This Lease is not a "joint use contract" as such term is employed in O.C.G.A.
(S) 46-3-37(c). Lessee further agrees to notify any contractors that may be
employed by Lessee of the existence of said code sections and regulations, and
to require that all work be performed in compliance with said code sections and
regulations by including same as a requirement in any contract let as a result
of said bid.
C. Warnings to Employees and Contractors. Lessee shall specifically and
-------------------------------------
adequately warn each and every employee of Lessee and Lessee's contractors and
agents of the danger inherent in making contact with OpCo's electric facilities
or of coming closer to same than permitted by the NESC, by Occupational Safety
and Health Administration regulations, or by prudent engineering and
construction practices, before such employee is permitted to perform any work on
or near any OpCo electric facilities. LESSEE FURTHER AGREES AND COVENANTS TO
WARN ALL PERSONS WHOM LESSEE KNOWS OR SHOULD REASONABLY ANTICIPATE FOR ANY
REASON MAY RESORT TO THE VICINITY OF SUCH ELECTRICAL FACILITIES OF THE FACT THAT
SUCH ELECTRICAL FACILITIES ARE:
(1) ELECTRIC FACILITIES,
(2) ENERGIZED,
(3) UNINSULATED, AND
(4) DANGEROUS.
D. Use of Competent Employees. Lessee specifically represents and
--------------------------
warrants that it shall permit, and shall require its agents and contractors to
permit, only individuals who are appropriately trained and experienced to work
in the vicinity of energized electric facilities to install or maintain any
Lessee Radio Facilities near, on or upon OpCo electric facilities or to perform
any other work in the vicinity of any OpCo electric facilities.
E. Use of Approved Contractors. Except for work performed for Lessee by
---------------------------
OpCo, Lessee shall perform all work on the Premises by contracting with
contractors who are duly qualified to work in the immediate vicinity of
energized electric facilities.
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<PAGE>
THE APPROVAL BY OPCO OF ANY CONTRACTOR SHALL IN NO WAY IMPLY ANY REPRESENTATION
OR WARRANTY BY OPCO CONCERNING SUCH CONTRACTOR OR ANY WORK PERFORMED OR TO BE
PERFORMED BY SUCH CONTRACTOR OR IMPUTE TO OPCO ANY LIABILITY FOR ANY ACTION OR
INACTION OF ANY SUCH CONTRACTOR.
39. Additional Provisions. In addition to the terms and conditions set
---------------------
forth in the body of this Lease, this Lease and Lessee's rights hereunder shall
be subject to the Additional Terms and Conditions set forth in Schedule "3"
------------
attached hereto and by reference made a part hereof. In the event of a conflict
between a term, condition or provision set forth in the body of this Lease and a
term, condition or provision set forth in Schedule "3", the term, condition or
------------
provision set forth in Schedule "3" shall prevail.
------------
40. (a) Option to Convey by OpCo. OpCo may, at any time, sell to Lessee
------------------------
the Premises upon the terms and conditions set forth in this Paragraph 40. For
the purposes of this Paragraph 40, the term "Premises" shall include any
easements benefiting the Premises.
(b) Exercise. OpCo may give notice to Lessee of OpCo's desire to
--------
convey the fee interest in the Premises to Lessee (the "Put Notice"), at any
time. The Closing (as that term is hereinafter defined) shall occur within
sixty (60) business days after the Put Notice is given; provided, however, if
the Closing does not occur because of the default of OpCo or the failure of a
condition precedent, the Lease shall continue in force and effect, until such
Closing occurs.
(c) Purchase Price. The purchase price (the "Purchase Price") of the
--------------
Premises to be paid in cash by Lessee at Closing shall be the "Market Value", as
herein defined.
(e) Studies. Between the date on which OpCo gives the Put Notice and
-------
the date of Closing, Lessee and the agents and contractors of Lessee shall have
the right to enter upon the Premises to survey and inspect the Premises and to
conduct soil, environmental engineering and other tests and studies, all at the
expense of Lessee. Lessee hereby indemnifies and holds OpCo harmless from and
against any and all liens, personal injury or death of any person or any
Premises damage in any way caused by or arising out of the exercise by Lessee of
its inspection rights under this subsection (e).
(f) Conditions Precedent. The obligation of Lessee to proceed with
--------------------
Closing is subject to the following conditions precedent:
(i) Lessee shall have the right, after the Put Notice is given,
to cause the title to the Premises to be examined, and to cause a current
and accurate survey to the performed, and to give to OpCo written notice of
any exceptions or defects to the title to the Premises other than (a)
Premises taxes not then due and payable, (b) utility easements serving the
Premises, (c) any encumbrances which do not adversely affect Lessee's
ability to use the Premises for its then current use, and (d) any leases,
rental agreements or other rights of occupancy (collectively, "Adjoining
Leases") affecting the Premises (collectively, the "Permitted
Encumbrances"). The Premises shall not be subject to any mortgage, deed to
secure debt, security agreement, judgment, lien or claim of lien or any
other title exception that is monetary in nature (a "Monetary Lien"),
unless such instrument is subordinate to the Put Option such that, upon
payment of the Purchase Price, the lien of such instrument shall
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<PAGE>
be released, or is less than the Purchase Price and shall therefore be
released and paid in full from the proceeds of Closing, or unless such
instrument is the "Indenture" (collectively, the "OpCo Defects").
"Indenture" shall mean that certain Indenture dated as of March 1, 1941, as
amended and supplemented (hereinafter called the "Indenture"), executed by
OpCo to The New York Trust Company, as Trustee (on September 8, 1959, The
New York Trust Company merged into Chemical Corn Exchange Bank, the name of
which became Chemical Bank New York Trust Company at the time of said
merger, and said Chemical Bank New York Trust Company merged into Chemical
Bank on February 17, 1969, and said Chemical Bank merged into The Chase
Manhattan Bank on July 15, 1996) or of any substitute or replacement
thereof, if any. OpCo shall have the lien of the Indenture released from
the Premises within one hundred and eighty (180) days after the date of
Closing. [INSERT APPLICABLE REFERENCE FOR ALABAMA, FLORIDA, MISSISSIPPI]
Lessee shall not be obligated to proceed with Closing unless Lessee is able
to obtain at Closing an owner's title insurance policy ("Title Policy"),
issued by a national title insurance company ("Title Company") acceptable
to Lessee, insuring Lessee in the amount of the Purchase Price, covering
the Premises, on ALTA Form 1992-B, without exception other than the
Permitted Encumbrances.
(ii) At the time of Closing, the Premises must be in
substantially the same condition as on the date on which the Put Notice is
given.
(iii) At the time of Closing, the Premises must not be subject to
any pending or threatened condemnation or other taking, whether permanent
or temporary, pursuant to the power of eminent domain (collectively, a
"Taking"), unless OpCo, as a condition of Closing, assigns to Lessee any
and all rights, interests and proceeds in or payable to OpCo with respect
to the Premises arising out of such Taking; provided, however, that if such
condemnation or other taking would have a material impact on the Premises
or Lessee's use thereof, then Lessee may, at its option and in its sole
discretion, elect not to proceed with the Closing, such election to be made
by notice given to OpCo within ten (10) days after Lessee has notice of
such Taking. For the purposes of this paragraph, a Taking shall
conclusively be deemed to be material if (i) it takes any portion of the
Premises, or (ii) causes the Premises to violate any applicable zoning
laws;
If any of the conditions precedent of the obligations of Lessee set forth in
this subsection are not fully satisfied as of the time of Closing, Lessee shall
not be obligated to proceed with Closing; provided, however, that Lessee shall
have the right and option, in its discretion, to waive any one or more of the
conditions precedent contained in this subsection. Lessee acknowledges and
agrees that Lessee's remedy for a failure of any of the aforesaid conditions
precedent shall be not to proceed with Closing, and that OpCo shall have no
liability in connection with the failure of any such conditions, unless such
failure arises out of any action taken willfully by OpCo to create the failure
of the condition precedent.
(g) Closing. The closing ("Closing") of the sale of the Premises
-------
contemplated hereby shall be held at the offices of OpCo, during regular
business hours on or before the date which is the final day allowable for
Closing in accordance with subsection (b) of this Article. The exact time and
date of Closing shall be selected by Lessee by written notice given to OpCo at
least ten (10) days prior to the date so specified.
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<PAGE>
(h) Closing Documents. At Closing, OpCo shall execute and deliver at
-----------------
Closing the following:
(i) A Limited Warranty Deed conveying the Premises, which shall
be subject only to the matters of record as of the date of conveyance, but
not subject to Monetary Liens other than the Indenture (subject to OpCo's
obligation to obtain a release of the Indenture within one hundred eighty
days after Closing). OpCo will cause any OpCo Defects other than the
Indenture to be satisfied and released as of the time of Closing;
(ii) Such reasonable evidence of authority and existence of OpCo
as may be required by the Title Company to enable Lessee to obtain the
Title Policy;
(iii) A certificate and affidavit of non-foreign status;
(iv) An affidavit of ownership, in a form which will enable the
Title Company to delete from the Title Policy the standard exceptions for
rights of parties in possession and matters not appearing in the public
records;
Seller shall pay any applicable transfer tax. Purchaser shall pay all title
insurance costs, survey costs and other costs incurred by Lessee. Each of OpCo
and Lessee shall pay their own attorneys' fees. Ad valorem taxes assessed
against the Premises for the year in which the Closing occurs, rents, utility
and other operating expenses shall be prorated as of the day of Closing.
(i) "As-Is". At Closing, the Premises shall be conveyed to Lessee in
-------
an "as is" condition, without warranty except as set forth in the Limited
Warranty Deed of any kind and this Lease shall automatically terminate.
(j) Casualty and Taking. If after the Put Notice is given and prior
-------------------
to Closing, the Premises are totally damaged or destroyed to an extent which
exceeds fifty percent (50%) of the Purchase Price, or a Taking occurs which
affects all or any part of the Premises, Lessee shall have the right and option,
as its exclusive remedies, either to elect not to purchase the Premises or to
accept conveyance of the Premises subject to such casualty or taking and receive
at the Closing an assignment without recourse of all right, title and interest
of OpCo to receive available insurance or condemnation proceeds (provided that
OpCo shall, at no cost to OpCo, cooperate with Lessee in collecting such
insurance proceeds or condemnation proceeds, as applicable); such option of
Lessee shall be exercised by a written notice given to OpCo within thirty (30)
calendar days after occurrence of the casualty or Taking, as applicable. If
Lessee elects not to purchase pursuant to the subsection (i), this Lease shall
not terminate and the occurrence of such casualty or Taking shall then be
- ---
governed by the applicable provisions of this Lease.
(k) No Brokers. OpCo and Lessee each warrant and represent to the
----------
other that neither has employed or otherwise engaged a real estate broker or
agent in connection with the sale pursuant to the Put Option. OpCo and Lessee
covenant and agree, each to the other, to indemnify the other against any loss,
liability, costs (including reasonable attorneys' fees actually incurred),
claims, demands, causes of action and suits arising out of the alleged
employment or engagement by the indemnifying party of any real estate broker or
agent in connection with the Purchase Option. The indemnities contained in this
subsection (k) shall survive Closing and any termination of this Lease.
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<PAGE>
(l) Market Value. The "Market Value" of the Premises shall be the
------------
fair market value of the Premises, taking into account the size, location, use,
entitlements, encumbrances, funds derived from payments by third-parties for the
use thereof, and any and all other relevant factors used to reasonably ascertain
the value of Premises and Premises thereon. OpCo shall, with the Put Notice, set
forth its assessment of the Market Value. Lessee shall have fifteen (15) days to
accept or reject such determination of Market Value. If Lessee rejects such
offer within the fifteen (15) day period, Lessee may notify OpCo in writing of
its intention to submit the issue of Market Value to arbitration and of the name
of the arbitrator selected by Lessee. If Lessee fails to give such notice of its
desire to arbitrate within said fifteen (15) day period, then Lessee shall have
elected to purchase at OpCo's initial offer of the Market Value. Within ten (10)
days after receipt of such notice by OpCo from Lessee, OpCo shall notify Lessee
of the arbitrator selected by OpCo. Within ten (10) days after the appointment
of OpCo's arbitrator, the arbitrators so appointed shall jointly appoint a third
arbitrator. If such arbitrators are unable to select a third arbitrator within
ten (10) days after the appointment of OpCo's arbitrator, then OpCo or Lessee,
or both, shall immediately by petition to the Presiding Judge of the Superior
Court of __________ County, _____________, request the appointment of five (5)
persons, each of whom shall be qualified to serve as a third arbitrator, and
none of whom shall have any interest in or be in any way affiliated with or
related to either OpCo or Lessee as an officer, employee or agent of OpCo or
Lessee or a relative of any officer, agent or employee of OpCo or Lessee. From
the five (5) persons so appointed, OpCo and Lessee shall, within ten (10) days
after such appointment, alternatively strike two names each, Lessee striking one
name first. The remaining person shall act as the third arbitrator. If either
OpCo or Lessee shall fail or refuse to appoint an arbitrator within the time
provided, then the other party shall petition the then Presiding Judge of the
Superior Court of ____________ County, _____________ to appoint an arbitrator
for such party and any arbitrator so appointed shall be considered as having
been appointed by the party so failing or refusing to appoint an arbitrator. If
either party shall fail or refuse within the time provided to strike from the
list of the five (5) persons appointed by the Presiding Judge of the Superior
Court of __________ County, then the other party shall proceed to select the
third arbitrator from said list. Notwithstanding anything to the contrary set
forth in this paragraph, each of the arbitrators selected shall be qualified
arbitrators and experienced in the type of issues to be arbitrated.
After a third arbitrator has been appointed in accordance with
the foregoing paragraph, the arbitrators shall hold such meetings as either OpCo
or Lessee, or both, may reasonably request and at such meetings hear and
consider any evidence which either OpCo or Lessee, or both, desire to present.
Within twenty (20) days after the appointment of the third arbitrator, the
arbitrators shall make their final determination deciding the issue of Market
Value.
The determination made by the arbitrator as to the Market Value
shall be in writing and signed by at least two arbitrators and shall be binding
upon OpCo and Lessee.
OpCo shall pay the fees and expenses of the arbitrator selected
by OpCo and Lessee shall pay the fees and expenses of the arbitrator selected by
Lessee. The fees and expenses of the third arbitrator, together with any
expenses of the arbitration proceeding itself, shall be divided equally between
OpCo and Lessee.
[This section intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed, or caused their
respective duly authorized representatives to execute, this Lease under seal as
of the day and year first above written.
Lessee:
__________________________________
__________________________________
By:_______________________________
Name:_____________________________
(Printed or Typed)
Its:______________________________
(Title)
Attest:___________________________
Name:_____________________________
(Printed or Typed)
Its:______________________________
(Title)
(AFFIX CORPORATE SEAL)
OPCO:
GEORGIA POWER COMPANY
By:_______________________________
Name: Wayne T. Dahlke
(Printed or Typed)
Its: Senior Vice President, Power Delivery
(Title)
Attest:___________________________
Name:
(Printed or Typed)
Its:
(Title)
(AFFIX CORPORATE SEAL)
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<PAGE>
Schedule "1"
Description of Premises
<PAGE>
Schedule "2"
Description of the Lessee Radio Facilities
<PAGE>
Schedule "3"
Additional Terms and Conditions
1. [ADDITIONAL PROVISION WHERE OPCO TOWER ON SAME SITE AT SOUTHERN
COMMUNICATIONS TOWER AND ASSUMES THAT NO OPCO FACILITIES ARE LOCATED ON SOUTHERN
COMMUNICATIONS TOWER] Section 37 of the Lease is hereby modified in its
entirety to read as follows:
37. OpCo Facilities, Reserved Rights and Third Party Facilities &
-------------------------------------------------------------
Rights. "OpCo Facilities" shall mean the tower designated "OpCo" on
------
Schedule 1-A attached hereto and by reference made a part hereof (the "OpCo
------------
Tower"), and all guy wires, supports, ground fields and other related
equipment and installations associated therewith, and any improvements or
additions thereto and any replacements or substitutions therefor, together
with any and all equipment buildings, equipment, systems or facilities
(including but not limited to electric and phone or other data
communication lines) located on or used in connection with the OpCo Tower
or used for or in connection with wireless communications (including but
not limited to radio and microwave communications), including without
limitation, transmitters, receivers, antennae, multiple address system
radios or power line carrier equipment, conduit, waveguides, fixtures,
appliances, communications lines, wire, cable and equipment, and any other
physical connections between OpCo's antennae and OpCo's equipment (such as
but not limited to transmitters and receivers), any building or buildings
housing all or any portion thereof, and any permits, licenses or leases
relating to any one or more of the foregoing. Specifically excluded from
"OpCo Facilities" is the tower (collectively with any improvements or
additions thereto and any replacements or substitutions therefor, the
"SoComm Tower") designated "SoComm" on Schedule 1-A attached hereto.
------------
"Reserved Rights" shall mean the reservation by OpCo, unto itself, its
successors and assigns, for the benefit of OpCo, its successors, assigns
and such others (such as but not limited to OpCo's agents, contractors,
subcontractors, licensees and permittees) as OpCo shall from time to time
designate, the rights, interests and easements from time to time and at any
time, upon, over, across and under the Premises (i) to construct, install,
use, patrol, obtain access to, operate, maintain, repair, inspect, renew,
rebuild, reconstruct, replace, improve, upgrade, enhance and add onto the
OpCo Facilities and (ii) to install, operate, use, obtain access to,
repair, inspect, renew, rebuild and maintain necessary and appropriate
lines and facilities for the provision utilities (including but not limited
to electricity and data communications) to the OpCo Facilities provided
that such activity will not unreasonably interfere with Lessee's use of the
Lessee Radio Facilities. "Third Party Facilities & Rights" shall mean the
rights and interests of the third parties (the "Third Parties"), if any,
specified on Schedule 3.1 attached hereto and by reference made a part
------------
hereof, under or pursuant to a license, lease or other agreement in effect
on the date hereof, in and to any and all equipment buildings, equipment,
systems or facilities (including but not limited to electric and phone or
other data communication lines) located on or used in connection with the
SoComm Tower or used for or in connection with wireless communications
(including but not limited to radio and microwave communications),
including without limitation, transmitters, receivers, antennae, multiple
address system radios or power line carrier equipment, conduit, waveguides,
fixtures, appliances, communications lines, wire, cable and equipment, and
any other physical connections between the antennae and equipment of such
Third Parties (such as but not limited to transmitters and receivers),
<PAGE>
any building or buildings housing all or any portion thereof, and any
permits, licenses or leases relating to any one or more of the foregoing.
30
<PAGE>
Schedule "3.1"
Third Party Occupants
<PAGE>
EXHIBIT 10.9
Restricted Premises Form
Site Number:___________________
Latitude:______________________
Longitude:_____________________
Site Name:_____________________
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into this ___ day of
_____________ 199__ (the "Effective Date") by and between ____________ POWER
COMPANY, with offices at ______________________ ("OpCo") and
___________________, with offices at _____________________ ("Lessee"). OpCo and
Lessee are sometimes referred to herein individually as a "Party" and
collectively as the "Parties".
W I T N E S S E T H:
WHEREAS, Lessee is in the communications tower construction, operation and
leasing business in various areas, including areas within the State of
___________;
WHEREAS, OpCo is engaged in the business of generating, transmitting and
distributing electricity;
WHEREAS, Lessee desires to locate and operate certain of its radio
transmission towers within, over, and upon certain facilities operated by OpCo;
WHEREAS, OpCo, subject to the terms and conditions hereinafter set forth,
is willing to permit, to the extent that OpCo may do so lawfully, Lessee to
install certain radio transmission facilities upon the property more
particularly identified on Schedule "1" attached hereto and by reference made a
------------
part hereof (the "Premises"), so long as, such use will not interfere with
OpCo's own service requirements, including considerations of economy and safety,
and if OpCo and its Affiliates are protected and indemnified against costs to
them arising from such use of the Premises and the Lessee Radio Facilities;
provided, however, that specifically excluded from the Premises and the Lessee
Radio Facilities are the "OpCo Facilities" and the "Reserved Rights" and the
"Third Party Facilities & Rights" (as those terms are defined in Section 37 of
this Lease);
NOW, THEREFORE, for and in consideration of the foregoing, the mutual
covenants herein contained, the sum of Ten and No/100 Dollars ($10.00) in hand
paid by each Party hereto to the other, and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged by the Parties hereto, the Parties hereto hereby covenant and agree
as follows:
1. Lease of Ground Space.
---------------------
A. Lease. Subject to the terms and conditions set forth herein, OpCo
-----
hereby leases to Lessee the Premises. Lessee may operate, maintain, repair and
reconstruct at the Premises the existing communications tower (such tower being
more particularly described on Schedule "1" attached hereto and by reference
------------
made a part hereof) (collectively, together with any other facilities installed
by Lessee pursuant to this Lease, the "Lessee Radio Facilities"). Nothing herein
shall be
<PAGE>
construed to permit Lessee to install any facilities of any nature on any other
property of OpCo or its Affiliates. Lessee may install transmitters, receivers,
antennae, conduit, waveguides, and communications lines, wire and cable on the
Premises. Lessee may construct equipment buildings on the Premises, but the
location of such buildings shall be subject to OpCo's prior approval. Lessee
shall provide OpCo at least thirty (30) days advance notice of any improvements
to any existing tower that would increase the height of such tower. No
additional tower shall be constructed or installed on the Premises without the
prior written consent of OpCo, which consent may be granted or withheld in
OpCo's sole discretion. In the event OpCo grants such consent, then during the
course of construction or installation of such additional tower, Lessee shall
not alter, modify or amend the plans approved by OpCo and shall not permit the
construction to progress other than in accordance with such plans without first
obtaining OpCo's written approval. OpCo shall have the right, during the
construction period, to have its representative monitor construction and report
on its progress and compliance with the approved plans. If such report shows
deviations from the approved plans, Lessee, upon notice, shall take immediate
steps, at its expense, to conform the construction to the previously approved
plans. The value or cost of any improvements constructed by Lessee shall not in
any way constitute a substitute for or a credit against any obligation of Lessee
under this Lease to pay rent or any other sums.
B. Responsibilities of Lessee. Lessee shall be solely responsible at
--------------------------
its own expense for any site modifications that may be necessary or appropriate
on any portion of the Premises in connection with the Lessee Radio Facilities
and Lessee's use thereof (including without limitation, fence relocation,
grading of any required road or the Premises, and graveling newly graded
portions of the Premises), for the selection, installation, maintenance and
repair of the Lessee Radio Facilities (including without limitation, obtaining
any required construction permits or other governmental approvals) and for the
provision of utilities, including without limitation electric power and
telecommunications services, to the Lessee Radio Facilities. Title to and
absolute beneficial ownership of any and all such modifications (excluding any
modifications of Lessee Radio Facilities) shall vest in OpCo or the applicable
Affiliate of OpCo upon installation free of any lien created by any action or
inaction of Lessee.
C. Utility Easements. Subject to the terms and conditions set forth
-----------------
herein, OpCo hereby grants Lessee a non-exclusive easement over, under, across
and upon the Premises in such location or locations as may be designated by OpCo
in writing for the installation, operation, and maintenance of necessary and
appropriate lines and facilities for the provision of utilities, including
without limitation electric power and telecommunications services, to the
Premises and the Lessee Radio Facilities. Any and all upgrades or improvements
to OpCo's and its Affiliates' electric facilities that may be required for the
installation and operation of the Lessee Radio Facilities shall be performed at
the sole expense of Lessee and to the satisfaction of OpCo and its Affiliates.
Title to and absolute beneficial ownership of any and all such upgrades or
improvements (excluding any upgrades or improvements of Lessee Radio Facilities)
shall vest in OpCo or the applicable Affiliate of OpCo upon installation free of
any lien created by any action or inaction of Lessee.
D. Access.
------
(1) Notice. Subject to the requirement of Subsection 1.E of this
------
Lease that certain work be performed by or under the direct supervision of OpCo
or its Affiliates or otherwise be consented to by OpCo, Lessee shall have access
to any Lessee Radio Facilities upon
-2-
<PAGE>
twenty-four (24) hours prior telephonic notice from Lessee to OpCo at [INSERT
REFERENCE TO DISTRIBUTION CONTROL CENTER CONTACT], which telephonic notice is
actually received by such authorized representative of OpCo (and not, by way of
example and not of limitation, merely left as a voicemail message); provided,
however, if OpCo determines that any electrical outage is required in connection
with allowing Lessee access to the Lessee Radio Facilities, OpCo shall have the
right to deny Lessee access to the Lessee Radio Facilities for a reasonable
time; further provided, however, that, upon at least four (4) business hours
advance notice to OpCo at [INSERT REFERENCE TO REGION OPERATING CONTACT], Lessee
shall have access to all Lessee Radio Facilities located on an OpCo operating
headquarters site during the routine business hours of such operating
headquarters. Lessee and Lessor agree to cooperate to develop mutually
acceptable access procedures for the Premises, including after-hours and
emergency procedures. OpCo may require that a representative of OpCo or one of
its Affiliates accompany any representatives of Lessee having access to such
portions of the Premises. Employees and agents of Lessee shall, while on the
Premises, comply with all OpCo's rules and regulations, including without
limitation security requirements. Lessee shall provide to OpCo a list of persons
who are authorized to supervise work on, or access to, the Lessee Radio
Facilities. OpCo and its Affiliates shall have the right to notify Lessee that
certain persons are excluded if, in the reasonable judgment of OpCo and its
Affiliates, the exclusion of such persons is necessary for reasons of safety or
the proper security and maintenance of OpCo's facilities.
(2) Precautions. At all times while on the Premises, Lessee
-----------
shall take appropriate measures and precautions not to disturb, damage, or
disrupt OpCo's and its Affiliates' or any other person's equipment, structures
or other property on the Premises and the Utility Facilities or, OpCo's, its
Affiliates' or any other person's operation thereof. "Affiliate" shall mean any
company, partnership, joint venture, limited liability company, or other entity
controlled by, controlling or under common control with OpCo, together with any
entity which acquires all or substantially all of the assets or issued and
outstanding shares of capital stock of OpCo.
(3) Construction of Fence. OpCo reserves the right at any time
---------------------
and from time to time to require Lessee, by written notice, to construct, at
Lessee's sole cost and expense, either or both of the following:(a) a driveway
providing a separate point of access to the Lessee Radio Facilities from the
right of way adjoining or in close proximity to the Premises over and across the
property specified in such notice, and (b) an appropriate fence or other barrier
physically separating the Premises from the Utility Facilities. Upon Lessee's
receipt of written request from OpCo under the immediately preceding sentence,
Lessee shall cause such driveway or barrier, as the case may be, to be
constructed on or before the date sixty (60) days or as soon as practicable
after such notice, all in accordance with plans approved by OpCo.
E. Performance of Work. OpCo's and its Affiliates' operating
-------------------
policies and procedures require that work performed on or in connection with or
in the vicinity of certain electric facilities be performed by or under the
direct supervision of OpCo or its Affiliates because of considerations of
reliability, safety, and economy in connection with OpCo's and its Affiliates'
operations. Except as otherwise approved by OpCo in writing, OpCo or one of its
Affiliates shall perform or supervise all work required in connection with the
installation, presence, rearrangement, transfer, maintenance, replacement,
repair or removal of Lessee Radio Facilities located (i) within the enclosure
surrounding any Utility Facilities; (ii) on or within twenty (20) feet of any
electric transmission support structure; (iii) within twenty (20) feet of any
energized electric transmission or substation equipment; or (iv) within twenty
(20) feet of any telecommunications tower of OpCo or
-3-
<PAGE>
any Affiliate of OpCo. Lessee shall pay OpCo or the applicable Affiliate of OpCo
for all such work at OpCo's or its Affiliate's standard time and materials rates
that are charged to persons or entities other than Affiliates for work of a
similar nature, as the same may be changed from time to time in OpCo's or its
Affiliates' sole discretion. As used in this Lease, the term "substation" refers
to any area on the Utility Facilities that is from time to time designated by
OpCo as a substation area and all equipment, structures and energized electric
facilities contained therein.
F. Signage. Lessee shall not place or allow to be placed any signage
-------
on the Premises, other than a sign of the type normally used to identify the
Lessee Radio Facilities as the property of Lessee.
2. Use of Lessee Radio Facilities.
------------------------------
A. Responsibilities of Lessee. Lessee shall be solely responsible at
--------------------------
its own expense for the selection, installation, maintenance and repair of the
Lessee Radio Facilities (including without limitation, obtaining any required
construction permits or other governmental approvals).
B. Operating Frequency. Unless otherwise agreed in writing by OpCo,
-------------------
the Lessee Radio Facilities shall not be operated at the frequency for which the
communications systems of OpCo or any of its Affiliates are currently licensed
to operate by the Federal Communications Commission, or which would interfere
with the operation of such systems.
3. Term; Termination.
-----------------
A. Commencement and Continuation. The Term of this Lease shall
-----------------------------
commence on the Effective Date and ends on the date that is twenty (20) years
after the Effective Date, unless extended pursuant to Section 5 of this Lease.
B. Termination. This Lease may be terminated prior to the end of the
-----------
Term as follows:
(1) For Default. Either Party in its sole discretion may
-----------
terminate this Lease by written notice upon the occurrence of an event of
default by the other Party, and the failure to cure such default as provided in
this Lease.
(2) Lessee also may terminate this Lease upon sixty (60) days
prior written notice to OpCo if Lessee is unable to obtain or maintain or
otherwise suffers a cancellation of any license, permit or governmental approval
necessary for the operation of the Lessee Radio Facilities or Lessee's permitted
use of the Premises and provided Lessee has demonstrated to the reasonable
satisfaction of OpCo that Lessee has diligently and in good faith attempted to
cure or remedy any such cancellation.
(3) OpCo also may terminate this Lease:
(a) in the event the Public Service Commission of the State
within which the Premises are located or any law, rule
or regulation applicable to OpCo or the Utility
Facilities
-4-
<PAGE>
prevents, makes unlawful, or eliminates OpCo's or its
Affiliates' authority to lease the Premises to Lessee
or to allow the Lessee Radio Facilities to be located
on the Premises or requires the removal of the Lessee
Radio Facilities.
(b) upon two hundred forty (240) days prior written notice
to Lessee, if OpCo determines, in its sole discretion,
that OpCo needs to expand or otherwise utilize the
Premises or the Utility Facilities for electric utility
business purposes (including without limitation pump
storage facilities) in such a manner that will require
the removal of the Lessee Radio Facilities; provided,
however, in the event of such determination, OpCo shall
use its reasonable efforts to provide Lessee with
comparable space on other property, if any, owned by
OpCo within close proximity to the Premises. The cost
and expense of relocating the Lessee Radio Facilities
to such comparable space, if any, designated by OpCo
and acceptable to Lessee shall be borne entirely by
Lessee. Notwithstanding the foregoing, in the event
OpCo is not able to provide Lessee with such comparable
space on other property, if any, owned by OpCo within
close proximity to the Premises after using reasonable
efforts to find such space, OpCo shall have the right
to terminate this Lease.
(c) upon two hundred forty (240) days prior written notice
to Lessee, if OpCo alters its use of the Utility
Facilities or the Premises to preclude, based on OpCo's
standards applicable to operation of substations,
transmission lines, operating headquarters, utility
communications facilities, or pump storage facilities,
the simultaneous use of the Premises as a substation,
transmission line, operating headquarters, utility
communications facility, or pump storage facility, as
the case may be, and for the operation of the Lessee
Radio Facilities.
(d) upon two hundred forty (240) days prior written notice
to Lessee, if OpCo determines that the Premises or the
Utility Facilities are no longer suitable for use as a
substation, transmission line, operating headquarters,
or utility communications facility, as the case may be.
(4) As Otherwise Provided. This Lease also may be terminated as
---------------------
expressly provided by any other provision of this Lease.
-5-
<PAGE>
4. Rent, Billing and Payment.
-------------------------
A. Rent. Commencing on the Effective Date, and continuing thereafter
----
on the first day of each subsequent calendar month, as rental for the Premises,
Lessee shall pay to OpCo in advance, in good funds, without deduction, setoff or
invoice, the sum of ________ Thousand ______ Hundred and No/100 Dollars
($________) per month (the "Monthly Rent") during the Term, regardless of
whether Lessee has installed the Lessee Radio Facilities upon the Premises.
B. Charges for Work Performed by OpCo. In the event Lessee fails to
----------------------------------
maintain or remove the Lessee Radio Facilities or other property of Lessee as
required under this Lease, or fails to repair all damages resulting from such
removal, and OpCo performs such duties, OpCo shall invoice Lessee for charges
for work performed and supervision provided by OpCo in connection with the
installation, presence, rearrangement, transfer, maintenance, replacement,
repair or removal of the Lessee Radio Facilities pursuant to this Lease and
Lessee shall pay such invoice within ten (10) days after receipt.
C. Time for Payment. Any amount not paid when due, or within any
----------------
grace period applicable thereto, including, without limitation any disputed
amounts that are ultimately determined to be due, shall bear interest at the
rate of one and one/half percent (1.5%) per month, compounded monthly (or, if
less, the highest rate permitted by applicable law), until paid.
5. Options to Extend. (a) Provided this Lease is then in full force and
-----------------
effect and Lessee is in full compliance with the terms and conditions of this
Lease, OpCo hereby grants to Lessee two (2) options to extend the Term for a
period of five (5) years each (each, an "Extended Term"), at a monthly rental
rate equal to the Monthly Rent. In the event Lessee desires to extend the Term,
Lessee shall notify OpCo at least six (6) months [but not more than seven (7)
months] in advance of the expiration of the Term, or the then applicable
Extended Term, as the case may be.
6. Assignment and Subleasing.
-------------------------
A. By Lessee. Lessee may assign this Lease and its rights hereunder
---------
at any time upon notice to, but without the need for the consent or approval of,
OpCo, if such assignment is made as part of the transfer, to the assignee, of
all or substantially all of Lessor's assets, and such assignee is not a wireless
communications provider or affiliate thereof. Lessee may assign this Lease and
its rights hereunder to any assignee upon the prior written approval of Lessee,
such consent not to be unreasonably withheld.
B. By OpCo. OpCo may assign, transfer or convey all or any portion
-------
of the Premises without the consent of or notice to Lessee, and in the event of
any such transfer, assignment or conveyance, Lessee shall look solely to such
transferee or assignee for the performance of all obligations, covenants,
conditions, and agreements imposed upon OpCo pursuant to the terms of this
Lease.
-6-
<PAGE>
7. Lessee's Compliance With Laws. Lessee shall comply with all local,
-----------------------------
city, county, state and federal laws, rules, ordinances, statutes and
regulations [including but not limited to Federal Aviation Administration
regulations and Federal Communications Commission requirements applicable to the
Premises or the Lessee Radio Facilities (or both), including but not limited to
tower marking and lighting requirements] now in effect or hereafter enacted or
passed as the same may apply to the Lessee Radio Facilities and the use of the
Premises by Lessee, and Lessee shall obtain, at Lessee's sole cost and expense,
any licenses, permits and other approvals required for Lessee's use of the
Premises and the Lessee Radio Facilities. OpCo agrees, provided OpCo incurs no
cost or expense or is reimbursed by Lessee for any costs and expenses incurred
by OpCo, to cooperate with Lessee in obtaining such licenses, permits or
approvals.
8. Lessee's Radio Facilities. The Lessee Radio Facilities shall be
-------------------------
constructed and installed by Lessee at Lessee's sole cost and expense, in a good
and workmanlike manner in accordance with Lessee's specifications, and in such a
manner as not to present a safety or operational hazard to the Utility
Facilities. OpCo and its Affiliates may enter the Premises for any reasonable
purpose and bring and store necessary repair materials without any liability to
Lessee, but OpCo and its Affiliates shall exercise reasonable care to minimize
any interference with Lessee's use and operation of the Lessee Radio Facilities.
OpCo and its Affiliates shall be entitled to obtain access to the Lessee Radio
Facilities during business hours upon prior written notice to Lessee. OpCo and
its Affiliates shall be entitled to obtain access to the Lessee Radio Facilities
if OpCo or its Affiliates in good faith believes that an emergency exists.
9. Title. (a) Title to the Lessee Radio Facilities, and title to any
-----
other improvements constructed by Lessee, shall be in Lessee, but
notwithstanding such title, the terms and conditions of this Lease shall govern
the construction, use, and operation of the Improvements and the exercise of
Lessee's rights with respect thereto. If Lessee is not then in default, upon the
termination or expiration of this Lease, Lessee shall remove the Lessee Radio
Facilities and all such improvements and shall restore all damage to the
Premises caused by or resulting from such removal. If Lessee shall fail or
refuse to remove all of the Lessee Radio Facilities and such other improvements
from the Premises upon the expiration or termination of this Lease for any cause
whatsoever, or upon the Lessee being dispossessed by process of law or
otherwise, such Lessee Radio Facilities and other improvements shall at OpCo's
sole option be deemed conclusively to have been abandoned and may be
appropriated, sold, stored, destroyed or otherwise disposed of by OpCo without
written notice to Lessee or any other party and without obligation to account
for them. Lessee shall pay OpCo on demand any and all expenses incurred by OpCo
in the removal of such property, including, without limitation, the cost of
repairing any damage to the Premises caused by the removal of such property and
storage charges (if OpCo elects to store such property). The covenants and
conditions of this Section 9 shall survive any expiration or termination of this
Lease. The value or cost of the Lessee Radio Facilities or any improvements
constructed by Lessee shall not in any way constitute a substitute for or a
credit against any obligation of Lessee under this Lease to pay rent or other
sums.
(b) Upon any termination of this Lease, Lessee shall peaceably quit and
surrender the Premises to OpCo in good order and condition, ordinary wear and
tear excepted. In no event shall any of the Lessee Radio Facilities be removed
by Lessee unless the same are promptly replaced with comparable or better such
facilities or unless same is damaged and is removed by Lessee pursuant to
Section 28 hereof.
-7-
<PAGE>
10. Radio Frequency Interference.
----------------------------
A. By Lessee. Lessee shall operate and cause to be operated the
---------
Lessee Radio Facilities and the Premises only in strict accordance with all
applicable requirements of the Federal Communications Commission ("FCC") and
shall use its best efforts to avoid creating any radio frequency interference
with any operations of OpCo or of OpCo's Affiliates. In the event that the
operation (whether by Lessee or others) of the Lessee Radio Facilities or the
Premises (or both) interferes with the operation, reliability, or safety of any
of OpCo's or any of its Affiliates' operations, Lessee shall cease such
operation (or shall cause such operation to be ceased) forthwith upon written
notice from OpCo or its Affiliates until such interference has been remedied.
Lessee expressly agrees that should such operation not be so ceased or should
such interference not be remedied, OpCo's and its Affiliates' remedy at law
would be inadequate. Lessee hereby waives any defense that a remedy at law would
be available or adequate to remedy any such failure to cease interference with
the operation, reliability, or safety of OpCo's or its Affiliates' operations
and agrees that OpCo and its Affiliates shall be entitled to temporary,
preliminary and permanent injunctive relief in addition to any other remedy
available at law or in equity for any such continued interference following
written notice from OpCo.
B. By OpCo. OpCo shall make a reasonable effort at the sole expense
-------
of Lessee to avoid creating any radio frequency interference with the operation
of the Lessee Radio Facilities. OpCo agrees to use reasonable efforts to consult
with Lessee prior to any change in OpCo's or its Affiliates' operations on or
near the Premises that may be reasonably likely to cause or to increase
interference with the Lessee Radio Facilities, but nothing herein shall be
construed to require OpCo or its Affiliates to make any change in its operations
or to refrain from any planned change in its operations in order to avoid
interference with the Lessee Radio Facilities or to accommodate Lessee's
operations.
11. Rights of Other Authorized Users.
--------------------------------
A. Subject to Subsection 10.B of this Lease, OpCo reserves to itself
and its Affiliates the right to maintain and operate its electric facilities in
such manner as, in the sole judgment of OpCo and its Affiliates, will best
enable it to fulfill its own service requirements. Nothing herein contained
shall be construed to require OpCo and its Affiliates to maintain any facilities
for the benefit of Lessee.
B. Nothing herein contained shall be construed as affecting the
rights or privileges previously conferred by OpCo and its Affiliates, by
contract or otherwise, to others, not Parties to this Lease, to use the Premises
for purposes related to OpCo's electric utility business; and, subject to
Subsection 10.B of this Lease, OpCo and its Affiliates shall have the right to
continue and extend such rights and privileges. The privileges herein granted
shall at all times be subject to such contracts and arrangements, which shall be
identified for Lessee upon request. Such privileges shall be non-exclusive and
OpCo and its Affiliates shall have the right in their sole discretion to grant
similar privileges of any sort to any person or entity; provided, however, that
OpCo and its Affiliates agree that they shall not permit any person or entity
not previously authorized to use the Premises to install any equipment or
facilities or conduct any operations on the Premises that would be reasonably
likely to interfere with the operation of the Lessee Radio Facilities without
the written consent of Lessee, which shall not be unreasonably withheld,
conditioned, or delayed.
-8-
<PAGE>
C. No use, however extended, of the Premises shall create or vest in
Lessee any ownership or property rights in the Premises, but Lessee's rights
therein shall be and remain a mere leasehold and shall always be subject to
termination as provided herein and may be assigned only as expressly provided
herein.
12. Electricity. Lessee shall be responsible for, shall cause to be
-----------
separately metered, and shall promptly pay in full for all electricity consumed
by Lessee at the Premises.
13. Lender's Continuation Rights. OpCo's right, title and interest herein
----------------------------
and in the Premises shall not be subordinated to the lien, priority and security
title of any encumbrance of this Lease or the interest of Lessee hereunder as
security for any indebtedness Lessee may incur, whether by deed to secure debt,
mortgage, deed of trust or other security instrument (all or any one of which
hereinafter referred to as "Leasehold Mortgage" and the owner or owners or
holder or holders of all or any of which hereinafter referred to as "Leasehold
Mortgagee"), and OpCo's right to receive Monthly Rent and additional rent
hereunder shall have priority over any rights of any Leasehold Mortgagee.
Lessee shall have the right to convey Lessee's interest under this Lease to
a bank, trust or insurance company, pension fund, college or university, or
other institutional lender. No Leasehold Mortgage shall be binding upon OpCo
with respect to the enforcement of the rights and remedies contained herein and
provided by law for the benefit of any Leasehold Mortgagee unless and until an
executed counterpart of such Leasehold Mortgage shall have first been delivered
to OpCo, notwithstanding any other form of notice to OpCo, actual or
constructive.
If OpCo shall have received from Lessee or from a Leasehold Mortgagee,
prior to any event of default by Lessee hereunder, written notice in the manner
provided in Section 23 hereof, specifying the name and address of such Leasehold
Mortgagee and requesting that OpCo give to such Leasehold Mortgagee a copy of
each notice of default by Lessee at the same time as and whenever any such
notice of default shall thereafter be given by OpCo to Lessee, then OpCo shall
comply with such request by giving such notice, addressed to such Leasehold
Mortgagee at the address last furnished to OpCo. OpCo shall accept performance
by any Leasehold Mortgagee or a purchaser of the leasehold rights of any
covenant, condition or agreement on Lessee's part to be performed hereunder with
the same force and effect as though performed by Lessee, if, at the time of such
performance (or prior thereto), OpCo shall be (or shall have been) furnished
with evidence reasonably satisfactory to OpCo of the interest in this Lease
claimed by the Leasehold Mortgagee tendering such performance.
In case of termination of this Lease by reason of the happening of any
event of default by Lessee, OpCo shall give notice thereof to any Leasehold
Mortgagee who shall have notified OpCo of its name and address pursuant to this
Section 13, which notice shall be addressed to such Leasehold Mortgagee at the
address last furnished to OpCo. If within ninety (90) days after the giving of
such notice, such Leasehold Mortgagee shall pay, or assume the payment of, all
Monthly Rent and additional rent and any and all other sums due and payable by
Lessee hereunder, as of the date of such termination, together with an amount of
money equal to the amount which, but for such termination, would have become due
and payable under this Lease, OpCo shall, upon the written request of such
Leasehold Mortgagee made any time within sixty (60) days from the date of notice
given to the Leasehold Mortgagee of such termination,
-9-
<PAGE>
execute and deliver a new lease of the Premises to such Leasehold Mortgagee for
the remainder of the Term, upon the same terms, covenants, conditions,
limitations and agreements herein contained, including without limitation the
covenants for Monthly Rent and additional rent, but subject to the rights, if
any, of parties then in possession (actual or constructive) of all or any part
of the Premises; provided, however, that such Leasehold Mortgagee shall have
paid to OpCo all Monthly Rent, additional rent and other charges due under this
Lease up to and including the date of the commencement of the term of such new
lease, together with all expenses, including attorneys' fees, incident to the
execution and delivery of such new lease, and that nothing contained herein
shall be deemed to impose any obligation on the part of OpCo to deliver physical
possession of the Premises to such Leasehold Mortgagee.
OpCo agrees, for the benefit of any Leasehold Mortgagee who shall become
entitled to notice as provided in this Section 13, that OpCo will not give or
serve any notice of termination of this Lease upon Lessee pursuant to Section
3.B(1) hereof, if within ninety (90) days after the receipt by such Leasehold
Mortgagee of written notice of the particular event of default by Lessee, such
Leasehold Mortgagee shall have served upon OpCo notice of the intention of such
Leasehold Mortgagee either to acquire Lessee's interest in the Premises by
foreclosure of its Leasehold Mortgage and to effect thereby the removal of
Lessee from the Premises in the case of an event of default by Lessee not
susceptible of being cured by such Leasehold Mortgagee, or to secure the
appointment of a receiver or otherwise obtain possession of the Premises and
cure such default in the case of an event of default by Lessee which requires
entry upon the Premises by such Leasehold Mortgagee in order to cure the same;
provided, however, that such Leasehold Mortgagee shall pay all Monthly Rent and
additional rent then due and shall diligently pursue and prosecute the intention
as expressed in such notice to OpCo, and such notice of intention incorporates
an assumption by such Leasehold Mortgagee of all of the obligations of Lessee
under this Lease susceptible of being performed by such Leasehold Mortgagee
during such forbearance, including, but not limited to, the obligation to pay
all Monthly Rent and additional rent and all other charges then due or to become
due during such forbearance, a covenant by such Leasehold Mortgagee that the net
subrental proceeds collected by any receiver or mortgagee in possession shall
inure to the benefit of and be paid to OpCo unless such Leasehold Mortgagee
cures all such defaults, whereupon all such net subrental proceeds shall be paid
to such Leasehold Mortgagee, and an indemnification by such Leasehold Mortgagee
in favor of OpCo which shall hold OpCo harmless from and against any liability,
loss and expense occasioned by or arising out of such forbearance
notwithstanding any notice to OpCo of discontinuance of proceedings or
relinquishment of possession by such Leasehold Mortgagee.
Notwithstanding anything to the contrary in the immediately preceding
paragraph concerning OpCo's forbearance, OpCo shall not be precluded from
exercising any rights or remedies under this Lease with respect to any other
default by Lessee during any such period of forbearance.
No Leasehold Mortgagee or purchaser at foreclosure shall be entitled to
become the owner of Lessee's interest in this Lease unless such Leasehold
Mortgagee or purchaser shall first have delivered to OpCo an assumption
agreement, executed in recordable form, wherein and whereby such Leasehold
Mortgagee or purchaser (i) assumes the performance of all the terms, covenants
and conditions of this Lease during the period it is the owner of Lessee's
interest in this Lease, and expressly confirms that the same are in full force
and effect, and (ii) agrees to operate the Premises for the use of the Lessee
Radio Facilities.
-10-
<PAGE>
14. Manner of Operation. From and after the date of this Lease, Lessee
-------------------
shall not install new equipment on the Premises if such equipment will or does
cause interference with the operations of OpCo or any Affiliate. In the event
any such interference occurs and does not cease promptly, OpCo shall have the
right, in addition to any other rights or remedies under this Lease or at law or
in equity, to terminate this Lease. Lessee shall conduct its operations on the
Premises in such a manner as not to present a safety or operational hazard to
the Utility Facilities.
15. Insurance. Throughout the Term of this Lease and each Extended Term,
---------
Lessee shall maintain, at its expense, a policy or policies of insurance for
each type of coverage and with the minimum limits stated below:
(1) Worker's Compensation insurance covering the legal liability
of Lessee and its contractors under the applicable worker's
compensation or occupational disease laws of the State or
Federal Government for claims for personal injuries and
death resulting therefrom to Lessee's and its contractors'
employees. Lessee shall also obtain a minimum of
$1,000,000.00 of Employers' Liability insurance.
(2) Commercial General Liability insurance covering the legal
liability (including liability assumed contractually,
whether incidental or not) of Lessee and its contractors who
may be present on the Premises, for claims for personal
injuries (including death) and property damage arising out
of this Lease or any access upon the Premises or the Utility
Facilities by Lessee or its contractors or any work to be
performed by Lessee or its contractors, in an amount no less
than $3,000,000.00 for any one occurrence.
Commercial General Liability insurance shall be obtained
which shall include broad form contractual liability
coverage, products/ completed operations and broad form
property damage (if required), and OpCo shall be named as an
additional insured on such Commercial General Liability
policy regarding liability arising out of operations
performed under this Lease.
(3) Automobile Liability insurance covering the legal liability
(including liability assumed contractually, whether
incidental or not) of Lessee and its contractors who may
access the Premises, for claims for personal injuries and
death resulting therefrom and for property belonging to
others than Lessee caused by highway licensed vehicles of or
used by Lessee or its contractors in an amount not less
than:
$3,000,000.00 for any one person
$3,000,000.00 for bodily injury for any one occurrence
$2,000,000.00 for property damage for any one occurrence
-11-
<PAGE>
Automobile Liability insurance shall provide coverage for
owned, hired or non-owned automobile or other automobile
equipment and OpCo shall be named as an additional insured
on such policy.
(4) Insurance against the risks customarily included under "all-
risks" policies with respect to improved properties similar
to the Premises in an amount equal to the "full insurable
value" (which as used herein shall mean the full replacement
value, including the costs of debris removal, which amount
shall be determined annually) of all improvements. Lessee
shall be entitled to carry a deductible of up to $10,000.00
in connection with said coverage. Lessee hereby further
agrees that, to the extent available, Lessee will obtain an
"agreed amount" endorsement with respect to such insurance
so as to prevent either OpCo or Lessee from becoming a co-
insurer of any loss. During construction, reconstruction,
alteration or material remodeling of any improvements on the
Premises such policies shall be in "builder's risk" form if
there would be an exclusion of coverage under Lessee's all-
risks policy as a result of such construction,
reconstruction, alteration or material remodeling.
Lessee's agreements with its contractors shall require such
contractors to obtain insurance meeting the minimum limits and incorporating the
contractual requirements that are prescribed by this Section 15. Lessee, on
behalf of itself and its contractors, does hereby waive and relinquish any right
of subrogation against OpCo and its agents, representatives, employees, and
affiliates they might possess for any policy of insurance provided under this
Section or under any State or Federal Worker's Compensation, or Employer's
Liability Act.
B. All insurance shall be written by insurers with a Best's rating
of no less than A:VII or equivalent which are authorized to do insurance
business in the state where the Premises are located, shall name OpCo as an
additional insured party as to liability and casualty insurance, shall be
reasonably satisfactory to OpCo in all respects and shall expressly provide that
no cancellation, reduction in amount or material change in coverage thereof
shall be effective until at least thirty (30) days after receipt by OpCo of
written notice thereof. A copy of each policy or of an acceptable certificate of
insurance in force, issued by the insurer, shall be delivered to OpCo on or
before the date Lessee is required to obtain the applicable insurance, and with
respect to renewal or replacement policies, not less than thirty (30) days prior
to expiration of the policy being renewed or replaced.
C. Beginning on the Effective Date and thence annually on January 1
of each year thereafter for every year that this Lease is in force, Lessee shall
submit to OpCo Certificates of Insurance evidencing the coverages prescribed by
this Section 15 and certifying that such policies have been endorsed as required
by this Section 15.
D. The provisions requiring Lessee to carry insurance shall not be
construed as waiving, restricting, or limiting any liability imposed upon Lessee
under this Lease, whether or not the same is covered by insurance. It is the
intent of the parties, however, that to the extent there is in force insurance
coverage available to cover the legal and contractually assumed liability of
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<PAGE>
Lessee, any payments due as a result of such liability shall be made first from
the proceeds of such policies to the extent of the coverage limits.
E. The required certificate and all renewal certificates shall be
delivered to OpCo at the address shown below:
Georgia Power Company
BIN _________
241 Ralph McGill Boulevard, N.E.
Atlanta, GA 30308-3374
Attention: Manager, Power Delivery Contracts
FAX: (404) 526-2992
16. Waiver of Subrogation.
---------------------
A. In the event the Premises are located in Georgia, then, to the
fullest extent permitted under O.C.G.A. Section 13-8-2, OpCo and Lessee hereby
waive any claim each may have against the other or any Affiliate by way of
subrogation or otherwise from any and all liability for any loss or damage to
property, whether caused by the negligence or fault of the other party, to the
extent such loss or damage is covered or required to be covered by the fire and
extended coverage policy or so-called all-risk policy with respect to the
Utility Facilities, Premises or the Lessee Radio Facilities, or any plan of
self-insurance with respect to risks which would be insured against under such
policies, notwithstanding the failure to obtain such policies. Each of OpCo and
Lessee shall cause any fire insurance and extended coverage or so-called all-
risk policies which it maintains in respect of the Utility Facilities, Premises
or the Lessee Radio Facilities, to contain a provision whereby the insurer
waives any rights of subrogation against the other party.
B. The provisions of this Section 16.B shall apply in the event the
Premises are located in Georgia. Except as otherwise provided in Section 16.A of
this Lease, the waivers and indemnities in this Lease in favor of OpCo shall not
apply to damages arising out of bodily injury to persons or damage to property
caused by or resulting from the sole negligence of OpCo, its agents or employees
to the extent O.C.G.A. Section 13-8-2 is applicable thereto. Except as otherwise
provided in Section 16.A, the waivers and indemnities in this Lease in favor of
Lessee shall not apply to damages arising out of bodily injury to persons or
damage to property caused by or resulting from the sole negligence of Lessee,
its agents or employees to the extent O.C.G.A. Section 13-8-2 is applicable
thereto.
C. The provisions of this Section 16.C shall apply in the event the
Premises are not located in Georgia. OpCo and Lessee hereby waive any claim each
may have against the other or any Affiliate by way of subrogation or otherwise
from any and all liability for any loss or damage to property, whether caused by
the negligence or fault of the other party, to the extent such loss or damage is
covered or required to be covered by the fire and extended coverage policy or
so-called all-risk policy with respect to the Utility Facilities, Premises or
the Lessee Radio Facilities, or any plan of self-insurance with respect to risks
which would be insured against under such policies, notwithstanding the failure
to obtain such policies. Each of OpCo and Lessee shall cause any fire insurance
and extended coverage or so-called all-risk policies which it maintains in
respect of the Utility Facilities, Premises or the Lessee Radio Facilities, to
contain a provision whereby the insurer waives any rights of subrogation against
the other party.
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<PAGE>
17. Indemnification. Lessee shall, and does hereby agree to, indemnify,
---------------
save harmless and defend OpCo (its Affiliates and their respective directors,
officers, agents, contractors, servants and employees) from any and all claims,
costs (including but not limited to court costs and attorneys' fees), damages
and liabilities (except as set forth in the next sentence) arising from or out
of or the occupancy or use by Lessee of the Premises or the installation, use,
maintenance, repair or removal of the Lessee Radio Facilities, or occasioned
wholly or in part by any negligent act or omission of Lessee, its agents,
contractors, employees, servants, lessees, licensees or concessionaires. OpCo
shall be solely responsible for, and the indemnity contained in the sentence
immediately preceding this sentence shall not apply to, claims, costs, damages
and liabilities to the extent caused by or resulting from the sole negligence or
wilful misconduct of OpCo, OpCo's officers, agents, servants, employees or
contractors. Each Affiliate of OpCo is an intended third party beneficiary of
this Section 17. OpCo shall, and does hereby agree to, indemnify, save harmless
and defend Lessee and its directors, officers, agents, contractors, servants and
employees from any and all claims, costs (including but not limited to court
costs and attorneys' fees), damages and liabilities (except as set forth in the
next sentence) arising from or out of use by OpCo of the Premises pursuant to
this Lease. Lessee shall be solely responsible for, and the indemnity contained
in the sentence immediately preceding this sentence shall not apply to, claims
costs, damages and liabilities to the extent caused by or resulting from the
sole negligence or wilful misconduct of Lessee, Lessee's officers, agents,
servants, employees or contractors.
18. Events of Default. The following events shall constitute events of
-----------------
default under this Lease:
A. Lessee's failure to pay any installment of rent when the same
shall be due and payable and the continuance of such failure for a period
of five (5) days after receipt by Lessee of notice in writing from OpCo
specifying such failure, provided, however, such notice and such grace
period shall be required to be provided by OpCo and shall be accorded
Lessee, if necessary, only two (2) times during any twelve (12) consecutive
month period of the Term, and a default by Lessee shall be deemed to have
immediately occurred upon the third (3rd) failure by Lessee to make a
timely payment as aforesaid within any twelve (12) consecutive month period
of the Term; or
B. Lessee's failure to perform any of the other covenants,
conditions and agreements herein contained on Lessee's part to be kept or
performed and the continuance of such failure without the curing of same
for a period of thirty (30) days after receipt by Lessee of notice in
writing from OpCo specifying the nature of such failure [but if any such
failure to comply on the part of Lessee would reasonably require more than
thirty (30) days to cure, no event of default shall occur if Lessee
commences curing such failure within the thirty (30) day notice period and
thereafter promptly, effectively and continuously proceeds with the curing
of the failure to comply on the part of Lessee and, in all such events,
cures such failure to comply on the part of Lessee no later than sixty (60)
days after such notice]; or
C. Lessee shall (i) voluntarily be adjudicated a bankrupt or
insolvent, (ii) seek or consent to the appointment of a receiver or trustee
for itself or for any of portion of the Premises or the Lessee Radio
Facilities, (iii) file a petition seeking relief under the bankruptcy or
other similar laws of the United States, any state or any jurisdiction,
(iv)
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<PAGE>
make a general assignment for the benefit of creditors, or (v) be unable to
pay its debts as they mature; or
D. All or any portion of this Lease or Lessee's interest herein or
Lessee's interest in the Premises or in the Lessee Radio Facilities is
executed upon or attached; or
E. Any attempt by Lessee to make any sale, assignment, mortgage,
pledge, hypothecation or other transfer of all or any portion of this Lease
or any interest of Lessee hereunder or in the Premises or to sublet the
Premises or any portion thereof without full compliance with any and all
requirements therefor set forth in this Lease.
19. Remedies. Upon the occurrence of an event of default, at OpCo's
--------
option:
A. OpCo may terminate this Lease by written notice to Lessee, in
which event Lessee shall remove the Lessee Radio Facilities within five (5)
days after OpCo's termination notice (and Lessee shall repair, at its sole
cost and expense, any damage to the Premises or to any improvements caused
by such removal) and shall surrender the Premises within such five (5) day
period, and if Lessee fails to remove the Lessee Radio Facilities or to
surrender the Premises within such time period, OpCo may, without prejudice
to any other right or remedy which OpCo may have, enter upon and take
possession of the Premises (by force, summary proceedings, ejectment or
otherwise) and remove Lessee and the Lessee Radio Facilities without being
liable for prosecution or any claim for damages therefor, and Lessee hereby
waives its rights to any legal proceedings in connection with such reentry.
B. OpCo may enter upon and take possession of the Premises without
termination of this Lease, and remove Lessee by force, summary proceedings,
ejectment or otherwise, without being liable for prosecution or any claim
for damages therefor, and Lessee hereby waives its rights to any legal
proceedings in connection with such reentry. If OpCo elects, OpCo may take
such action as is necessary to relet the Premises and may so relet the
Premises at such rent and upon such terms and conditions as OpCo may deem
advisable and receive the rent therefor. Upon such reletting, all rentals
received by OpCo from such reletting shall be applied first to the payment
of any expenses of such reletting, including but not limited to brokerage
fees and attorneys' fees and the costs of alterations and repairs, second
to the payment of rental and other charges due and unpaid hereunder, and
the residue, if any, shall be held by OpCo and applied against future rent
and other charges as the same may become due and payable under this Lease.
Lessee shall pay to OpCo, on demand, any deficiency that may from time to
time arise by reason of such reletting and OpCo hereby reserves the right
to bring an action or proceeding for the recovery of any such deficits.
C. Upon any termination of this Lease under this Section 19, whether
by lapse of time or otherwise, OpCo shall be entitled to recover as
damages, all rent, including all abated rent, if any, and any amounts
treated as additional rent under this Lease, and other sums due and payable
by Lessee on the date of termination, plus as liquidated damages and not as
a penalty, an amount equal to the sum of: (a) an amount equal to the then
present value (using a discount rate of 8%) of the rent reserved in this
Lease for the residue of the stated Term of this Lease including any
amounts treated as additional rent under this Lease
-15-
<PAGE>
and all other sums provided in this Lease to be paid by Lessee, minus the
fair rental value of the Premises for such residue; (b) the value of the
time and expense necessary to obtain a replacement tenant or tenants, and
the estimated expenses relating to recovery of the Premises, preparation
for reletting and for reletting itself; and (c) the cost of performing any
other covenants which would have otherwise been performed by Lessee.
20. Environmental. Lessee covenants that Lessee, its agents, contractors,
-------------
employees, servants, lessees, licensees or concessionaires ("Lessee's Users")
will not generate, store, use, treat, release or dispose of any Hazardous
Substances (as hereinafter defined) in, on, under or at the Premises, except for
the storage and use of such Hazardous Substances as are commonly legally used or
stored and in such quantities as are commonly legally used or stored as a
consequence of using the Premises for the purposes permitted hereunder, but only
so long as the use or storage of such substances does not pose a threat to
public health or to the environment and would not necessitate any governmental
regulation, including but not limited to permitting, notification, reporting, or
response or remedial action, under applicable environmental laws. Additionally,
Lessee's Users will not use the Premises as either a permanent or temporary dump
site for any Hazardous Substances. Lessee shall indemnify and hold harmless
OpCo (its Affiliates and their respective directors, officers, agents and
employees) from and against any and all losses, fines, penalties, liabilities,
strict liability, damages, injuries, expenses, response or remedial costs,
reasonable engineer's, expert's and attorneys' fees and laboratory costs, costs
of any settlement or judgment and claims of any and every kind whatsoever paid,
incurred or suffered by, or asserted against, OpCo (its Affiliates or their
respective directors, officers, agents or employees) by any person or entity or
governmental agency for, with respect to, or as a direct or indirect result of,
the breach of the foregoing covenants or any violation by Lessee's Users of any
environmental laws related to the generation, storage, use, treatment, disposal,
release or threatened release of Hazardous Substances. "Hazardous Substances"
shall mean any material, constituent, substance or waste currently, or at any
time in the future, defined as, classified as or considered toxic, hazardous,
infectious or radioactive by any governmental agency or under applicable
federal, state or local law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, constituent, substance or
material, as now or at any time hereafter in effect, including but not limited
to listed or characteristic hazardous wastes under the Resource Conservation and
Recovery Act, as amended, hazardous substances as defined in Section 101(14) of
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, hazardous substances as defined under the Georgia Hazardous Site
Response Act, [INSERT APPLICABLE REFERENCE FOR ALABAMA, FLORIDA, MISSISSIPPI]
asbestos, and asbestos containing material. The provisions of this Section 20
shall survive cancellation, termination or expiration of this Lease.
21. Taxes. Lessee shall pay and discharge punctually, as and when the same
-----
shall become due and payable, all taxes and other governmental impositions and
charges of every kind and nature whatsoever, extraordinary as well as ordinary
which shall or may during the term of this Lease be charged, levied, laid,
assessed, imposed, become due and payable, or liens upon or for or with respect
to the Premises or any part thereof, or any improvements, buildings,
appurtenances or equipment (including without limitation the Lessee Radio
Facilities) owned by Lessee thereon or therein or any part thereof, together
with all interest and penalties thereon, under or by virtue of all present or
future laws, ordinances, requirements, orders, directives, rules or regulations
of the federal, state and county governments and of all other governmental
authorities whatsoever. If
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<PAGE>
personal property taxes are assessed against the Lessee Radio Facilities, Lessee
shall pay such taxes as are directly attributable to the Lessee Radio
Facilities.
22. Disclaimer of Warranties. OPCO MAKES NO WARRANTIES OF ANY KIND WITH
------------------------
RESPECT TO THE CONDITION OR SUITABILITY OF THE PREMISES FOR THE PURPOSES
INTENDED BY LESSEE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL EXPRESS, IMPLIED OR STATUTORY
WARRANTIES ARE HEREBY DISCLAIMED. NO WARRANTIES ARE MADE OR SHALL BE IMPLIED BY
VIRTUE OF APPROVAL BY OPCO OF ANY ENGINEERING ANALYSIS, DRAWINGS, SITE PLANS,
WORK, INSTALLATIONS, PLANNED CONSTRUCTION OR FINAL CONSTRUCTION. LESSEE HAS MADE
OR SHALL MAKE SUCH INSPECTIONS OF THE PREMISES AS LESSEE DEEMS APPROPRIATE PRIOR
TO ENTERING INTO THIS LEASE OR INSTALLING OR USING ANY OF LESSEE'S RADIO
FACILITIES THEREON OR THEREIN, AND LESSEE EXPRESSLY ACCEPTS THE PREMISES WITHOUT
WARRANTY OF ANY KIND OR NATURE. OPCO DOES NOT REPRESENT OR WARRANT THAT OPCO OR
ANY OF ITS AFFILIATES HOLDS TITLE OF ANY KIND TO THE PREMISES OR ANY FACILITIES
OR IMPROVEMENTS CURRENTLY LOCATED THEREON. Lessee shall obtain at its sole
expense any and all licenses, permits, and other approvals that may be required
for Lessee's use of the Premises and, including, without limitation, any permits
or approvals from other persons claiming an interest in the Premises.
23. Notices. All notices, demands, requests, consents, and approvals
-------
desired, necessary, required or permitted to be given pursuant to the terms of
this Lease shall be in writing and shall be deemed to have been properly given
if personally delivered (including delivery by courier or by Federal Express or
similar overnight delivery service) or sent, postage prepaid, by first class
registered or certified United States mail, return receipt requested, addressed
to each Party at the following address:
To OpCo:
Georgia Power Company
BIN ___________
241 Ralph McGill Boulevard, N.E.
Atlanta, GA 30308-3374
Attention: Manager, Power Delivery Contracts
with an additional copy (which shall not constitute notice) to:
Troutman Sanders
5200 NationsBank Plaza
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Jeffrey F. Hetsko, Esq.
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<PAGE>
To Lessee:
____________________________
____________________________
____________________________
____________________________
with an additional copy (which shall not constitute notice) to:
____________________________
____________________________
____________________________
____________________________
or at such other address in the United States as OpCo or Lessee may from time to
time designate by like notice. Any such notice, demand, request or other
communication shall be considered given or delivered, as the case may be, on the
date of personal delivery or on the date of deposit in the United States mail as
provided above. Rejection or other refusal to accept or inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice, demand, request or other communication.
24. No Liability for Consequential Damages. NEITHER PARTY SHALL BE LIABLE
--------------------------------------
TO THE OTHER PARTY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY KIND
WHATSOEVER, INCLUDING BUT NOT LIMITED TO LOST PROFITS, REGARDLESS OF WHETHER OR
NOT SUCH PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH CONSEQUENTIAL OR
INCIDENTAL DAMAGES OR LOST PROFITS.
25. Severability. In the event any one or more of the provisions contained
------------
in this Lease shall for any reason be held to be invalid, illegal or
unenforceable in any respect, by a court of last resort having jurisdiction in
the Premises, the validity of the remainder of this Lease shall not be affected,
this Lease shall not terminate, and there shall be substituted for such illegal,
invalid or unenforceable provision a like provision which is legal, valid and
enforceable within the limits established by such court's final opinion and
which most nearly accomplishes and reflects the original intention of the
Parties.
26. Entire Agreement. This Lease constitutes the full and complete
----------------
agreement between the Parties and the Parties shall not be bound by any
statement, special condition or agreements not herein expressed. Any alteration
or amendment to this Lease by the Parties shall be in writing, executed by the
Parties and by reference incorporated into this Lease.
27. Governing Law. This Lease shall be governed by the laws of the state
-------------
where the Premises are located.
28. Casualty. In the event that, at any time during the Term, the Lessee
--------
Radio Facilities shall be destroyed or damaged in whole or in part then Lessee
shall, at Lessee's sole cost and expense, cause the same to be repaired,
replaced or rebuilt. Lessee shall commence such repair, replacement or
rebuilding within sixty (60) days after the date of such damage or destruction
and shall thereafter diligently and continuously prosecute such repair,
replacement or rebuilding to
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<PAGE>
completion. In the event the Lessee Radio Facilities are destroyed or damaged in
whole or in part at any time during the last year of the Term of this Lease to
the extent that, in Lessee's reasonable discretion, the Lessee Radio Facilities
are not usable in their damaged condition for the conduct of Lessee's business,
Lessee may, upon written notice to OpCo, terminate this Lease as of the date set
forth in such notice [which shall be not less than ten (10) days after the date
of such notice] and all rentals and other sums shall be accounted for between
OpCo and Lessee as of such date, and Lessee shall immediately remove the Lessee
Radio Facilities; provided, however, that Lessee shall repair, at its sole cost
and expense, any damage to the Premises or to any improvements caused by such
removal. In the event Lessee has not commenced such repair, replacement or
rebuilding within sixty (60) days after the date of such damage or destruction,
OpCo may, upon written notice to Lessee prior to commencement of such repair,
replacement or rebuilding, terminate this Lease as of the date sixty (60) days
after such damage or destruction. In the event Lessee fails to complete such
repair, replacement or rebuilding within one hundred twenty (120) days after the
date of such damage or destruction, OpCo may, upon written notice to Lessee
prior to completion of such repair, replacement or rebuilding, terminate this
Lease as of the date one hundred twenty (120) days after such damage or
destruction, and all rentals and other sums shall be accounted for between OpCo
and Lessee as of such date.
29. Condemnation. If the whole of the Premises, or such portion of the
------------
Premises as will make the Premises unusable for Lessee's use, in OpCo's
reasonable discretion, or if the whole of the Premises, or such portion thereof
as will make the Premises unusable for the purposes herein leased, is condemned
by any legally constituted authority, or conveyed to such authority in lieu of
such condemnation, then in any of said events, the term of this Lease shall end
on the date when possession thereof is taken by the condemning authority, and
rental shall be accounted for between OpCo and Lessee as of such date. In the
event any portion of the Premises is taken by condemnation or a conveyance in
lieu thereof (other than as set forth in the preceding sentence), at Lessee's
option, Lessee may (i) terminate this Lease, or (ii) elect to continue this
Lease. Nothing herein shall be construed to preclude Lessee from prosecuting
any claim directly against the condemning authority for moving expenses, loss of
goodwill, loss of business, and for the unamortized cost of the Lessee Radio
Facilities, provided, however, that no such claim shall diminish or adversely
affect OpCo's award. In no event shall Lessee have or assert a claim for the
value of any unexpired portion of the Term. Subject to the foregoing provisions
of this Section 29, Lessee hereby assigns to OpCo any and all of Lessee's right,
title and interest in or to any compensation awarded or paid as a result of any
such taking.
30. Subordination. Lessee's rights hereunder shall be subject to any
-------------
mortgage, indenture or deed to secure debt which is now, or may hereafter be,
placed upon the Premises by OpCo or any Affiliate of OpCo.
31. Time of the Essence. Time is of the essence of this Lease. No remedy
-------------------
conferred upon or reserved to OpCo in this Lease, at law or in equity is
intended to be exclusive of any other available remedies, but each and every
remedy shall be cumulative and shall be in addition to every other remedy given
in this Lease or now or hereafter existing in law or in equity.
32. Confidentiality. This Lease contains confidential information of OpCo,
---------------
and Lessee covenants and agrees not to divulge the contents of this Lease to
anyone without the prior written consent of OpCo, except as may be required by
statute, court order or other legal process. No public announcement (excluding
disclosures required by law to be made) shall be made by
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<PAGE>
Lessee with regard to this Lease or its terms without the prior written consent
of OpCo. Lessee and OpCo hereby agree that this Lease shall not be recorded in
any public records. Upon request of either Party, the other Party shall execute
a Short Form of Lease containing a legal description of the Premises and the
term, and available extensions, setting forth that Lessee has a leasehold
interest pursuant to the Lease and a description of the non-interference
provisions contained herein. Any and all recording costs and taxes, if any,
required in connection with the recording of the Short Form of Lease shall be at
the sole cost and expense of Lessee.
33. Forum for Litigation. In the event that litigation is required in
--------------------
order to resolve any dispute or disagreement connected with this Lease, it is
agreed by and between the Parties hereto that venue and jurisdiction for any
such litigation shall be, unless otherwise required by law, in Fulton County,
Georgia, if the Premises are in Georgia, in Jefferson County, Alabama, if the
Premises are in Alabama, in ________ County, Florida, if the Premises are in
Florida, and in ________ County, Mississippi, if the Premises are in
Mississippi.
34. Headings. The headings in this Lease are included for convenience only
--------
and shall not be taken into consideration in any construction or interpretation
of all or any part of this Lease.
35. Execution. This Lease may be executed in one or more counterparts,
---------
each of which shall be deemed to be an original, but all of which together shall
constitute the same Lease. Any signature page of any such counterpart may be
attached or appended to any other counterpart to complete a fully executed
counterpart of this Lease.
36. Representations and Warranties of the Parties. Each Party hereto
---------------------------------------------
hereby represents and warrants to the other Party hereto the following:
A. Such Party is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to enter into and perform its obligations under
this Lease.
B. This Lease has been duly authorized by all necessary corporate
action on the part of such Party, has been duly executed and delivered by a duly
authorized officer of such Party and constitutes the legal, valid and binding
obligation of such Party enforceable in accordance with its terms, except to the
extent such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, and similar laws affecting creditors' rights generally and
except to the extent that remedies may be limited by applicable principles of
equity.
37. OpCo Facilities, Reserved Rights and Third Party Facilities & Rights.
--------------------------------------------------------------------
"OpCo Facilities" shall mean any and all equipment buildings, equipment, systems
or facilities (other than the existing tower) used for or in connection with
wireless communications (including without limitation radio and microwave
communications), including without limitation, transmitters, receivers,
antennae, multiple address system radios or power line carrier equipment,
conduit, waveguides, fixtures, appliances, communications lines, wire, cable and
equipment, and any other physical connections between OpCo's antennae and OpCo's
equipment (such as but not limited to transmitters and receivers), any building
housing all or any portion thereof, and any permits, licenses or leases relating
to any one or more of the foregoing. "Reserved Rights" shall mean the
reservation by OpCo, unto itself, its successors and assigns, for the benefit of
OpCo, its successors, assigns and such others (such as but not limited to OpCo's
agents,
-20-
<PAGE>
contractors, subcontractors, licensees and permittees) as OpCo shall from time
to time designate, the rights, interests and easements from time to time and at
any time, upon, over, across and under the Premises (i) to construct, install,
use, patrol, obtain access to, operate, maintain, repair, inspect, renew,
rebuild, reconstruct, replace, improve, upgrade, enhance and add onto the OpCo
Facilities and (ii) to install, operate, use, obtain access to, repair, inspect,
renew, rebuild and maintain necessary and appropriate lines and facilities for
the provision of utilities (including but not limited to electricity and data
communications) to the OpCo Facilities provided that such activity will not
unreasonably interfere with Lessee's use of the Lessee Radio Facilities. "Third
Party Facilities & Rights" shall mean the rights and interests of the third
parties (the "Third Parties"), if any, specified on Schedule 3.1 attached hereto
------------
and by reference made a part hereof, under or pursuant to a license, lease or
other agreement in effect on the date hereof, in and to any and all equipment
buildings, equipment, systems or facilities (including but not limited to
electric and phone or other data communication lines) located on or used in
connection with the existing tower (including without limitation any
improvements or additions thereto or replacements or substitutions therefor) or
used for or in connection with wireless communications (including but not
limited to radio and microwave communications), including without limitation,
transmitters, receivers, antennae, multiple address system radios or power line
carrier equipment, conduit, waveguides, fixtures, appliances, communications
lines, wire, cable and equipment, and any other physical connections between the
antennae and equipment of such Third Parties (such as but not limited to
transmitters and receivers), any building or buildings housing all or any
portion thereof, and any permits, licenses or leases relating to any one or more
of the foregoing.
38. Safety.
------
A. Compliance with NESC and Georgia Power Company Standards. All Lessee
--------------------------------------------------------
Radio Facilities installed on the Premises shall at all times be installed and
maintained in accordance with:
(i) the applicable requirements and specifications of the National
Electrical Safety Code ("NESC"), as revised;
(ii) Any safety procedures and requirements from time to time
specified by OpCo; and
(iii) all rules and orders now in effect or hereafter issued by any
federal, state or local governmental authority having jurisdiction.
All Work shall be performed by Lessee in a workmanlike manner in accordance with
accepted construction practices and conforming to national, state and local
codes, and conforming to the existing site construction standards and in such a
manner as not to present a safety or operational hazard to the Utility
Facilities. Lessee shall use contractors in possession of all licenses
necessary to perform the Work and use adequate numbers of skilled and, as
applicable, licensed workmen who are thoroughly trained and experienced in the
necessary crafts, and who are completely familiar with the specified
requirements and methods needed for proper performance of the work. "Work"
shall include any and all construction to install the Lessee Radio Facilities,
or any additional facilities or equipment, or the construction required under
Section 1.D.(4), and any repair, replacement, maintenance or modification
thereto.
-21-
<PAGE>
B. High Voltage Safety Act. Lessee hereby agrees and covenants not to
-----------------------
use, and will prohibit agents, employees and contractors of Lessee from using,
any tools, equipment or machinery within twenty (20) feet of OpCo's overhead
conductors or energized substation equipment located on or in the vicinity of
the Premises. The following provisions of this Section 38.B shall apply in the
event the Premises are in Georgia. All work required in connection with the
installation, presence, rearrangement, transfer, maintenance, replacement,
repair or removal of the Lessee Radio Facilities or otherwise within twenty (20)
feet of OpCo's overhead conductors or energized substation equipment shall be
performed in strict compliance with all applicable provisions of the High
Voltage Safety Act, O.C.G.A. (S)(S) 46-3-30 et seq. (HIGH VOLTAGE SAFETY ACT),
and the Rules and Regulations of the State of Georgia Section 300-3-7.01 et seq.
This Lease is not a "joint use contract" as such term is employed in O.C.G.A.
(S) 46-3-37(c). Lessee further agrees to notify any contractors that may be
employed by Lessee of the existence of said code sections and regulations, and
to require that all work be performed in compliance with said code sections and
regulations by including same as a requirement in any contract let as a result
of said bid.
C. Warnings to Employees and Contractors. Lessee shall specifically and
-------------------------------------
adequately warn each and every employee of Lessee and Lessee's contractors and
agents of the danger inherent in making contact with OpCo's electric facilities
or of coming closer to same than permitted by the NESC, by Occupational Safety
and Health Administration regulations, or by prudent engineering and
construction practices, before such employee is permitted to perform any work on
or near any OpCo electric facilities. LESSEE FURTHER AGREES AND COVENANTS TO
WARN ALL PERSONS WHOM LESSEE KNOWS OR SHOULD REASONABLY ANTICIPATE FOR ANY
REASON MAY RESORT TO THE VICINITY OF SUCH ELECTRICAL FACILITIES OF THE FACT THAT
SUCH ELECTRICAL FACILITIES ARE:
(1) ELECTRIC FACILITIES,
(2) ENERGIZED,
(3) UNINSULATED, AND
(4) DANGEROUS.
D. Use of Competent Employees. Lessee specifically represents and
--------------------------
warrants that it shall permit, and shall require its agents and contractors to
permit, only individuals who are appropriately trained and experienced to work
in the vicinity of energized electric facilities to install or maintain any
Lessee Radio Facilities near, on or upon OpCo electric facilities or to perform
any other work in the vicinity of any OpCo electric facilities.
E. Use of Approved Contractors. Except for work performed for Lessee by
---------------------------
OpCo, Lessee shall perform all work on the Premises by contracting with
contractors who are duly qualified to work in the immediate vicinity of
energized electric facilities.
THE APPROVAL BY OPCO OF ANY CONTRACTOR SHALL IN NO WAY IMPLY ANY REPRESENTATION
OR WARRANTY BY OPCO CONCERNING SUCH CONTRACTOR OR ANY WORK PERFORMED OR TO BE
PERFORMED BY SUCH CONTRACTOR OR
-22-
<PAGE>
IMPUTE TO OPCO ANY LIABILITY FOR ANY ACTION OR INACTION OF ANY SUCH CONTRACTOR.
39. Additional Provisions. In addition to the terms and conditions set
---------------------
forth in the body of this Lease, this Lease and Lessee's rights hereunder shall
be subject to the Additional Terms and Conditions set forth in Schedule "3"
------------
attached hereto and by reference made a part hereof. In the event of a conflict
between a term, condition or provision set forth in the body of this Lease and a
term, condition or provision set forth in Schedule "3", the term, condition or
------------
provision set forth in Schedule "3" shall prevail.
------------
40. (a) Option to Convey by OpCo. OpCo may, at any time, sell to Lessee
------------------------
the Premises upon the terms and conditions set forth in this Paragraph 40. For
the purposes of this Paragraph 40, the term "Premises" shall include any
easements benefiting the Premises.
(b) Exercise. OpCo may give notice to Lessee of OpCo's desire to
--------
convey the fee interest in the Premises to Lessee (the "Put Notice"), at any
time. The Closing (as that term is hereinafter defined) shall occur within
sixty (60) business days after the Put Notice is given; provided, however, if
the Closing does not occur because of the default of OpCo or the failure of a
condition precedent, the Lease shall continue in force and effect, until such
Closing occurs.
(c) Purchase Price. The purchase price (the "Purchase Price") of the
--------------
Premises to be paid in cash by Lessee at Closing shall be the "Market Value", as
herein defined.
(e) Studies. Between the date on which OpCo gives the Put Notice and
-------
the date of Closing, Lessee and the agents and contractors of Lessee shall have
the right to enter upon the Premises to survey and inspect the Premises and to
conduct soil, environmental engineering and other tests and studies, all at the
expense of Lessee. Lessee hereby indemnifies and holds OpCo harmless from and
against any and all liens, personal injury or death of any person or any
Premises damage in any way caused by or arising out of the exercise by Lessee of
its inspection rights under this subsection (e).
(f) Conditions Precedent. The obligation of Lessee to proceed with
--------------------
Closing is subject to the following conditions precedent:
(i) Lessee shall have the right, after the Put Notice is given,
to cause the title to the Premises to be examined, and to cause a current
and accurate survey to the performed, and to give to OpCo written notice of
any exceptions or defects to the title to the Premises other than (a)
Premises taxes not then due and payable, (b) utility easements serving the
Premises, (c) any encumbrances which do not adversely affect Lessee's
ability to use the Premises for its then current use, and (d) any leases,
rental agreements or other rights of occupancy (collectively, "Adjoining
Leases") affecting the Premises (collectively, the "Permitted
Encumbrances"). The Premises shall not be subject to any mortgage, deed to
secure debt, security agreement, judgment, lien or claim of lien or any
other title exception that is monetary in nature (a "Monetary Lien"),
unless such instrument is subordinate to the Put Option such that, upon
payment of the Purchase Price, the lien of such instrument shall be
released, or is less than the Purchase Price and shall therefore be
released and paid in full from the proceeds of Closing, or unless such
instrument is the "Indenture" (collectively, the "OpCo Defects").
"Indenture" shall mean that certain Indenture dated as of March 1,
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<PAGE>
1941, as amended and supplemented (hereinafter called the "Indenture"),
executed by OpCo to The New York Trust Company, as Trustee (on September 8,
1959, The New York Trust Company merged into Chemical Corn Exchange Bank,
the name of which became Chemical Bank New York Trust Company at the time
of said merger, and said Chemical Bank New York Trust Company merged into
Chemical Bank on February 17, 1969, and said Chemical Bank merged into The
Chase Manhattan Bank on July 15, 1996) or of any substitute or replacement
thereof, if any. OpCo shall have the lien of the Indenture released from
the Premises within one hundred and eighty (180) days after the date of
Closing. [INSERT APPLICABLE REFERENCE FOR ALABAMA, FLORIDA, MISSISSIPPI]
Lessee shall not be obligated to proceed with Closing unless Lessee is able
to obtain at Closing an owner's title insurance policy ("Title Policy"),
issued by a national title insurance company ("Title Company") acceptable
to Lessee, insuring Lessee in the amount of the Purchase Price, covering
the Premises, on ALTA Form 1992-B, without exception other than the
Permitted Encumbrances.
(ii) At the time of Closing, the Premises must be in
substantially the same condition as on the date on which the Put Notice is
given.
(iii) At the time of Closing, the Premises must not be subject to
any pending or threatened condemnation or other taking, whether permanent
or temporary, pursuant to the power of eminent domain (collectively, a
"Taking"), unless OpCo, as a condition of Closing, assigns to Lessee any
and all rights, interests and proceeds in or payable to OpCo with respect
to the Premises arising out of such Taking; provided, however, that if such
condemnation or other taking would have a material impact on the Premises
or Lessee's use thereof, then Lessee may, at its option and in its sole
discretion, elect not to proceed with the Closing, such election to be made
by notice given to OpCo within ten (10) days after Lessee has notice of
such Taking. For the purposes of this paragraph, a Taking shall
conclusively be deemed to be material if (i) it takes any portion of the
Premises, or (ii) causes the Premises to violate any applicable zoning
laws;
If any of the conditions precedent of the obligations of Lessee set forth in
this subsection are not fully satisfied as of the time of Closing, Lessee shall
not be obligated to proceed with Closing; provided, however, that Lessee shall
have the right and option, in its discretion, to waive any one or more of the
conditions precedent contained in this subsection. Lessee acknowledges and
agrees that Lessee's remedy for a failure of any of the aforesaid conditions
precedent shall be not to proceed with Closing, and that OpCo shall have no
liability in connection with the failure of any such conditions, unless such
failure arises out of any action taken willfully by OpCo to create the failure
of the condition precedent.
(g) Closing. The closing ("Closing") of the sale of the Premises
-------
contemplated hereby shall be held at the offices of OpCo, during regular
business hours on or before the date which is the final day allowable for
Closing in accordance with subsection (b) of this Article. The exact time and
date of Closing shall be selected by Lessee by written notice given to OpCo at
least ten (10) days prior to the date so specified.
(h) Closing Documents. At Closing, OpCo shall execute and deliver at
-----------------
Closing the following:
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<PAGE>
(i) A Limited Warranty Deed conveying the Premises, which shall
be subject only to the matters of record as of the date of conveyance, but
not subject to Monetary Liens other than the Indenture (subject to OpCo's
obligation to obtain a release of the Indenture within one hundred eighty
days after Closing). OpCo will cause any OpCo Defects other than the
Indenture to be satisfied and released as of the time of Closing;
(ii) Such reasonable evidence of authority and existence of OpCo
as may be required by the Title Company to enable Lessee to obtain the
Title Policy;
(iii) A certificate and affidavit of non-foreign status;
(iv) An affidavit of ownership, in a form which will enable the
Title Company to delete from the Title Policy the standard exceptions for
rights of parties in possession and matters not appearing in the public
records;
Seller shall pay any applicable transfer tax. Purchaser shall pay all title
insurance costs, survey costs and other costs incurred by Lessee. Each of OpCo
and Lessee shall pay their own attorneys' fees. Ad valorem taxes assessed
against the Premises for the year in which the Closing occurs, rents, utility
and other operating expenses shall be prorated as of the day of Closing.
(i) "As-Is". At Closing, the Premises shall be conveyed to Lessee in
-------
an "as is" condition, without warranty except as set forth in the Limited
Warranty Deed of any kind and this Lease shall automatically terminate.
(j) Casualty and Taking. If after the Put Notice is given and prior
-------------------
to Closing, the Premises are totally damaged or destroyed to an extent which
exceeds fifty percent (50%) of the Purchase Price, or a Taking occurs which
affects all or any part of the Premises, Lessee shall have the right and option,
as its exclusive remedies, either to elect not to purchase the Premises or to
accept conveyance of the Premises subject to such casualty or taking and receive
at the Closing an assignment without recourse of all right, title and interest
of OpCo to receive available insurance or condemnation proceeds (provided that
OpCo shall, at no cost to OpCo, cooperate with Lessee in collecting such
insurance proceeds or condemnation proceeds, as applicable); such option of
Lessee shall be exercised by a written notice given to OpCo within thirty (30)
calendar days after occurrence of the casualty or Taking, as applicable. If
Lessee elects not to purchase pursuant to the subsection (i), this Lease shall
not terminate and the occurrence of such casualty or Taking shall then be
- ---
governed by the applicable provisions of this Lease.
(k) No Brokers. OpCo and Lessee each warrant and represent to the
----------
other that neither has employed or otherwise engaged a real estate broker or
agent in connection with the sale pursuant to the Put Option. OpCo and Lessee
covenant and agree, each to the other, to indemnify the other against any loss,
liability, costs (including reasonable attorneys' fees actually incurred),
claims, demands, causes of action and suits arising out of the alleged
employment or engagement by the indemnifying party of any real estate broker or
agent in connection with the Purchase Option. The indemnities contained in this
subsection (k) shall survive Closing and any termination of this Lease.
(l) Market Value. The "Market Value" of the Premises shall be the
------------
fair market value of the Premises, taking into account the size, location, use,
entitlements,
-25-
<PAGE>
encumbrances, funds derived from payments by third-parties for the use thereof,
and any and all other relevant factors used to reasonably ascertain the value of
Premises and Premises thereon. OpCo shall, with the Put Notice, set forth its
assessment of the Market Value. Lessee shall have fifteen (15) days to accept or
reject such determination of Market Value. If Lessee rejects such offer within
the fifteen (15) day period, Lessee may notify OpCo in writing of its intention
to submit the issue of Market Value to arbitration and of the name of the
arbitrator selected by Lessee. If Lessee fails to give such notice of its desire
to arbitrate within said fifteen (15) day period, then Lessee shall have elected
to purchase at OpCo's initial offer of the Market Value. Within ten (10) days
after receipt of such notice by OpCo from Lessee, OpCo shall notify Lessee of
the arbitrator selected by OpCo. Within ten (10) days after the appointment of
OpCo's arbitrator, the arbitrators so appointed shall jointly appoint a third
arbitrator. If such arbitrators are unable to select a third arbitrator within
ten (10) days after the appointment of OpCo's arbitrator, then OpCo or Lessee,
or both, shall immediately by petition to the Presiding Judge of the Superior
Court of __________ County, _____________, request the appointment of five (5)
persons, each of whom shall be qualified to serve as a third arbitrator, and
none of whom shall have any interest in or be in any way affiliated with or
related to either OpCo or Lessee as an officer, employee or agent of OpCo or
Lessee or a relative of any officer, agent or employee of OpCo or Lessee. From
the five (5) persons so appointed, OpCo and Lessee shall, within ten (10) days
after such appointment, alternatively strike two names each, Lessee striking one
name first. The remaining person shall act as the third arbitrator. If either
OpCo or Lessee shall fail or refuse to appoint an arbitrator within the time
provided, then the other party shall petition the then Presiding Judge of the
Superior Court of ____________ County, _____________ to appoint an arbitrator
for such party and any arbitrator so appointed shall be considered as having
been appointed by the party so failing or refusing to appoint an arbitrator. If
either party shall fail or refuse within the time provided to strike from the
list of the five (5) persons appointed by the Presiding Judge of the Superior
Court of __________ County, then the other party shall proceed to select the
third arbitrator from said list. Notwithstanding anything to the contrary set
forth in this paragraph, each of the arbitrators selected shall be qualified
arbitrators and experienced in the type of issues to be arbitrated.
After a third arbitrator has been appointed in accordance with
the foregoing paragraph, the arbitrators shall hold such meetings as either OpCo
or Lessee, or both, may reasonably request and at such meetings hear and
consider any evidence which either OpCo or Lessee, or both, desire to present.
Within twenty (20) days after the appointment of the third arbitrator, the
arbitrators shall make their final determination deciding the issue of Market
Value.
The determination made by the arbitrator as to the Market Value
shall be in writing and signed by at least two arbitrators and shall be binding
upon OpCo and Lessee.
OpCo shall pay the fees and expenses of the arbitrator selected
by OpCo and Lessee shall pay the fees and expenses of the arbitrator selected by
Lessee. The fees and expenses of the third arbitrator, together with any
expenses of the arbitration proceeding itself, shall be divided equally between
OpCo and Lessee.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed, or caused their
respective duly authorized representatives to execute, this Lease under seal as
of the day and year first above written.
Lessee:
__________________________________
__________________________________
By:_______________________________
Name:_____________________________
(Printed or Typed)
Its:______________________________
(Title)
Attest:___________________________
Name:_____________________________
(Printed or Typed)
Its:______________________________
(Title)
(AFFIX CORPORATE SEAL)
[Signatures Continued From Previous Page]
OPCO:
GEORGIA POWER COMPANY
By:_______________________________
Name: Wayne T. Dahlke
(Printed or Typed)
Its: Senior Vice President, Power Delivery
(Title)
Attest:___________________________
Name:
(Printed or Typed)
Its:
(Title)
(AFFIX CORPORATE SEAL)
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<PAGE>
Schedule "1"
Description of Premises
<PAGE>
Schedule "2"
Description of the Lessee Radio Facilities
<PAGE>
Schedule "3"
Additional Terms and Conditions
1. [ADDITIONAL PROVISION WHERE OPCO TOWER ON SAME SITE AT SOUTHERN
COMMUNICATIONS TOWER AND ASSUMES THAT NO OPCO FACILITIES ARE LOCATED ON SOUTHERN
COMMUNICATIONS TOWER] Section 37 of the Lease is hereby modified in its
entirety to read as follows:
37. OpCo Facilities, Reserved Rights and Third Party Facilities &
-------------------------------------------------------------
Rights. "OpCo Facilities" shall mean the tower designated "OpCo" on
------
Schedule 1-A attached hereto and by reference made a part hereof (the "OpCo
------------
Tower"), and all guy wires, supports, ground fields and other related
equipment and installations associated therewith, and any improvements or
additions thereto and any replacements or substitutions therefor, together
with any and all equipment buildings, equipment, systems or facilities
(including but not limited to electric and phone or other data
communication lines) located on or used in connection with the OpCo Tower
or used for or in connection with wireless communications (including but
not limited to radio and microwave communications), including without
limitation, transmitters, receivers, antennae, multiple address system
radios or power line carrier equipment, conduit, waveguides, fixtures,
appliances, communications lines, wire, cable and equipment, and any other
physical connections between OpCo's antennae and OpCo's equipment (such as
but not limited to transmitters and receivers), any building or buildings
housing all or any portion thereof, and any permits, licenses or leases
relating to any one or more of the foregoing. Specifically excluded from
"OpCo Facilities" is the tower (collectively with any improvements or
additions thereto and any replacements or substitutions therefor, the
"SoComm Tower") designated "SoComm" on Schedule 1-A attached hereto.
------------
"Reserved Rights" shall mean the reservation by OpCo, unto itself, its
successors and assigns, for the benefit of OpCo, its successors, assigns
and such others (such as but not limited to OpCo's agents, contractors,
subcontractors, licensees and permittees) as OpCo shall from time to time
designate, the rights, interests and easements from time to time and at any
time, upon, over, across and under the Premises (i) to construct, install,
use, patrol, obtain access to, operate, maintain, repair, inspect, renew,
rebuild, reconstruct, replace, improve, upgrade, enhance and add onto the
OpCo Facilities and (ii) to install, operate, use, obtain access to,
repair, inspect, renew, rebuild and maintain necessary and appropriate
lines and facilities for the provision utilities (including but not limited
to electricity and data communications) to the OpCo Facilities provided
that such activity will not unreasonably interfere with Lessee's use of the
Lessee Radio Facilities. "Third Party Facilities & Rights" shall mean the
rights and interests of the third parties (the "Third Parties"), if any,
specified on Schedule 3.1 attached hereto and by reference made a part
------------
hereof, under or pursuant to a license, lease or other agreement in effect
on the date hereof, in and to any and all equipment buildings, equipment,
systems or facilities (including but not limited to electric and phone or
other data communication lines) located on or used in connection with the
SoComm Tower or used for or in connection with wireless communications
(including but not limited to radio and microwave communications),
including without limitation, transmitters, receivers, antennae, multiple
address system radios or power line carrier equipment, conduit, waveguides,
fixtures, appliances, communications lines, wire, cable and equipment, and
any other physical connections between the antennae and equipment of such
Third Parties (such as but not limited to transmitters and receivers),
<PAGE>
any building or buildings housing all or any portion thereof, and any
permits, licenses or leases relating to any one or more of the foregoing.
31
<PAGE>
Schedule "3.1"
Third Party Occupants
<PAGE>
EXHIBIT 10.10
MASTER ANTENNA SITE LEASE NO. ____
===============================================================================
LESSOR: Pinnacle Towers Inc. LESSEE: Teletouch Communications, Inc.
Third Floor 110 North College Street, Suite 200
1549 Ringling Boulevard Tyler, Texas 75702
Sarasota, Florida 34236
This Master Tower Site Lease (the "Lease") is entered pursuant to a
Contract of Sale dated December 31, 1997, between Lessor and Lessee (the
"Purchase Agreement"). Capitalized terms used but not defined in this Lease
have the meanings ascribed to them in the Purchase Agreement. Lessee
acknowledges and agrees that Lessee's entering into and performing under this
Lease is a material inducement to Lessor's purchase of the Property under the
Purchase Agreement.
Lessor operates the antenna site(s) described in the Antenna Site Lease
Schedule(s) executed and delivered by Lessor and Lessee pursuant to this Lease
from time to time (each a "Schedule" and, collectively, the "Schedules").
Lessor desires to lease to Lessee and Lessee desires to lease from Lessor
certain space at the site for the continuing operation of Lessee's equipment
which is currently installed and equipment which may be installed in the future
on the terms set forth in the Schedule(s) and herein. If the terms of a
Schedule conflict with this Lease, the Schedule shall control.
1. LEASED PREMISES. Lessor hereby leases to Lessee space at the site as
---------------
specified and described in a Schedule. If a Schedule provides that Lessee's
equipment will be connected to a multiplexer, Lessee shall be responsible for
all costs of multiplexer modules and other equipment required for the
connection.
2. TERM.
----
(a) The initial term and, if applicable, renewal terms of this Lease for
any antenna system shall be for a period of ten (10) years beginning on the date
of execution of this Lease. Provided Lessee is not in default, the lease term
may, by mutual agreement, be renewed for one or more five-year terms, at a
rental rate to be mutually agreed upon.
(b) If Lessee holds over the leased premises after the final term of
this Lease, then this Lease shall revert to a month-to-month term, and rent
shall be 150% of the rent for the last month of the preceding term. Lessor shall
have the right during such month-to-month term to terminate this Lease without
cause upon thirty (30) days notice to Lessee.
3. RENT.
----
(a) Lessee shall pay rent at the rate of $48,140.50 per month. Such
rental rate shall increase by 1.5% on each of the first four annual anniversary
dates of this Lease, and by 2.5% on each of the fifth through ninth anniversary
dates of this Lease. Rent for any fractional month at the beginning or end of a
term shall be prorated. Monthly rent as specified above applies to the
cumulative equipment currently in operation by Lessee at the twenty sites to be
acquired by Lessor pursuant to the Purchase Agreement.
(b) Lessee shall pay rent by electronic transfer or direct to Lessor's
lockbox account at Pinnacle Towers Inc., P.O. Box 550094, Tampa, FL 33655-0094
no later than the first day of each calendar month with respect to which it is
payable. If payment is not received by the 10th of any month, Lessor has the
option to charge a late fee equal to the greater of $25 or 1 1/2% per month of
the amount due.
(c) Any security deposit required by this Lease will be held in a non-
interest bearing account and shall be returned to Lessee thirty (30) days
following the conclusion of the lease term of the Schedule, provided Lessee is
not in default.
(d) Lessee shall pay all sales or use taxes applicable to rent payable
under this Lease or as a direct result of Lessee's equipment being located on
the leased premises.
4. INSTALLATION.
------------
(a) Lessor and Lessee acknowledge that Lessee currently has certain
equipment installed at the sites, which equipment is subject to the terms of
this Lease. Additionally, Lessor acknowledges that Lessee may wish to install
additional equipment at the sites in the future.
(b) Lessee shall install and operate only the equipment currently in
place on the leased premises and identified in the Schedules, and the cost of
Lessee's installation and licensing fees shall be borne solely by Lessee.
Lessee shall comply with all site rules and standards contained in Exhibit A to
this Lease with respect to any equipment that Lessor subsequently agrees may be
added to the
<PAGE>
Schedules, but will not be required to so comply with respect to the equipment
currently in place on the leased premises and identified in the Schedules on the
date of this Lease unless the tower whereupon the equipment is located is
subsequently upgraded or replaced by Lessor.
(c) During installation of any later approved equipment, Lessee shall
not cause interference of any kind to the activities of Lessor or lessees on the
site. If such interference is caused by Lessee and cannot be reduced to levels
reasonably acceptable to Lessor, Lessee shall immediately halt all installation
work, and Lessor may elect to terminate this Lease by giving Lessee ten (10)
days written notice.
(d) Lessee represents that: (I) Lessee's current and future equipment
and the operation and use thereof materially complies and will comply with all
applicable law, and (II) all equipment has received all approvals of
governmental authorities required in connection with ownership thereof and have
been operated and maintained in accordance with applicable law.
5. USES OF LEASED PREMISES.
-----------------------
(a) Lessee shall use the leased premises and conduct its communications
operations in compliance with the terms of its FCC license and applicable
regulations imposed by any other governmental agency. Lessee shall, if
requested, provide Lessor with copies of such permits.
(b) Lessee shall have a non-exclusive right to access the leased
premises twenty-four (24) hours a day, 365 days a year for its employees,
agents, or representatives as designated. In accordance with procedures in
Exhibit A, Lessee will be issued a key, key card, and/ or access code to unlock
the gate and transmitter room for maintenance purposes. This key may not be
duplicated, loaned, or transferred to any other entity. If this key or keycard
is lost or the integrity of security is breached by Lessee, Lessee will bear the
expense for Lessor to re-tool the locks, reprogram the security system, and
provide new keys and/or keycards for all authorized persons. Lessee shall
provide Lessor the name of Lessee's custodian of the key or keycard; should the
custodian change, Lessee shall notify Lessor, in writing, of the new custodian's
identity within twenty-four (24) hours.
(c) Before performing any installation or maintenance work at a site
(other than emergency and routine maintenance work), Lessee shall notify Lessor
and obtain Lessor's approval of the work to be performed and the persons to
perform the work with such approval not to be unreasonably withheld or delayed.
All contractors and subcontractors of Lessee who perform any services on the
leased premises must be approved by Lessor in advance with said approval not to
be unreasonably withheld or delayed and must hold all licenses necessary for the
work being performed. Lessee shall maintain a log of the entry and exit of its
employees and agents and shall make the log available to Lessor upon request.
(d) Lessee shall not bring onto the site any Hazardous Materials in
violation of any environmental law.
(e) Lessee shall not cause interference of any kind to the operations
of the Lessor or other lessees of space at the towers on the leased premises in
excess of levels permitted by the FCC. However, to the extent that the Lessee
does not cause interference with current lessees, Lessee shall not be required
to make modifications with respect to those lessees. If Lessee is notified that
its operations are causing objectionable interference, Lessee shall promptly
undertake all necessary steps to determine the cause of and eliminate such
interference. If the interference continues for a period in excess of forty-
eight (48) hours following notification, Lessor shall have the right to cause
Lessee to cease operating the offending equipment or to reduce the power
sufficiently to remove the interference until the condition can be remedied.
Lessee shall continue to be obligated to pay rent, and Lessor shall not be held
liable for any damages or loss of revenues. If Lessee is required to
discontinue its operation under this section for a period of sixty (60) days,
and provided Lessee has diligently pursued all reasonable cures and is unable to
eliminate the interference, then Lessee shall have the right to terminate this
Lease. Provided Lessee's equipment is operating properly, if the operations of
any equipment installed after Lessee's equipment cause objectionable
interference to Lessee's operation, then Lessor shall require the interfering
lessee to remedy the interference and bear the costs thereof.
(f) Lessee understands that it is the intention of Lessor to accommodate
as many users as possible at its sites. Lessee shall cooperate, at no cost to
Lessee, with Lessor in rescheduling its transmitting activities, reducing power,
or interrupting its activities for limited periods of time in order to permit
the safe installation of new equipment or new facilities at the site or to
permit repairs to facilities of any user of the site or to the site or related
facilities.
(g) Lessor makes no guaranty or warranty, including any implied warranty
of merchantability or fitness for a particular use. Lessee has examined the
leased premises and determined that they are suitable for its purposes.
6. Utilities. In addition to all rental amounts required hereunder,
---------
Lessee shall pay to Landlord the sum of $2,936.00 per month for utility costs
incurred by Lessor, and shall not be responsible for utility costs incurred by
Lessor in excess of $2,936.00 per month. Lessee shall also pay all installation
costs for electrical power feeds, phone lines, and other utility installation
for Lessee's equipment.
7. INSURANCE. Requirements are set forth in Exhibit B.
---------
2
<PAGE>
8. MAINTENANCE OF SITE.
-------------------
(a) Lessor shall maintain the site(s) in good repair, ordinary wear and
tear excepted, and in compliance with applicable sections of Part 17 of the
FCC's rules pertaining to lighting, marking, inspection, and maintenance. In
cases where such FCC regulations require the painting of Lessee's feedlines,
Lessee hereby consents to such painting at Lessor's expense.
(b) Lessee shall maintain its equipment in accordance with standards of
good engineering practice to assure that it conforms with the site standards in
Exhibit A and shall at the conclusion of a Schedule surrender possession of the
leased premises to Lessor in the same condition they were at the commencement of
the Schedule, ordinary wear and tear excepted.
9. ALTERATION BY LESSEE.
--------------------
(a) Lessee may not make improvements or alterations to the tower(s),
building(s), or any portion of the leased premises without the expressed written
permission of Lessor. Any such improvements that are approved by Lessor and
made by Lessee shall become the property of Lessor upon termination or
expiration of this Lease.
(b) Notwithstanding Section 9(a) above, Lessee may make changes and
alterations in its equipment provided that (i) such changes or alterations
conform with standards of good engineering practice and the provisions of
Section 5, (ii) plans and specifications are first submitted to and approved in
writing by Lessor (such approval not to be unreasonably withheld or delayed
using customary commercial standards), and (iii) any proposed changes or
alterations do not materially increase the "wind loading" of the tower. Upon
Lessor's reasonable request, Lessee will provide an independent professional
analysis of "wind loading" and stress to determine any changes that equipment
replacements or alterations would cause.
10. SITE DAMAGE; DAMAGE TO LESSEE'S EQUIPMENT; SERVICE INTERRUPTION.
----------------------------------------------------------------
(a) If a site is fully or partially destroyed or damaged, Lessor, at its
option, may elect to terminate a Schedule upon ten (10) days written notice to
the Lessee. In this event, Lessee shall owe rent only up to the date on which
Lessee was unable to conduct its normal operations solely due to the damage or
destruction of the site.
(b) Lessor, at its option, may elect to repair or rebuild the site, in
which case, the Schedules shall remain in force. Lessor will provide Lessee at
least thirty (30) days notice thereof, and any such project shall be completed
within one hundred eighty (180) days after the date of damage or destruction.
If reconstruction or repair cannot reasonably be undertaken without dismantling
Lessee's antenna, then Lessor may remove Lessee's antenna and interrupt Lessee's
operations, thereafter replacing the antenna as soon as reasonably possible.
Lessee shall be entitled to a pro rata abatement of rent for the time it is
unable to conduct its normal operations as a result of such total or partial
destruction or damage or need of repair. Lessee shall also be entitled to a pro
rata abatement of rent, if Lessor does not repair or rebuild the site in
accordance with the terms hereof, in an amount for the damaged location
calculated in accordance with the allocation set forth on the attached Exhibit
C.
(c) Under no circumstances whatsoever shall Lessor be responsible for
damage to or loss of Lessee's equipment, or for financial loss due to business
interruption, unless by Lessor's negligence or willful misconduct.
(d) Lessor shall incur no liability to Lessee for failure to furnish
space and/or electrical power if prevented by war, fires, accidents, acts of
God, or other causes beyond its reasonable control. During such period, Lessee
shall be entitled only to a pro rata abatement of rent for the time it is unable
to conduct substantially normal operations as a result of such circumstances,
except that Lessee shall not be entitled to any abatement for outages of less
than twenty-four (24) hours consecutive duration.
11. EMINENT DOMAIN. If the land or leased premises (or any material part
--------------
thereof) upon which a tower, foundation, or building is located are acquired or
condemned under the power of eminent domain, whether by public authority, public
utility, or otherwise, then the applicable Schedule shall terminate as of the
date of the acquisition. Lessor shall be entitled to the entire amount of any
condemnation award, and Lessee shall be entitled to make claim for and retain a
condemnation award based on and attributable to the expense and damage of
removing its fixtures.
12. INDEMNIFICATION BY LESSEE. Lessee shall indemnify, hold harmless, and
-------------------------
defend Lessor for and against any and all liabilities, claims, demands, suits,
damages, actions, recoveries, judgments, and expenses (including court costs,
reasonable attorneys' fees, and costs of investigation) resulting from: (a) a
breach by Lessee of any provision contained herein or any agreement executed
pursuant hereto; and (b) injuries to or death of any person or any damage to
property or loss of revenues due to discontinuance of operations at the leased
premises resulting from, or that is claimed to result from or arise out of any
act or omission of Lessee or its contractors, subcontractors, agents, or
representatives in or around the leased premises or any breach of this Lease by
Lessee, except to the extent such liabilities are directly caused by the willful
misconduct or gross negligence of Lessor.
13. INDEMNIFICATION BY LESSOR. Lessor shall indemnify, hold harmless,
-------------------------
and defend Lessee for and against any and all liabilities, claims, demands,
suits, damages, actions, recoveries, judgments, and expenses (including court
costs, reasonable attorneys' fees, and costs of investigation) resulting from:
(a) a breach by Lessor of any provision contained herein or any agreement
executed pursuant hereto; and (b) injuries to or death of any person or any
damage to property or loss of revenues due to discontinuance of operations at
the leased premises resulting from, or that is claimed to result from or arise
out of any act or omission of Lessor or its contractors, subcontractors,
3
<PAGE>
agents, or representatives in or around the leased premises or any breach of
this Lease by Lessor, except to the extent such liabilities are directly caused
by the willful misconduct or gross negligence of Lessee.
14. ASSIGNMENT. Lessee shall not assign, mortgage, or encumber this Lease
----------
and shall not sublet or permit the leased premises or any part thereof to be
used by others without the express written approval of Lessor, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
Lessor's consent shall not be required in the event Lessee assigns this Lease to
a purchaser of all or substantially all assets of Lessee. No sublease or
authorized use by others shall relieve Lessee of its obligations under this
Lease. Lessor may assign, mortgage, or encumber its rights under this Lease at
any time.
15. DEFAULT BY LESSEE. If Lessee fails to make payments within ten (10)
-----------------
days of date due and such failure continues for five (5) days after written
notice from Lessor, Lessee is adjudged bankrupt or insolvent, makes a transfer
in fraud of creditors, makes an arrangement for the benefit of creditors;
institutes voluntary bankruptcy or insolvency proceedings or consents to the
filing of a bankruptcy or insolvency proceeding or files a petition or answer or
consent seeking reorganization or liquidation under any bankruptcy or similar
laws; a receiver or trustee is appointed for substantially all of the assets of
Lessee or for Lessee's leasehold interest in this Lease, or; any representation,
warranty, or covenant of Lessee herein is untrue, false, or misleading at any
time; or Lessee fails to comply with any other term of this Lease after receipt
of written notice from Lessor, and does not cure such other failure within
thirty (30) days of such written notice, or does not commence to cure within
thirty (30) days and complete such cure within ninety (90) days of such written
notice (each an "Event of Default"); then Lessor shall have the option to
terminate this Lease or any or all Schedules, in which event Lessee shall
surrender possession of the leased premises within ten (10) days, or to pursue
any other remedy available to Lessor under this Lease or otherwise provided by
law or equity. Lessor may also apply any or all of the deposit or prepaid rent
to cure a default. Upon an Event of Default, Lessee shall pay Lessor the sum
of: (a) the unpaid rent and other amounts payable hereunder through the date of
such Event of Default; (b) the cost of repairing, altering, or otherwise putting
the leased premises into condition acceptable to a new lessee or lessees; (c)
all expenses incurred by Lessor in enforcing its remedies, including reasonable
attorneys' fees and court costs; (d) any other damages or relief Lessor may be
entitled to at law or in equity.
Lessee shall be liable for all expenses incurred by Lessor for recovery, and
repossession by Lessor, which actions shall not affect the obligations of Lessee
for the unexpired term of this Lease unless Lessor terminates this Lease.
16. DEFAULT BY LESSOR. Upon the occurrence of any act or omission by Lessor
-----------------
that would give Lessee the right to damages or the right to terminate a Schedule
or this Lease, Lessee shall not sue for damages or exercise any right to
terminate this Lease or a Schedule until it gives Lessor and any mortgagee (the
existence of which Lessor notifies Lessee in writing) of this Lease notice in
writing of the act or omission and a reasonable time (which shall not be less
than thirty [30] days) to remedy such act or omission.
17. REMOVAL OF LESSEE'S EQUIPMENT. At the termination of a Schedule,
-----------------------------
provided Lessee is not in default, Lessee shall have one hundred eighty (180)
days to remove its equipment in accordance with Lessor's designation of the
order of removal, but such removal shall be within thirty (30) days if Lessee
defaults in any rent payment. Lessee shall pay all costs in connection with the
removal.
18. SUBORDINATION. This Lease is and shall be subject and subordinate to
-------------
all mortgages that may now or hereafter affect the leased premises and to all
renewals, modifications, consolidations, replacements, and extensions thereof;
provided, however, as a condition precedent to any such subordination, the party
secured by such instrument shall covenant for itself and any purchaser at
foreclosure not to disturb Lessee's quiet enjoyment so long as Lessee is not in
default hereunder. This subordination shall be self-operative and no further
instrument of subordination shall be required by any mortgagee. However, upon
written request from Lessor, Lessee shall execute a certificate confirming such
subordination.
19. LIENS. Lessee shall not suffer or permit any liens to stand against the
-----
leased premises or any part thereof by reason of any work, labor, service, or
materials done for, or supplied for, or supplied to or claimed to have been done
for, or supplied to, Lessee or anyone holding Lessee's property or any part
thereof through or under Lessee ("Mechanics' Liens"). If any Mechanics' Lien
shall at any time be filed against the leased premises, Lessee shall cause it to
be discharged of record within thirty (30) days after the date of filing by
either payment, deposit, or bond. If Lessee fails to discharge any such
Mechanics' Lien within such period, then, in addition to any other right or
remedy of Lessor, Lessor may, but shall not be obligated to, procure the
discharge of the Mechanics' Lien. All amounts incurred by Lessor, including
reasonable attorneys' fees, in procuring the discharge of such Mechanics' Lien,
together with interest thereon at 12% per annum from the date of incurrence,
shall become due and payable immediately by Lessee to Lessor.
20. ESTOPPEL CERTIFICATES. At any time, but not with less than ten (10)
---------------------
days prior written notice, Lessee shall execute, acknowledge, and deliver to
Lessor a statement in writing certifying, if true, that this Lease and
applicable Schedule(s) are unmodified and in full force and effect (or, if there
have been any modifications, that the Lease is in full force and effect as
modified and stating the modifications), and the dates to which rent and other
charges, if any, have been paid in advance.
21. SITE RELOCATION. If Lessor reasonably determines that it is not able
---------------
to continue to lease any site to Lessee due to any title defect or condition
that existed or arose before the date hereof, then if Lessor locates another
site within a 5 mile radius of the subject site, Lessee shall be obligated to
relocate to such replacement site, at its cost and expense. Notwithstanding the
foregoing sentence, Lessee shall
4
<PAGE>
be obligated to pay all rent allocable to the Mexia Site and Temple Site (as
hereinafter defined) whether or not Lessor locates a replacement site for the
Lessee upon the occurrence of the following: (1) Lessor reasonably determines
that it is not able to lease to the Lessee the Mexia Site identified as Site No.
4170 in the Purchase Agreement (the "Mexia Site") due to tax suits and or
judgments which are currently outstanding against the Mexia Site, or (2) Lessor
reasonably determines it is not able to lease to the Lessee the Temple Site
identified as Site No. 4120 in the Purchase Agreement (the "Temple Site") due to
the fact that there is no building permit or variance for the Temple Site for
the improvements as they currently exist. For the preceding sentence, Lessor
agrees to use reasonable efforts to locate a replacement site within a five (5)
mile radius of the subject site, but Lessor shall determine in its sole
discretion if it is economically feasible for Lessor to obtain a replacement
site.
22. MISCELLANEOUS.
--------------
(a) The remedies provided herein shall be cumulative and shall not
preclude the assertion by any party hereto of any other rights or the seeking of
any other remedies against the other parties hereto.
(b) Should Lessor permit a continuing default by Lessee under this
Lease, the obligations of Lessee hereunder shall continue, and such permissive
default shall not be construed as a renewal of the term hereof nor as a waiver
of any of the rights of Lessor or obligations of Lessee hereunder.
(c) In addition to the other remedies in this Lease, and anything
contained herein to the contrary notwithstanding, Lessor shall be entitled to
specific performance or injunctive relief of any violation or attempted or
threatened violation of this Lease by Lessee without the necessity to post a
bond.
(d) This Lease may be executed in counterparts, and any number of
counterparts signed in the aggregate by the parties will constitute a single,
original instrument.
(e) This Lease, including the exhibits, schedules, lists and other
documents referred to herein, contain the entire understanding of the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, warranties, covenants, or understandings other than expressly set
forth herein or therein. This Lease supersedes all prior agreements and
understandings between the parties with respect to its subject matter. No
modification of this Lease shall be effective unless contained in a writing
signed, dated and fully witnessed by the authorized representative of both
parties.
(f) All notices, requests, claims, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally by FAX, by courier or mailed (certified mail, postage
prepaid, return receipt requested) to Lessor at the address shown herein and to
Lessee at the address shown on a Schedule or to such other address as any party
may have furnished to the other in writing in accordance with this provision.
(g) This Lease shall be governed by, construed and enforced in
accordance with the laws of the State of Texas without regard to its conflict of
laws rules.
(h) Each party hereby waives any right of recovery against the other for
injury or loss due to hazards covered by insurance or required to be covered, to
the extent of the injury or loss covered thereby. Any policy of insurance to be
provided by Lessee or Lessor pursuant to this Lease shall contain a clause
denying the applicable insurer any right of subrogation against the other party.
IN WITNESS THEREOF, this Lease has been duly executed and delivered by
Lessor and Lessee on the date indicated below.
LESSOR:
PINNACLE TOWERS INC.,
a Delaware corporation
WITNESS: ________________________________ By:_________________________
Name:____________________
Title:___________________
WITNESS: _________________________________ DATE: January 26, 1998
5
<PAGE>
LESSEE:
TELETOUCH COMMUNICATIONS, INC.,
a Delaware corporation
WITNESS: ________________________________ By:____________________________
Name: Robert M. McMurrey
Title: Chairman and Chief
Executive Officer
WITNESS: _________________________________ DATE: January 26, 1998
6
<PAGE>
EXHIBIT A
TO
PINNACLE TOWERS INC. MASTER ANTENNA SITE LEASE #
ANTENNA SITE STANDARDS APPLICABLE TO ANTENNA ADDED OR RELOCATED AFTER THE
-------------------------------------------------------------------------
INITIAL LEASE DATE
------------------
1. PURPOSE: In order to minimize interference to every Lessee's operations
-------
and equipment, and to maintain good engineering practice, the following
installation and maintenance standards are being established and may be amended
by Lessor when deemed necessary.
2. PRE-INSTALLATION STANDARDS: Prior to any installation, Lessee must
--------------------------
provide Lessor with complete plans for approval, including list of proposed
equipment and subcontractors, and no work may be performed until approval has
been given and all criteria has been met, which approval shall not be
unreasonably withheld or delayed. All equipment must be placed in approved
locations only, and any changes must be approved by Lessor before the
installation begins. The Lessor or its representative shall be on-site during
major work on the tower. Lessee must notify the Lessor at least five (5) days
in advance of any installation work. Following initial installation, routine
maintenance work to Lessee's equipment may be performed without prior notice.
3. INSTALLATION:
------------
(a) The following minimum protective devices must be properly installed:
(1) Lightning arrestor in feedline at wall feedthru plate for all non-
broadcast antennas.
(2) Surge protectors in any AC & phone line circuit.
(3) Transmitter RF shielding kit if applicable.
(4) Isolator and harmonic filter.
(5) Duplexer or cavity bandpass filter.
(b) All transmitters, duplexers, isolators, multicouplers, etc. must be
housed in a metal cabinet or rack-mounted.
(c) All transmission lines entering the building must be 1/2"
Heliax/Wellflex or better via a wall feedthru plate, terminating in a
properly installed lightning arrestor with an ID tag on both ends of
the line.
(d) Solid outer shield cable such as Superflex or Heliax/Wellflex must be
used for all intercabling outside the cabinet. The use of braided RF
cable (eg; RG8) will NOT be permitted outside the cabinet to minimize
RF leakage which could cause interference.
(e) All antenna, power and phone cables shall be routed to the base station
in a neat manner using routes provided for that purpose. All phone
lines shall use shielded cable properly grounded.
(f) All stations are to obtain power from the power panel and/or AC
receptacle provided for their specific use.
(g) All RF equipment cabinets must be grounded to the site ground system
using copper strap or ribbon cable with cadweld or silver solder
connections.
(h) All antenna lines shall be electrically bonded to the tower at the
antenna and at the bottom of the tower using grounding kits installed
per manufacturer's specifications, and all antenna brackets must be
pre-approved.
(i) All equipment cabinets shall be identified with a typed label under
plastic on which the Lessee's name, address and 24-hour phone number
must be listed, in addition to a copy of Lessee's FCC license.
(j) Monitor speakers shall be disabled except when maintenance is being
performed.
(k) All antenna lines will be tagged within twelve (12) inches of the
antenna, at the entrance to the building, at the repeater or base
station cabinet, and/or at the multicoupler/combiner ports.
(l) No drilling, welding or alteration of the tower is permitted for any
reason.
(m) All ferrous metals located outside of the building or on the tower
shall be either stainless steel or hot-dipped galvanized, not plated.
(n) Painted towers will require the painting of feedline by the Lessee
prior to or before completion of the install.
4. GENERAL: Lessee must comply with any applicable instructions regarding
-------
any site security system.
(a) Gates shall remain closed at all times unless entering or exiting the
premises. When leaving the building, ensure that all doors are locked
and the security system is armed.
(b) Any tower elevator may be used only after receiving proper instruction
on its use, signing a waiver and receiving authorization from the Lessor.
(c) This lease does not guarantee parking space. If space is available,
park only in the designated areas. Do not park so as to block any ingress or
egress except as may be necessary to load or unload equipment. Parking is for
temporary use while working at the site.
(d) Do not adjust or tamper with the thermostats or HVAC systems.
Access to the building roof is restricted to authorized maintenance
personnel.
7
<PAGE>
EXHIBIT B
TO
PINNACLE TOWERS INC. MASTER ANTENNA SITE LEASE #
INSURANCE FOR LESSEE AND LESSEE'S CONTRACTORS AND SUBCONTRACTORS
----------------------------------------------------------------
Lessee, its contractors and subcontractors, will provide certificates of
insurance with Lessor named as "additionally insured" on policies except workers
compensation showing the insurance in force with a thirty (30) days day notice
of cancellation, non-renewal or material change. Certificate must be site
specific. In addition, it is the Lessee's responsibility to communicate to
Lessor, forty eight (48) hours in advance, when any work (other than routine and
emergency work) will be taking place at tower site. Coverage for contractors
and subcontractors are as follows:
Lessee will require contractors working on the leased site in the capacity of
General Site Maintenance limited to:
(a) Grounds and vegetation maintenance and installation not requiring
heavy equipment.
(b) Minor repairs and installations to existing facilities (locks,
plumbing, fencing, air conditioning, etc.) will carry an umbrella/
excess liability in excess of the business automobile, commercial
general liability and workers compensation of a minimum of:
Each occurrence limit $1,000,000.00
General aggregate limit $1,000,000.00
Lessee will for itself, and will require contractors working at the tower site
only but not on the tower itself, excluding the above functions to, carry an
umbrella / excess liability in excess of the business automobile, commercial
general liability and workers compensation with minimum limits of:
Each occurrence limit $3,000,000.00
General aggregate limit $3,000,000.00
Lessee will for itself, and will require contractors working at the tower site
in ANY capacity which requires climbing the tower itself to, carry an
---
umbrella/excess liability in excess of the business automobile, commercial
general liability and workers compensation of a minimum of:
Each occurrence limit $5,000,000.00
General aggregate limit $5,000,000.00
The Lessee and Lessee's representatives, contractors and independent
contractors, are not related to the Lessor other than by this lease of space at
the site.
INSURANCE: Before commencement of any lease term under the schedule, Lessee,
its contractors and subcontractors operations shall procure and maintain
insurance coverage covering all of Lessee's, its contractors and subcontractors
operations and activities in, upon or in conjunction with the leased premise.
The insurance shall be provided in companies legally qualified to transact
business in the State where the site is located in companies with an AM Best
Rating of A-: VIII or greater with the following minimum limits.
PROPERTY: Lessee is responsible for insuring for all loss or damage to their
property or the property of others for which they are responsible including loss
of use or business interruption. Lessor assumes no responsibility for damage
occurring to Lessee's, Lessee's contractors and/or subcontractors real,
personal property and/or business interruption regardless of location.
BUSINESS AUTOMOBILE LIABILITY: Bodily Injury and Property Damage Liability or
owned, hired and non-owned vehicles:
Combined Single Limit $1,000,000.00
8
<PAGE>
EXHIBIT B (CONT.)
TO
PINNACLE TOWERS INC. MASTER ANTENNA SITE LEASE #
INSURANCE FOR LESSEE LESSEE'S CONTRACTORS AND SUBCONTRACTORS
------------------------------------------------------------
COMMERCIAL GENERAL LIABILITY: Including but not limited to bodily injury
liability, property damage liability, products and completed operations
liability, broad form property damage liability and personal injury liability:
<TABLE>
<CAPTION>
Policy Form Occurrence
<S> <C>
General Aggregate Limit $1,000,000.00
Products & Completed Operations Limit $1,000,000.00
Personal Injury & Advertising Injury Limit $1,000,000.00
Each Occurrence Limit $1,000,000.00
Fire Damage Limit $ 50,000.00
Medical Expense Limit $ 5,000.00
</TABLE>
WORKERS COMPENSATION:
Requirements for the State of the site location Statutory
Employers Liability
Limit each accident $ 100,000.00
Limit disease aggregate $ 500,000.00
Limit disease each employee $ 100,000.00
Lessor shall be added as an additional insured on Lessee's policies except
workers compensation. A certificate of insurance naming the Lessor as an
additional insured and showing the insurance in force shall be delivered to
the Lessor with a thirty (30) day notice of cancellation, non-renewal or
material change. Lessee agrees that the insurance coverage's outlined
above may be maintained pursuant to master policies of insurance covering
the specific site locations but requires that limits shall not be reduced
at the Lessor's site by activities at the Lessee's other sites or
operations. Limits of coverage are named site specific.
9
<PAGE>
EXHIBIT C
PER SITE RENT ALLOCATION
<PAGE>
ANTENNA TOWER SITE LEASE SCHEDULE NO.:
MASTER SITE LEASE NO.:
LEASE REFERENCE:
PAGE (1) OF (2)
This Antenna Site Lease Schedule is an integral part of the Master Antenna Site
Lease referred to above, the terms of which are hereby incorporated herein. If
there is a conflict between the terms of this Schedule and the Lease, this
Schedule shall prevail.
LESSOR: Name: Pinnacle Towers Inc.
Address: 1549 Ringling Boulevard, Third Floor
City/State/Zip: Sarasota, FL 34236
Phone: 941/364-8886 Fax: 941/364-8761
LESSEE: Name: Teletouch Communications, Inc.
110 North College Street, Suite 200
Tyler, Texas 75702
Phone:
Contact(s):
Fax:
Entity Type: Business Type:
SITE: Name:
Address:
City/State:
Coordinates:
LESSEE SHALL BE SOLELY LIABLE FOR ALL UTILITY COSTS RELATING TO THE INSTALLATION
AND OPERATION OF ITS EQUIPMENT.
THIS AGREEMENT WILL SUPERSEDE ANY AND ALL PREVIOUS AGREEMENTS MADE BETWEEN
LESSOR AND LESSEE FOR THIS SITE.
Lessee's FCC License/Callsign: ________________ Expiration Date: _______________
_______Lessee owned antenna(s) OR ______Multiplexer port of Lessor's antenna
A) TO BE MOUNTED ON THE TOWER: No. of Antennas: No. of Feedlines:
Ant #1: Mounting Height: _______feet Tower leg: ___________
Antenna Mfg/Model:_________________ Length: _______________
Antenna Mount:___________________________________________
Feedline Mfg/Type: ________________ Diameter: _________
Ant #2: Mounting Height: _______feet Tower leg: ____________
Antenna Mfg/Model:_________________ Length: _______________
Antenna Mount:____________________________________________
Feedline Mfg/Type: ________________ Diameter:__________
B) TO BE INSTALLED IN BUILDING:
Equipment Mfg/Model #:____________________ Type (Terminal, Transmitter,
Repeater, etc.): _____________ Number of Channels: _______________ Power:_____
__W
Number of Cabinets:_______________________ Floorspace required:_________
Transmit Frequencies:_______________, _____________, _____________,
____________, _____________, ______________, _______________ Receive
Frequencies: _______________. _____________, ______________, _____________,
______________, _____________, ________________
Filters/Duplexers: ______________________________________________________
2
<PAGE>
C) SPACE FOR SATELLITE ANTENNAS & OTHER ANCILLARY SYSTEMS:
Description:__________________________________________Size: ______________
Pole-Mounted (Preferred): _____ Tower Mounting Hgt (if ground space
unavail):__________
Mfg/Model :________________________________________________________________
NOTES: ___________________________________________________________________
___________________________________________________________________
LESSOR:
PINNACLE TOWERS INC.
a Delaware corporation
WITNESS: __________________________________ By:____________________________
Name:_______________________
Title:______________________
WITNESS: __________________________________
Date:__________________________
LESSEE:
TELETOUCH COMMUNICATIONS, INC.,
a ____________ corporation
WITNESS: __________________________________ By:_____________________________
Name:________________________
Title:_______________________
WITNESS: __________________________________
Date:___________________________
3
<PAGE>
If the outstanding shares of the Company's common stock are changed into a
different number of shares due to (i) a reclassification, split-up, combination
or exchange of shares, or (ii) any dividend payable in stock or other securities
being declared on such shares, or if, at the time the Consultant exercises
options he received under this Agreement, the bid price for the Company's common
stock as quoted on the OTC Bulletin Board or such other national market system
or exchange on which the Company's common stock is quoted or traded at the time
is less than $.40 per share, then the number of shares subject to options as
described in this paragraph shall adjusted to provide the Consultant with the
same economic effect as contemplated by this Agreement before the occurence of
any of the events described in this sentence.
<PAGE>
Exhibit 10.11
CONTRACT OF SALE
This Contract of Sale ("Contract") is made and entered into by and between
TELETOUCH COMMUNICATIONS, INC. ("Seller") and PINNACLE TOWERS INC. ("Buyer"),
effective as of _______________, 1998 (the "Effective Date").
ARTICLE I
DEFINED TERMS AND EXHIBITS
--------------------------
I.1 As used herein, the following terms shall have the meanings
respectively indicated:
"Books" means those portions of Seller's books, records, files which
relate to the Tower Business.
"Closing" means the consummation of the purchase of the Property by
Buyer from Seller in accordance with the terms and provisions hereof.
"Closing Date" means the date on which the Closing will be held.
"Improvements" means all Towers (as hereinafter defined), buildings,
structures and improvements on the Leased Real Property (as hereinafter
defined) and Owned Real Property (as hereinafter defined) and including,
without limitation, all mechanical systems, fixtures and equipment;
electrical systems, fixtures and equipment; heating systems, fixtures and
equipment; air conditioning systems, fixtures and equipment; but excluding
(a) all property owned by third parties, (b) all property leased by third
parties other than from Seller and (c) any antennas, lines, transmitters
and other related items which are affixed to the Towers or are located
nearby and which will remain on the Property pursuant to the Master Lease.
"Land Leases" means the land and ground lease agreements whereby
Seller is the lessee of the Leased Real Property, which are more
particularly described on Exhibit "E" attached hereto.
-----------
"Leased Real Property" means the property leased by Seller and more
particularly described on Exhibit "A" attached hereto.
-----------
"Owned Real Property" means the property owned by Seller and more
particularly described on Exhibit "B" attached hereto.
-----------
"Permits" means any of Seller's approvals, permits, licenses and
similar rights from governmental agencies to the extent that they (i)
relate exclusively to the ownership or
<PAGE>
operation of the Towers (not including any such approvals, permits,
licenses and similar rights from governmental agencies which relate to the
ownership and operation of Seller's antennas, lines, transmitters and other
related items which are affixed to the Towers or are located nearby and
which will remain on the Property pursuant to the Master Lease) and (ii)
are transferable.
"Personalty" means all personal property of every kind and character
owned by the Seller and located in or on and used primarily in connection
with the Improvements or the operations thereon (excluding all property (a)
all property owned by third parties, (b) all property leased by third
parties other than from Seller and (c) any antennas, lines, transmitters
and other related items which are affixed to the Towers or are located
nearby and which will remain on the Property pursuant to the Master Lease)
including without limitation all tangible personal property related to the
design, operation, and maintenance of the Towers.
"Property" means Seller's interests in the Leased Real Property
pursuant to the Land Leases or otherwise, the Owned Real Property, the
Personalty, the User Contracts and the Improvements along with Seller=s
interests in: all related agreements, contracts, security interests,
guaranties, other similar arrangements and rights thereunder, claims,
deposits, prepayments, refunds, causes of action, choses in action, rights
of recovery, rights of set off, rights of recoupment, related leaseholds
and subleaseholds therein, improvements, fixtures and fittings thereon,
easements, rights appurtenant thereto (such as appurtenant rights in and to
public rights-of-way, and other streets), Permits, and plats and
architectural drawings related to the Towers.
"Purchase Price" means the total consideration to be paid by Buyer to
Seller for the purchase of the Property as set forth in Section 3.1 hereof.
The Purchase Price for the Property shall be allocated by and between Buyer
and Seller (the "Purchase Price Allocation").
"Towers" means the communication towers owned by Seller and located on
the Leased Real Property and Owned Real Property.
"Tower Business" means the business of owning and operating the
Property that is conducted by Seller.
"User Contracts" means the leases and subleases with customers
relating to the rental of space or the entitlement to install equipment on
any of the Towers and listed on Exhibit "C" hereto.
-----------
I.2 The following Exhibits are attached hereto and incorporated herein for
all purposes:
Exhibit "A" - Leased Real Property
-----------
Exhibit "B" - Owned Real Property
-----------
-2-
<PAGE>
Exhibit "C" - User Contracts
-----------
Exhibit "D" - Master Antenna Site Lease from Buyer to
-----------
Seller
Exhibit "E" - Land Leases
-----------
Exhibit "F" - Rental Allocation
-----------
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
------------------------------
II.1 Upon the terms and conditions hereinafter stated, Seller hereby sells,
assigns and conveys the Property to Buyer, and Buyer hereby purchases, assumes
and accepts the Property from Seller.
ARTICLE III
PURCHASE PRICE
--------------
III.1 The Purchase Price. The Purchase Price to be paid by Buyer to
------------------
Seller for the Property shall be Eight Million Six Hundred Twenty-Seven
Thousand One Hundred Ninety-Eight and 40/100 Dollars ($8,627,198.40).
III.2 Wire Transfer. The Purchase Price (less the Escrowed Funds (as
-------------
hereinafter defined) and the Rental Prepayment (as hereinafter defined)) shall
be paid to Seller at Closing in cash or by wire transfer of funds.
ARTICLE IV
BUYER'S DUE DILIGENCE
---------------------
-3-
<PAGE>
IV.1 Inspection, Feasibility Study, Review. Buyer, and its employees and
--------------------------------------
agents, shall have the right to enter upon the Property to inspect the Property,
including Seller's books, records and files relating thereto, and to conduct any
tests, studies, appraisals, or inspections deemed necessary by Buyer, including
but not limited to an environmental compliance and conditions review
satisfactory to Buyer, and to make all inquiries of third parties with respect
to the Property ("Inspections"). For good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by Buyer, and in order
to induce Seller to grant Buyer the rights set forth in this section, Buyer
agrees to indemnify and defend Seller, and hold Seller, Seller's agents,
representatives, employees and affiliates harmless, from and against, and
reimburse Seller, Seller's agents, representatives, employees and affiliates
with respect to, any and all liabilities, debts, damages, losses, claims, causes
of action, suit or suits, costs, and expenses of any nature whatsoever
(including, but not limited to, court costs and reasonable attorneys' fees) that
such parties may suffer or incur as a result of or arising out of Buyer's (or
Buyer's agents' or employees') entry upon the Property or Buyer's exercise of
its rights under this section; provided, however, in no event shall the
foregoing indemnity extend to the negligence or willful misconduct of Seller or
Seller's agents or employees. Notwithstanding anything to the contrary, the
agreements of Buyer to indemnify Seller, Seller's agents, representatives,
employees and affiliates set forth in the immediately preceding sentence shall
survive any Closing or any termination of this Contract. In conducting its
Inspections, Buyer covenants and agrees (i) not to interfere with the activity
of any tenant or any person occupying or providing services to the Property,
(ii) not to reveal to any third party not approved in writing by Seller (other
than in a compulsory legal proceeding or to the Buyer's counsel, lenders,
investors or consultants) the results of its Inspections, and (iii) to restore
the Property to its original condition upon the conclusion of its Inspections.
Buyer also agrees to provide Seller with a copy of any Inspections.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as of the Effective Date as
follows:
V.1 Authority. Buyer represents, warrants, covenants and agrees with
---------
Seller that Buyer has the full right, power and authority to purchase the
Property from Seller as provided in this Contract and to carry out its
obligations hereunder and that all required action necessary to authorize Buyer
to enter into this Contract and to carry out its obligations hereunder has been
taken.
V.2 Violation. To the best of Buyer's current, actual knowledge, neither
---------
the execution and performance of this Contract or the agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby or thereby
by Buyer will conflict with, result in a violation or breach of, or constitute a
default under any agreement or other instrument under which Buyer is bound
V.3 Consents. No consent from any of Buyer's lenders or board of
--------
directors (other than any such consents which have already been obtained by
Buyer) is required to authorize, or is
-4-
<PAGE>
required in connection with, the execution, delivery, or performance of this
Contract or related documents on the part of Buyer.
Buyer agrees to promptly notify Seller if any of its representations set
forth above become or are likely to become untrue or otherwise misleading.
Buyer agrees to notify Seller of any of the following which occurs prior to
Closing: (a) a change in Buyer's lender or lender status, (b) the proposed or
actual disposition of substantially all of Buyer's assets (whether by stock,
merger or otherwise) or (c) any change in control of Buyer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as of the Effective Date as
follows:
VI.1 Authority. Seller represents, warrants, covenants and agrees with
---------
Buyer that Seller has the full right, power and authority to sell, transfer and
assign the Property to Buyer as provided in this Contract and to carry out its
obligations hereunder and that all required action necessary to authorize Seller
to enter into this Contract and to carry out its obligations hereunder has been
taken.
VI.2 Title. To the best of Seller's current, actual knowledge, except
-----
for liens and encumbrances that (i) will be paid in full from the Purchase Price
proceeds or (ii) do not materially affect the Buyer's ability to operate the
Tower Business, Seller has good and indefeasible title to the Property. All
Property of the Tower Business on the date hereof is reflected on Exhibits "A",
-------------
"B" and "C".
- -----------
VI.3 Contracts. Attached to this Contract as Exhibit "C" and Exhibit "E"
--------- ----------- -----------
are materially true and complete schedules of all User Contracts and Land Leases
(collectively, the "Leases"), respectively. The copies of all Leases delivered
by Seller to Buyer are true, correct and complete in all material respects. To
the best of Seller's current, actual knowledge: (i) neither the Seller nor any
other party is in material default of any of the Leases (for purposes of this
Section 6.3, a "material default" under a Lease shall be a default which would
entitle the other party to the Lease to terminate such Lease) and (ii) there are
no disputes regarding any of the Leases. Moreover, Seller has not actually
received any written notice or threat of cancellation or termination of any of
the Leases and, except as provided for in the Leases, to the best of Seller's
current, actual knowledge, Seller has not granted any currently outstanding
options to purchase or rights of first refusal regarding the Property.
VI.4 Violation. To the best of Seller's current, actual knowledge, neither
---------
the execution and performance of this Contract or the agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby or thereby
by Seller will conflict with, result in a violation or breach of, or constitute
a default under any agreement or other instrument under which Seller is bound or
to which the Property is subject. Furthermore, Seller has not actually received
any written notice of a material violation of any law in connection with the
Property.
-5-
<PAGE>
VI.5 Taxes. To the best of Seller's current, actual knowledge, Seller is
-----
not delinquent in the payment of any sales tax on the rentals paid to it under
the User Contracts, any sales tax on the rentals paid by it under the Land
Leases or any ad valorem taxes on any of the Owned Real Property.
VI.6 Consents. No consent from any of Seller's lenders or landlords under
--------
the Land Leases (other than those consents which will be obtained by Seller
prior to Closing) is required to authorize, or is required in connection with,
the execution, delivery, or performance of this Contract or related documents on
the part of Seller.
VI.7 Litigation. To the best of Seller's current, actual knowledge, there
----------
is no litigation against or affecting the Property or Tower Business and Seller
is not subject to or in default of any continuing court or administrative order,
judgment, writ, injunction, or decree applicable specifically to Seller, the
Tower Business or the Property.
VI.8 Environmental. To the best of Seller's current, actual knowledge
-------------
(except as otherwise disclosed in the environmental reports submitted by Seller
to Buyer or as revealed by Buyer's Inspections), the Property is in material
compliance with all applicable environmental laws. Seller has provided Buyer
with all environmental studies, records and reports in Seller's actual
possession, and all correspondence with any governmental entities, in Seller's
actual possession, concerning environmental conditions of the Property. Except
as otherwise disclosed in the environmental reports submitted by Seller to Buyer
or as revealed by Buyer's Inspections: (i) Seller has not placed or released any
hazardous materials on the Property in material violation of any environmental
law and (ii) Seller has no current, actual knowledge of any underground storage
tanks on the Property in material violation of any environmental law.
VI.9 Real Estate Matters. Seller has not actually received written
-------------------
notice of any fact or circumstance that may result in the termination or
reduction of the access from each parcel of real estate included in the Property
to the existing public roads. To the best of Seller's current, actual
knowledge, each parcel of real estate included in the Property abuts on and has
direct vehicular access to a public road, or has such access via an easement,
license or lease benefitting such real estate.
For purposes of this Contract, the phrase "to the best of Seller's
knowledge", or words of like import, means that the facts in question are
actually known (as opposed to imputed, inquiry or constructive knowledge) to,
and the phrase "Seller's actual possession or receipt" means in the actual
possession or receipt of Seller, without any further due diligence or duty of
inquiry. Seller shall have no duty of investigation with respect to any
representation made to the best of its knowledge and shall not be charged with
"constructive", "imputed" or "deemed" knowledge. Further, Seller's obligations
to disclose matters "known to Seller" or words of like import as used in this
Contract shall be deemed breached only if Seller, had actual knowledge (as
opposed to imputed or constructive knowledge) of such matter not disclosed to
Buyer.
-6-
<PAGE>
ARTICLE VII
AS-IS/WHERE IS
--------------
-7-
<PAGE>
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS CONTRACT: (1) THE PROPERTY
SHALL BE CONVEYED "AS-IS," "WHERE-IS" AND WITH ANY AND ALL LATENT AND PATENT
DEFECTS AND (2) SELLER MAKES NO WARRANTIES OR REPRESENTATIONS OF ANY KIND,
EXPRESSED OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING BUT NOT LIMITED TO
THE AVAILABILITY OF UTILITIES, ACCESS TO PUBLIC ROADS, ZONING, INGRESS OR
EGRESS, VALUATION, GOVERNMENTAL APPROVALS, GOVERNMENTAL REGULATIONS, PHYSICAL
AND ENVIRONMENTAL CONDITION OR ANY OTHER MATTER OR THING RELATING TO OR
AFFECTING THE PROPERTY. NO WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, MATERIALS, WORKMANSHIP OR APPLIANCES HAS BEEN MADE OR IS
EXPRESSED OR IMPLIED BY THIS CONVEYANCE. SELLER EXPRESSLY DISCLAIMS ANY
WARRANTY OF HABITABILITY, GOOD AND WORKMANLIKE CONSTRUCTION, SUITABILITY, OR
DESIGN. BUYER HAS CONDUCTED, WITH SELLER'S FULL COOPERATION, ITS OWN
INDEPENDENT INSPECTION OF THE PROPERTY AND EXCEPT FOR SELLER'S REPRESENTATIONS
EXPRESSLY SET FORTH IN THIS CONTRACT, HAS AGREED NOT TO RELY ON ANY
REPRESENTATIONS MADE BY SELLER BUT RATHER, AS A SIGNIFICANT PORTION OF THE
CONSIDERATION GIVEN TO SELLER FOR THIS CONVEYANCE, HAS AGREED TO RELY SOLELY AND
EXCLUSIVELY UPON ITS OWN EVALUATION AND INSPECTION OF THE PROPERTY. BUYER
REPRESENTS THAT IT IS A KNOWLEDGEABLE BUYER AND, EXCEPT FOR SELLER'S
REPRESENTATIONS EXPRESSLY SET FORTH IN THIS CONTRACT, THAT IT IS RELYING SOLELY
ON ITS OWN EXPERTISE AND THAT OF BUYER'S CONSULTANTS IN PURCHASING THE PROPERTY.
MOREOVER, EXCEPT FOR SELLER'S REPRESENTATIONS EXPRESSLY SET FORTH IN THIS
CONTRACT, BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT
LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT BE REVEALED
BY BUYER'S INSPECTIONS AND INVESTIGATIONS. BUYER FURTHER ACKNOWLEDGES AND
AGREES THAT THERE ARE NO ORAL AGREEMENTS, WARRANTIES, OR REPRESENTATIONS,
COLLATERAL TO OR AFFECTING THE PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY
THIRD PARTY. THE TERMS AND CONDITIONS OF THIS SECTION SHALL EXPRESSLY SURVIVE
THE CLOSING, NOT MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL BE
INCORPORATED INTO THE DEED(S) AND ANY OTHER CONVEYANCE DOCUMENTS EXECUTED
PURSUANT HERETO. THE PROVISIONS CONTAINED HEREIN ARE THE RESULT OF EXTENSIVE
NEGOTIATIONS BETWEEN THE BUYER AND SELLER AND NO ASSURANCES, REPRESENTATIONS, OR
WARRANTIES ABOUT THE QUALITY, CONDITION, OR STATE OF THE PROPERTY WERE MADE OR
GIVEN BY SELLER IN THE INDUCEMENT THEREOF. BUYER FURTHER ACKNOWLEDGES THAT ANY
INFORMATION PROVIDED BY THE SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY OR
TO BE PROVIDED WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF
SOURCES AND SELLER (I) HAS NOT MADE ANY
-8-
<PAGE>
INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION; AND (II) EXCEPT
FOR SELLER'S REPRESENTATIONS EXPRESSLY SET FORTH IN THIS CONTRACT, MAKES NO
REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION.
ARTICLE VIII
EXPRESS COVENANTS OF SELLER
---------------------------
VIII.1 Between the Effective Date and the Closing, Seller, expressly
covenants and agrees that:
(a) Seller shall not commit waste of the Property.
(b) Seller shall give to Buyer immediate written notice of the
institution of or receipt of notice of any material litigation or
threatened litigation affecting Seller or the Property which would in any
way constitute or have the effect of presently or in the future creating a
lien, claim or obligation of any kind against the Property.
(c) Other than mechanics' and materialmen's liens which arise in the
Seller's ordinary course of business, Seller shall not impose, nor permit
to be imposed upon the Property any new or additional encumbrances to title
and shall discharge, or cause to be discharged, any claims of lien or liens
imposed upon the Property following the date of execution of this Contract
by Seller.
(d) Seller shall maintain its current or comparable insurance on the
Property.
(e) Seller shall notify Buyer of any material emergency or other
material change in the Property and of any pending or threatened
governmental complaints, investigations or hearings that might have a
material adverse effect on the Property.
(f) Seller shall not accelerate, modify or cancel any Lease, or other
agreement constituting a part of the Property.
(g) Seller shall not enter into any other commitment or transaction
that could materially and adversely affect the Tower Business or the
Property.
(h) Seller shall not engage in, solicit or authorize any negotiations
or proposal for the purchase of the Property, except with Buyer.
(i) Seller shall obtain releases, terminations and/or satisfactions
of all mortgages, liens and financing statements affecting the Property
which were granted by Seller.
-9-
<PAGE>
VIII.2 Seller agrees that all Owned Real Property and Leased Real
Property, for which the Requirements (as hereinafter defined) are not satisfied
prior to Closing, shall be subject to the Escrow Agreement (as hereinafter
defined).
ARTICLE IX
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
-------------------------------------------
IX.1 Buyer shall not be obligated to consummate the sale contemplated by
this Contract unless:
(a) Closing Documents. Seller shall have provided to Buyer at
-----------------
Closing, each of the documents and other items required pursuant to Section
11.2(a) hereof.
(b) Seller's Warranties, Representations and Covenants. Each of
--------------------------------------------------
Seller's warranties and representations set forth herein shall be true and
correct in all material respects as of the Effective Date and as of Closing
and Seller shall have performed all its covenants as set forth in this
Contract.
ARTICLE X
CONDITION PRECEDENT TO SELLER'S PERFORMANCE
-------------------------------------------
X.1 Seller shall not be obligated to consummate the sale contemplated
by this Contract unless:
(a) Closing Documents. Buyer shall have provided to Seller at
-----------------
Closing, each of the documents required pursuant to Section 11.2(b) hereof.
(b) Buyer's Warranties and Representations. Each of Buyer's
--------------------------------------
warranties and representations set forth herein shall be true and correct
in all material respects as of the Effective Date and as of Closing.
(c) Credit Facility Amendment. Seller shall have renegotiated the
-------------------------
terms of its Credit Agreement with its existing lenders upon terms
satisfactory to Seller in its sole discretion.
ARTICLE XI
CLOSING
-------
XI.1 Date and Place of Closing. The Closing hereunder shall take place
-------------------------
in the offices of Bracewell & Patterson, L.L.P., 711 Louisiana Street, Suite
2900, Houston, Texas 77002, or at such other place as Seller and Buyer may
mutually agree. The Closing Date shall be latter of (a) the date which is three
(3) business days following Buyer's receipt of written notice from Seller of
Seller's desire to close the transaction contemplated hereby and (b) January 9,
1998. If the transaction has
-10-
<PAGE>
not closed by March 31, 1998, either Buyer or Seller may terminate this Contract
by providing written notice to the other.
XI.2 Items to be Delivered
---------------------
(a) Seller. Seller hereby delivers to Buyer the following items:
------
(i) A special warranty deed, for each of the Owned Real
Properties, duly executed and acknowledged by Seller
subject to all exceptions and restrictions then affecting
such Owned Real Properties including any items that would
be revealed by a survey (the "Deed(s)").
(ii) A counterpart of an assignment and assumption of leasehold
estate for each of the Leased Real Properties ("Assignment
of Leases") duly executed and acknowledged by Seller
assigning and transferring to Buyer all of Seller's right,
title, and interest as the lessee, without warranty except
as otherwise expressly set forth in this Contract.
(iii) Originals of all written User Contracts which are
assignable, together with one counterpart of an assignment
and assumption of such User Contracts ("Assignment of
Contracts"), duly executed and acknowledged by Seller,
whereby Seller assigns and transfers to Buyer all of
Seller's right, title, and interest therein, without
warranty (except as otherwise expressly set forth in this
Contract), and whereby Buyer assumes all of Seller's
obligations (regardless of when such obligations may have
arisen) under such User Contracts.
(iv) A counterpart of the Purchase Price Allocation executed by
Seller.
(v) A counterpart of a Master Antenna Site Lease ("Master
Lease") whereby Buyer agrees to lease space on the Towers
to Seller pursuant to the terms of and in the form of the
agreement attached hereto as Exhibit "D".
-----------
(vi) A bill of sale conveying to Buyer all of Seller's right,
title, and interest in and to the Personalty, without
warranty.
(vii) A Land Lease Agreement (in form and substance reasonably
acceptable to Buyer and Seller) relating to the Tyler,
Texas property granting to Buyer, in exchange for a rental
payment of $1.00 per month, certain non-exclusive rights
to use land owned by Seller to access the Tower being
conveyed to Buyer hereunder for an initial
-11-
<PAGE>
period of ten (10) years with two additional rights to
extend for periods of ten (10) years each upon similar terms
(the "Tyler Lease").
(viii) An amount of money (the "Rental Prepayment") equal to the
product of (a) .11111 and (b) the sum of rents allocable to
those Leased Real Properties and Owned Real Properties, as
set forth on Exhibit "F" attached hereto ("Allocable Rent"),
-----------
for which the Requirements (as hereinafter defined) are not
satisfied prior to Closing. The Rental Prepayment shall be
applied to Seller's rental obligations under the Master
Lease.
(ix) A counterpart of an escrow agreement pursuant to which,
Seller shall escrow an amount equal to the product of (a)
.88889 and (b) the sum of Allocable Rent for each Leased
Real Property and each Owned Real Property for which the
Requirements are not satisfied prior to Closing (the
"Escrowed Funds"), with a party to be agreed upon by and
between Buyer and Seller ("Escrow Agent"), to secure
Seller's obligations under the Master Lease (the "Escrow
Agreement"). The Escrow Agreement shall provide that the
Escrowed Funds will be retained by the Escrow Agent until
Buyer has been able to obtain with respect to each Leased
Real Property and each Owned Real Property, in form and
substance reasonably acceptable to Buyer: (w) a survey and a
title insurance commitment covering such property together
with all related easements, containing no exceptions which
are reasonably likely to have an adverse effect on Buyer's
ability to operate the Towers, (x) documentation of all Land
Leases in writing in recordable form (for each Leased Real
Property only), (y) landlord estoppel, consent and
nondisturbance agreements from each of the landlords under
the Land Leases (for each Leased Real Property only) and (z)
all easements reasonably necessary for access to the parcel,
or for the location of guy wires supporting any Tower on the
subject parcel (collectively, the "Requirements"). The
Escrow Agreement shall also provide that the Escrowed Funds
shall be released as follows: (a) on the ninetieth (90th)
day following the Closing, (1) Seller shall receive an
amount equal to the product
-12-
<PAGE>
of (A) .88889 and (B) the sum of the Allocable Rent for each
Leased Real Property and each Owned Real Property for which
the Requirements have been satisfied and (2) Buyer shall
receive an amount equal to the product of (A) .33333 and (B)
the sum of the Allocable Rent for each Leased Real Property
and each Owned Real Property for which the Requirements
remain unsatisfied, (b) on the first anniversary of the
Closing Date, (1) Seller shall receive an amount equal to
the product of (A) .55556 and (B) the sum of the Allocable
Rent for each Leased Real Property and each Owned Real
Property for which the Requirements have been satisfied and
(2) Buyer shall receive an amount equal to the product of
(A) .44444 and (B) the sum of the Allocable Rent for each
Leased Real Property and each Owned Real Property for which
the Requirements remain unsatisfied and (c) on the second
anniversary of the Closing Date, (1) Seller shall receive an
amount equal to the product of (A) .11111 and (B) the sum of
the Allocable Rent for each Leased Real Property and each
Owned Real Property for which the Requirements have been
satisfied and (2) Buyer shall receive an amount equal to the
product of (A) .11111 and (B) the sum of the Allocable Rent
for each Leased Real Property and each Owned Real Property
for which the Requirements remain unsatisfied. All sums
released to Buyer under the Escrow Agreement shall be
applied to Seller's rental obligations under the Master
Lease.
(x) All keys to each site, facilities, and equipment transferred
to Buyer and all security and access codes, if any,
applicable to each site, facilities, and equipment.
(xi) Copies of Seller's Books.
(xii) All additional documents and instruments or which Buyer's
counsel and Seller's counsel may mutually and reasonably
determine are necessary to the proper consummation of this
transaction.
(b) Buyer. Buyer shall deliver to the Seller each of the following
-----
items:
(i) The total Purchase Price (less the Escrowed Funds and the
Rental Prepayment) after deducting therefrom any credits to
which Buyer may be entitled.
(ii) A counterpart of the Assignment of Leases duly executed and
acknowledged by Buyer whereby Buyer assumes all of Seller's
obligations (regardless of when such obligations may have
arisen) under the leases for the Leased Real Properties.
(iii) A counterpart of the Assignment of Contracts duly executed
and acknowledged by Buyer.
(iv) A counterpart of the Master Lease duly executed and
acknowledged by Buyer.
-13-
<PAGE>
(v) A counterpart of the Purchase Price Allocation executed by
Buyer.
(vi) A counterpart of the Tyler Lease.
(vii) All additional documents and instruments which Buyer's
counsel and Seller's counsel may mutually and reasonably
determine are necessary to the proper consummation of this
transaction.
XI.3 Credits/Prorations. Current ad valorem and personal property taxes,
------------------
and any rents or other fees and charges associated with the Property shall be
prorated through the Closing Date. If the amount of the ad valorem (or personal
property) taxes for the year in which the sale is closed is not available,
proration of taxes shall be made on the basis of taxes assessed in the previous
year, with a subsequent cash adjustment of such proration to be made between
Seller and Buyer, if necessary, when actual tax figures are available.
All prepaid rents under User Contracts shall be delivered to Buyer or
otherwise credited against the cash due from Buyer to Seller. Seller will
furnish Buyer with a schedule of delinquent rents for the Property. Unpaid rents
due from tenants will not be prorated. Buyer shall pay Seller's pro rata share
of any delinquent rents due from tenants, net of any reasonable out of pocket
cost of collection, if, as, and when they are collected by Buyer, it being
understood and agreed that all rents collected by Buyer which are not
specifically designated by the tenants to be on account of their obligation for
any period before the Closing Date shall be applied to current rental periods
and second to satisfy rental obligations arising from past rental periods.
All other income and expenses of the Property (except as may otherwise be
provided herein) shall be prorated through the Closing Date.
Buyer shall receive a credit against the Purchase Price for the amounts of
all security deposits (including without limitation, rent deposits, damage or
similar deposits and excluding all application fees or deposits which are non-
refundable or which as of the Closing Date have been forfeited) which may have
been delivered by tenants under the User Contracts except, to the extent that
Seller documents to Buyer's reasonable satisfaction that the same have been
applied to delinquent sums or to damages as provided in the User Contracts.
XI.4 Delinquent Rents. Seller shall retain title to all delinquent rents
----------------
existing as of the Closing Date or otherwise allocable to the period of time
prior to the Closing Date under the User Contracts, and shall have the right to
collect such delinquent rents at Seller's sole cost and expense; provided,
however, that in pursuance of such collection efforts, Seller shall not exercise
any of the lessor's or landlord's rights under any User Contracts. The Buyer
agrees to cooperate with Seller, at no cost to Buyer, in connection with such
collections, and to promptly remit to Seller all such delinquent rents collected
by the Buyer after the Closing Date; provided, however, that all rents that (i)
are received after the date hereof from such delinquent tenants and (ii) are not
designated by such tenants to be on account of their obligations for any period
before the Closing Date, shall be applied
-14-
<PAGE>
first against the then-current portion of such tenant's rent obligation and then
against the delinquent portion due to Seller. The provisions of this Section
11.4 shall survive the Closing.
XI.5 Costs of Closing.
----------------
Seller agrees to pay:
(a) Seller's attorneys' fees;
(b) One half (1/2) of any escrow fees charged by the Title Company or
the Escrow Agent pursuant hereto; and
(c) Recording fees charged to release any liens on the Property prior
to or after the Closing Date.
Buyer agrees to pay:
(a) Buyer's attorneys' fees;
(b) One half (1/2) of any escrow fees and all of the recording fees
charged by the Title Company or the Escrow Agent pursuant hereto;
(c) All fees in connection with recording the Deed(s) and the
Easement;
(d) All fees in connection with satisfying the Requirements
(specifically excluding any legal fees and other incidental costs incurred
by Seller pursuant to Section 12.11 and any other expenses for which Seller
is responsible under the terms of this Contract);
(e) The cost of any title policies or surveys obtained by Buyer; and
(f) The costs of any Inspections conducted by Buyer.
All other costs, fees, penalties and other expenses incurred shall be paid by
Seller and/or Buyer as is customarily done in connection with a closing in
Harris County, Texas of the type of transaction contemplated by this Contract.
XI.6 Utilities. Buyer and Seller shall mutually endeavor to have utility
---------
meters read, final bills sent to the Seller, and all utility (including
telephones) services to be placed in the Buyer's name, effective as of the
Closing Date.
ARTICLE XII
MISCELLANEOUS
-------------
-15-
<PAGE>
XII.1 References. All references to "Article", "Articles", "Section", or
----------
"Sections" contained herein are, unless specifically indicated otherwise,
references to Articles and Sections of this Contract.
XII.2 Exhibits. All references to "Exhibits" contained herein are
--------
references to exhibits attached hereto, all of which are made a part hereof for
all purposes.
XII.3 Captions. The captions, headings and arrangements used in this
--------
Contract are for convenience only and do not in any way affect, limit, amplify
or modify the terms and provisions hereof.
XII.4 Number and Gender of Words. Whenever herein the singular number is
--------------------------
used, the same shall include the plural where appropriate and words of any
gender shall include each other gender where appropriate.
XII.5 Governing Law. This Contract is being executed and delivered and is
-------------
intended to be performed in the State of Texas, and the laws of such State shall
govern the validity, construction, enforcement and interpretation of this
Contract, unless otherwise specified herein.
XII.6 Attorneys Fees. If it shall be necessary for either Buyer or Seller
--------------
to employ an attorney to enforce their respective rights pursuant to this
Contract because of the default of the other party, the non-prevailing party in
any legal action shall reimburse the prevailing party for its reasonable
attorneys' fees.
XII.7 Entirety and Amendments. This Contract embodies the entire
-----------------------
agreement between the parties and supersedes all prior agreements and
understandings, if any, relating to the Property and may be amended or
supplemented only by an instrument in writing executed by the party against whom
enforcement is sought.
XII.8 Invalid Provisions. If any provision of this Contract is held to be
------------------
illegal, invalid, or unenforceable under present or future laws, such provisions
shall be fully severable the same as if such invalid or unenforceable provisions
had never comprised a part of the Contract; and the remaining provisions of the
Contract shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Contract. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be automatically as a part of this Contract, a provision
as similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
XII.9 Multiple Counterparts. This Contract may be executed in a number of
---------------------
original or facsimile identical counterparts. If so executed, each of such
counterparts is to be deemed an original for all purposes and all such
counterparts shall, collectively, constitute one agreement, but, in making proof
of this Contract, it shall not be necessary to produce or account for more than
one such counterpart.
-16-
<PAGE>
XII.10 Parties Bound. This Contract shall be binding upon and inure
-------------
solely to the benefit of Seller and Buyer and their respective heirs, personal
representatives, successors and permitted assigns and no third party is intended
to be a beneficiary of this Contract.
XII.11 Further Acts. In addition to the acts and deeds recited herein and
------------
contemplated to be performed, executed and/or delivered by Seller and Buyer,
Seller and Buyer agree to perform, execute and/or deliver or cause to be
performed, executed and/or delivered after the closing any and all such further
acts, deeds and assurances as may be reasonably necessary to consummate the
transactions contemplated hereby. Seller expressly agrees that it shall, at its
sole cost and expense, cooperate and assist (in all reasonable respects) Buyer
in order to satisfy all Requirements (including, without limitation, obtaining
any agreements or information which are reasonably necessary in such regard)
pertaining to the Leased Real Property and Owned Real Property that is subject
to the Escrow Agreement (it being understood and agreed that, notwithstanding
anything set forth herein to the contrary, Buyer shall be responsible for the
payment of all title insurance premiums, survey costs and other Buyer's expenses
enumerated in Section 11.5). In addition, Buyer and Seller agree to cooperate
(in all reasonable respects) with each other following the Closing to correct
any material title or survey defects relating to any of the Leased Real Property
or Owned Real Property (Seller further agrees to use commercially reasonable
efforts to make any such corrections within 180 days following Closing).
XII.12 Time of the Essence. It is expressly agreed by the parties hereto
-------------------
that time is of the essence with respect to this Contract.
XII.13 Real Estate Brokerage. Seller has not entered into any written
---------------------
agreement with any broker relating to the sale and purchase of the Property
contemplated hereby. Buyer has not entered into any written agreement with any
broker relating to the sale or purchase of the Property contemplated hereby.
The Texas Real Estate Licensing Act requires the real estate agent to advise
Buyer that it should have an attorney examine an abstract of title to the
property being purchased or a title policy should be obtained. Notice to that
effect is therefore given to the Buyer.
XII.14 Waiver. It is not a waiver of breach if the nondefaulting party
------
fails to declare immediately a default or delays in taking any action. Pursuit
of any remedies set forth in this Contract does not preclude pursuit of other
remedies in this Contract. No waiver of any party's rights hereunder shall be
binding unless in writing and executed by an authorized signature of the party
to be so bound and any waiver by any party shall not be construed to be a waiver
of any matter other than the matter specifically waived in such writing.
XII.15 Confidentiality. Except for compulsory disclosures in legal
---------------
proceedings, Buyer and Seller, and their respective agents, agree to keep
confidential the terms of this Contract and any other documents delivered
pursuant hereto and further covenant not to discuss the same with any third
party without first seeking the written consent of the other.
-17-
<PAGE>
XII.16 Survival. All covenants and agreements contained herein and
--------
intended to be performed subsequent to the Closing Date shall survive the
execution and delivery of the Deed(s) and other closing documents required
hereby and shall specifically not be deemed to be merged into or waived by any
instrument of closing, but shall expressly survive and be binding upon Seller
and Buyer. Any liability of either party for misrepresentation or breach of
warranty contained herein shall survive the execution and delivery of the
Deed(s) and other closing documents required hereby for a period of eighteen
(18) months (except for all representations and warranties of title contained in
the Deed(s) which shall survive indefinitely), shall specifically not be deemed
to be merged into or waived by any instrument of closing, and such liability
shall expressly survive and be binding upon such party for such eighteen (18)
month period.
XII.17 Notices. All notices, demands and requests and other
-------
communications required or permitted hereunder shall be in writing, shall be
sent by certified mail, return receipt requested, by courier, or by telephonic
facsimile and shall be deemed to be delivered (i) upon first attempted delivery
if sent by mail or by courier and (ii) upon transmittal (with receipt
confirmation) if sent by telephonic facsimile. Buyer's and Seller's respective
addresses for purposes of this Contract, and to which all notices required
hereunder shall be sent, are as follows:
If to the Seller: Teletouch Communications
1000 Louisiana Street
Suite 600
Houston, Texas 77002
Attn: Mr. Robert M. McMurrey
(713) 951-3351 (Facsimile)
(713) 951-0316 (Telephone)
with a copy to: Bracewell & Patterson, L.L.P.
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Attn: Mr. Thomas D. Manford, III
(713) 221-1212 (Facsimile)
(713) 221-1303 (Telephone)
-18-
<PAGE>
If to the Buyer: Pinnacle Towers, Inc.
1549 Ringling Boulevard
3rd Floor
Sarasota, Florida 34236
Attn: Mr. Robert J. Wolsey
(941) 364-8761 (Facsimile)
(941) 364-8886 (Telephone)
with a copy to: Holland & Knight, L.L.P.
400 North Ashley Drive
Suite 2300
Tampa, Florida 33602-4300
Attn: Mr. Trey Baldy
(813) 229-0134 (Facsimile)
(813) 227-8500 (Telephone)
Either party hereto may change its address for notice by giving three (3)
days prior written notice thereof to the other party.
XII.18 Assignment of Contract. This Contract may not be assigned by
----------------------
either party hereto without the prior written consent of the other party.
XII.19 Limitation on Buyer's Remedies. If Buyer discovers after Closing
------------------------------
that any of the representations made in Sections 6.2, 6.6 or 6.9 were untrue
when made, Buyer's sole and exclusive remedy shall be to obtain a release of any
Escrowed Funds relating to the Leased Real Property or Owned Real Property to
which the misrepresentation relates. Any release of Escrowed Funds pursuant to
this Section 12.19 or the Escrow Agreement shall be applied to Seller's rental
obligations under the Master Lease.
XII.20 Limitation on Subsequent Sale. If the transaction contemplated by
-----------------------------
this Contract fails to close because Seller is unable to satisfy the condition
precedent set forth in Section 10.1(c) above or if Seller terminates this
Contract pursuant to Section 11.1 above, Seller shall not solicit, negotiate or
otherwise consummate a sale of the Property for a period of six (6) months
following the date this Contract is terminated.
XII.21 Post Closing Audits. Seller shall, for a period of one (1) year
-------------------
following the Closing, cooperate (in all material respects) with Buyer and will
make available to Buyer and Buyer's
-19-
<PAGE>
accountants, Seller's financial books and records regarding the Property in
connection with audits of Buyer or Buyer's business pertaining to financing done
by Buyer after Closing.
EXECUTED effective as of the Effective Date.
SELLER:
TELETOUCH COMMUNICATIONS, INC.,
By:_________________________________
Name:________________________
Title:______________________________
BUYER:
PINNACLE TOWERS INC.
By:_________________________________
Name:________________________
Title:_________________________________
-20-
<PAGE>
EXHIBIT "A"
-----------
Leased Real Property
--------------------
<TABLE>
<CAPTION>
===============================================================================================================
SITE # PROPERTY OWNER ADDRESS (SITE) CITY (SITE) STATE ZIP CODE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 02460 Razor Back Bumper Granite Mtn Little Rock AR 72219
- ---------------------------------------------------------------------------------------------------------------
2 02532 Dr. H. C. Carrouthers Burrow Mtn, 1.25 Mi NE Morrilton AR 72110
- ---------------------------------------------------------------------------------------------------------------
3 02570 Kennith R. Nichols 1.32 Miles NE of Int US64 Ozark AR 72949
- ---------------------------------------------------------------------------------------------------------------
4 04100 Mary Kubala 1.3 Mi WNW of Walburg Walburg TX 78626
- ---------------------------------------------------------------------------------------------------------------
5 04120 Michael Mundell 817 S 1st St Temple TX 76501
- ---------------------------------------------------------------------------------------------------------------
6 04135 Ann Howard 2 Mi ESE of Moody Moody TX 07666
- ---------------------------------------------------------------------------------------------------------------
7 04170 James Carroll/John Jones 1000' N of USS4 Mexia TX 76667
- ---------------------------------------------------------------------------------------------------------------
8 04180 Georgia M. Willis 5 Miles N of Mexia Elm Mott TX 76710
- ---------------------------------------------------------------------------------------------------------------
9 04185 David Tyssen 1.4 Mi W of Clifton Clifton TX 76634
===============================================================================================================
</TABLE>
<PAGE>
EXHIBIT "B"
-----------
Owned Real Property
-------------------
<TABLE>
<CAPTION>
=============================================================================================
SITE # ADDRESS (SITE) CITY (SITE) STATE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 02308 8623 Cityview Tyler TX
- ---------------------------------------------------------------------------------------------
2 02588 3.1 Mi SW of Jonesboro Jonesboro AR
- ---------------------------------------------------------------------------------------------
3 02630 22 Mi N of Int of Harrison Harrison AR
- ---------------------------------------------------------------------------------------------
4 03001 2121 Old Henderson Hwy Tyler TX
- ---------------------------------------------------------------------------------------------
5 03205 Glasgow Rd, 2.5 Mi E of Tyler Tyler TX
- ---------------------------------------------------------------------------------------------
6 03245 8 Mi NW of Longview East Mtn TX
- ---------------------------------------------------------------------------------------------
7 04105 2 Mi S of Belton Belton TX
- ---------------------------------------------------------------------------------------------
8 04115 3 Mi S of Killeen Killeen TX
- ---------------------------------------------------------------------------------------------
9 04130 Top of Hogg Mtn Copperas Cove TX
- ---------------------------------------------------------------------------------------------
10 04160 5 Mi S of Waco Waco (Hewitt) TX
- ---------------------------------------------------------------------------------------------
11 04165 1200 Block of N 46th St Waco TX
=============================================================================================
</TABLE>
<PAGE>
EXHIBIT "C"
-----------
User Contracts
--------------
<TABLE>
<CAPTION>
===============================================================================
CUST. NO. CUST. NAME MO. AMT.
- -------------------------------------------------------------------------------
<S> <C> <C>
20297 GTECH Corporation $ 350.00
- -------------------------------------------------------------------------------
20297 GTECH Corporation 400.00
- -------------------------------------------------------------------------------
20297 GTECH Corporation 375.00
- -------------------------------------------------------------------------------
20570 Pagemart 350.00
- -------------------------------------------------------------------------------
20821 Young Brothers Inc. 65.00
- -------------------------------------------------------------------------------
20822 Transit Mix #146 200.00
- -------------------------------------------------------------------------------
20881 McLennan County Elec. 350.00
- -------------------------------------------------------------------------------
20886 Star-Tex Propane Inc. 380.50
- -------------------------------------------------------------------------------
20914 NOAA Weather Service 300.00
- -------------------------------------------------------------------------------
20917 Lone Star Gas 150.00
- -------------------------------------------------------------------------------
21826 P C I 500.00
- -------------------------------------------------------------------------------
22391 Metrocel Cellular Tele 200.00
- -------------------------------------------------------------------------------
23018 LTS Business Comm. 0.00
- -------------------------------------------------------------------------------
23366 Advanced Mobilcomm 465.00
- -------------------------------------------------------------------------------
23927 Huffman Communications 275.00
- -------------------------------------------------------------------------------
25891 National Medical Rentals 230.00
- -------------------------------------------------------------------------------
26116 Mobile Comm Nationwide 957.00
- -------------------------------------------------------------------------------
27124 Drug Enforcement Admin 320.00
- -------------------------------------------------------------------------------
28598 Metropolitan Houston 625.00
- -------------------------------------------------------------------------------
29596 G C R - Cotton Truck 320.00
- -------------------------------------------------------------------------------
30122 Roosth & Genecov 184.00
- -------------------------------------------------------------------------------
31007 Ardis Company 242.71
- -------------------------------------------------------------------------------
31009 Pronet 235.00
- -------------------------------------------------------------------------------
31046 Mobile Comm 345.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===============================================================================
CUST. NO. CUST. NAME MO. AMT.
- -------------------------------------------------------------------------------
<S> <C> <C>
31046 Mobile Comm 240.00
- -------------------------------------------------------------------------------
31089 G-Tech Corp. 450.00
- -------------------------------------------------------------------------------
31240 United Mobile Comm 305.00
- -------------------------------------------------------------------------------
31270 Parkway Paging Inc. 1,115.00
- -------------------------------------------------------------------------------
31273 Golf Star Comm. 154.40
- -------------------------------------------------------------------------------
31282 Mother Frances Hospital 506.00
- -------------------------------------------------------------------------------
31282 Mother Frances Hospital 12.00
- -------------------------------------------------------------------------------
31295 Neches Communications 262.00
- -------------------------------------------------------------------------------
31308 Nextel Communications 529.00
- -------------------------------------------------------------------------------
32077 Adams Gary 160.00
- -------------------------------------------------------------------------------
32258 Evans Air Conditioning 125.00
- -------------------------------------------------------------------------------
37057 US Customs Service 202.40
- -------------------------------------------------------------------------------
37061 IRS-J Hopson 333.00
- -------------------------------------------------------------------------------
37065 FBI S100481 1,441.50
- -------------------------------------------------------------------------------
41035 Sprint Communications 202.65
- -------------------------------------------------------------------------------
41367 Laidlaw Waste Disposal 270.00
- -------------------------------------------------------------------------------
Total Monthly Tower Billing 14,127.16
===============================================================================
</TABLE>
<PAGE>
EXHIBIT "D"
-----------
Master Lease
------------
<PAGE>
EXHIBIT "E"
-----------
Land Leases
-----------
<PAGE>
EXHIBIT "F"
-----------
Rental Allocation
-----------------
PURCHASE PRICE ALLOCATION
<TABLE>
<CAPTION>
Tower Allocable Rent
- ----- --------------
<S> <C>
Tyler - Cityview $ 121,512
Little Rock $ 65,353
Morrilton (AR) $ 65,161
Ozark (AR) $ 65,161
Jonesboro (AR) $ 67,676
Harrison (AR) $ 68,046
Tyler-Old Henderson Hwy. $ 68,042
Tyler-Glasgow Road $ 225,142
Best Mountain $ 72,244
Walburg $ 67,084
Bellon $ 67,324
Killeen $ 83,893
Temple $ 64,583
Cooperas Cove $ 79,190
Meedy $ 97,196
Marlhi $ 66,942
Waco-Hewltt $ 82,470
Waco-46th Street $ 166,860
Mexle $ 77,243
Elm Mott $ 65,161
Clifton $ 63,718
==========
TOTAL $1,350,000
</TABLE>
<PAGE>
FIRST AMENDMENT TO CONTRACT OF SALE
THIS FIRST AMENDMENT TO CONTRACT OF SALE (this "Amendment") is entered into
effective as of January 22, 1998, by and between TELETOUCH COMMUNICATIONS, INC.
("Seller") and PINNACLE TOWERS INC. (the "Buyer") for the purpose of amending
that certain Contract of Sale dated as of December 31, 1997 (the "Contract").
WHEREAS, Buyer and Seller have mutually agreed to increase the Purchase
Price (as defined in the Contract) to be paid by Buyer to Seller.
NOW THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency which are
hereby acknowledged, the parties agree as follows:
1. Section 3.1 of the Contract is deleted in its entirety and replaced
with the following:
"3.1 The Purchase Price. The Purchase Price to be paid by Buyer to
------------------
Seller for the Property shall be Eight Million Seven Hundred
Twenty Thousand Seventy Eight and 40/100 Dollars
($8,720,078.40)."
2. Exhibit "B" of the Contract is amended by substituting the legal
description attached hereto as Schedule 1 for the legal description of
----------
the Tyler, TX/Site No. 3001.
3. Exhibit "C" of the Contract is amended and replaced in its entirety
with Schedule 2 attached hereto.
----------
4. Buyer and Seller agree to negotiate in good faith and execute the
Purchase Price Allocation (as defined in the Contract) on a post
closing basis.
Except as specifically provided for herein, all terms and conditions of the
Contract shall remain in full force and effect. This Amendment may be executed
in any number of counterparts, each of which when so executed and delivered
shall be an original but all such counterparts shall together constitute one and
the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
SELLER
TELETOUCH COMMUNICATIONS, INC.
By:_______________________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
BUYER
PINNACLE TOWERS, INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
-9-
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION FOR TYLER, TX/SITE NO. 3001
---------------------------------------------
<PAGE>
SCHEDULE 2
USER CONTRACTS
--------------
<TABLE>
<CAPTION>
===============================================================================
CUST. NO. CUST. NAME MO. AMT.
- -------------------------------------------------------------------------------
<S> <C> <C>
20297 GTECH Corporation $ 350.00
- -------------------------------------------------------------------------------
20297 GTECH Corporation 400.00
- -------------------------------------------------------------------------------
20297 GTECH Corporation 375.00
- -------------------------------------------------------------------------------
20570 Pagemart 700.00
- -------------------------------------------------------------------------------
20821 Young Brothers Inc. 65.00
- -------------------------------------------------------------------------------
20822 Transit Mix #146 200.00
- -------------------------------------------------------------------------------
20881 McLennan County Elec. 350.00
- -------------------------------------------------------------------------------
20886 Star-Tex Propane Inc. 380.50
- -------------------------------------------------------------------------------
20914 NOAA Weather Service 300.00
- -------------------------------------------------------------------------------
20917 Lone Star Gas 150.00
- -------------------------------------------------------------------------------
21826 P C I 500.00
- -------------------------------------------------------------------------------
22391 Metrocel Cellular Tele 200.00
- -------------------------------------------------------------------------------
23018 LTS Business Comm. 0.00
- -------------------------------------------------------------------------------
23366 Advanced Mobilcomm 465.00
- -------------------------------------------------------------------------------
23927 Huffman Communications 275.00
- -------------------------------------------------------------------------------
25891 National Medical Rentals 230.00
- -------------------------------------------------------------------------------
26116 Mobile Comm Nationwide 957.00
- -------------------------------------------------------------------------------
27124 Drug Enforcement Admin 320.00
- -------------------------------------------------------------------------------
28598 Metropolitan Houston 625.00
- -------------------------------------------------------------------------------
29596 G C R - Cotton Truck 320.00
- -------------------------------------------------------------------------------
30122 Roosth & Genecov 184.00
- -------------------------------------------------------------------------------
31007 Ardis Company 242.71
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===============================================================================
CUST. NO. CUST. NAME MO. AMT.
- -------------------------------------------------------------------------------
<S> <C> <C>
31009 Pronet 235.00
- -------------------------------------------------------------------------------
31046 Mobile Comm 345.00
- -------------------------------------------------------------------------------
31046 Mobile Comm 240.00
- -------------------------------------------------------------------------------
31089 G-Tech Corp. 450.00
- -------------------------------------------------------------------------------
31240 United Mobile Comm 305.00
- -------------------------------------------------------------------------------
31270 Parkway Paging Inc. 1,115.00
- -------------------------------------------------------------------------------
31273 Golf Star Comm. 154.40
- -------------------------------------------------------------------------------
31282 Mother Frances Hospital 506.00
- -------------------------------------------------------------------------------
31282 Mother Frances Hospital 12.00
- -------------------------------------------------------------------------------
31295 Neches Communications 262.00
- -------------------------------------------------------------------------------
31308 Nextel Communications 529.00
- -------------------------------------------------------------------------------
32077 Adams Gary 160.00
- -------------------------------------------------------------------------------
32258 Evans Air Conditioning 125.00
- -------------------------------------------------------------------------------
37057 US Customs Service 202.40
- -------------------------------------------------------------------------------
37061 IRS-J Hopson 333.00
- -------------------------------------------------------------------------------
37065 FBI S100481 1,441.50
- -------------------------------------------------------------------------------
41035 Sprint Communications 202.65
- -------------------------------------------------------------------------------
41367 Laidlaw Waste Disposal 270.00
- -------------------------------------------------------------------------------
Globalstar LP 295.00
- -------------------------------------------------------------------------------
Total Monthly Tower Billing 14,772.16
===============================================================================
</TABLE>
<PAGE>
EXHIBIT 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made as of May 3,
---------
1995, between Pinnacle Towers Inc., a Delaware corporation (the "Company"), and
-------
Robert J. Wolsey ("Executive").
---------
This Agreement is being entered into in connection with the consummation of
the transactions contemplated by the Subscription and Stockholders Agreement
dated as of April 17, 1995 (as in effect from time to time, the "Stockholders
------------
Agreement") among the Company, ABRY Broadcast Partners II, L.P., a Delaware
- ---------
limited partnership ("ABRY Partners"), Executive and the other Executives named
-------------
in the Stockholders Agreement. The execution and delivery of this Agreement are
conditions precedent to ABRY Partners' obligation to consummate the transactions
contemplated by the Stockholders Agreement. Each capitalized term used and not
otherwise defined in this Agreement has the meaning which the Stockholders
Agreement assigns to that term.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company will employ Executive, and Executive accepts
----------
employment with the Company, upon the terms and conditions set forth in this
Agreement, for the period beginning on the date of this Agreement and ending as
provided in Section 4 (the "Employment Period").
-----------------
2. POSITION AND DUTIES. During the Employment Period, Executive will
-------------------
render such managerial, analytical, administrative, marketing and other
executive services to the Company and its Subsidiaries as are from time to time
necessary in connection with the management and affairs of the Company, which
will include acquiring, owning, constructing, licensing, managing-for-hire,
leasing, operating and divesting tower or other communication sites and related
properties (together with all reasonably related activities, the "Business").
--------
During the Employment Period, except as otherwise determined by the Board,
Executive will serve as the chief executive officer of the Company. Executive
will report to the Board, and Executive will devote his best efforts and his
full business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company and its Subsidiaries. Executive will perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner
<PAGE>
3. BASE SALARY, BONUS AND BENEFITS.
-------------------------------
(A) BASE SALARY. During the Employment Period, Executive will be paid
-----------
as base compensation for services (as in effect from time to time, the "Base
----
Salary") the amount described in this paragraph 3(a). The Base Salary initially
will be $75,000 per annum, and will be subject to annual review and adjustment
from time to time by the Board. The Base Salary will be payable in regular
installments in accordance with the Company's general payroll practices. In
addition, during the Employment Period, Executive will be entitled to
participate in all of the employee benefit programs for which senior executive
employees of the Company are generally eligible.
(B) REIMBURSEMENT OF EXPENSES. The Company will reimburse Executive
-------------------------
for all reasonable expenses incurred by him in the course of performing his
duties under this Agreement and which are consistent with the Company's policies
in effect from time to time with respect to travel, entertainment and other
business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(C) BONUS. In addition to the Base Salary, the Company (by action of
-----
the Board) may, in its sole discretion, award a bonus (the "Bonus") to Executive
following the end of each fiscal year during the Employment Period based upon
Executive's performance and the Company's and the Subsidiaries' operating
results during such fiscal year. The amount of the Bonus, if any, will be
determined, and may be adjusted, from time to time as the Board may determine.
(D) FRINGE BENEFITS. In addition to the Base Salary and Bonus,
---------------
Executive will be entitled to the following benefits during the Employment
Period, unless otherwise modified by the Company (by action of the Board):
(i) at the Company's expense, the use of an automobile supplied
by the Company; and
(ii) health insurance and disability insurance of such coverage
as is determined by the Board.
4. TERMINATION. The Employment Period will continue until Executive's
-----------
resignation, death or disability or other incapacity (as determined by the Board
in good faith) or until the Employment Period is terminated by the Company (by
action of the Board) for any reason or for no reason. In the event of
Executive's resignation, death, disability or other incapacity or the
termination of the Employment Period by the Company for Cause (as defined
below), Executive will not be entitled to receive his Base Salary or any fringe
benefits or Bonus for periods after the termination of the Employment Period.
In the event of termination of the Employment Period by the Company for any
other reason or for
2
<PAGE>
no reason, Executive will be entitled to receive his Base Salary (at the rate
then in effect) and fringe benefits described in paragraph 3(d) for a period of
eighteen months thereafter (so long as Executive is not in breach of paragraph 6
or paragraph 7). For purposes of this Agreement, "Cause" will mean (i) the
-----
commission of a felony or a crime involving moral turpitude or the commission of
any act involving dishonesty, disloyalty or fraud with respect to the Company or
any Subsidiary, (ii) conduct tending to bring the Company or any Subsidiary into
substantial public disgrace or disrepute, (iii) substantial and repeated failure
to perform duties as reasonably directed by the Board, (iv) gross negligence or
willful misconduct with respect to the Company or any Subsidiary or (v) any
other material breach of this Agreement which is not cured within fifteen (15)
days after written notice thereof to Executive.
5. RESIGNATION AS OFFICER OR DIRECTOR. Upon the termination of the
----------------------------------
Employment Period, Executive will resign each position (if any) that he then
holds as an officer or director of the Company or any Subsidiary.
6. CONFIDENTIAL INFORMATION. The Executive acknowledges that the
------------------------
information, observations and data which has been or may be obtained by him
while employed by the Company (including while employed by or associated with
Old Paramount) concerning the business or affairs of the Company or any
Subsidiary (collectively, "Confidential Information") are and will be the
------------------------
property of the Company and the Subsidiaries. Therefore, Executive agrees that
he will not disclose to any unauthorized Person or use for his own account any
Confidential Information without the prior written consent of the Company (by
the action of the Board), unless and to the extent that the aforementioned
matters become generally known to and available for use by the public other than
as a result of Executive's acts or omissions to act. Executive will deliver to
the Company at the termination of the Employment Period, or at any other time
the Company may request, all memoranda, notes, plans, records, reports, computer
tapes and software and other documents and data (and copies thereof) containing
or relating to Confidential Information or the business of the Company or any
Subsidiary which he may then possess or have under his control.
7. NON-COMPETE, NON-SOLICITATION.
-----------------------------
(A) NON-COMPETE. Executive acknowledges that in the course of his
-----------
employment with the Company (including while employed by or associated with Old
Paramount) he has and will become familiar with trade secrets and other
confidential information concerning the Company or any Subsidiary, and their
predecessors, and with investment opportunities relating to the Business, and
that his services will be of special, unique and extraordinary value to the
foregoing entities. Therefore, Executive agrees that, during the Employment
Period and for two (2) years thereafter (the Employment Period and such 2 years
being the "Noncompete Period"),
-----------------
3
<PAGE>
he will not directly or indirectly own, manage, control, participate in, consult
with, render services for, or in any other manner engage in, any business
competing with the business of the Company or any Subsidiary, as such businesses
exist or are in process on the date of the termination of the Employment Period,
within the Target Area (the Target Area being the area which management of the
Company has proposed, as a material inducement for the investments by ABRY
Partners which are contemplated by the Stockholders Agreement, as the primary
region for the development and operation of the Company's business) or in any
geographical area which is outside the Target Area and in which the Company or
any Subsidiary then engages in such business or in which the Company or any
Subsidiary then has entered into or offered to enter into a letter of intent or
other agreement to acquire, operate or manage one or more tower properties or
with respect to any other transaction relating to the Business. Nothing in this
paragraph 7 will prohibit Executive from being a passive owner of not more than
2% of the outstanding stock of a corporation of any class which is publicly
traded, so long as Executive has no active participation in the business of such
corporation. The "Target Area" means the states of Alabama, Florida, Georgia,
-----------
Louisiana, Mississippi, North Carolina and South Carolina.
(B) NON-SOLICITATION. During the Noncompete Period, Executive will
----------------
not directly or indirectly (i) induce or attempt to induce any employee of the
Company or any Subsidiary to leave the
employ of such entity, or in any way interfere with the relationship between any
such entity and any employee thereof, (ii) hire any person who was an employee
of the Company or any Subsidiary at any time during the Employment Period, or
(iii) induce or attempt to induce any customer, supplier or other business
relation of the Company or any Subsidiary to cease doing business with such
entity, or in any way interfere with the relationship between any such customer,
supplier or other business relation and such entity.
8. ENFORCEMENT. The Company and Executive agree that if, at the time of
-----------
enforcement of Section 6 or 7, a court holds that any restriction stated in such
Section is unreasonable under circumstances then existing, then the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to information of the type described
in Sections 6 and 7, the Company and Executive agree that money damages would be
an inadequate remedy for any breach of Section 6 or 7. Therefore, in the event
of a breach or threatened breach of Section 6 or 7, the Company or its
successors or assigns (or any other affected Person) may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions of Section 6 or 7,
4
<PAGE>
without posting a bond or other security. The provisions of Sections 6, 7 and 8
are intended to be for the benefit of the Company, the Subsidiaries, their
respective successors and assigns, each of which may enforce such provisions and
each of which (other than the Company) is an express third-party beneficiary of
such provisions. Sections 6, 7 and 8 will survive and continue in full force in
accordance with their terms notwithstanding any termination of the Employment
Period.
9. REPRESENTATIONS. Executive represents and warrants to the Company
---------------
that Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other Person.
10. NOTICES. Any notice provided for in this Agreement will be in writing
-------
and will be either personally delivered, or mailed by first class mail, return
receipt requested, or sent by
reputable overnight courier, in each case with delivery charges or postage
prepaid, to the recipient at the address indicated below:
Notices to Executive:
--------------------
8944 Fisherman's Bay
Sarasota, Florida 34231
Notices to the Company:
----------------------
c/o ABRY Partners, Inc.
18 Newbury Street
Boston, Massachusetts 02116
Attention: President
or such other address or to the attention of such other Person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
11. AMENDMENT AND WAIVER. No modification, amendment or waiver of any
--------------------
provision of this Agreement will be effective unless such modification,
amendment or waiver is approved in writing by the Company, Executive and ABRY
Partners. The failure of either to enforce any of the provisions of this
Agreement will in no way be construed as a waiver of such provisions and will
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. The Company and
Executive intend that ABRY Partners, so long as it is a stockholder of the
Company, be and is a third-party beneficiary of this Agreement.
12. SEVERABILITY. Whenever possible, each provision of this Agreement
------------
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this
5
<PAGE>
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect the validity, legality or enforceability of any
other provision of this Agreement in such jurisdiction or affect the validity,
legality or
enforceability of any provision in any other jurisdiction, but this Agreement
will be reformed, construed and enforced in that jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained in this
Agreement.
13. ENTIRE AGREEMENT. This Agreement embodies the complete agreement and
----------------
understanding among the parties to this Agreement with respect to the subject
matter of this Agreement and supersedes and preempts any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter of this Agreement in any way.
14. SUCCESSORS AND ASSIGNS. This Agreement will bind and inure to the
----------------------
benefit of and be enforceable by the Company, ABRY Partners and Executive and
their respective assigns; provided that Executive may not assign his rights
--------
under this Agreement without the prior written consent of each of the Company
and ABRY Partners.
15. COUNTERPARTS. This Agreement may be executed simul taneously in two
------------
or more counterparts, any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together will constitute one and the same Agreement.
16. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings of
------------------------------------
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement.
17. GOVERNING LAW. All issues and questions concerning the construction,
-------------
validity, interpretation and enforcement of this Agreement will be governed by
and construed in accordance with the domestic laws of the Commonwealth of
Massachusetts, without giving effect to any choice of law or conflict provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the laws of any jurisdiction other than the Commonwealth of
Massachusetts to be applied. In furtherance of the foregoing, the internal law
of the Commonwealth of Massachusetts will control the interpretation and
construction of this Agreement (and all schedules and exhibits hereto), even if
under that juris diction's choice of law or conflict of law analysis, the
substan tive law of some other jurisdiction would ordinarily apply.
18. NO STRICT CONSTRUCTION. The parties to this Agreement have
----------------------
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if
6
<PAGE>
drafted jointly by the parties, and no presumption or burden of proof will arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Employment Agreement as of the date first written above.
PINNACLE TOWERS, INC.
By: ________________________________
Its:________________________________
____________________________________
Robert J. Wolsey
7
<PAGE>
EXHIBIT 10.13
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made as of
---------
February 17, 1997, between Pinnacle Towers Inc., a Delaware corporation (the
"Company"), and Steven Day ("Executive").
------- ---------
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company will employ Executive, and Executive accepts
----------
employment with the Company, upon the terms and conditions set forth in this
Agreement, for the period beginning on the date of this Agreement and ending as
provided in Section 4 (the "Employment Period").
-----------------
2. POSITION AND DUTIES. During the Employment Period, Executive will
-------------------
render such managerial, analytical, administrative, marketing and other
executive services to the Company, its parent company, Pinnacle Holdings Inc.
("Pinnacle Holdings"), and the Subsidiaries as are from time to time necessary
-----------------
in connection with the management and affairs of Pinnacle Holdings, the Company
and the Subsidiaries, which will include acquiring, owning, constructing,
licensing, managing-for-hire, leasing, operating and divesting tower or other
communication sites and related properties (together with all reasonably related
activities, the "Business"). During the Employment Period, except as otherwise
--------
determined by the chief executive officer of the Company or the Board, Executive
will serve as the chief financial officer and chief accounting officer of the
Company and Pinnacle Holdings. Executive will report to the chief executive
officer of the Company and the Board, and Executive will devote his best efforts
and his full business time and attention (except for permitted vacation periods
and reasonable periods of illness or other incapacity) to the business and
affairs of Pinnacle Holdings, the Company and the Subsidiaries. Executive will
perform his duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient mariner.
3. BASE SALARY, BONUS AND BENEFITS.
-------------------------------
(a) Base Salary. During the Employment Period, Executive will be
-----------
paid as base compensation for services (as in effect from time to time, the
"Base Salary") the amount described in this paragraph 3(a). The Base Salary
-----------
initially will be $150,000 per annum, and will be subject to annual review and
adjustment from time to time by the Board. The Base Salary will be payable in
regular installments in accordance with the Company's general payroll practices.
In addition, during the Employment Period, Executive will be entitled to
participate in all of the employee
<PAGE>
benefit programs for which senior executive employees of the Company are
generally eligible.
(b) Reimbursement of Expenses. The Company will reimburse Executive
-------------------------
for all reasonable expenses incurred by him in the course of performing his
duties under this Agreement and which are consistent with the Company's policies
in effect from time to time with respect to travel, entertainment and other
business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(c) Bonus. In addition to the Base Salary, the Company (by action of
-----
the Board) may, in its sole discretion, award a bonus (the "Bonus") to Executive
-----
following the end of each fiscal year during the Employment Period based upon
Executive's performance and the Company's and the Subsidiaries' operating
results during such fiscal year. The amount of the Bonus, if any, will be
determined, and may be adjusted, from time to time as the Board may determine.
(d) Fringe Benefits. In addition to the Base Salary and Bonus,
---------------
Executive will be entitled to the following benefits during the Employment
Period, unless otherwise modified by the Company (by action of the Board):
(i) at the Company's expense, the use of an automobile supplied
by the Company; and
(ii) medical insurance and disability insurance of such coverage
as is determined by the Board.
4. TERMINATION. The Employment Period will continue until Executive's
-----------
resignation, death or disability or other incapacity (as determined by the Board
in good faith) or until the Employment Period is terminated by the Company (by
action of the Board) for any reason or for no reason. In the event of
Executive's resignation, death, disability or other incapacity or the
termination of the Employment Period by the Company for Cause (as defined
below), Executive will not be entitled to receive his Base Salary or any fringe
benefits or Bonus for periods after the termination of the Employment Period.
In the event of termination of the Employment Period by the Company for any
other reason or for no reason, Executive will be entitled to receive his Base
Salary (at the rate then in effect) and the medical insurance benefits described
in paragraph 3(d)(ii) for a period of six months thereafter (so long as
Executive is not in breach of paragraph 6 or paragraph 7). For purposes of this
Agreement, "Cause" will mean (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any act involving dishonesty, disloyalty or
fraud with respect to Pinnacle Holdings, the Company or any Subsidiary, (ii)
conduct tending to bring Pinnacle Holdings, the Company or any Subsidiary into
substantial public disgrace or disrepute, (iii) substantial and repeated failure
to perform duties
2
<PAGE>
as reasonably directed by the Board, (iv) gross negligence or willful misconduct
with respect to Pinnacle Holdings, the Company or any Subsidiary or (v) any
other material breach of this Agreement which is not cured within fifteen (15)
days after written notice thereof to Executive.
5. RESIGNATION AS OFFICER OR DIRECTOR. Upon the termination of the
----------------------------------
Employment Period, Executive will resign each position (if any) that he then
holds as an officer or director of Pinnacle Holdings, the Company or any
Subsidiary.
6. CONFIDENTIAL INFORMATION. The Executive acknowledges that the
------------------------
information, observations and data which has been or may be obtained by him
while employed by the Company concerning the business or affairs of Pinnacle
Holdings, the Company or any Subsidiary (collectively, "Confidential
------------
Information") are and will be the property of Pinnacle Holdings, the Company and
- -----------
the Subsidiaries. Therefore, Executive agrees that he will not disclose to any
unauthorized Person or use for his own account any Confidential Information
without the prior written consent of the Company (by the action of the Board),
unless and to the extent that the aforementioned matters become generally known
to and available for use by the public other than as a result of Executive's
acts or omissions to act. Executive will deliver to the Company at the
termination of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) containing or
relating to Confidential Information or the business of Pinnacle Holdings, the
Company or any Subsidiary which he may then possess or have under his control.
7. NON-COMPETE, NON-SOLICITATION.
-----------------------------
(a) Non-Compete. Executive acknowledges that in the course of his
-----------
employment with the Company he has and will become familiar with trade secrets
and other confidential information concerning Pinnacle Holdings, the Company or
any Subsidiary, and their predecessors, and with investment opportunities
relating to the Business, and that his services will be of special, unique and
extraordinary value to the foregoing entities. Therefore, Executive agrees
that, during the Employment Period and for two (2) years thereafter (the
Employment Period and such 2 years being the "Noncompete Period"), he will not
-----------------
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any other manner engage in, any business competing
with the business of Pinnacle Holdings, the Company or any Subsidiary, as such
businesses exist or are in process on the date of the termination of the
Employment Period, within the Target Area (the Target Area being the area which
management of the Company has proposed, as a material inducement for the
investments in the Company and Pinnacle Holdings by ABRY Broadcast Partners II,
L.P. ("ABRY Partners") and other stockholders of the Company and
-------------
3
<PAGE>
Pinnacle Holdings, as the primary region for the development and operation of
the Company's business) or in any geographical area which is outside the Target
Area and in which the Company or any Subsidiary then engages in such business or
in which the Company or any Subsidiary then has entered into or offered to enter
into a letter of intent or other agreement to acquire, operate or manage one or
more tower properties or with respect to any other transaction relating to the
Business. Nothing in this paragraph 7 will prohibit Executive from being a
passive owner of not more than 2% of the outstanding stock of a corporation of
any class which is publicly traded, so long as Executive has no active
participation in the business of such corporation. The "Target Area" means the
-----------
states of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and
South Carolina.
(b) Non-Solicitation. During the Noncompete Period, Executive will
----------------
not directly or indirectly (i) induce or attempt to induce any employee of
Pinnacle Holdings, the Company or any Subsidiary to leave the employ of such
entity, or in any way interfere with the relationship between any such entity
and any employee thereof, (ii) hire any person who was an employee of Pinnacle
Holdings, the Company or any Subsidiary at any time during the Employment
Period, or (iii) induce or attempt to induce any customer, supplier or other
business relation of Pinnacle Holdings, the Company or any Subsidiary to cease
doing business with such entity, or in any way interfere with the relationship
between any such customer, supplier or other business relation and such entity.
8. Enforcement. The Company and Executive agree that if, at the time of
-----------
enforcement of Section 6 or 7, a court holds that any restriction stated in such
Section is unreasonable under circumstances then existing, then the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to information of the type described
in Sections 6 and 7, the Company and Executive agree that money damages would be
an inadequate remedy for any breach of Section 6 or 7. Therefore, in the event
of a breach or threatened breach of Section 6 or 7, the Company or its
successors or assigns (or any other affected Person) may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions of Section 6 or 7,
without posting a bond or other security. The provisions of Sections 6, 7 and 8
are intended to be for the benefit of Pinnacle Holdings, the Company, the
Subsidiaries, their respective successors and assigns, each of which may enforce
such provisions and each of which (other than the Company) is an express third-
party beneficiary of such provisions. Sections 6, 7 and 8 will survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
4
<PAGE>
9. REPRESENTATIONS. Executive represents and warrants to the Company that
---------------
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other Person.
10. NOTICES. Any notice provided for in this Agreement will be in writing
-------
and will be either personally delivered, or mailed by first class mail, return
receipt requested, or sent by reputable overnight courier, in each case with
delivery charges or postage prepaid, to the recipient at the address indicated
below:
Notices to Executive:
--------------------
______________________
______________________
Notices to the Company:
----------------------
c/o ABRY Partners, Inc.
18 Newbury Street
Boston, Massachusetts 02116
Attention: President
or such other address or to the attention of such other Person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
11. AMENDMENT AND WAIVER. No modification, amendment or waiver of any
--------------------
provision of this Agreement will be effective unless such modification,
amendment or waiver is approved in writing by the Company, Executive and ABRY
Partners. The failure of either to enforce any of the provisions of this
Agreement will in no way be construed as a waiver of such provisions and will
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. The Company and
Executive intend that ABRY Partners, so long as it is a stockholder of the
Company or Pinnacle Holdings, be and is a third-party beneficiary of this
Agreement.
12. SEVERABILITY. Whenever possible, each provision of this Agreement
------------
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
will be reformed, construed and enforced in that
5
<PAGE>
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained in this Agreement.
13. ENTIRE AGREEMENT. This Agreement embodies the complete agreement and
----------------
understanding among the parties to this Agreement with respect to the subject
matter of this Agreement and supersedes and preempts any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter of this Agreement in any way.
14. SUCCESSORS AND ASSIGNS. This Agreement will bind and inure to the
----------------------
benefit of and be enforceable by the Company, ABRY Partners and Executive and
their respective assigns; provided that Executive may not assign his rights
--------
under this Agreement without the prior written consent of each of the Company
and ABRY Partners.
15. COUNTERPARTS. This Agreement may be executed simultaneously in two or
------------
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and the
same Agreement.
16. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings of
------------------------------------
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. As used in this Agreement, the term
"Subsidiary" refers to any corporation, partnership, limited liability company
----------
or other entity in which the Company or any other Subsidiary has an ownership
interest.
17. GOVERNING LAW. All issues and questions concerning the construction,
-------------
validity, interpretation and enforcement of this Agreement will be governed by
and construed in accordance with the domestic laws of the Commonwealth of
Massachusetts, without giving effect to any choice of law or conflict provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the laws of any jurisdiction other than the Commonwealth of
Massachusetts to be applied. In furtherance of the foregoing, the internal law
of the Commonwealth of Massachusetts will control the interpretation and
construction of this Agreement (and all schedules and exhibits hereto), even if
under that juris diction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
18. NO STRICT CONSTRUCTION. The parties to this Agreement have
----------------------
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties, and no
presumption or burden of proof will arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Employment Agreement as of the date first written above.
PINNACLE TOWERS INC.
By:__________________________________
Its:_________________________________
_____________________________________
Steven Day
7
<PAGE>
Exhibit 10.14
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made as of May 3,
---------
1995, between Pinnacle Towers Inc., a Delaware corporation (the "Company"), and
-------
James M. Dell'Apa ("Executive").
---------
This Agreement is being entered into in connection with the consummation of
the transactions contemplated by the Subscription and Stockholders Agreement
dated as of April 17, 1995 (as in effect from time to time, the "Stockholders
------------
Agreement") among the Company, ABRY Broadcast Partners II, L.P., a Delaware
- ---------
limited partnership ("ABRY Partners"), Executive and the other Executives named
-------------
in the Stockholders Agreement. The execution and delivery of this Agreement are
conditions precedent to ABRY Partners' obligation to consummate the transactions
contemplated by the Stockholders Agreement. Each capitalized term used and not
otherwise defined in this Agreement has the meaning which the Stockholders
Agreement assigns to that term.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company will employ Executive, and Executive accepts
----------
employment with the Company, upon the terms and conditions set forth in this
Agreement, for the period beginning on the date of this Agreement and ending as
provided in Section 4 (the "Employment Period").
-----------------
2. POSITION AND DUTIES. During the Employment Period, Executive will
-------------------
render such managerial, analytical, administrative, marketing and other
executive services to the Company and its Subsidiaries as are from time to time
necessary in connection with the management and affairs of the Company, which
will include acquiring, owning, constructing, licensing, managing-for-hire,
leasing, operating and divesting tower or other communication sites and related
properties (together with all reasonably related activities, the "Business").
--------
During the Employment Period, except as otherwise determined by the Board,
Executive will serve as the chief executive officer of the Company. Executive
will report to the Board, and Executive will devote his best efforts and his
full business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company and its Subsidiaries. Executive will perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner
<PAGE>
3. BASE SALARY, BONUS AND BENEFITS.
-------------------------------
(A) BASE SALARY. During the Employment Period, Executive will be paid
-----------
as base compensation for services (as in effect from time to time, the "Base
----
Salary") the amount described in this paragraph 3(a). The Base Salary initially
- ------
will be $75,000 per annum, and will be subject to annual review and adjustment
from time to time by the Board. The Base Salary will be payable in regular
installments in accordance with the Company's general payroll practices. In
addition, during the Employment Period, Executive will be entitled to
participate in all of the employee benefit programs for which senior executive
employees of the Company are generally eligible.
(B) REIMBURSEMENT OF EXPENSES. The Company will reimburse Executive
-------------------------
for all reasonable expenses incurred by him in the course of performing his
duties under this Agreement and which are consistent with the Company's policies
in effect from time to time with respect to travel, entertainment and other
business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(C) BONUS. In addition to the Base Salary, the Company (by action of
-----
the Board) may, in its sole discretion, award a bonus (the "Bonus") to Executive
-----
following the end of each fiscal year during the Employment Period based upon
Executive's performance and the Company's and the Subsidiaries' operating
results during such fiscal year. The amount of the Bonus, if any, will be
determined, and may be adjusted, from time to time as the Board may determine.
(D) FRINGE BENEFITS. In addition to the Base Salary and Bonus,
---------------
Executive will be entitled to the following benefits during the Employment
Period, unless otherwise modified by the Company (by action of the Board):
(i) at the Company's expense, the use of an automobile supplied
by the Company; and
(ii) health insurance and disability insurance of such coverage
as is determined by the Board.
4. TERMINATION. The Employment Period will continue until Executive's
-----------
resignation, death or disability or other incapacity (as determined by the Board
in good faith) or until the Employment Period is terminated by the Company (by
action of the Board) for any reason or for no reason. In the event of
Executive's resignation, death, disability or other incapacity or the
termination of the Employment Period by the Company for Cause (as defined
below), Executive will not be entitled to receive his Base Salary or any fringe
benefits or Bonus for periods after the termination of the Employment Period.
In the event of termination of the Employment Period by the Company for any
other reason or for
2
<PAGE>
no reason, Executive will be entitled to receive his Base Salary (at the rate
then in effect) and fringe benefits described in paragraph 3(d) for a period of
eighteen months thereafter (so long as Executive is not in breach of paragraph 6
or paragraph 7). For purposes of this Agreement, "Cause" will mean (i) the
-----
commission of a felony or a crime involving moral turpitude or the commission of
any act involving dishonesty, disloyalty or fraud with respect to the Company or
any Subsidiary, (ii) conduct tending to bring the Company or any Subsidiary into
substantial public disgrace or disrepute, (iii) substantial and repeated failure
to perform duties as reasonably directed by the Board, (iv) gross negligence or
willful misconduct with respect to the Company or any Subsidiary or (v) any
other material breach of this Agreement which is not cured within fifteen (15)
days after written notice thereof to Executive.
5. RESIGNATION AS OFFICER OR DIRECTOR. Upon the termination of the
----------------------------------
Employment Period, Executive will resign each position (if any) that he then
holds as an officer or director of the Company or any Subsidiary.
6. CONFIDENTIAL INFORMATION. The Executive acknowledges that the
------------------------
information, observations and data which has been or may be obtained by him
while employed by the Company (including while employed by or associated with
Old Paramount) concerning the business or affairs of the Company or any
Subsidiary (collectively, "Confidential Information") are and will be the
------------------------
property of the Company and the Subsidiaries. Therefore, Executive agrees that
he will not disclose to any unauthorized Person or use for his own account any
Confidential Information without the prior written consent of the Company (by
the action of the Board), unless and to the extent that the aforementioned
matters become generally known ta and available for use by the public other than
as a result of Executive's acts or omissions to act. Executive will deliver to
the Company at the termination of the Employment Period, or at any other time
the Company may request, all memoranda, notes, plans, records, reports, computer
tapes and software and other documents and data (and copies thereof) containing
or relating to Confidential Information or the business of the Company or any
Subsidiary which he may then possess or have under his control.
7. NON-COMPETE, NON-SOLICITATION.
-----------------------------
(A) NON-COMPETE. Executive acknowledges that in the course of his
-----------
employment with the Company (including while employed by or associated with Old
Paramount) he has and will become familiar with trade secrets and other
confidential information concerning the Company or any Subsidiary, and their
predecessors, and with investment opportunities relating to the Business, and
that his services will be of special, unique and extraordinary value to the
foregoing entities. Therefore, Executive agrees that, during the Employment
Period and for two (2) years thereafter (the Employment Period and such 2 years
being the "Noncompete Period"),
-----------------
3
<PAGE>
he will not directly or indirectly own, manage, control, participate in, consult
with, render services for, or in any other manner engage in, any business
competing with the business of the Company or any Subsidiary, as such businesses
exist or are in process on the date of the termination of the Employment Period,
within the Target Area (the Target Area being the area which management of the
Company has proposed, as a material inducement for the investments by ABRY
Partners which are contemplated by the Stockholders Agreement, as the primary
region for the development and operation of the Company's business) or in any
geographical area which is outside the Target Area and in which the Company or
any Subsidiary then engages in such business or in which the Company or any
Subsidiary then has entered into or offered to enter into a letter of intent or
other agreement to acquire, operate or manage one or more tower properties or
with respect to any other transaction relating to the Business. Nothing in this
paragraph 7 will prohibit Executive from being a passive owner of not more than
2% of the outstanding stock of a corporation of any class which is publicly
traded, so long as Executive has no active participation in the business of such
corporation. The "Target Area" means the states of Alabama, Florida, Georgia,
-----------
Louisiana, Mississippi, North Carolina and South Carolina.
(B) NON-SOLICITATION. During the Noncompete Period, Executive will
----------------
not directly or indirectly (i) induce or attempt to induce any employee of the
Company or any Subsidiary to leave the
employ of such entity, or in any way interfere with the relationship between any
such entity and any employee thereof, (ii) hire any person who was an employee
of the Company or any Subsidiary at any time during the Employment Period, or
(iii) induce or attempt to induce any customer, supplier or other business
relation of the Company or any Subsidiary to cease doing business with such
entity, or in any way interfere with the relationship between any such customer,
supplier or other business relation and such entity.
8. ENFORCEMENT. The Company and Executive agree that if, at the time of
-----------
enforcement of Section 6 or 7, a court holds that any restriction stated in such
Section is unreasonable under circumstances then existing, then the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to information of the type described
in Sections 6 and 7, the Company and Executive agree that money damages would be
an inadequate remedy for any breach of Section 6 or 7. Therefore, in the event
of a breach or threatened breach of Section 6 or 7, the Company or its
successors or assigns (or any other affected Person) may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions of Section 6 or 7,
4
<PAGE>
without posting a bond or other security. The provisions of Sections 6, 7 and 8
are intended to be for the benefit of the Company, the Subsidiaries, their
respective successors and assigns, each of which may enforce such provisions and
each of which (other than the Company) is an express third-party beneficiary of
such provisions. Sections 6, 7 and 8 will survive and continue in full force in
accordance with their terms notwithstanding any termination of the Employment
Period.
9. REPRESENTATIONS. Executive represents and warrants to the Company
---------------
that Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other Person.
10. NOTICES. Any notice provided for in this Agreement will be in writing
-------
and will be either personally delivered, or mailed by first class mail, return
receipt requested, or sent by reputable overnight courier, in each case with
delivery charges or postage prepaid, to the recipient at the address indicated
below:
Notices to Executive:
--------------------
2015 Klingle Road, N.W.
Washington, D.C. 20010
Notices to the Company:
----------------------
c/o ABRY Partners, Inc.
18 Newbury Street
Boston, Massachusetts 02116
Attention: President
or such other address or to the attention of such other Person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
11. AMENDMENT AND WAIVER. No modification, amendment or waiver of any
--------------------
provision of this Agreement will be effective unless such modification,
amendment or waiver is approved in writing by the Company, Executive and ABRY
Partners. The failure of either to enforce any of the provisions of this
Agreement will in no way be construed as a waiver of such provisions and will
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. The Company and
Executive intend that ABRY Partners, so long as it is a stockholder of the
Company, be and is a third-party beneficiary of this Agreement.
12. SEVERABILITY. Whenever possible, each provision of this Agreement
------------
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this
5
<PAGE>
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect the validity, legality or enforceability of any
other provision of this Agreement in such jurisdiction or affect the validity,
legality or
enforceability of any provision in any other jurisdiction, but this Agreement
will be reformed, construed and enforced in that jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained in this
Agreement.
13. ENTIRE AGREEMENT. This Agreement embodies the complete agreement and
----------------
understanding among the parties to this Agreement with respect to the subject
matter of this Agreement and supersedes and preempts any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter of this Agreement in any way.
14. SUCCESSORS AND ASSIGNS. This Agreement will bind and inure to the
----------------------
benefit of and be enforceable by the Company, ABRY Partners and Executive and
their respective assigns; provided that Executive may not assign his rights
--------
under this Agreement without the prior written consent of each of the Company
and ABRY Partners.
15. COUNTERPARTS. This Agreement may be executed simul taneously in two
------------
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one and
the same Agreement.
16. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings of
------------------------------------
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement.
17. GOVERNING LAW. All issues and questions concerning the construction,
-------------
validity, interpretation and enforcement of this Agreement will be governed by
and construed in accordance with the domestic laws of the Commonwealth of
Massachusetts, without giving effect to any choice of law or conflict provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the laws of any jurisdiction other than the Commonwealth of
Massachusetts to be applied. In furtherance of the foregoing, the internal law
of the Commonwealth of Massachusetts will control the interpretation and
construction of this Agreement (and all schedules and exhibits hereto), even if
under that juris diction's choice of law or conflict of law analysis, the
substan tive law of some other jurisdiction would ordinarily apply.
18. NO STRICT CONSTRUCTION. The parties to this Agreement have
----------------------
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if
6
<PAGE>
drafted jointly by the parties, and no presumption or burden of proof will arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Employment Agreement as of the date first written above.
PINNACLE TOWERS, INC.
By:________________________________
Its:_______________________________
___________________________________
James M. Dell'Apa
TPA3-523927
7
<PAGE>
EXHIBIT 10.15
SUBSCRIPTION AGREEMENT
AMONG
PINNACLE TOWERS INC.,
ABRY BROADCAST PARTNERS II, L.P.
AND
THE INVESTORS NAMED HEREIN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I: PURCHASE, PLEDGE AND CONTRIBUTION OF SHARES................. 1
1.1 Share Purchase.............................................. 1
1.2 Share Pledge................................................ 1
1.3 Contribution to Pinnacle Holdings........................... 2
1.4 Preemptive Rights........................................... 2
ARTICLE II: TRANSFER OF SHARES GENERALLY; SALE OR
REORGANIZATION OF THE ISSUER................................ 3
2.1 Transfer of Shares.......................................... 3
2.2 Tag-Along Rights............................................ 5
2.3 Sale of the Issuer.......................................... 6
2.4 Recapitalization............................................ 8
2.5 Holdback.................................................... 8
ARTICLE III: REPRESENTATIONS AND WARRANTIES.............................. 8
3.1 Representations and Warranties of the
Investors................................................... 8
3.2 Representations and Warranties of the
Issuer...................................................... 12
3.3 Survival.................................................... 13
ARTICLE IV: GENERAL PROVISIONS.......................................... 13
4.1 Transfer of Restricted Securities........................... 14
4.2 Addresses and Notices....................................... 15
4.3 Binding Effect.............................................. 16
4.4 Amendment; Waiver........................................... 16
4.5 Consent to Jurisdiction..................................... 16
4.6 Further Action.............................................. 16
4.7 Other Definitional Provisions............................... 17
4.8 Severability................................................ 17
4.9 Entire Agreement............................................ 17
4.10 Counterparts................................................ 18
4.11 Descriptive Headings........................................ 18
4.12 Governing Law............................................... 18
4.13 No Strict Construction...................................... 18
</TABLE>
-i-
<PAGE>
LIST OF EXHIBITS
----------------
EXHIBIT A Investors
EXHIBIT B Defined Terms
EXHIBIT C Form of Pledge Agreement
-ii-
<PAGE>
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT is entered into as of December 31, 1995 by
and among Pinnacle Towers Inc., a Delaware corporation ("Pinnacle Towers"), ABRY
---------------
Broadcast Partners II, L.P., a Delaware limited partnership ("ABRY"), and the
----
Persons named on the attached Exhibit A (the "Investors").
--------- ---------
Certain terms used in this Agreement have the respective meanings
which the attached Exhibit B assigns to those terms.
---------
Subject to the terms and conditions of this Agreement, each Investor
desires to purchase capital stock of Pinnacle Towers and the Investors and
Pinnacle Towers desire to set forth certain agreements among them with respect
to the ownership of such capital stock.
Therefore, the parties hereto agree as follows:
ARTICLE I
PURCHASE, PLEDGE AND CONTRIBUTION OF SHARES
1.1 SHARE PURCHASE. On the Closing Date, each Investor will
--------------
purchase from Pinnacle Towers, and Pinnacle Towers will issue to each Investor,
25 shares of Pinnacle Towers' Class A Common, for a cash purchase price of
$2,500 (i.e., $100 per share). The purchase and sale of the Shares pursuant to
this Section 1.1 (the "Closing") will occur on the date, and at the time and
-------
place, specified by Pinnacle Towers by written notice to the Investors not less
than 5 Business Days prior to the Closing. This Agreement will terminate
without any action by any Person if the Closing does not occur on or prior to
December 31, 1995.
1.2 Share Pledge. If requested to do so in writing by Pinnacle
------------
Towers, each Investor will pledge to NationsBank of Texas, National Association
("NationsBank") any or all of the Shares acquired by such Investor pursuant to
-----------
this Agreement, to secure Pinnacle Towers' obligations under the Senior Credit
Agreement and certain related agreements and instruments. Such pledge will be
made on the same terms as the pledge made by ABRY in connection with the Senior
Credit Agreement, under a pledge agreement substantially in the form of the
attached Exhibit C. Upon such request, each Investor will execute and deliver
---------
such a pledge agreement and all related stock powers and other documents and
instruments which NationsBank may reasonably deem necessary to give effect to
such pledge, and will surrender the certificate(s) representing the pledged
Shares as directed by Pinnacle Towers or NationsBank.
<PAGE>
1.3 CONTRIBUTION TO PINNACLE HOLDINGS.
---------------------------------
(a) It is contemplated that, on or after the Closing Date, the
present stockholders of Pinnacle Towers will capitalize Pinnacle Holdings
Inc., a Delaware corporation ("Pinnacle Holdings"), by contributing to the
-----------------
capital of Pinnacle Holdings all of the capital stock of Pinnacle Towers
held by them in exchange for shares of the capital stock of Pinnacle
Holdings of a like kind and a like number. Upon such contribution, Pinnacle
Towers will assign all of its rights under this Agreement to Pinnacle
Holdings, and Pinnacle Holdings will assume all of Pinnacle Towers'
obligations under this Agreement.
(b) Each Investor agrees that, upon such contribution being made by
ABRY, and without further action by such Investor, such Investor will
similarly contribute to Pinnacle Holdings all shares of Pinnacle Towers
held by such Investor. Each Investor agrees that Pinnacle Towers may
retain the certificate representing shares of Pinnacle Towers issued to
such Investor in order to facilitate such contribution by it.
(c) Prior to such contribution by the Investors, as used in this
Agreement the term "Issuer" will refer to Pinnacle Towers and the term
------
"Shares" will refer to the shares of Pinnacle Towers' Class A Common issued
-------
pursuant to Section 1.1.
(d) From and after such contribution by the Investors, as used in
this Agreement the term "Issuer" will refer to Pinnacle Holdings and the
------
term "Shares" will refer to the shares of Pinnacle Holdings' Class A Common
------
issued pursuant to this Section 1.3 in exchange for shares of Pinnacle
Towers' Class A Common upon such contribution.
1.4 Preemptive Rights.
-----------------
(A) GENERAL RIGHT. Except for any Exempt Issuance, if after the
-------------
Closing the Issuer authorizes the issuance or sale of any Common Equivalents,
then the Issuer will give each Investor written notice offering to sell to that
Investor a portion of such Common Equivalents equal to that Investor's Ownership
Percentage. Such notice will describe in reasonable detail the Common
Equivalents being offered, the purchase price, the payment terms and such
Investor's Ownership Percentage. Each Investor (and each other stockholder of
the Issuer) will be entitled to purchase those Common Equivalents at the same
price and on the same other terms as those Common Equivalents are issued to
other Persons; provided that, if other Persons purchasing or receiving Common
--------
Equivalents are required to also purchase other securities of the Issuer or any
other Person, then the Investors exercising their rights under this
-2-
<PAGE>
Section 1.4 will also be required to purchase the same strip of securities (on
the same terms and conditions) that such other Persons are required to purchase.
(B) METHOD OF EXERCISE. In order to exercise its purchase rights
------------------
under this Section 1.4, an Investor must, within 10 Business Days after receipt
of the written notice described in Section 1.4(a), deliver a written notice to
the Issuer stating that such Investor is electing to purchase Common Equivalents
and stating the quantity of Common Equivalents for which that Investor will
subscribe.
(C) SALE TO OTHERS. During the 180 days after the end of the 10-day
--------------
offering period described in Section 1.4(b), the Issuer will be entitled to sell
any Common Equivalents which the Investors and the other stockholders of the
Issuer have not elected to purchase, on terms and conditions no more favorable
to the purchasers thereof than those offered to the Investors. Any Common
Equivalents offered or sold by the Issuer after such 180-day period must be
reoffered in accordance with the terms of this Section 1.4 to the Investors and
the other stockholders of the Issuer.
(D) TERMINATION. The rights of the Investors under this Section 1.4
-----------
will terminate upon an IPO.
ARTICLE II
TRANSFER OF SHARES GENERALLY;
SALE OR REORGANIZATION OF THE ISSUER
2.1 TRANSFER OF SHARES.
------------------
(A) TRANSFER RESTRICTIONS. Because it is the intention of the Issuer
---------------------
and its stockholders that the Issuer satisfy the provisions of the Code relating
to qualification of the Issuer as a "real estate investment trust," particularly
Section 856(a)(5) of the Code, no holder of any Share may Transfer any Share or
any interest therein to any other Person if, as a result of such Transfer,
either (i) beneficial ownership of shares of all classes of capital stock of the
Issuer would be held by less than 100 Persons (the "Aggregate Ownership Limit"),
-------------------------
if beneficial ownership of all Common Shares was held by 100 or more Persons
prior to such Transfer, or (ii) if such Transfer would result in the ownership
by the Transferee in combination with four or fewer individuals (within the
meaning of Section 542(a)(2) of the Code) of more than fifty percent of the
aggregate value of all shares of all classes of capital stock of the Issuer (the
"Percentage Ownership Limit").
--------------------------
(B) REGISTRATION OF TRANSFER. The Issuer will keep at its principal
------------------------
office (or such other place as the Issuer reasonably
-3-
<PAGE>
designates) a register for the registration of Shares. Upon the surrender at
such place of any certificate representing Shares with respect to all of which a
transfer would satisfy all requirements of Section 2.1(a), the Issuer will, at
the request of the registered holder of such certificate, execute and deliver a
new certificate or certificates in exchange therefor representing in the
aggregate the number of shares of the class represented by the surrendered
certificate, and the Issuer forthwith will cancel such surrendered certificate.
Each such new certificate will be registered in such name and will represent
such number of shares of such class as is requested by the holder of the
surrendered certificate (so long as the requirements of this Section 2.1(b) and
Section 2.1(a) are otherwise satisfied with respect to the Shares represented by
such certificate) and will be substantially identical in form to the surrendered
certificate. The issuance of new certificates will be made without charge to
the holders of the surrendered certificates for any issuance tax in respect
thereof or other cost incurred by the Issuer in connection with such issuance.
(C) EFFECT OF UNAUTHORIZED TRANSFERS. Any Transfer of any Share in
--------------------------------
violation of the Percentage Ownership Limit, the Aggregate Ownership Limit,
and/or any other restriction or requirement specified in the Issuer's Charter (a
"Purported Transfer") will be void and of no legal effect. Any Purported
------------------
Transfer will cause (without action on the part of the Issuer, the Transferee
(the "Prohibited Transferee"), or the Transferor) all Shares (or interests
---------------------
therein) involved in such Purported Transfer to be transferred to the Issuer, as
trustee (in such capacity, the "Trustee") in trust for the exclusive benefit of
-------
one or more organizations described in Section 501(c)(3) of the Code (the
"Charitable Beneficiaries"). The Trustee will be deemed to own such Shares for
------------------------
the benefit of the Charitable Beneficiaries on the day prior to the date of the
Purported Transfer. Any dividends or distributions paid by the Issuer to the
Purported Transferee prior to discovery of a Purported Transfer will be
disgorged and repaid to the Issuer, as Trustee, by the Prohibited Transferee.
Any dividend declared after a Purported Transfer but unpaid will be rescinded as
void ab initio with respect to the Prohibited Transferee. Any dividends so
disgorged or rescinded will then be paid over to the Trustee and held in trust
for the Charitable Beneficiaries. Any vote taken by a Prohibited Transferee
prior to the discovery by the Issuer of a Purported Transfer will be rescinded
as void ab initio. With respect to the Shares involved in the Purported
Transfer, the Trustee will be deemed to have an irrevocable proxy to vote such
Shares for the benefit of the Charitable Beneficiaries.
(D) NOTIFICATION OF PROPOSED TRANSFERS. In order that the Issuer may
----------------------------------
enforce the Aggregate Ownership Limit and the Percentage Ownership Limit, no
Share will be Transferrable by the holder thereof (except pursuant to Section
1.3) unless, not less
-4-
<PAGE>
than 30 days prior to any such proposed Transfer, the holder of any and all
Shares proposed to be Transferred ("Transferred Shares") delivers to the Issuer
------------------
written notice of its intention to effect such a Transfer.
2.2 TAG-ALONG RIGHTS.
----------------
(A) TAG-ALONG SALE NOTICE. Not later than the 5th Business Day prior
---------------------
to any Transfer of Common Shares by ABRY, ABRY will give each Investor a written
notice (the "Tag-Along Sale Notice") specifying the material terms of the
---------------------
proposed Transfer. Each Investor may elect to participate in such Transfer as
an additional Transferor on the terms of this Section 2.2, by delivering written
notice to that effect to ABRY within 5 Business Days after delivery of the Tag-
Along Sale Notice.
(B) MANNER OF PARTICIPATION. If any Investor elects to participate in
-----------------------
any such Transfer, then each Investor participating in that Transfer as a
Transferor will be entitled to include in that Transfer, at the same price and
on the same terms (subject to Section 2.2(c)), up to a quantity of Shares which
is equal to the product of (1) the quotient determined by dividing that
-----------------------------------
Investor's Ownership Percentage by the aggregate Ownership Percentages of all
--
Persons (including ABRY and the Investors and other stockholders of the Issuer
which have elected to participate in such Transfer) multiplied by (2) the
aggregate number of Common Shares to be included in that Transfer.
For example, if ABRY proposes to Transfer 100,000 Common Shares, and one
Investor and one non-Investor stockholder of the Issuer elect to
participate in that Transfer, and the Ownership Percentage of ABRY is 60%
and the respective Ownership Percentages of the Investor and the Non-
Investor stockholder are 0.01% and 1%, then the Investor will be entitled
to include in that Transfer approximately 16.4 Common Shares./1/
(C) ALLOCATION OF CONSIDERATION. In any Transfer of Common Shares
---------------------------
in accordance with this Section 2.2, the aggregate consideration paid by the
Transferee in question will be divided among ABRY and the participating
Investors and other stockholders of the Issuer as if such consideration were to
be distributed as a Distribution to the Issuer's stockholders in accordance with
the Issuer's Charter and the Common Shares Transferred were the only shares of
the Issuer's capital stock outstanding.
(D) EXCEPTED TRANSFERS. The provisions of this Section 2.2 will not
------------------
apply to any Transfer by ABRY (i) to an
______________________
/1/i.e., [0.01% /(60% + 1% + 0.01%)] x 100,000 Common Shares.
-5-
<PAGE>
Affiliate of ABRY (provided that the Affiliate agrees to be bound by the terms
--------
of this Agreement with respect to any subsequent Transfer of the Common Shares
Transferred to that Affiliate), (ii) pursuant to Section 2.3, (iii) in any
Public Sale (including in connection with or as part of an IPO), or (iv) to any
employee of the Issuer or any Subsidiary.
(E) TRANSFERS IN VIOLATION. Any Transfer of any Common Shares in
----------------------
violation of this Section 2.2 will be null and void, and the Issuer will not
give any effect to any such Transfer in the Issuer's records. ABRY will not
Transfer (other than pursuant to clause (ii), clause (iii) or clause (iv) of
Section 2.2(d)) any Common Shares to any Person which does not agree to permit
participation by the holders of Shares in such Transfer in accordance with this
Section 2.2.
(F) TERMINATION OF RESTRICTIONS. If any Common Shares are Transferred
---------------------------
in accordance with this Section 2.2 (other than to an Affiliate of ABRY), then
no Investor will have any rights pursuant to this Section 2.2 with respect to
any subsequent Transfer of those Common Shares. The rights of the Investors
under this Section 2.2 will terminate with respect to all Transfers of Common
Shares upon an IPO or a Sale of the Issuer.
2.3 SALE OF THE ISSUER.
------------------
(A) GENERALLY. In connection with any Approved Sale, each Investor
---------
will vote in favor of, consent to and raise no objection with respect to the
Approved Sale, and if the Approved Sale is structured as a sale of the Issuer's
capital stock, then each Investor will sell capital stock of the Issuer,
Options, Convertible Securities and other rights to acquire securities of the
Issuer on the terms and conditions applicable to the Approved Sale. Each
Investor will take all actions which may be necessary to approve and effect any
Approved Sale (including waiving any dissenter's or similar rights which such
Investor may have with respect to any Approved Sale) and will use its best
efforts to cooperate in any Approved Sale and will take all other necessary and
desirable actions in connection with the consummation of any Approved Sale as
the Issuer or ABRY may reasonably request.
(B) CONDITIONS. The obligations of each Investor with respect to any
----------
Approved Sale are subject to the satisfaction of the following conditions:
(i) upon the consummation of the Approved Sale, each Investor will
receive the same form of consideration and the same amount of consideration
per share or other unit of securities, subject to Section 2.3(c);
-6-
<PAGE>
(ii) if any holders of a class of the Issuer's securities are given
an option as to the form and amount of consideration to be received, then
each Investor which holds any securities of that class will be given the
same option;
(iii) each Investor which holds any then currently exercisable
Options, Convertible Securities or other rights to acquire securities of
the Issuer of any class will be given an opportunity to either (A) exercise
those rights prior to the consummation of the Approved Sale and participate
in the Approved Sale as a holder of the securities issuable upon exercise
or (B) upon consummation of the Approved Sale, receive in exchange for
those rights consideration equal to the amount determined by multiplying
(1) the per-unit amount received by the holders of securities of that class
in connection with the Approved Sale less the per-unit exercise price
payable upon the exercise of those rights by (2) the number of units
issuable upon the exercise of those rights; and
(iv) no Investor will be required by reason of any Approved Sale to
incur indemnification liability in a proportion which is greater than that
Investor's pro rata share of the proceeds of the Approved Sale with respect
to breaches of representations and warranties regarding matters other than
that Investor and the securities purported to be owned by that Investor.
(C) DISTRIBUTIONS UPON SALE OF THE ISSUER. In the event of a Sale of
-------------------------------------
the Issuer, including an Approved Sale, which is effected by means of a sale or
exchange of the Issuer's capital stock (whether by sale, merger,
recapitalization, reorganization, consolidation, combination, sale or transfer
of capital stock or otherwise), each Investor will receive in exchange for the
shares owned by such Investor to be sold or exchanged the same portion of the
aggregate consideration from such sale or exchange that such Investor would have
received if such aggregate consideration had been distributed by the Issuer in
complete liquidation of the Issuer pursuant to Issuer's Charter, determined as
if the securities involved in such Approved Sale of the Issuer were the Issuer's
sole outstanding securities. Each Investor will take all necessary or desirable
actions in connection with the distribution of the aggregate consideration from
such sale or exchange as are requested by the Issuer to give effect to this
Section 2.3(c).
2.4 RECAPITALIZATION. In the event that a Transfer to which the
----------------
tag-along rights described in Section 2.2 would apply, or a Public Offering, is
proposed and ABRY requests in order to facilitate that Transfer, or the
underwriters or other Persons managing or administering that offering on behalf
of the Issuer (the "Managers") advise the Issuer in writing that in their
--------
opinion
-7-
<PAGE>
the equity structure of the Issuer (including the fact that the Issuer is
organized as a corporation) may adversely affect the marketability of the
offering, then each Investor will consent to and vote for a recapitalization or
reorganization of the Issuer and/or the exchange or conversion of the Issuer's
capital stock into a form of business organization and/or common and preferred
securities that ABRY or the Managers, as the case may be, propose, and will take
all other necessary or desirable actions in connection with the consummation of
the recapitalization, reorganization and/or exchange or conversion, including
entering into any amendment or restatement of this Agreement or approving any
amendment or restatement of the Issuer's Charter which may be required in order
to preserve the relative rights and obligations of any Person; provided that the
--------
resulting organization and the common and preferred securities issued in
connection with that recapitalization or reorganization reflect and are
consistent with the relative rights, duties and preferences among the Issuer's
outstanding securities prior to such recapitalization or reorganization.
2.5 HOLDBACK. No Investor will offer to the public for sale, or
--------
make any public sale or distribution of, any Share or any other Common Shares or
other equity security of the Issuer, or any securities convertible into or
exchangeable or exercisable for any of the foregoing, during the seven days
prior to or the 180 days after the effective date of any underwritten registered
offering of the Issuer's capital stock or other securities, unless the
underwriters managing such underwritten offering otherwise agree. The
restrictions set forth in this Section 2.5 will continue with respect to any
particular security until the date on which that security has been sold in a
Public Sale.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. As an
-----------------------------------------------
inducement to the Issuer to enter into this Agreement and to consummate the
transactions contemplated by this Agreement, each Investor represents and
warrants to the Issuer, effective as of the time of and immediately after giving
effect to the Closing (as if such representations and warranties were made at
such time), and with respect to itself or himself and not with respect to any
other Person, that:
(A) AUTHORIZATION AND BINDING EFFECT. The execution, delivery and
--------------------------------
performance by that Investor of this Agreement have (to the extent required)
been duly authorized by it or him, and that Investor has full legal capacity to
enter into this Agreement.
-8-
<PAGE>
This Agreement constitutes a valid and binding obligation of that Investor which
is enforceable in accordance with its terms.
(B) ABSENCE OF CONFLICTS. The execution and delivery by that
--------------------
Investor of this Agreement, and that Investor's fulfillment of and compliance
with the terms of this Agreement, do not and will not in any material respect
(i) conflict with or result in a breach of the terms, conditions or
provisions of,
(ii) constitute a default under,
(iii) result in the creation of any lien, security interest,
charge or encumbrance upon that Investor's assets pursuant to,
(iv) give any third party the right to accelerate any obligation
under,
(v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity or any other
Person pursuant to,
any of the charter, bylaws, plan, trust or other organizational documents of
that Investor (if any), or any Law to which that Investor or any of its or his
assets is subject.
(C) INVESTMENT REPRESENTATIONS. With respect to the Shares to be
--------------------------
acquired by the representing and warranting Investor pursuant to Sections 1.1
and 1.3:
(I) INVESTMENT RISK. The representing and warranting Investor, by
---------------
reason of its or his, or its or his purchaser representative's, business or
financial experience, is capable of evaluating the risks and merits of an
investment in those Shares and of protecting its or his own interests in
connection with the investment pursuant to this Agreement. That Investor
further acknowledges that those Shares are a speculative investment which
involves a substantial degree of risk of loss by that Investor of its or
his entire investment in the Issuer, and that Investor understands and
takes full cognizance of the risk factors related to the acquisition of
those Shares and that the Issuer has only recently been organized and has a
limited financial and operating history. That Investor is financially able
to bear the economic risk of an investment in those Shares, including the
total loss of that investment.
-9-
<PAGE>
(II) NO GENERAL SOLICITATION. The representing and warranting
-----------------------
Investor has not seen, received, been presented with, or been solicited by
any leaflet, public promotional meeting, newspaper or magazine article or
advertisement, radio or television advertisement, or any other form of
advertising or general solicitation, with respect to the issuance of those
Shares.
(III) INVESTMENT INTENT; STATUS. The representing and warranting
-------------------------
Investor is acquiring those Shares for investment purposes for its or his
own account only, and not with a view to or for sale in connection with any
distribution of all or any part of those Shares. No other Person will have
any direct or indirect beneficial interest in or right to those Shares.
That Investor either (a) is an "accredited investor" (as that term is
defined in Rule 501 promulgated under the Securities Act) or (b) is making
the investment in Shares based upon the knowledge and experience in
financial and business matters of the "purchaser representative" (as that
term is defined in Rule 501 promulgated under the Securities Act) named on
that Investor's signature page attached to this Agreement. That Investor
is a resident of the state or nation specified below on that Investor's
signature page attached to this Agreement.
(IV) LACK OF REGISTRATION. The representing and warranting Investor
--------------------
acknowledges that those Shares have not been registered under the
Securities Act or the securities laws of any state, in reliance, in part,
on its or his representations, warranties, and agreements set forth in this
Agreement. That Investor understands that each such Share is a "restricted
security" under the Securities Act in that those Shares will be acquired
from the Issuer in a transaction not involving a public offering, that
those Shares may be resold without registration under the Securities Act
only in certain limited circumstances, and that otherwise those Shares must
be held indefinitely. That Investor further understands and agrees that the
Issuer and its stockholders are under no obligation to register or qualify
those Shares under the Securities Act or under any state securities law, or
to assist that Investor in complying with any exemption from regis tration
and qualification. That Investor agrees that it or he will not make any
disposition of all or any part of those Shares which will result in the
violation by it or him or by the Issuer of the Securities Act, or any other
applicable securities laws.
(V) LACK OF LIQUIDITY. The representing and warranting Investor
-----------------
acknowledges that there are substantial restrictions on the transferability
of those Shares pursuant to this Agreement and applicable law, that there
is no public market
-10-
<PAGE>
for those Shares or other securities of the Issuer and none is expected to
develop, and that, accordingly, it may not be possible for that Investor to
liquidate its or his investment in the Shares.
(VI) ACCESS TO INFORMATION. The representing and warranting Investor,
---------------------
or its or his purchaser representative, if any, has received and reviewed
the Confidential Offering Memorandum dated November 1, 1995 regarding the
offering of the Shares. That Investor, or its or his purchaser
representative, if any, has had an opportunity to ask questions and
receive answers from the Issuer and the Persons involved in organizing,
establishing and managing the business and affairs of the Issuer regarding
the terms and conditions of acquisition of those Shares and regarding the
proposed business, financial affairs, and other aspects of the Issuer, and
has further had the opportunity to obtain all information (to the extent
the Issuer possesses or can acquire such information without unreasonable
effort or expense) which that Investor, or its or his purchaser
representative, if any, deems necessary to evaluate its or his investment
in those Shares and to verify the accuracy of information otherwise
provided to it or him. That Investor, or its or his purchaser
representative, if any, has received and reviewed all information which it
or he considers necessary or appropriate for deciding whether to acquire
and commit to acquire those Shares.
(VII) LACK OF REPRESENTATIONS. Neither the Issuer, ABRY, nor any
-----------------------
representative of the Issuer or ABRY, nor any other Person, has at any time
expressly or implicitly represented, guaranteed, or warranted to that
Investor that it or he may freely Transfer those Shares, that a percentage
of profit and/or amount or type of consideration will be realized as a
result of an investment in those Shares, that past performance or
experience on the part of any Person in any way indicates the predictable
results of the ownership of those Shares or of the Issuer's business, that
any cash distributions from Issuer operations or otherwise will be made to
the owners of Shares by any specific date or will be made at all, or that
any specific tax benefits will accrue as a result of an investment in the
Issuer.
(VIII) CONSULTATION WITH ADVISORS. The representing and warranting
--------------------------
Investor has been advised to consult with its or his own legal counsel and
financial advisors (including its or his purchaser representative, if any)
regarding all legal and financial matters concerning an investment in the
Issuer and the tax and other consequences of investing in the Issuer and
acquiring and owning those Shares, and has done so, to the extent that
Investor considers necessary.
-11-
<PAGE>
(IX) TAX MATTERS. The representing and warranting Investor
-----------
acknowledges that the tax consequences to it or him of acquiring and owning
those Shares will depend on its or his particular circumstances, and
neither the Issuer nor any representative of the Issuer nor any other
Person will be responsible or liable for the tax consequences to that
Investor of an investment in the Issuer. That Investor will look solely
to, and rely upon, its or his own advisors with respect to the tax
consequences of this investment. That Investor acknowledges that there can
be no assurance that the Code or the Treasury Regulations or any other Law
will not be amended or interpreted in the future in such a manner so as to
deprive the Issuer and its Investors of some or all of the tax benefits
they might receive, nor that some of the deductions claimed by the Issuer
or the allocations of items of income, gain, loss, deduction, or credit
among the Issuer's Investors may not be challenged by the Internal Revenue
Service or any other taxing authority.
3.2 REPRESENTATIONS AND WARRANTIES OF THE ISSUER. As an inducement
--------------------------------------------
to each Investor to enter into this Agreement and to acquire or agree to acquire
Shares, the Issuer represents and warrants to each Investor as of the time of
and immediately after giving effect to the Closing and as of the time of the
contribution described in Section 1.3 (in each case as if such representations
and warranties were made at each such time) that:
(A) AUTHORIZATION AND BINDING EFFECT. The execution, delivery and
--------------------------------
performance by the Issuer of this Agreement have been duly authorized by
the Issuer, and this Agreement constitutes a valid and binding obligation
of the Issuer which is enforceable in accordance with its terms.
(B) ABSENCE OF CONFLICTS. The execution and delivery by the Issuer of
--------------------
this Agreement, and the Issuer's fulfillment of and compliance with the
terms of this Agreement do not and will not in any material respect
(i) conflict with or result in a breach of the terms,
conditions or provisions of,
(ii) constitute a default under,
(iii) result in the creation of any lien, security interest, charge or
encumbrance upon the Issuer's assets pursuant to,
(iv) give any third party the right to accelerate any obligation
under,
(v) result in a violation of, or
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<PAGE>
(vi) require any authorization, consent, approval, exemption or other
action by or notice to any Government Entity or any other Person
pursuant to,
any of the charter or bylaws of the Issuer, or any Law to which The Issuer
or any of its assets is subject.
(C) TAX MATTERS. The Issuer acknowledges that the Investors'
-----------
investments are being made based upon the understanding that, for United
States federal income tax purposes, the Issuer will be eligible to be
treated, and will in fact be treated, as a real estate investment trust (a
"REIT"). In furtherance of that understanding and in order to induce the
----
Investors to make the investments described in Section 1.1, the Issuer
represents that the Issuer will (1) use reasonable efforts to become and
continue to be qualified to be so treated, (2) validly and timely elect to
be taxed as a REIT, (3) acquire, manage and dispose of such assets in such
manner as to continue to be eligible to be taxed as a REIT, (4) make such
dividend distributions to its stockholders at such times as may be required
to maintain its qualification as a REIT, and (5) take or refrain from
taking such other actions as may be necessary or desirable to preserve its
eligibility to be taxed as a REIT. In addition, insofar as is reasonably
practicable, the Issuer warrants and covenants that it will manage the
Issuer's affairs in such a manner as to avoid the incurrence of any
material amount of United States federal income taxes, including taxes
relating to foreclosure property and taxes imposed upon prohibited
transactions.
3.3 SURVIVAL. Each representation and warranty set forth in Section
--------
3.1 or Section 3.2 will survive the execution and delivery of this Agreement and
the Closing.
ARTICLE IV
GENERAL PROVISIONS
4.1 TRANSFER OF RESTRICTED SECURITIES.
---------------------------------
(A) GENERALLY. Without limiting Section 2.1, Shares which are
---------
Restricted Securities may be Transferred only (i) in Public Offerings, (ii)
under Rule 144 or Rule 144A promulgated under the Securities Act (or any similar
rule or rules then in force) if such rule is available, (iii) pursuant to
Section 2.2, 2.3 or 2.4, or (iv) subject to the conditions specified in Section
4.1(b), by any other legally available means of Transfer.
(B) OPINION DELIVERY. In connection with the transfer of any
----------------
Restricted Securities (other than a Transfer described in
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<PAGE>
Section 4.1(a)(i), 4.1(a)(ii) or 4.1(a)(iii)), the holder of such Restricted
Securities will deliver written notice to the Issuer describing in reasonable
detail the Transfer or proposed Transfer, together with an opinion (in form and
substance reasonably satisfactory to the Issuer) of legal counsel which (to the
Issuer's reasonable satisfaction) is knowledgeable in securities law matters, to
the effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if such holder of the Restricted Securities delivers to the Issuer an
opinion (in form and substance reasonably acceptable to the Issuer) of such
legal counsel to the effect that no subsequent Transfer of such Restrict ed
Securities will require registration under the Securities Act, then the Issuer
will upon such contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act legend set forth in
Section 4.1(c). If the Issuer is not required to deliver new certificates for
such Restricted Securities not bearing such legend, then such holder will not
Transfer the same until the prospective Transferee has confirmed to the Issuer
in writing its agreement to be bound by the conditions contained in this Section
4.1.
(C) LEGEND. Each certificate representing Restricted Securities will
------
be imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
______________, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE SUBSCRIPTION
AGREEMENT DATED AS OF _________, 1995, AS IN EFFECT FROM TIME TO TIME,
BETWEEN THE ISSUER (THE "ISSUER") AND CERTAIN INVESTORS, AND THE ISSUER
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF
SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE.
(D) LEGEND REMOVAL. If any Restricted Securities become eligible for
--------------
sale pursuant to Rule 144(k) promulgated under the Securities Act (or any
similar rule or rules then in force), then the Issuer will, upon the request of
the holder of such Restricted Securities, remove the legend set forth in Section
4.1(c) from the certificates for such Restricted Securities.
4.2 ADDRESSES AND NOTICES. Any notice, demand, request or report
---------------------
required or permitted to be given or made to any Person under this Agreement
will be in writing and will be deemed given or made when delivered in person or
when sent by first class mail or
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<PAGE>
by other commercially reasonable means of written communication (including
delivery by an internationally recognized courier service or by facsimile
transmission) (i) to the Issuer or to ABRY, at the address, and with the copy,
specified below, or (ii) to any Investor, at that Investor's address as shown on
the Issuer's books and records.
To the Issuer:
-------------
1800 Second Street
Sarasota, Florida 34236
Attention: President
with a copy (which copy will not
--------------------------------
constitute notice to the Issuer) to:
-----------------------------------
ABRY Partners, Inc.
18 Newbury Street
Boston, MA 02116
Attention: Royce Yudkoff
To ABRY:
-------
ABRY Partners, Inc.
18 Newbury Street
Boston, MA 02116
Attention: Royce Yudkoff
with a copy (which copy will not
--------------------------------
constitute notice to ABRY) to:
-----------------------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: John Kuehn
or to such other address as the recipient may have theretofore specified to the
sending Person in accordance with this Section 4.2.
4.3 BINDING EFFECT. This Agreement will be binding upon and inure to
--------------
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns. Notwithstanding the
foregoing, no Investor will Transfer any Share (other than in a Public Sale, a
Sale of the Issuer or a Transfer made in accordance with Section 1.3 or Section
2.1) to any Person who does not agree in writing to be bound by the provisions
of this Agreement applicable to such Shares immediately prior to such Transfer.
4.4 AMENDMENT; WAIVER. Except as otherwise provided in this
-----------------
Agreement, no modification, amendment or waiver of any provision of this
Agreement will be effective unless such modification, amendment or waiver is
approved in writing by the Issuer and the holders of a majority of the Shares.
No failure by any party
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<PAGE>
to insist upon the strict performance of any covenant, duty, agreement or
condition of this Agreement or to exercise any right or remedy consequent upon a
breach thereof will constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.
4.5 CONSENT TO JURISDICTION. Each Investor, ABRY and the Issuer
-----------------------
agrees that any legal proceeding instituted against it or him with respect to
the Issuer's business or property, or relating to this Agreement, may be brought
in any court of competent jurisdiction located in the State of Delaware or the
Commonwealth of Massachusetts, as selected by the Board, and each Investor, ABRY
and the Issuer waives the right to trial by jury with respect to all such
matters. Each Investor, ABRY and the Issuer irrevocably accepts and submits to
the non-exclusive jurisdiction of each of the aforementioned courts in personam
generally and unconditionally with respect to any such proceeding for itself or
himself and its or his property. If any such proceeding is brought in any such
jurisdiction, each Investor, ABRY and the Issuer hereby (a) waives any objection
on the ground of venue or the convenience of the forum, and (b) agrees that any
judgment obtained in any such proceeding will be conclusive and may be enforced
in any other jurisdiction by suit on the judgment, a certified or exemplified
copy of which will be conclusive evidence of the fact and amount of that
Investor's, ABRY's or the Issuer's obligations. Service of process and notice
of any such proceeding may be made by any means provided for in Section 4.2.
4.6 FURTHER ACTION. The parties will execute and deliver all
--------------
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
4.7 Other Definitional Provisions.
-----------------------------
(A) "HEREOF," ETC. The terms "hereof," "herein" and "hereunder" and
-------------
terms of similar import will refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, clause and Exhibit references
contained in this Agreement are references to Sections, clauses and Exhibits in
or attached to this Agreement, unless otherwise specified.
(B) NUMBER AND GENDER. Each defined term used in this Agreement has a
-----------------
comparable meaning when used in its plural or singular form. Each gender-
specific term used in this Agreement has a comparable meaning whether used in a
masculine, feminine or gender-neutral form.
(C) INCLUDING. Whenever the term "including" is used in this
---------
Agreement (whether or not that term is followed by the phrase "but not limited
to" or "without limitation" or words of similar
-16-
<PAGE>
effect) in connection with a listing of items within a particular
classification, that listing will be interpreted to be illustrative only and
will not be interpreted as a limitation on, or an exclusive listing of, the
items within that classification.
(D) SUCCESSOR LAWS. Each reference in this Agreement or any other
--------------
Transaction Document to any Law will be deemed to include such Law as it
hereafter may be amended, supplemented or modified from time to time and any
successor Law thereto, unless such treatment would be contrary to the express
terms of this Agreement or such Transaction Document.
4.8 SEVERABILITY. Whenever possible, each provision of this
------------
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect the validity, legality or enforceability of any other provision of
this Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
4.9 ENTIRE AGREEMENT. This Agreement embodies the complete agreement
----------------
and understanding among the parties to this Agreement with respect to the
subject matter of this Agreement and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter of this Agreement in any
way; provided that this Section 4.9 shall not cause any representation contained
--------
in the confidential offering memorandum or any supplement thereto, or any other
written offering literature, furnished by the Issuer to any Investor or
prospective Investor to be superseded, preempted or merged with this Agreement,
and each such representation will survive the execution of this Agreement and
the consummation of the transactions contemplated hereby.
4.10 COUNTERPARTS. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
4.11 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a substantive part of
this Agreement.
4.12 GOVERNING LAW. ALL MATTERS RELATING TO THE INTERNAL AFFAIRS OF
-------------
THE ISSUER AND THE RELATIVE RIGHTS OF THE HOLDERS OF THE
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<PAGE>
ISSUER'S CAPITAL STOCK AS SUCH WILL BE GOVERNED BY THE DELAWARE ACT. ALL OTHER
ISSUES AND QUESTIONS, INCLUDING THOSE CONCERNING THE CONSTRUCTION, VALIDITY,
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE EXHIBITS WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT PROVISION OR
RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE
APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF
DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT
(AND ALL SCHEDULES AND EXHIBITS HERETO), EVEN IF UNDER THAT JURISDICTION'S
CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER
JURISDICTION WOULD ORDINARILY APPLY.
4.13 NO STRICT CONSTRUCTION. The parties to this Agreement have
----------------------
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties, and no
presumption or burden of proof will arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
* * * * *
-18-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed or caused to be
executed on their behalf this Subscription Agreement as of the first date set
forth above.
PINNACLE TOWERS INC.
By____________________________
Its___________________________
ABRY BROADCAST PARTNERS, L.P.
By ABRY Capital, L.P.
Its General Partner
By ABRY Holdings, Inc.
Its General Partner
By_______________________
Its______________________
-19-
<PAGE>
SIGNATURE PAGE FOR INVESTOR
- ------------------ --------
PINNACLE TOWERS INC.
- --------------------
SUBSCRIPTION AGREEMENT IF INDIVIDUAL INVESTOR:
- ----------------------
_______________________________
(please print or type name)
_______________________________
(signature)
IF NON-INDIVIDUAL INVESTOR:
_______________________________
(please print or type name)
By_____________________________
(signature)
Its____________________________
(specify title)
FOR ALL INVESTORS:
State (or Nation, if other
than the United States of
America) of Residence/Domicile:
_______________________________
(please print or type)
check one:
____ Accredited Investor
____ Not an Accredited Investor --
If not an Accredited
Investor, name of Purchaser
Representative:
_____________________________
(please print or type)
-20-
<PAGE>
EXHIBIT A
INVESTORS
---------
(ATTACHED)
-21-
<PAGE>
EXHIBIT B
DEFINED TERMS
-------------
As used in the Subscription Agreement to which this Exhibit B is
attached, the following terms have the following respective meanings:
"AFFILIATE" means any Person that directly or indirectly controls, is
---------
controlled by, or is under common control with the Person in question. For
purposes of this Agreement, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise; provided that each direct and indirect partner of ABRY
--------
will be deemed to be an Affiliate of ABRY.
"AGREEMENT" means this Subscription Agreement, as in effect from time
---------
to time.
"AGGREGATE OWNERSHIP LIMIT" has the meaning set forth in Section
-------------------------
2.1(a).
"APPROVED SALE" means any Sale of the Issuer which is approved by
-------------
holders of Common Shares entitled to cast a majority of the votes entitled to be
cast by the outstanding Common Shares, voting in the manner provided in the
Issuer's Charter.
"BOARD" means the Issuer's board of directors.
-----
"BUSINESS DAY" means Monday through Friday of each week (determined by
------------
reference to Boston, Massachusetts, time), except that a legal holiday
recognized as such by the government of the United States will not be regarded
as a Business Day.
"CHARITABLE BENEFICIARIES" has the meaning set forth in Section
------------------------
2.1(c).
"CLASS A COMMON" means the Issuer's Class A Common Stock, par value
--------------
$0.001 per share.
"CLASS B COMMON" means the Issuer's Class B Common Stock, par value
--------------
$0.001 per share.
"CLASS C COMMON" means the Issuer's Class C Common Stock, par value
--------------
$0.001 per share.
"CLASS D COMMON" means the Issuer's Class D Common Stock, par value
--------------
$0.001 per share.
-22-
<PAGE>
"CLOSING" has the meaning set forth in Section 1.1.
-------
"CLOSING DATE" means the date upon which the Closing occurs.
------------
"CODE" means the United States Internal Revenue Code of 1986, as in
----
effect from time to time.
"COMMON EQUIVALENT" means any Common Share, Option or Convertible
-----------------
Security.
"COMMON SHARE" means any share of Class A Common, Class B Common,
------------
Class C Common or Class D Common and will include any common securities issued
in respect of any of those Common Shares in connection with any recapitalization
described in Section 2.4.
"CONVERTIBLE SECURITIES" means any securities of the Issuer directly
----------------------
or indirectly convertible into or exchangeable for Common Shares.
"DISTRIBUTION" has the meaning which the Issuer's Charter assigns to
------------
that term.
"EXEMPT ISSUANCE" means any issuance or sale of any Common Equivalent
---------------
by the Issuer (a) to any employee of the Issuer or any Subsidiary, (b) in
connection with the acquisition of another company, business or assets, (c)
pursuant to a Public Offering, (d) upon the exercise, conversion or exchange of
any Option or Convertible Security issued in accordance with Section 1.4 or any
Exempt Issuance, (e) to ABRY, as part of its initial commitment to purchase up
to 200,000 shares of Class A Common at $100 per share, (f) upon the conversion
of Class D Common into Class C Common in accordance with the Issuer's Charter,
(g) as part of any recapitalization or reorganization described in Section 2.4,
or (h) as a distribution in the form of securities of the Issuer.
"GOVERNMENT ENTITY" means the United States of America or any other
-----------------
nation, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government in each case having jurisdiction over the matter in
question, including any Tribunal.
"IPO" means the initial Public Offering, other than a Public Offering
---
registered on Form S-8 or any similar or successor form promulgated under the
Securities Act.
"ISSUER" has the meaning set forth in Section 1.3.
------
"ISSUER'S CHARTER" means the Issuer's Certificate of Incorporation, as
----------------
in effect from time to time.
-23-
<PAGE>
"LAWS" means all applicable statutes, laws, ordinances, regulations,
----
rules, orders, judgments, writs, injunctions, acts or decrees of any Tribunal or
other Government Entity.
"MANAGERS" has the meaning set forth in Section 2.4.
--------
"NATIONSBANK" has the meaning set forth in Section 1.2.
-----------
"OPTIONS" means any warrants, options or other rights to directly or
-------
indirectly subscribe for or purchase Common Shares or Convertible Securities.
"OWNERSHIP PERCENTAGE" for any Person at any time means the aggregate
--------------------
number of shares of Class A Common, Class B Common and Class C Common
(determined as if all Class D Common were converted into Class C Common in
accordance with the Issuer Charter immediately prior to that time) which are
held by that Person, expressed as a percentage of the aggregate number of shares
of Class A Common, Class B Common and Class C Common (determined as if all Class
D Common were converted into Class C Common in accordance with the Issuer
Charter immediately prior to that time) which are then outstanding.
"PERCENTAGE OWNERSHIP LIMIT" has the meaning set forth in Section
--------------------------
2.1(a).
"PERSON" means an individual or a corporation, limited liability
------
company, partnership, trust, unincorporated organization, association or other
entity, including any Government Entity.
"PINNACLE HOLDINGS" has the meaning set forth in Section 1.3(a).
-----------------
"PUBLIC OFFERING" means any public offering of Shares or other equity
---------------
securities of the Issuer which is registered pursuant to the Securities Act.
"PUBLIC SALE" means any sale of Common Shares to the public pursuant
-----------
to an offering registered under the Securities Act or through a broker, dealer
or market maker pursuant to the provisions of Rule 144, or pursuant to Rule
144(k), adopted pursuant to the Securities Act.
"PROHIBITED TRANSFER" has the meaning set forth in Section 2.1(c).
-------------------
"PURPORTED TRANSFER" has the meaning set forth in Section 2.1(c).
------------------
"RESTRICTED SECURITIES" means (i) the Shares issued under this
---------------------
Agreement or issued upon conversion of any such Shares, and
-24-
<PAGE>
(ii) any securities issued with respect to the securities referred to in clause
(i) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
will cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) been distributed to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) promulgated under the
Securities Act or (c) been otherwise transferred and new certificates for them
not bearing the Securities Act legend set forth in Section 4.1(c) have been
delivered by the Issuer in accordance with Section 4.1(b).
"SALE OF THE ISSUER" means any transaction or series of related
------------------
transactions pursuant to which any Person(s) in the aggregate acquire(s) (i)
other than from the Issuer, equity securities representing a majority of the
economic interest in the Issuer at the time of such acquisition (whether by
merger, consolidation, reorganization, combination, sale or transfer of capital
stock or otherwise), (ii) from the Issuer and/or the Subsidiaries, a majority of
the Issuer's assets determined on a consolidated basis, or (iii) from the Issuer
and/or the Subsidiaries, all or substantially all of the Issuer's assets
determined on a consolidated basis.
"SECURITIES ACT" means the United States Securities Act of 1933 and
--------------
applicable rules and regulations thereunder, in each case as in effect from time
to time.
"SENIOR CREDIT AGREEMENT" means the Credit Agreement among Pinnacle
-----------------------
Towers, NationsBank, as Administrative Lender, and the Lenders referred to
therein, dated as of September 1, 1995, as in effect from time to time.
"SHARE" has the meaning set forth in Section 1.3.
-----
A "SUBSIDIARY" of any Person means any corporation, limited liability
----------
company, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of 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 that Person or one or more of the other subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited
liability company, membership, partnership or other similar ownership interest
thereof
-25-
<PAGE>
is at the time owned or controlled, directly or indirectly, by any Person or one
or more subsidiaries of that Person or a combination thereof. For purposes of
this Agreement, a Person or Persons will be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons are allocated a majority of limited
liability company, partnership, association or other business entity gains or
losses or control any manager, managing director or general partner of such
limited liability company, partnership, association or other business entity.
The capitalized term "SUBSIDIARY" refers to a subsidiary of the Issuer.
----------
"TAG-ALONG NOTICE" has the meaning set forth in Section 2.2(a).
----------------
"TRANSFER" means any direct or indirect sale, pledge, encumbrance,
--------
assignment, gift, hypothecation, exchange, transfer or other disposition (and
the terms "Transferee," "Transferor" and "Transferred" have correlative
---------- ---------- -----------
meanings).
"TRANSFERRED SHARES" has the meaning set forth in Section 2.1(d).
------------------
"TREASURY REGULATIONS" means the income tax regulations promulgated
--------------------
under the Code, as such regulations are in effect from time to time.
"TRIBUNAL" means any government, arbitration panel, court or
--------
governmental department, commission, board, bureau, agency or instrumentality of
the United States of America or any state, province, commonwealth, nation,
territory, possession, county, parish, town, township, village, municipality or
other Government Entity, in each case having jurisdiction over the matter in
question, whether now or hereafter constituted and/or existing.
"TRUSTEE" has the meaning set forth in Section 2.1(c).
-------
* * * * *
-26-
<PAGE>
EXHIBIT C
FORM OF PLEDGE AGREEMENT
------------------------
(ATTACHED)
-27-
<PAGE>
EXHIBIT 10.16
SECOND AMENDED AND RESTATED
SUBSCRIPTION AND STOCKHOLDERS AGREEMENT
AMONG
PINNACLE HOLDINGS INC.
PINNACLE TOWERS INC.
AND
THE STOCKHOLDERS OF
PINNACLE HOLDINGS INC.
DATED AS OF MAY 16, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 ACQUISITIONS OF SHARES......................................... 2
1.1 Initial Share Acquisitions................................... 2
--------------------------
1.2 Contributions on December 31, 1995........................... 2
----------------------------------
1.3 Additional Capital Contributions............................. 2
--------------------------------
1.4 Conversion of Class D Common................................. 3
----------------------------
1.5 Preemptive Rights............................................ 3
-----------------
1.6 Expense Reimbursement........................................ 4
---------------------
ARTICLE 2 VESTING OF UNVESTED SHARES; REPURCHASE OF EXECUTIVE
SHARES; TRANSFER OF SHARES GENERALLY; SALE OR
REORGANIZATION OF THE COMPANY....................................... 5
2.1 Vesting of Unvested Shares................................... 5
---------------------------
2.2 Repurchase of Executive Shares: Call Option................. 6
--------------------------------------------
2.3 Repurchase of Executive Shares: Upon Termination
-------------------------------------------------
Without Cause................................................ 9
-------------
2.4 Repurchase of Executive Shares: Upon Death.................. 11
-------------------------------------------
2.5 Limitation on the Company.................................... 13
-------------------------
2.6 Retention of Executive Shares................................ 14
-----------------------------
2.7 Tag-Along Rights............................................. 14
----------------
2.8 Sale of the Company.......................................... 16
-------------------
2.9 Recapitalization............................................. 17
----------------
2.10 Holdback..................................................... 18
--------
ARTICLE 3 VOTING PROVISIONS.............................................. 18
3.1 Election of Executives to the Board.......................... 18
-----------------------------------
3.2 Resignation upon Termination................................. 18
----------------------------
3.3 Representations of the Fund.................................. 19
---------------------------
ARTICLE 4 VALUATION...................................................... 19
4.1 Marketable Securities........................................ 19
---------------------
4.2 Other Shares................................................. 19
------------
ARTICLE 5 REPRESENTATIONS AND WARRANTIES................................. 20
5.1 Representations and Warranties of the Fund and the
--------------------------------------------------
Executives................................................... 20
----------
5.2 Representations and Warranties of the Executives............. 24
------------------------------------------------
5.3 Representations and Warranties of the Company................ 24
---------------------------------------------
5.4 Survival..................................................... 25
--------
ARTICLE 6 [reserved]..................................................... 26
ARTICLE 7 GENERAL PROVISIONS............................................. 26
7.1 Transfer of Restricted Securities............................ 26
---------------------------------
7.2 Addresses and Notices........................................ 28
---------------------
7.3 Binding Effect............................................... 28
--------------
7.4 Amendment; Waiver............................................ 28
-----------------
7.5 Consent to Jurisdiction...................................... 29
-----------------------
7.6 Further Action............................................... 29
--------------
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
7.7 Other Definitional Provisions................................ 29
-----------------------------
7.8 Severability................................................. 30
------------
7.9 Entire Agreement............................................. 30
----------------
7.10 Counterparts................................................. 30
------------
7.11 Descriptive Headings......................................... 31
--------------------
7.12 Governing Law................................................ 31
-------------
7.13 No Strict Construction....................................... 31
----------------------
</TABLE>
-ii-
<PAGE>
LIST OF EXHIBITS
----------------
EXHIBIT A Defined Terms
EXHIBIT B-1 Stockholders and Pinnacle Tower Shares
EXHIBIT B-2 Stockholders and Pinnacle Holdings Shares
EXHIBIT C Expenses to be Reimbursed
EXHIBIT D Form of Consulting Agreement
EXHIBIT E Form of Employment Agreement
-iii-
<PAGE>
SECOND AMENDED AND RESTATED
SUBSCRIPTION AND STOCKHOLDERS AGREEMENT
This SECOND AMENDED AND RESTATED SUBSCRIPTION AND STOCKHOLDERS
AGREEMENT is entered into as of May 16, 1996 by and among Pinnacle Holdings
Inc., a Delaware corporation (the "Company"), Pinnacle Towers Inc., a Delaware
-------
corporation ("Pinnacle Towers"), ABRY Broadcast Partners II, L.P., a Delaware
---------------
limited partnership (the "Fund"), and Robert J. Wolsey ("Wolsey"), James M.
---- ------
Dell'Apa ("Dell'Apa"), Michael D. Craig ("Craig") and the Gardere & Wynne
-------- -----
Savings and Retirement Plan Trust for the Benefit of Michael D. Craig (the
"Craig Trust").
- ------------
Certain terms used in this Agreement have the respective meanings
which the attached Exhibit A assigns to those terms.
---------
Pinnacle Towers, the Fund, Wolsey, Dell'Apa, Craig and the Craig Trust
are parties to a Subscription and Stockholders Agreement dated as of April 17,
1995, amended by Amendment No. 1 thereto dated as of May 3, 1995 and further
amended and restated by the Amended and Restated Subscription and Stockholders
Agreement dated as of December 31, 1995 (the "Original Agreement") whereby the
------------------
Fund, Wolsey, Dell'Apa, Craig and the Craig Trust (the "Initial Stockholders")
--------------------
capitalized Pinnacle Towers and the Company, set forth certain arrangements
concerning Pinnacle Towers and the Company and their securities and the Company
became a party to the Original Agreement. In addition, pursuant to a
Contribution Agreement (the "Contribution Agreement"), dated as of December 31,
----------------------
1995, among the Company and the parties to the Original Agreement, each Initial
Stockholder contributed to the capital of the Company all of the capital stock
of Pinnacle Towers held by such Initial Stockholder, in return for shares of
capital stock of the Company. The Company, Pinnacle Towers and the Initial
Stockholders desire that the arrangements among Pinnacle Towers and the Initial
Stockholders which are set forth in the Original Agreement continue with respect
to the Company and its securities after such contributions, from and after the
Effective Time.
Therefore, the parties hereto agree that the Original Agreement is
hereby amended and restated in its entirety as follows:
ARTICLE 1
ACQUISITIONS OF SHARES
1.1 INITIAL SHARE ACQUISITIONS. On May 3, 1995 (the "Closing Date"):
-------------------------- ------------
<PAGE>
(A) BY THE FUND. The Fund acquired from Pinnacle Towers, and Pinnacle
-----------
Towers issued to the Fund, 35,000 shares of Pinnacle Towers' Class A Common
Stock, and in consideration for such shares the Fund contributed to
Pinnacle Towers cash in the amount of $3,500,000.
(B) BY THE INITIAL EXECUTIVES. Each of Wolsey, Dell'Apa, Craig and
-------------------------
the Craig Trust acquired from Pinnacle Towers, and Pinnacle Towers issued
to each of them, the number of shares of Pinnacle Towers' Class B Common
Stock, and the number of shares of Pinnacle Towers' Class D Common Stock,
set forth opposite their respective names on the attached Exhibit B-1, and
-----------
in consideration for the issuance of such shares each of them contributed
to Pinnacle Towers cash in the amount set forth opposite his name on the
attached Exhibit B-1.
-----------
All of the shares of Class D Common Stock of Pinnacle Towers described in clause
(b) above were Unvested Shares upon their issuance and were Unvested Shares at
the time of their contribution to the Company as described in Section 1.2.
1.2 CONTRIBUTIONS ON DECEMBER 31, 1995. On December 31, 1995,
----------------------------------
pursuant to the Contribution Agreement and effective as of the Effective Time,
each of the Fund, Wolsey, Dell'Apa, Craig and the Craig Trust contributed to the
capital of the Company the shares of Pinnacle Towers' capital stock acquired by
such Person as described in Section 11 and, in consideration for such
contribution, was issued the shares of capital stock of the Company set forth
opposite such Person's name of the attached Exhibit B-2. On the date of this
-----------
Agreement and as of the Effective Time, all shares of Class D Common so issued
are Unvested Shares, and may become Vested Shares pursuant to Section 2.1.
1.3 ADDITIONAL CAPITAL CONTRIBUTIONS.
--------------------------------
(A) INITIAL COMMITTED CONTRIBUTIONS. In order to fund all or a
-------------------------------
portion of the acquisition of any assets or business by the Company,
operating costs of the Company, or for any other purpose which the Board
has approved or may approve, the Fund has made, and from time to time on or
prior to May 3, 1998 may make, additional contributions to the Company's
capital in an aggregate amount not to exceed $16,500,000 (collectively, the
"Initial Committed Contributions"). In consideration for each $100.00
-------------------------------
contributed by the Fund in any Initial Committed Contribution, the Company
has issued or will issue to the Fund one share of Class A Common.
(B) SECONDARY COMMITTED CONTRIBUTIONS. In order to fund all or a
---------------------------------
portion of the acquisition of any assets or business by the Company,
operating costs of the Company, or for any other purpose which the Board
has approved or may approve, the Fund has made, and from time to time on or
prior
-2-
<PAGE>
to the third anniversary of the Closing Date may make, additional
contributions to the Company's capital in an aggregate amount not to exceed
$30,000,000 (collectively, the "Secondary Committed Contributions" and
---------------------------------
together with the Initial Committed Contributions, the "Committed
---------
Contributions"). In consideration for each $100.00 contributed by the Fund
-------------
in any Secondary Committed Contribution, the Company has issued or will
issue to the Fund one share of Class E Common.
1.4 CONVERSION OF CLASS D COMMON. On the Conversion Date, each
----------------------------
holder of Class D Common will convert all shares of Class D Common held by such
holder into shares of Class C Common in accordance with the Company Charter.
All Class C Common issued upon conversion of shares of Class D Common which are
Vested Shares immediately prior to such conversion will be Vested Shares
immediately after such conversion. All shares of Class C Common issued upon the
conversion of shares of Class D Common which are Unvested Shares immediately
prior to such conversion will be Unvested Shares immediately after such
conversion.
For example, if immediately prior to conversion there are
outstanding 2,000 shares of Class D Common which are Vested
Shares, 8,000 shares of Class D Common which are Unvested Shares,
68,000 shares of Class A Common and 12,000 shares of Class B
Common, then 20,000 shares of Class C Common will be issuable
upon such conversion, and 4,000 of those shares of Class C Common
will be Vested Shares upon conversion and the remaining 16,000
shares of Class C Common will be Unvested Shares upon conversion.
1.5 PREEMPTIVE RIGHTS.
-----------------
(A) GENERAL RIGHT. Except for any Exempt Issuance, if the Company
-------------
authorizes the issuance or sale of any Common Equivalents, then the Company
will give each Stockholder which owns Non-Incentive Common Shares written notice
offering to sell to that Stockholder a portion of such Common Equivalents equal
to that Stockholder's Ownership Percentage. Such notice will describe in
reasonable detail the Common Equivalents being offered, the purchase price, the
payment terms and such Stockholder's Ownership Percentage. Each Stockholder
which holds Non-Incentive Common Shares will be entitled to purchase those
Common Equivalents at the same price and on the same other terms as those Common
Equivalents are issued to other Persons; provided that, if other Persons
--------
purchasing or receiving Common Equivalents are required to also purchase other
securities of the Company or any other Person, then the Stockholders exercising
their rights under this Section 1.5 will also be required to purchase the same
strip of securities (on the same terms and conditions) that such other Persons
are required to purchase.
-3-
<PAGE>
(B) METHOD OF EXERCISE. In order to exercise its purchase rights
------------------
under this Section 1.5, a Stockholder must, within 10 Business Days after
receipt of the written notice described in Section 1.5(a), deliver a written
notice to the Company stating that such Stockholder is electing to purchase
Common Equivalents and stating the maximum quantity of Common Equivalents for
which that Stockholder will subscribe. If any Stockholder does not elect to
purchase the full amount of that Stockholder's Ownership Percentage of the
Common Equivalents to be issued, then the unpurchased Common Equivalents will be
allocated to those other Stockholders who have elected to purchase their full
allotment, pro rata according to their respective Ownership Percentages, until
either all of the Common Equivalents being offered have been allocated or each
subscribing Stockholder has been allocated the entire quantity of Common
Equivalents for which that Stockholder has subscribed.
(C) SALE TO OTHERS. During the 180 days after the end of the 10-day
--------------
offering period described in Section 1.5(b), the Company will be entitled to
sell any Common Equivalents which the Stockholders which hold Non-Incentive
Common Shares have not elected to purchase, on terms and conditions no more
favorable to the purchasers thereof than those offered to those Stockholders.
Any Common Equivalents offered or sold by the Company after such 180-day period
must be reoffered in accordance with the terms of this Section 1.5 to the
Stockholders which hold Non-Incentive Common Shares.
(D) TERMINATION. The rights of the Stockholders under this Section
-----------
1.5 will terminate upon an IPO.
1.6 EXPENSE REIMBURSEMENT. To the extent that it has not already
---------------------
done so, the Company will reimburse each of the Fund, Wolsey, Dell'Apa and Craig
for the direct out-of-pocket costs and expenses incurred by such Stockholder in
connection with the preparation, negotiation and execution of the Transaction
Documents and the consummation of the transactions contemplated thereby, and
will reimburse Wolsey, Dell'Apa and Craig for certain start-up and other
expenses incurred by them prior to the Closing Date, a description of which is
attached to this Agreement as Exhibit C. To the extent they are not yet known
---------
or quantified, the Company will reimburse such items promptly after a report
thereof is furnished to the Company and the Fund.
-4-
<PAGE>
ARTICLE 2
VESTING OF UNVESTED SHARES;
REPURCHASE OF EXECUTIVE SHARES; TRANSFER OF SHARES GENERALLY;
SALE OR REORGANIZATION OF THE COMPANY
2.1 VESTING OF UNVESTED SHARES.
--------------------------
(A) SCHEDULED VESTING. On each anniversary of the Closing Date
-----------------
which is specified below and on which any Executive is an employee of the
Company or Pinnacle Towers, the "Fraction" specified below of the Incentive
Shares for that Executive which are then Unvested Shares (whether or not then
held by that Executive) became or will become Vested Shares:
<TABLE>
<CAPTION>
Anniversary of the
Closing Date: Fraction
-------------------- --------
<S> <C>
First 1/10
Second 1/9
Third 1/8
Fourth 2/7
Fifth 1/2
Sixth 1/1/1/
</TABLE>
For example, if 10,000 Unvested Shares are issued to an Executive
on the Closing Date and that Executive is an employee of the
Company or Pinnacle Towers on each of the first, second, third,
fourth, fifth and sixth anniversaries of the Closing Date, then
on such anniversaries the following number of those shares will
become Vested Shares, respectively: 1,000, 1,000, 1,000, 2,000,
2,500 and 2,500.
For all purposes relevant to this Agreement, "employment" by the Company or
Pinnacle Towers with respect to the Craig Trust will refer to employment of
Craig by the Company or Pinnacle Towers (the intention of the parties being that
in all respects the treatment of any Shares held by the Craig Trust will be the
same as the treatment which would have been afforded those Shares under this
Agreement if they had been owned by Craig).
(B) ACCELERATED VESTING. Notwithstanding Section 2.1(a), upon any
-------------------
IPO or Sale of the Company, all Unvested Shares for any Executive which is then
an employee of the Company or Pinnacle Towers (whether or not then held by that
Executive) will become Vested Shares.
_________________________
/1/i.e., all Unvested Shares for any Executive will become Vested Shares if that
Executive is an employee of the Company or Pinnacle Towers on the sixth
anniversary of the Closing Date.
-5-
<PAGE>
(C) EFFECT OF TERMINATION OF EMPLOYMENT. Notwithstanding Sections
-----------------------------------
2.1(a) and 2.1, all Incentive Shares for any Executive (whether or not then held
by that Executive) will become (or remain) Unvested Shares upon the termination
of that Executive's employment with the Company and Pinnacle Towers either (i)
by the Company, Pinnacle Towers or by that Executive for any reason or for no
reason (other than by reason of such Executive's death or permanent disability)
prior to the third anniversary of the Closing Date or (ii) by reason of Cause at
any time prior to, on or after the third anniversary of the Closing Date.
2.2 REPURCHASE OF EXECUTIVE SHARES: CALL OPTION
--------------------------------------------
(A) CALL OPTION. If any Executive ceases to be employed by the
-----------
Company and Pinnacle Towers/2/ for any reason or for no reason (the cessation of
an Executive's employment being a "Termination"), then the Executive Shares for
-----------
that Executive (whether then held by that Executive or one or more of that
Executive's permitted Transferees or, in the case of Craig, the Craig Trust or
its permitted Transferees) will be subject to repurchase by the Company and the
Stockholders which hold Non-Incentive Common Shares upon the terms and
conditions of this Section 2.2 (the "Call Option").
-----------
(B) CALL OPTION PRICE. In connection with any exercise of the Call
-----------------
Option, the purchase price for each Unvested Share for the Executive as to which
a Termination has occurred (whether or not then held by that Executive) will be
$0.001, and the purchase price for each other Executive Share for that Executive
(whether or not then held by that Executive) will be the Fair Market Value of
that Executive Share as of the date upon which the Company Call Notice or the
Fund Call Notice, as the case may be, is given. The Fair Market Value of any
Executive Share will be determined pursuant to Article 4.
(C) EXERCISE BY THE COMPANY. Promptly after any Termination (with
-----------------------
respect to the Unvested Shares which are part of the Executive Shares for the
Executive in question) the Company will, and at any time and from time to time
on or prior to the 20th Business Day after any Termination (with respect to the
other Executive Shares for that Executive), the Company may, exercise the Call
Option for all or any portion of the Executive Shares for the Executive in
question by delivering written notice (the "Company Call Notice") to the
-------------------
holder(s) of the Executive Shares to be purchased. The Company Call Notice will
set forth the number and type of Executive Shares to be acquired from each
holder, the aggregate consideration to be paid for those Executive Shares and
the time and place for the closing of the Company's purchase.
_________________________
/2/i.e., if the Executive is employed by neither the Company nor Pinnacle
Towers.
-6-
<PAGE>
(D) EXERCISE BY THE INITIAL STOCKHOLDERS.
------------------------------------
(i) If the Company does not exercise or has not exercised the Call
Option for any or all of the Executive Shares in question, then, at any
time and from time to time on or prior to the 20th Business Day after the
Termination in question, at the election of the Fund (by written notice as
described in clause (ii) below), then the Stockholders which hold Non-
Incentive Common Shares, including the Fund, if the Fund holds Non-
Incentive Common Shares, but excluding any Executive as to which a
Termination has occurred and any Family Member of any such Executive (those
non-excluded Stockholders being the "Eligible Stockholders") will be
---------------------
entitled to exercise the Call Option with respect to any or all of the
Executive Shares for the Executive in question and which the Company is not
able to purchase (collectively, the "Available Shares").
----------------
(ii) If the Fund so elects, then the Fund will give written notice
(the "Fund Call Notice") to the other Eligible Stockholders setting forth
----------------
the number of Available Shares of the type(s) to be purchased and the
proposed purchase price for those Available Shares. Each Eligible
Stockholder may elect to purchase any or all of the Available Shares of the
type(s) specified in the Fund Call Notice by giving written notice (an
"Election Notice") to the Fund specifying the maximum number of Executive
---------------
Shares of each such type which that Eligible Stockholder would purchase,
within 5 Business Days after the Fund Call Notice is given.
(iii) If the Eligible Stockholders elect to purchase an aggregate
number of Executive Shares of any type which is greater than the number of
Available Shares of that type which is specified in the Fund Call Notice,
then the number of Available Shares of that type which is specified in the
Fund Call Notice will be allocated among the electing Eligible Stockholders
pro rata, based upon their respective Non-Incentive Percentages. If any of
those Available Shares of any type are not allocated to the Eligible
Stockholders pursuant to the immediately preceding sentence, then the
unallocated Available Shares of that type will be allocated and reallocated
among the Eligible Stockholders who have elected to purchase more Available
Shares of that type (as indicated in their respective Election Notices),
pro rata based on their respective Non-Incentive Percentages, until either
the entire number of Available Shares of that type which is specified in
the Fund Call Notice have been allocated or each Eligible Stockholder has
been allocated the maximum number of the Available Shares of that type
which that Eligible Stockholder has elected to purchase (as indicated in
that Eligible Stockholder's Election Notice).
-7-
<PAGE>
(iv) As soon as practicable, the Fund will notify each holder of
Executive Shares as to the number of Executive Shares being purchased from
such holder by the Eligible Stockholders, the aggregate consideration to be
paid for those Executive Shares and the time and place for the closing of
the purchase by the Eligible Stockholders (the "Supplemental Call Notice").
------------------------
At the time the Fund delivers the Supplemental Call Notice to the holder(s)
of Executive Shares, the Fund will also deliver written notice to each
subscribing Eligible Stockholder setting forth the number and type of
Available Shares allocated to that Eligible Stockholder pursuant to clause
(ii) above, the aggregate purchase price and the time and place of the
closing of the purchase by the Eligible Stockholders.
(E) ALLOCATION AMONG SELLING HOLDERS. The number of Executive Shares
--------------------------------
of any type to be repurchased by the Company or the Eligible Stockholders will
be satisfied to the extent possible from the Executive Shares held by the
Executive as to which the Termination in question has occurred. If the number of
Executive Shares of any type then held by that Executive is less than the total
number of Executive Shares of that type to be purchased, then the Company and/or
the Eligible Stockholders will purchase the remaining Executive Shares of that
type from the other holder(s) of Executive Shares for that Executive and of that
type, pro rata according to the number of such Executive Shares held by such
other holder(s).
(F) CLOSING. The closing of any purchase of Executive Shares pursuant
-------
to the Call Option will take place on the date designated in the Company Call
Notice or Supplemental Call Notice, as the case may be, which date will not be
earlier than the 5th Business Day after the delivery of such notice. The Company
and/or the Eligible Stockholders will pay for the Executive Shares to be
purchased pursuant to the Call Option by delivery of one or more certified
checks or wire transfers of funds. The purchasers of Executive Shares under this
Section 2.2 will be entitled to receive customary representations and warranties
from the sellers regarding the sale of those Executive Shares (including
representations and warranties to the effect that the seller(s) have good title
to those Executive Shares, free and clear of any liens or encumbrances) and to
require that those sellers execute and deliver transfer documentation that is
reasonable in form and substance.
(G) CHARACTERIZATION OF EXECUTIVE SHARES PURCHASED. Any Executive
----------------------------------------------
Share purchased by any Executive or any Family Member of that Executive under
this Section 2.2 will thereafter be an Executive Share for that Executive (or
for Craig, in the case of any such Share purchased by the Craig Trust or any
Family Member thereof). Any Incentive Shares purchased by any Eligible
Stockholder under this Section 2.2 will thereafter continue to be Incentive
Shares in the hands of that Eligible Stockholder, but
-8-
<PAGE>
will not thereafter be or become Unvested Shares; provided that any Vested
--------
Shares or Unvested Shares purchased by any Executive or any Family Member
thereof will become Unvested Shares if a Termination described in Section 2.2(a)
occurs with respect to that Executive (or with respect to Craig, in the case of
any such Share purchased by the Craig Trust or any Family Member thereof).
(H) DEADLINE FOR EXERCISE OF CALL OPTION. No Company Call Notice or
------------------------------------
Fund Call Notice with respect to Executive Shares for any Executive may be given
after the date which is 20 Business Days after the date upon which the
Termination occurs with respect to that Executive.
2.3 REPURCHASE OF EXECUTIVE SHARES: UPON TERMINATION WITHOUT CAUSE.
--------------------------------------------------------------
(A) WITHOUT-CAUSE PUT OPTION. If the employment of any Executive by
------------------------
the Company and Pinnacle Towers is terminated by the Company and Pinnacle Towers
(other than for Cause or by reason of that Executive's death or disability),
then that Executive and his Family Members will have the right (the "Without-
-------
Cause Put Option") to require the Company to purchase from that Executive and
- ----------------
his Family Members any or all of the shares of Class B Common which are held by
them at the time the Without-Cause Put Notice is given and which were issued
pursuant to the Contribution Agreement (the "Purchased Executive Shares" for
--------------------------
that Executive), upon the terms and conditions of this Section 2.3. Any
Termination described in the preceding sentence is referred to as a "Without-
-------
Cause Termination."
- -----------------
(B) WITHOUT-CAUSE OPTION PRICE. In connection with any exercise of
--------------------------
the Without-Cause Put Option, the purchase price for each Purchased Executive
Share will be the Fair Market Value of that Purchased Executive Share as of the
date upon which the Without-Cause Put Notice is given. The Fair Market Value of
any Purchased Executive Share will be determined pursuant to Article 4.
(C) EXERCISE. Any Executive or Family Member of any Executive may
--------
exercise the Without-Cause Put Option at any time and from time to time during
the 20 Business Days after the Without-Cause Termination of that Executive by
delivering written notice (the "Without-Cause Put Notice") to the Company. The
------------------------
Without-Cause Put Notice will set forth the number of Purchased Executive Shares
to be sold by that Executive or Family Member.
(D) CLOSING. The closing of the purchase and sale of Purchased
-------
Executive Shares pursuant to any exercise of the Without-Cause Put Option will
take place promptly after both the purchase price for those shares has been
determined and the certificate(s) representing those Purchased Executive Shares
(duly endorsed for transfer to the Company) have been surrendered to the Company
at its principal executive office. The Company will pay for the
-9-
<PAGE>
Purchased Executive Shares to be purchased pursuant to the Without-Cause Put
Option by delivery of one or more certified checks or wire transfers of funds.
The Company will be entitled to receive customary representations and warranties
from the seller(s) of those Purchased Executive Shares regarding the sale of
those Shares (including representations and warranties to the effect that the
seller(s) have good title to those Shares, free and clear of any liens or
encumbrances) and to require that those sellers execute and deliver transfer
documentation that is reasonable and customary.
(E) CHARACTERIZATION OF EXECUTIVE SHARES PURCHASED. Any Purchased
----------------------------------------------
Executive Share purchased by the Company under this Section 2.3 will be
cancelled and will not thereafter be reissued or resold by the Company.
(F) DEADLINE FOR EXERCISE OF WITHOUT-CAUSE PUT OPTION. No Without-
-------------------------------------------------
Cause Put Notice with respect to Purchased Executive Shares held by any
Executive or any Family Member of that Executive may be given after the date
which is 20 Business Days after the date upon which the Without-Cause
Termination occurs with respect to that Executive (or with respect to Craig, in
the case of the Craig Trust).
2.4 REPURCHASE OF EXECUTIVE SHARES: UPON DEATH.
-------------------------------------------
(A) MAINTENANCE OF KEY-MAN INSURANCE. From time to time after the
--------------------------------
date of this Agreement, the Company will use reasonable efforts to maintain or
cause Pinnacle Towers to maintain, at the Company's or Pinnacle Towers' expense,
life insurance policies on the lives of each of Wolsey, Dell'Apa and Craig (the
"Key-Man Policies") which is then an employee of the Company or Pinnacle Towers.
----------------
Each Key-Man Policy will be the exclusive property of the Company and/or
Pinnacle Towers, and all death and other benefits payable under each Key-Man
Policy will be payable to the Company and/or Pinnacle Towers, as the sole
beneficiary(ies) thereof. The amounts of the death benefits payable under the
Key-Man Policy for each Executive will be reviewed and adjusted annually as may
be agreed by the Board and that Executive, with the intention being that the
amount of the death benefits (the "Death Benefits") approximate the aggregate
--------------
Fair Market Value of the Purchased Executive Shares and the Vested Shares for
that Executive (including, in the case of Craig, those held by the Craig Trust)
from time to time (to the extent that such insurance may be acquired for the
amount of such value).
(B) AFTER-DEATH PUT OPTION. Subject to Section 2.4(c), if the
----------------------
employment of any Executive by the Company and Pinnacle Towers is terminated by
reason of that Executive's death, then that Executive's Family Members will have
the right (the "After-Death Put Option") to require the Company to purchase from
----------------------
those Family Members any or all of the shares of the Purchased Executive Shares
-10-
<PAGE>
for that Executive and a like proportion of the Vested Shares for that
Executive, upon the terms and conditions of this Section 2.4.
For example, if at the time of the death of an Executive that
Executive and his Family Members hold in the aggregate 2,000
Purchased Executive Shares and 1,000 Vested Shares, and the
Family Members of that Executive elect to require the Company to
purchase 1,200 of those Purchased Executive Shares, then those
Family Members also will be required to sell (and the Company
also will be required to purchase) 600/3/ of those Vested Shares.
(C) AFTER-DEATH OPTION PRICE. In connection with any exercise of the
------------------------
After-Death Put Option, the aggregate purchase price for the Purchased Executive
Shares and Vested Shares for any Executive to be purchased by the Company will
be an amount equal to the aggregate Fair Market Value of such Shares as of the
date upon which the After-Death Put Notice is given; provided the Company will
--------
not be required to purchase any such Shares to the extent that the aggregate
Fair Market Value thereof on such date exceeds the amount of the Death Benefits
paid to the Company and/or Pinnacle Towers pursuant to the Key-Man Policy for
that Executive.
For example, assuming the facts set forth in the preceding
illustration and if the aggregate Fair Market Value of those
1,200 Purchased Executive Shares and 600 Vested Shares were
$3,000,000 and the Death Benefits paid under the Key-Man Policy
for that Executive were $2,500,000, then the number of each type
of Shares to be purchased will be reduced (to 1,000 Purchased
Executive Shares and 500 Vested Shares) so that the aggregate
purchase price of the Shares to be purchased does not exceed the
amount of those Death Benefits.
The Fair Market Value of any Purchased Executive Shares and Vested Shares will
be determined pursuant to Article 4.
(D) EXERCISE. Any Family Member of any Executive (including the Craig
--------
Trust, in the case of Craig's death) may exercise the After-Death Put Option at
any time and from time to time during the six months after the termination of
that Executive's employment by the Company and Pinnacle Towers by reason of his
death by delivering written notice (the "After-Death Put Notice") to the
----------------------
Company. The After-Death Put Notice will set forth the number of Purchased
Executive Shares to be sold by that Family Member.
(E) CLOSING. The closing of the purchase and sale of Purchased
-------
Executive Shares and Vested Shares pursuant to any
____________________________
/3/ i.e., 1,200/2,000 x 1,000 Vested Shares
-11-
<PAGE>
exercise of the After-Death Put Option will take place promptly after the last
to occur of the determination of the purchase price for the Shares to be
purchased, the Company's and/or Pinnacle Towers' receipt of the Death Benefits
in question, and the surrender at the Company's principal executive office of
the certificate(s) representing the Purchased Executive Shares and Vested Shares
to be purchased (duly endorsed for transfer to the Company). The Company will
pay for the Purchased Executive Shares and Vested Shares to be purchased
pursuant to the After-Death Put Option by delivery of one or more certified
checks or wire transfers of funds. The Company will be entitled to receive
customary representations and warranties from the seller(s) of those Purchased
Executive Shares and Vested Shares regarding the sale of those Shares (including
representations and warranties to the effect that the seller(s) have good title
to those Shares, free and clear of any liens or encumbrances) and to require
that those sellers execute and deliver transfer documentation that is reasonable
and customary.
(F) CHARACTERIZATION OF EXECUTIVE SHARES PURCHASED. Any Purchased
----------------------------------------------
Executive Share or Vested Share purchased by the Company under this Section 2.4
will be canceled and will not thereafter be reissued or resold by the Company.
(G) DEADLINE FOR EXERCISE OF AFTER-DEATH PUT OPTION. No After-Death
-----------------------------------------------
Put Notice with respect to Purchased Executive Shares or Vested Shares held by
any Family Member of any Executive may be given after the date which is six
months after the death of that Executive (or the death of Craig, in the case of
the Craig Trust).
(H) DISPOSITION OF REMAINING DEATH BENEFITS. To the extent that the
---------------------------------------
Company is not required to pay any portion of the Death Benefits under any Key-
Man Policy as the purchase price for Shares pursuant to the exercise of the
After-Death Put Option, the Company and/or Pinnacle Towers may retain such Death
Benefits and use them for any purpose which the Board may approve. The Family
Members of any Executive will be entitled to look solely to the proceeds of the
Key-Man Policy in question for the satisfaction of the Company's obligation to
pay the purchase price for any Shares pursuant to any exercise of the After-
Death Put Option.
2.5 LIMITATION ON THE COMPANY. Notwithstanding anything to the
-------------------------
contrary contained in this Agreement, all repurchases of shares by the Company
and the requirement to obtain and maintain Key-Man Policies will be subject to
all applicable restrictions contained in the Delaware Act and in the Company's
and its Subsidiaries' debt and equity financing agreements.
-12-
<PAGE>
2.6 RETENTION OF EXECUTIVE SHARES.
-----------------------------
(A) CONSENT REQUIRED GENERALLY. Without limiting Section 7.1, no
--------------------------
holder of any Executive Share will Transfer any Executive Share or any interest
therein without the prior written approval of the Board, other than (i) to any
Family Member of the Executive in question (provided that such Family Member
--------
agrees to be bound by the terms of this Agreement with respect to any subsequent
Transfer, and the repurchase of, such Executive Share), (ii) pursuant to Section
2.2, 2.3 or 2.4, (iii) pursuant to Section 2.7 or Section 2.8, or (iv) in any
Public Sale. The Board may impose any condition(s) which it deems appropriate in
connection with the grant of any such consent or approval. Any Transfer of any
Executive Shares in violation of this Section 2.6 will be null and void, and the
Company will not give any effect to any such Transfer in the Company's records.
(B) STATUS AFTER EXEMPT TRANSFER. Any Executive Shares which are
----------------------------
Transferred as described in clause (iii) or clause (iv) of Section 2.6(a) will
cease to be Shares for purposes of this Agreement (meaning, without limitation,
that they will not thereafter be subject to repurchase pursuant to Section 2.2,
2.3 or 2.4, nor will any Transferee in such a Transfer have any rights pursuant
to any of Sections 1.4, 2.2, 2.3, 2.4 or 2.7 by reason of holding any such
Shares).
2.7 TAG-ALONG RIGHTS.
----------------
(A) TAG-ALONG SALE NOTICE. Not later than the 5th Business Day prior
---------------------
to any Transfer of Common Shares by the Fund, the Fund will give each other
Stockholder which holds Non-Incentive Common Shares (collectively, the "Other
-----
Stockholders") a written notice (the "Tag-Along Sale Notice") specifying the
- ------------ ---------------------
material terms of the proposed Transfer. Each Other Stockholder may elect to
participate in such Transfer as an additional Transferor on the terms of this
Section 2.7, by delivering written notice to that effect to the Fund within 5
Business Days after delivery of the Tag-Along Sale Notice.
(B) MANNER OF PARTICIPATION. If any Other Stockholder elects to
-----------------------
participate in any such Transfer, then each Stockholder participating in that
Transfer as a Transferor (including the Fund) will be entitled to include in
that Transfer, at the same price and on the same terms (subject to Section
2.7(c)), up to a quantity of Non-Incentive Common Shares which is equal to the
product of (1) the quotient determined by dividing that Stockholder's Non-
-----------------------------------
Incentive Percentage by the aggregate Non-Incentive Percentage of all
participating Stockholders (including the Fund) multiplied by (2) the aggregate
number of Common Shares to be included in that Transfer.
-13-
<PAGE>
For example, if the Fund proposes to Transfer 10,000 Common Shares, and one
Other Stockholder elects to participate in that Transfer, and the Non-
Incentive Percentage of the Fund is 60% and the Non-Incentive Percentage of
the Other Stockholder is 20%, then the Other Stockholder will be entitled
to include in that Transfer 2,500 Common Shares, /4/ and the Fund will be
entitled to include in that Transfer 7,500 Common Shares.
(C) DIVISION OF CONSIDERATION. In any Transfer of Common Shares in
-------------------------
accordance with this Section 2.7, the aggregate consideration paid by the
Transferee in question will be divided among the Fund and the participating
Other Stockholders as if such consideration were to be distributed as a
Distribution to the Company's stockholders in accordance with the Company
Charter and the Common Shares Transferred were the only shares of the Company's
capital stock outstanding.
(D) EXCEPTED TRANSFERS. The provisions of this Section 2.7 will not
------------------
apply to any Transfer by the Fund (i) to an Affiliate of the Fund (provided that
--------
the Affiliate agrees to be bound by the terms of this Agreement with respect to
any subsequent Transfer of the Common Shares Transferred to that Affiliate),
(ii) pursuant to Section 2.8, (iii) in any Public Sale (including in connection
with or as part of an IPO), or (iv) to any employee of the Company or any
Subsidiary.
(E) TRANSFERS IN VIOLATION. Any Transfer of any Common Shares in
----------------------
violation of this Section 2.7 will be null and void, and the Company will not
give any effect to any such Transfer in the Company's records. The Fund will
not Transfer (other than pursuant to clause (ii), clause (iii) or clause (iv) of
Section 2.7(d) any Common Shares to any Person which does not agree to permit
participation by the holders of Non-Incentive Common Shares in such Transfer in
accordance with this Section 2.7.
(F) TERMINATION OF RESTRICTIONS. If any Common Shares are
---------------------------
Transferred in accordance with this Section 2.7 (other than to an Affiliate of
the Fund), then no Other Stockholder will have any rights pursuant to this
Section 2.7 with respect to any subsequent Transfer of those Common Shares. The
rights of the Other Stockholders under this Section 2.7 will terminate with
respect to all Transfers of Common Shares upon an IPO or a Sale of the Company.
________________________
i.e., [20% + (20% + 60%)] x 10,000 Common Shares.
-14-
<PAGE>
2.8 SALE OF THE COMPANY.
-------------------
(A) GENERALLY. In connection with any Approved Sale, each
---------
Stockholder will vote in favor of, consent to and raise no objection with
respect to the Approved Sale, and if the Approved Sale is structured as a sale
of the Company's capital stock, then each Stockholder will sell capital stock of
the Company, Options, Convertible Securities and other rights to acquire
securities of the Company on the terms and conditions applicable to the Approved
Sale. Each Stockholder will take all actions which may be necessary to approve
and effect any Approved Sale (including waiving any dissenter's or similar
rights which such Stockholder may have with respect to any Approved Sale) and
will use its best efforts to cooperate in any Approved Sale and will take all
other necessary and desirable actions in connection with the consummation of any
Approved Sale as the Company or the Fund may reasonably request. The reasonable
out-of-pocket expenses incurred by any Stockholder in the ordinary course of
complying with this Section 2.8 (including reasonable attorneys' fees) will be
paid for or reimbursed by the Company or borne by all Stockholders pro rata
according to the respective amounts of the proceeds received by them in
connection with that Approved Sale.
(B) CONDITIONS. The obligations of each Stockholder with respect
----------
to any Approved Sale are subject to the satisfaction of the following
conditions:
(i) upon the consummation of the Approved Sale, each Stockholder
will receive the same form of consideration and the same amount of
consideration per share or other unit of securities, subject to Section
2.8(c) and clauses (ii) and (iii) below;
(ii) if any holders of a class of the Company's securities are given
an option as to the form and amount of consideration to be received, then
each Stockholder which holds any securities of that class will be given the
same option;
(iii) each Stockholder which holds any then currently exercisable
Options, Convertible Securities or other rights to acquire securities of
the Company of any class will be given an opportunity to either (A)
exercise those rights prior to the consummation of the Approved Sale and
participate in the Approved Sale as a holder of the securities issuable
upon exercise or (B) upon consummation of the Approved Sale, receive in
exchange for those rights consideration equal to the amount determined by
multiplying (1) the per-unit amount received by the holders of securities
of that class in connection with the Approved Sale less the per-unit
exercise price per payable upon the exercise of those rights by (2) the
-15-
<PAGE>
number of units issuable upon the exercise of those rights; and
(iv) no Stockholder will be required by reason of any Approved Sale
to incur indemnification liability in a proportion which is greater than
that Stockholder's pro rata share of the proceeds of the Approved Sale with
respect to breaches of representations and warranties regarding matters
other than that Stockholder and the securities purported to be owned by
that Stockholder.
(C) DISTRIBUTIONS UPON SALE OF THE COMPANY. In the event of a Sale
--------------------------------------
of the Company, including an Approved Sale, which is effected by means of a sale
or exchange of the Company's capital stock (whether by sale, merger,
recapitalization, reorganization, consolidation, combination, sale or transfer
of capital stock or otherwise), subject to clause (iii) of Section 2.8(b), each
Stockholder will receive in exchange for the shares owned by such Stockholder to
be sold or exchanged the same portion of the aggregate consideration from such
sale or exchange that such Stockholder would have received if such aggregate
consideration had been distributed by the Company in complete liquidation of the
Company pursuant to Company Charter, determined as if the securities involved in
such Sale of the Company were the Company's sole outstanding securities. Each
Stockholder will take all necessary or desirable actions in connection with the
distribution of the aggregate consideration from such sale or exchange as are
requested by the Company to give effect to this Section 2.8(c).
2.9 RECAPITALIZATION. In the event that a Transfer to which the
----------------
tag-along rights described in Section 2.7 would apply, or a Public Offering, is
proposed and the Fund requests in order to facilitate that Transfer, or the
underwriters or other Persons managing or administering that offering on behalf
of the Company (the "Managers"), advise the Company in writing that in their
--------
opinion the equity structure of the Company (including the fact that the Company
is organized as a corporation) may adversely affect the marketability of the
offering, then each Stockholder will consent to and vote for a recapitalization
or reorganization of the Company and/or the exchange or conversion of the
Company's capital stock into a form of business organization and/or common and
preferred securities that the Fund or the Managers, as the case may be, propose,
and will take all other necessary or desirable actions in connection with the
consummation of the recapitalization, reorganization and/or exchange or
conversion, including entering into a restatement of any Transaction Document
which may be required in order to preserve the relative rights and obligations
of any Person; provided that the resulting organization and the common and
--------
preferred securities issued in connection with that recapitalization or
reorganization reflect and are consistent with the relative rights, duties and
preferences among the
-16-
<PAGE>
Company's outstanding securities prior to such recapitalization or
reorganization.
2.10 HOLDBACK. No Stockholder will offer to the public for sale, or
--------
make any public sale or distribution of, any Share or any other capital stock or
equity security of the Company, or any securities convertible into or
exchangeable or exercisable for any of the foregoing, during the seven days
prior to or the 180 days after the effective date of any underwritten registered
offering of the Company's capital stock or other securities, unless the
underwriters managing such underwritten offering otherwise agree. The
restrictions set forth in this Section 2.10 will continue with respect to any
particular security until the date on which that security has been sold in a
Public Sale.
ARTICLE 3
VOTING PROVISIONS
3.1 ELECTION OF EXECUTIVES TO THE BOARD. From and after the date of
-----------------------------------
this Agreement, the Fund will vote all Shares which are eligible to vote on such
matters, and will take all other necessary or desirable actions within the
Fund's control (whether in the Funds's capacity as a stockholder or otherwise,
and including attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company will take all necessary or desirable actions within its control
(including, without limitation, calling special board and stockholder meetings),
so that for so long as he is an employee of the Company or Pinnacle Towers, each
of Wolsey, Dell'Apa and Craig will be nominated and elected as a member of the
Board.
3.2 RESIGNATION UPON TERMINATION. Each of Wolsey, Dell'Apa and
----------------------------
Craig agrees that, effective at such time as he ceases to be an employee of the
Company and Pinnacle Towers, he will resign as a member of the Board.
3.3 REPRESENTATIONS OF THE FUND. The Fund represents and warrants
---------------------------
that the Fund has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Article 3. The Fund will not grant any proxy or become party
to any voting trust or other agreement which is inconsistent with, conflicts
with or violates any provision of this Article 3.
-17-
<PAGE>
ARTICLE 4
VALUATION
4.1 MARKETABLE SECURITIES. A Share which is listed on a recognized
---------------------
securities exchange will be valued as of its last sale price on the date in
question, or if no sale occurred on that date, at its last "bid" price on that
date; and a Share which is traded over-the-counter will be valued at its last
"bid" price on the date in question. This Section 4.1 will not apply, however,
to any security (i) held under a representation that it has been acquired for
investment, and not with a view to public sale or distribution, (ii) subject to
any other restriction on Transfer, or (iii) where the size of the owner's
holdings of the security compared to the trading volume in the security
materially affects its liquidity and marketability.
4.2 OTHER SHARES. Any Shares to which Section 4.1 does not apply by
------------
its terms will be valued as of the date in question at the price a willing buyer
would pay a willing seller in an arm's-length transaction, neither being under
any compulsion to buy or sell and both having knowledge of all relevant facts,
as determined using any reasonable valuation method designated by the Company in
good faith. The Fair Market Value of any Class A Common or Class B Common
described in this Section 4.2 will be determined by reference to the amount that
would be received in connection with a liquidation of the Company, and without
regard to any "premium" or "discount" which might be imputed if the rate at
which the Yield accrues on the Class A Common or the Class B Common were deemed
to constitute an above-market or below-market rate of return.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF THE FUND AND THE EXECUTIVES.
-------------------------------------------------------------
Pursuant to Section 5.1 of the Original Agreement, the Fund and the Initial
Stockholders made certain representations and warranties, each of which
representations and warranties will survive and be unaffected by the execution
and delivery of this Agreement and the Contribution Agreement and the
consummation of the contributions and issuances contemplated by the Contribution
Agreement. In addition, as an inducement to each other party to enter into this
Agreement and the Contribution Agreement and to consummate the transactions
contemplated by the Contribution Agreement, each of the Fund, Wolsey, Dell'Apa,
Craig and the Craig Trust represents and warrants to the others and to the
Company and Pinnacle Towers, effective as of the time of and immediately after
giving effect to the execution and delivery of this Agreement and the
Contribution Agreement and the consummation of the
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<PAGE>
contributions and issuances contemplated by the Contribution Agreement (as if
such representations and warranties were made at such time), and with respect to
itself or himself and not with respect to any other Person, that:
(A) AUTHORIZATION AND BINDING EFFECT. The execution, delivery and
--------------------------------
performance by that Stockholder of this Agreement and the Contribution Agreement
have (to the extent required) been duly authorized by it or him, and that
Stockholder has full legal capacity to enter into each such agreement. Each
such agreement constitutes a valid and binding obligation of that Stockholder
which is enforceable in accordance with its terms.
(B) ABSENCE OF CONFLICTS. The execution and delivery by that
--------------------
Stockholder of this Agreement and the Contribution Agreement, and that
Stockholder's fulfillment of and compliance with the respective terms of each
such agreement do not and will not in any material respect
(i) conflict with or result in a breach of the terms, conditions or
provisions of,
(ii) constitute a default under,
(iii) result in the creation of any lien, security interest, charge
or encumbrance upon that Stockholder's assets pursuant to,
(iv) give any third party the right to accelerate any obligation
under,
(v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity or any other
Person pursuant to,
any of the charter, bylaws, plan, trust or other organizational documents of
that Stockholder (if any), or any Law to which that Stockholder or any of its or
his assets is subject.
(C) INVESTMENT REPRESENTATIONS. With respect to the Shares acquired
--------------------------
by the representing and warranting Stockholder pursuant to the Contribution
Agreement:
(I) INVESTMENT RISK. The representing and warranting Stockholder,
---------------
by reason of its or his business or financial experience, is capable of
evaluating the risks and merits of an investment in those Shares and of
protecting its or his own interests in connection with the investment
pursuant to this Agreement. That Stockholder further acknowledges that
those Shares are a speculative investment which involves a substan-
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<PAGE>
tial degree of risk of loss by that Stockholder of its or his entire
investment in the Company, and that Stockholder under stands and takes full
cognizance of the risk factors related to the acquisition of those Shares
and that the Company is a holding company which is newly organized and has
no financial or operating history. That Stockholder is financially able to
bear the economic risk of an investment in those Shares, including the
total loss of that investment.
(II) NO GENERAL SOLICITATION. The representing and warranting
-----------------------
Stockholder has not seen, received, been presented with, or been solicited
by any leaflet, public promotional meeting, newspaper or magazine article
or advertisement, radio or television advertisement, or any other form of
advertising or general solicitation, with respect to the issuance of those
Shares.
(III) INVESTMENT INTENT. The representing and warranting
-----------------
Stockholder is acquiring those Shares for investment purposes for its or
his own account only, and not with a view to or for sale in connection with
any distribution of all or any part of those Shares. No other Person
(except the partners of the Fund, in the case of the Fund) will have any
direct or indirect beneficial interest in or right to those Shares.
(IV) LACK OF REGISTRATION. The representing and warranting
--------------------
Stockholder acknowledges that those Shares have not been registered under
the Securities Act or the securities laws of any state, in reliance, in
part, on its or his representations, warranties, and agreements set forth
in this Agreement. That Stockholder understands that each such Share is a
"restricted security" under the Securities Act in that those Shares will be
acquired from the Company in a transaction not involving a public offering,
that those Shares may be resold without registration under the Securities
Act only in certain limited circumstances, and that otherwise those Shares
must be held indefinitely. That Stockholder further understands and agrees
that the Company and its stockholders are under no obligation to register
or qualify those Shares under the Securities Act or under any state
securities law, or to assist that Stockholder in complying with any
exemption from registration and qualification. That Stockholder agrees
that it or he will not make any disposition of all or any part of those
Shares which will result in the violation by it or him or by the Company of
the Securities Act, or any other applicable securities laws.
(V) LACK OF LIQUIDITY. The representing and warranting Stockholder
-----------------
acknowledges that there are substantial restrictions on the transferability
of those Shares pursuant to this Agreement and applicable law, that there
is no public market for those Shares or other securities of the Company and
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<PAGE>
none is expected to develop, and that, accordingly, it may not be possible
for that Stockholder to liquidate its or his investment in the Company.
(VI) ACCESS TO INFORMATION. The representing and warranting
---------------------
Stockholder has had an opportunity to ask questions and receive answers
from the Company and Pinnacle Towers and the Persons involved in
organizing, establishing and managing the business and affairs of the
Company and Pinnacle Towers regarding the terms and conditions of
acquisition of those Shares and regarding the proposed business, financial
affairs, and other aspects of the Company and Pinnacle Towers, and has
further had the opportunity to obtain all information (to the extent the
Company and Pinnacle Towers possess or can acquire such information without
unreasonable effort or expense) which that Stockholder deems necessary to
evaluate its or his investment in those Shares and to verify the accuracy
of information otherwise provided to it or him. That Stockholder has
received and reviewed all information which it or he considers necessary or
appropriate for deciding whether to acquire and commit to acquire those
Shares.
(VII) LACK OF REPRESENTATIONS. Neither the Company nor Pinnacle
-----------------------
Towers, nor any representative of the Company or Pinnacle Towers, nor any
other Person, has at any time expressly or implicitly represented,
guaranteed, or warranted to that Stockholder that it or he may freely
Transfer those Shares, that a percentage of profit and/or amount or type of
consideration will be realized as a result of an investment in those
Shares, that past performance or experience on the part of any Person in
any way indicates the predictable results of the ownership of those Shares
or of the Company's or Pinnacle Towers' business, that any cash
distributions from the Company's or Pinnacle Towers' operations or
otherwise will be made to the owners of Shares by any specific date or will
be made at all, or that any specific tax benefits will accrue as a result
of an investment in the Company.
(VIII) CONSULTATION WITH ADVISORS. The representing and warranting
--------------------------
Stockholder has been advised to consult with its or his own legal counsel
and financial advisors regarding all legal and financial matters concerning
an investment in the Company and the tax and other consequences of
participating in the participating in the Company and acquiring and owning
those Shares, and has done so, to the extent that Stockholder considers
necessary.
(IX) TAX MATTERS. The representing and warranting Stockholder
-----------
acknowledges that the tax consequences to it or him of acquiring and owning
those Shares will depend on its or his particular circumstances, and
neither the Company or Pinnacle Towers nor any representative of either of
them nor
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<PAGE>
any other Person will be responsible or liable for the tax consequences to
that Stockholder of an investment in the Company. That Stockholder will
look solely to, and rely upon, its or his own advisors with respect to the
tax consequences of this investment. That Stockholder acknowledges that
there can be no assurance that the Code or the Treasury Regulations or any
other Law will not be amended or interpreted in the future in such a manner
so as to deprive the Company and its stockholders of some or all of the tax
benefits they might receive, nor that some of the deductions claimed by the
Company or the allocations of items of income, gain, loss, deduction, or
credit among the Company's stockholders may not be challenged by the
Internal Revenue Service or any other taxing authority.
Notwithstanding the provisions preceding clause (a) of this Section 5.1, each
representation and warranty of Craig set forth in this Section 5.1 will be
deemed also to be a representation and warranty of the Craig Trust set forth in
this Section 5.1, and each representation and warranty of the Craig Trust set
forth in this Section 5.1 will be deemed also to be a representation and
warranty of Craig set forth in this Section 5.1. For purposes of this Section
5.1, the knowledge or belief of the Craig Trust will mean knowledge or belief of
Craig.
5.2 REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVES. Pursuant to
------------------------------------------------
Section 5.2 of the Original Agreement, the Executives made certain
representations and warranties, each of which representations and warranties
will survive and be unaffected by the execution and delivery of this Agreement
and the Contribution Agreement and the consummation of the contributions and
issuances contemplated by the Contribution Agreement.
5.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Pursuant to
---------------------------------------------
Section 5.3 of the Original Agreement, Pinnacle Towers made certain
representations and warranties, each of which representations and warranties
will survive and be unaffected by the execution and delivery of this Agreement
and the Contribution Agreement and the consummation of the contributions and
issuances contemplated by the Contribution Agreement. In addition, as an
inducement to each other party to enter into this Agreement and the Contribution
Agreement and to consummate the transactions contemplated by the Contribution
Agreement, each of the Company and Pinnacle Towers represents and warrants to
the other and to the Initial Stockholders, effective as of the time of and
immediately after giving effect to the execution and delivery of this Agreement
and the Contribution Agreement and the consummation of the contributions and
issuances contemplated by the Contribution Agreement (as if such representations
and warranties were made at such time), that:
-22-
<PAGE>
(A) AUTHORIZATION AND BINDING EFFECT. The execution, delivery and
--------------------------------
performance by the Company and Pinnacle Towers of this Agreement and the
Contribution Agreement have been duly authorized by the Company and
Pinnacle Towers, and each such agreement constitutes a valid and binding
obligation of the Company and Pinnacle Towers which is enforceable in
accordance with its terms.
(B) ABSENCE OF CONFLICTS. The execution and delivery by the Company
--------------------
and Pinnacle Towers of this Agreement and the Contribution Agreement, and
the Company's and Pinnacle Towers' fulfillment of and compliance with the
respective terms of each such agreement do not and will not in any material
respect
(i) conflict with or result in a breach of the terms, conditions or
provisions of,
(ii) constitute a default under,
(iii) result in the creation of any lien, security interest, charge or
encumbrance upon the Company's or Pinnacle Towers' assets
pursuant to,
(iv) give any third party the right to accelerate any obligation
under,
(v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption or other
action by or notice to any Government Entity or any other Person
pursuant to,
any of the charter or bylaws of the Company or Pinnacle Powers, or any Law
to which the Company or Pinnacle Towers or any of their respective assets
is subject.
(C) TAX MATTERS. The Company acknowledges that the Fund's and the
-----------
Executives' investments are being made based upon the understanding that,
for United States federal income tax purposes, the Company will be eligible
to be treated, and will in fact be treated, as a real estate investment
trust (a "REIT"). In furtherance of that understanding and in order to
----
induce the Fund and the Executives to make the investments described in
Sections 1.2 and 1.3, the Company represents that it will (1) use
reasonable efforts to become and continue to be qualified to be so treated,
(2) validly and timely elect to be taxed as a REIT, (3) acquire, manage and
dispose of such assets in such manner as to continue to be eligible to be
taxed as a REIT, (4) make such dividend distributions to its shareholders
at such times as may be required to maintain its qualification as a REIT,
and (5) take or refrain from taking
-23-
<PAGE>
such other actions as may be necessary or desirable to preserve its
eligibility to be taxed as a REIT. In addition, insofar as is reasonably
practicable, the Company warrants and covenants that it will manage its
affairs in such a manner as to avoid the incurrence of any material amount
of United States federal income taxes, including taxes relating to
foreclosure property and taxes imposed upon prohibited transactions.
5.4 SURVIVAL. Each representation and warranty set forth in Section
--------
5.1, 5.2 or 5.3 of this Agreement or the Original Agreement will survive the
execution and delivery of this Agreement and the Contribution Agreement and the
consummation of contributions and issuances described in Section 1.2 until the
second anniversary of the Closing Date; provided that with respect to any claim
--------
made by any party hereto on or prior to the second anniversary of the Closing
Date, the representations and warranties that are the subject of such claim and
the indemnification obligations with respect thereto will continue in effect
insofar as they relate or allegedly relate to that claim, until that claim is
finally resolved. Each Person making any representation or warranty set forth
in this Article 5 or in Article 5 of the Original Agreement will indemnify and
hold harmless the Person(s) to whom such representation or warranty is made, and
all officers, directors, shareholders, managers, employees, partners, agents,
attorneys, representatives and other Affiliates thereof, 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, or suffers any other loss or expense, by reason of or arising
from any misrepresentation or misstatement of facts made by such representing or
warranting Person (including reasonable attorneys' fees, judgments, fines, and
amounts paid in settlement, payable as incurred by such Person in connection
with such action, suit, proceeding, or the like).
ARTICLE 6
[RESERVED]
ARTICLE 7
GENERAL PROVISIONS
7.1 TRANSFER OF RESTRICTED SECURITIES.
---------------------------------
(A) GENERALLY. Without limiting Sections 2.6 and 2.7, Shares which
---------
are Restricted Securities may be Transferred only (i) in Public Offerings, (ii)
under Rule 144 or Rule 144A promulgated under the Securities Act (or any similar
rule or rules then in force) if such rule is available, (iii) pursuant to
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<PAGE>
Section 2.2, 2.3 or 2.4, or (iv) subject to the conditions specified in Section
7.1(b), by any other legally available means of Transfer.
(B) OPINION DELIVERY. In connection with the transfer of any
----------------
Restricted Securities (other than a Transfer described in Section 7.1(a)(i),
7.1(a)(ii) or 7.1(a)(iii)), the holder of such Restricted Securities will
deliver written notice to the Company describing in reasonable detail the
Transfer or proposed Transfer, together with an opinion (in form and substance
reasonably satisfactory to the Company) of legal counsel which (to the Company's
reasonable satisfaction) is knowledgeable in securities law matters, to the
effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if such holder of the Restricted Securities delivers to the Company an
opinion (in form and substance reasonably acceptable to the Company) of such
legal counsel to the effect that no subsequent Transfer of such Restricted
Securities will require registration under the Securities Act, then the Company
will upon such contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act legend set forth in
Section 7.1(c). If the Company is not required to deliver new certificates for
such Restricted Securities not bearing such legend, then such holder will not
Transfer the same until the prospective Transferee has confirmed to the Company
in writing its agreement to be bound by the conditions contained in this Section
7.1.
(C) LEGEND. Each certificate representing Restricted Securities will
------
be imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
______________, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECOND AMENDED
AND RESTATED SUBSCRIPTION AND STOCKHOLDERS AGREEMENT DATED AS OF May 16,
1996, AS IN EFFECT FROM TIME TO TIME, BETWEEN THE ISSUER (THE "COMPANY"),
PINNACLE TOWERS INC. AND CERTAIN INVESTORS, AND THE COMPANY RESERVES THE
RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS
WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
(D) LEGEND REMOVAL. If any Restricted Securities become eligible for
--------------
sale pursuant to Rule 144(k) promulgated under the Securities Act (or any
similar rule or rules then in force), then the Company will, upon the request of
the holder of such Restricted
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<PAGE>
Securities, remove the legend set forth in Section 7.1(c) from the certificates
for such Restricted Securities.
7.2 ADDRESSES AND NOTICES. Any notice, demand, request or report
---------------------
required or permitted to be given or made to any Person under this Agreement
will be in writing and will be deemed given or made when delivered in person or
when sent by first class mail or by other commercially reasonable means of
written communication (including delivery by an internationally recognized
courier service or by facsimile transmission) (i) to the Company or Pinnacle
Towers, at the address, and with the copy, specified below, or (ii) to any
Stockholder, at that Stockholder's address as shown on the Company's books and
records
Pinnacle Towers Inc.
1800 Second Street
Sarasota, Florida 34236
Attention: President
with a copy (which copy will not
--------------------------------
constitute notice to the Company) to:
------------------------------------
ABRY Partners, Inc.
18 Newbury Street
Boston, MA 02116
Attention: Royce Yudkoff
or to such other address as the recipient may have theretofore specified to the
sending Person in accordance with this Section 7.2.
7.3 BINDING EFFECT. This Agreement will be binding upon and inure to
--------------
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns. Notwithstanding the
foregoing, no Stockholder will Transfer any Share (other than in a Public Sale,
a Sale of the Company or a Transfer made in accordance with Section 2.7) to any
Person who does not agree in writing to be bound by the provisions of this
Agreement applicable to such Shares immediately prior to such Transfer. The
Company may cause any other employee of the Company or any Subsidiary or any
other holder of its equity securities to become a party to this Agreement as an
additional "Stockholder" and/or an additional "Executive" by accepting from that
---------
employee or other holder the execution and delivery of a counterpart of this
Agreement agreeing to be bound in the capacity or capacities in question.
7.4 AMENDMENT; WAIVER. Except as otherwise provided in this
-----------------
Agreement, no modification, amendment or waiver of any provision of this
Agreement will be effective unless such modification, amendment or waiver is
approved in writing by the Company and the holders of Common Shares representing
a majority of the votes entitled to be cast in accordance with the Company
Charter by the
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<PAGE>
holders of the Common Shares held by the Stockholders. No failure by any party
to insist upon the strict performance of any covenant, duty, agreement or
condition of this Agreement or to exercise any right or remedy consequent upon a
breach thereof will constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.
7.5 CONSENT TO JURISDICTION. Each Stockholder agrees that any legal
-----------------------
proceeding instituted against it or him with respect to the Company's or
Pinnacle Towers' business or property, or relating to any Transaction Document,
may be brought in any court of competent jurisdiction located in the State of
Delaware or the Commonwealth of Massachusetts, as selected by the Board, and
each Stockholder, the Company and Pinnacle Towers waives the right to trial by
jury with respect to all such matters. Each Stockholder, the Company and
Pinnacle Towers irrevocably accepts and submits to the non-exclusive
jurisdiction of each of the aforementioned courts in personam generally and
unconditionally with respect to any such proceeding for itself or himself and
its or his property. If any such proceeding is brought in any such
jurisdiction, each Stockholder, the Company and Pinnacle Towers hereby (a)
waives any objection on the ground of venue or the convenience of the forum, and
(b) agrees that any judgment obtained in any such proceeding will be conclusive
and may be enforced in any other jurisdiction by suit on the judgment, a
certified or exemplified copy of which will be conclusive evidence of the fact
and amount of that Stockholder's, the Company's or Pinnacle Towers' obligations.
Service of process and notice of any such proceeding may be made by any means
provided for in Section 7.2.
7.6 FURTHER ACTION. The parties will execute and deliver all
--------------
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
7.7 OTHER DEFINITIONAL PROVISIONS.
-----------------------------
(A) "HEREOF," ETC. The terms "hereof," "herein" and "hereunder" and
-------------
terms of similar import will refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, clause and Exhibit references
contained in this Agreement are references to Sections, clauses and Exhibits in
or attached to this Agreement, unless otherwise specified.
(B) NUMBER AND GENDER. Each defined term used in this Agreement has
-----------------
a comparable meaning when used in its plural or singular form. Each gender-
specific term used in this Agreement has a comparable meaning whether used in a
masculine, feminine or gender-neutral form.
(C) INCLUDING. Whenever the term "including" is used in this
---------
Agreement (whether or not that term is followed by the phrase
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<PAGE>
"but not limited to" or "without limitation" or words of similar effect) in
connection with a listing of items within a particular classification, that
listing will be interpreted to be illustrative only and will not be interpreted
as a limitation on, or an exclusive listing of, the items within that
classification.
(D) SUCCESSOR LAWS. Each reference in this Agreement or any other
--------------
Transaction Document to any Law will be deemed to include such Law as it
hereafter may be amended, supplemented or modified from time to time and any
successor Law thereto, unless such treatment would be contrary to the express
terms of this Agreement or such Transaction Document.
7.8 SEVERABILITY. Whenever possible, each provision of this
------------
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect the validity, legality or enforceability of any other provision of
this Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
7.9 ENTIRE AGREEMENT. This Agreement (together with the other
----------------
Transaction Documents) embodies the complete agreement and understanding among
the parties to this Agreement with respect to the subject matter of this
Agreement and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral (including the letter
agreement dated March 13, 1995 between ABRY Partners and Paramount), which may
have related to the subject matter of this Agreement in any way.
7.10 COUNTERPARTS. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
7.11 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a substantive part of
this Agreement.
7.12 GOVERNING LAW. ALL MATTERS RELATING TO THE INTERNAL AFFAIRS OF
-------------
THE COMPANY AND PINNACLE TOWERS AND THE RELATIVE RIGHTS OF THE HOLDERS OF THE
COMPANY'S CAPITAL STOCK AS SUCH WILL BE GOVERNED BY THE DELAWARE ACT. ALL OTHER
ISSUES AND QUESTIONS, INCLUDING THOSE CONCERNING THE CONSTRUCTION, VALIDITY,
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE EXHIBITS WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC
-28-
<PAGE>
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF
THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT (AND ALL SCHEDULES AND EXHIBITS HERETO), EVEN IF UNDER THAT
JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF
SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
7.13 NO STRICT CONSTRUCTION. The parties to this Agreement have
----------------------
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties, and no
presumption or burden of proof will arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed or caused to be
executed on their behalf this Amended and Restated Subscription and Stockholders
Agreement as of the first date set forth above.
PINNACLE HOLDINGS INC.
By____________________________
Its___________________________
PINNACLE TOWERS INC.
By____________________________
Its___________________________
ABRY BROADCAST PARTNERS, L.P.
By ABRY Capital, L.P.
Its General Partner
By ABRY Holdings, Inc.
Its General Partner
By_______________________
Its______________________
_______________________________
Robert J. Wolsey
_______________________________
James M. Dell'Apa
_______________________________
Michael D. Craig
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<PAGE>
GARDERE & WYNNE SAVINGS AND
RETIREMENT PLAN TRUST FOR THE
BENEFIT OF MICHAEL D. CRAIG
By_________________________________
Michael D. Craig
Trustee
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<PAGE>
EXHIBIT A
DEFINED TERMS
As used in the Amended and Restated Subscription and Stockholders
Agreement to which this Exhibit A is attached, the following terms have the
following respective meanings:
"AFFILIATE" means any Person that directly or indirectly controls, is
---------
controlled by, or is under common control with the Person in question. For
purposes of this Agreement, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise; provided that each direct and indirect partner of the
--------
Fund will be deemed to be an Affiliate of the Fund.
"AFTER-DEATH PUT NOTICE" has the meaning set forth in Section 2.4(d).
----------------------
"AFTER-DEATH PUT OPTION" has the meaning set forth in Section 2.4(b).
----------------------
"AGREEMENT" means this Amended and Restated Subscription and
---------
Stockholders Agreement, as in effect from time to time.
"APPROVED SALE" means any Sale of the Company which is approved by
-------------
holders of Common Shares entitled to cast a majority of the votes entitled to be
cast by the outstanding Common Shares, voting in the manner provided in Section
IV(C)(1) of the Company Charter.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as
------------------------
of April 17, 1995 and as amended as of May 3, 1995 between Pinnacle Towers and
Paramount, as in effect from time to time.
"AVAILABLE SHARES" has the meaning set forth in Section 2.2(d).
----------------
"BOARD" means the Company's board of directors.
-----
"BUSINESS DAY" means Monday through Friday of each week (determined by
------------
reference to Boston, Massachusetts, time), except that a legal holiday
recognized as such by the government of the United States will not be regarded
as a Business Day.
"CALL OPTION" has the meaning set forth in Section 2.2(a).
-----------
-32-
<PAGE>
"CAUSE" for any of Wolsey, Dell'Apa or Craig has the meaning set forth
-----
in the Employment Agreement for that Executive.
"CLASS A COMMON" means the Company's Class A Common Stock, par value
--------------
$0.001 per share.
"CLASS B COMMON" means the Company's Class B Common Stock, par value
--------------
$0.001 per share.
"CLASS C COMMON" means the Company's Class C Common Stock, par value
--------------
$0.001 per share.
"CLASS D COMMON" means the Company's Class D Common Stock, par value
--------------
$0.001 per share.
"CLASS E COMMON" means the Company's Class E Common Stock, par value
--------------
$0.001 per share.
"CLOSING DATE" has the meaning set forth in Section 1.1.
------------
"CODE" means the United States Internal Revenue Code of 1986, as in
----
effect from time to time.
"COMMITTED CONTRIBUTIONS" has the meaning set forth in Section 1.3(b).
-----------------------
"COMMON EQUIVALENT" means any Common Share, Option or Convertible
-----------------
Security.
"COMMON SHARE" means any share of Class A Common, Class B Common,
------------
Class C Common, Class D Common or Class E Common and will include any common
securities issued in respect of any of those Common Shares in connection with
any recapitalization described in Section 2.9; provided that Common Share shall
--------
not in any event mean any share of Class E Common for dates prior to the date of
this Agreement.
"COMPANY" means Pinnacle Holdings Inc., a Delaware corporation.
-------
"COMPANY CALL NOTICE" has the meaning set forth in Section 2.2(c).
-------------------
"COMPANY CHARTER" means the Company's Amended and Restated Certificate
---------------
of Incorporation as filed with the Secretary of State of Delaware, as such
Certificate of Incorporation is in effect from time to time.
"CONSULTING AGREEMENT" means the Consulting and Management Services
--------------------
Agreement dated as of May 3, 1995 and substantially in the form of the attached
Exhibit D, between Pinnacle Towers and ABRY Partners, Inc., as in effect from
- ---------
time to time.
-33-
<PAGE>
"CONVERSION DATE" means the date which is specified by the Executive
---------------
Committee (as such term is defined in the bylaws of the Company) of the Board
(or, at any time when there is no such Executive Committee, then by the Board),
but in any event which is not later than the consummation of an IPO.
"CONVERTIBLE SECURITIES" means any securities of the Company directly
----------------------
or indirectly convertible into or exchangeable for Common Shares.
"CRAIG" means Michael D. Craig.
-----
"CRAIG TRUST" means the Gardere & Wynne Savings and Retirement Plan
-----------
Trust for the Benefit of Michael D. Craig.
"DEATH BENEFITS" has the meaning set forth in Section 24.
--------------
"DELL'APA" means James M. Dell'Apa.
--------
"DELAWARE ACT" means the Delaware General Corporation Law, as in
------------
effect from time to time.
"DISTRIBUTION" has the meaning which the Company Charter assigns to
------------
that term.
"ELECTION NOTICE" has the meaning set forth in Section 2.2(d).
---------------
"ELIGIBLE STOCKHOLDER" has the meaning set forth in Section 2.2(d).
--------------------
"EMPLOYMENT AGREEMENT" for any of Wolsey, Dell'Apa or Craig means the
--------------------
Executive Employment Agreement dated as of May 3, 1995 and substantially in the
form of the attached Exhibit E, between Pinnacle Towers and such individual, as
---------
in effect from time to time.
"EXECUTIVE" means Wolsey, Dell'Apa, Craig, the Craig Trust and any
---------
other Person who may become a party to this Agreement as an "Executive" in
accordance with Section 7.3.
"EXECUTIVE SHARE" for any Executive means any Common Shares initially
---------------
issued (including by reason of the exercise of the preemptive rights set forth
in Section 1.5) to any Executive or any Family Member of that Executive (whether
or not owned by such Executive at any time question), and will include any
common securities issued in respect of any of those Common Shares in connection
with any recapitalization or reorganization described in Section 2.9. Without
limiting the foregoing, any shares so issued to the Craig Trust will be part of
the "Executive Shares" for Craig.
-34-
<PAGE>
"EXEMPT ISSUANCE" means any issuance or sale of any Common Equivalent
---------------
by the Company (a) to any employee of the Company or any Subsidiary, (b) in
connection with the acquisition of another company, business or assets, (c)
pursuant to a Public Offering, (d) upon the exercise, conversion or exchange of
any Option or Convertible Security issued in accordance with Section 1.5, (e)
pursuant to the Contribution Agreement, (f) pursuant to Section 1.1, Section 1.2
or Section 1.3, (g) upon the conversion of Class D Common into Class C Common in
accordance with the Company Charter, (h) as part of any recapitalization or
reorganization described in Section 2.9, (i) as a distribution in the form of
securities of the Company, or (j) of up to 2,500 Common Shares to up to 100
Persons other than the Fund on or prior to December 31, 1995.
"FAIR MARKET VALUE" for any Share means the amount determined
-----------------
according to Article 4.
"FAMILY MEMBER" of a Person means such Person's parents, spouse,
-------------
natural or adopted descendants or estate, or any trust established solely for
the benefit of such Person and/or one or more of the foregoing and of which such
Person or another Family Member of such Person is the sole trustee. Without
limiting the foregoing, Craig will be considered a "Family Member" of the Craig
Trust, and the Craig Trust will be considered a "Family Member" of Craig.
"FUND" means ABRY Broadcast Partners II, L.P., a Delaware limited
----
partnership.
"FUND CALL NOTICE" has the meaning set forth in Section 2.2(d).
----------------
"GOVERNMENT ENTITY" means the United States of America or any other
-----------------
nation, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regula tory or administrative
functions of government in each case having jurisdiction over the matter in
question, including any Tribunal.
"INCENTIVE SHARES" for any Executive means all Class D Common issued
----------------
to that Executive pursuant to the Contribution Agreement and all Class C Common
issued upon conversion of any of those Class D Common shares, and will include
any common securities issued in respect of any of those Common Shares in
connection with any recapitalization or reorganization described in Section 2.9.
"INITIAL COMMITTED CONTRIBUTIONS" has the meaning set forth in Section
-------------------------------
1.3(a).
"IPO" means the initial Public Offering, other than a Public Offering
---
registered on Form S-8 or any similar or successor form promulgated under the
Securities Act.
-35-
<PAGE>
"KEY-MAN POLICY" has the meaning set forth in Section 2.4(a).
--------------
"LAWS" means all applicable statutes, laws, ordinances, regulations,
----
rules, orders, judgments, writs, injunctions, acts or decrees of any Tribunal or
other Government Entity.
"MANAGERS" has the meaning set forth in Section 2.9.
--------
"NON-INCENTIVE COMMON SHARES" means all Common Shares which are not
---------------------------
Incentive Shares, and will include any common securities issued with respect to
any of those Common Shares in connection with any recapitalization or
reorganization described in Section 2.9.
"NON-INCENTIVE PERCENTAGE" for any Stockholder at any time means the
------------------------
number of Non-Incentive Common Shares owned by that Stockholder at such time,
expressed as a percentage of the number of Non-Incentive Common Shares
outstanding at such time.
"OPTIONS" means any warrants, options or other rights to directly or
-------
indirectly subscribe for or purchase Common Shares or Convertible Securities.
"OTHER STOCKHOLDERS" has the meaning set forth in Section 2.7(a).
------------------
"OWNERSHIP PERCENTAGE" for any Person at any time means the aggregate
--------------------
number of shares of Class A Common, Class B Common, Class E Common and Class C
Common (determined as if all Class D Common were converted into Class C Common
in accordance with the Company Charter immediately prior to that time) which are
held by that Person and which are not Unvested Shares, expressed as a percentage
of the aggregate number of shares of Class A Common, Class B Common, Class E
Common and Class C Common (determined as if all Class D Common were converted
into Class C Common in accordance with the Company Charter immediately prior to
that time) which are then outstanding and which are not Unvested Shares.
"PARAMOUNT" means Paramount Towers Inc., a Delaware corporation.
---------
"PERSON" means an individual or a corporation, limited liability
------
company, partnership, trust, unincorporated organization, association or other
entity, including any Government Entity.
"PINNACLE TOWERS" means Pinnacle Towers Inc., a Delaware corporation.
---------------
"PUBLIC OFFERING" means any public offering of Shares or other equity
---------------
securities of the Company which is registered pursuant to the Securities Act.
-36-
<PAGE>
"PUBLIC SALE" means any sale of Common Shares to the public pursuant
-----------
to an offering registered under the Securities Act or through a broker, dealer
or market maker pursuant to the provisions of Rule 144, or pursuant to Rule
144(k), adopted pursuant to the Securities Act.
"PURCHASED EXECUTIVE SHARES" has the meaning set forth in Section
--------------------------
2.3(a).
"RESTRICTED SECURITIES" means (i) the Shares issued under this
---------------------
Agreement or the Contribution Agreement or issued upon conversion of any such
Shares, and (ii) any securities issued with respect to the securities referred
to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular Restricted Securities, such
securities will cease to be Restricted Securities when they have (a) been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) been distributed to the
public through a broker, dealer or market maker pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act or become eligible for
sale pursuant to Rule 144(k) (or any similar provision then in force)
promulgated under the Securities Act or (c) been otherwise transferred and new
certificates for them not bearing the Securities Act legend set forth in Section
7.1(c) have been delivered by the Company in accordance with Section 7.1(b).
"SALE OF THE COMPANY" means any transaction or series of related
-------------------
transactions pursuant to which any Person(s) in the aggregate acquire(s) (i)
other than from the Company, equity securities representing a majority of the
economic interest in the Company at the time of such acquisition (whether by
merger, consolidation, reorganization, combination, sale or transfer of capital
stock or otherwise), (ii) from the Company or Pinnacle Towers, a majority of the
equity securities representing a majority of the voting or economic interest in
Pinnacle Towers at the time of such acquisition (whether by merger,
consolidation, reorganization, combination, sale or transfer of capital stock
or otherwise), or (iii) from Pinnacle Towers and/or its Subsidiaries, all or
substantially all of Pinnacle Towers' assets determined on a consolidated basis,
in each case other than by reason of the grant or foreclosure of any pledge or
lien on the same or any disposition following any such foreclosure.
"SECONDARY COMMITTED CONTRIBUTIONS" has the meaning set forth in
---------------------------------
Section 1.3(b).
"SECURITIES ACT" means the United States Securities Act of 1933 and
--------------
applicable rules and regulations thereunder, in each case as in effect from time
to time.
-37-
<PAGE>
"SHARE" means any Common Share or any other equity security of the
-----
Company which may hereafter be issued or outstanding.
"STOCKHOLDER" means the Fund, the Executives, and any other Person who
-----------
hereafter becomes a party to this Agreement in the capacity as a holder of any
Shares; but in each case only so long as such Person is shown on the Company's
books and records as the holder of one or more Shares.
A "SUBSIDIARY" of any Person means any corporation, limited liability
----------
company, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of 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 that Person or one or more of the other subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited
liability company, membership, partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more subsidiaries of that Person or a combination thereof. For
purposes of this Agreement, a Person or Persons will be deemed to have a
majority ownership interest in a limited liability company, partnership,
association or other business entity if such Person or Persons are allocated a
majority of limited liability company, partnership, association or other
business entity gains or losses or control any manager, managing director or
general partner of such limited liability company, partnership, association or
other business entity. The capitalized term "SUBSIDIARY" refers to a subsidiary
----------
of the Company.
"SUPPLEMENTAL CALL NOTICE" has the meaning set forth in Section
------------------------
2.2(d).
"TAG-ALONG SALE NOTICE" has the meaning set forth in Section 2.7(a).
---------------------
"TERMINATION" has the meaning set forth in Section 2.2(a).
-----------
"TRANSACTION DOCUMENTS" means this Agreement, the Contribution
---------------------
Agreement, the Company Charter, the Consulting Agreement, Employment Agreements,
the Asset Purchase Agreement, and all other agreements, instruments and
documents entered into or delivered in connection with this Agreement or the
Original Agreement.
"TRANSFER" means any direct or indirect sale, pledge, encumbrance,
--------
assignment, gift, hypothecation, exchange, transfer or
-38-
<PAGE>
other disposition (and the terms "Transferee," "Transferor" and "Transferred"
---------- ---------- -----------
have correlative meanings).
"TREASURY REGULATIONS" means the income tax regulations promulgated
--------------------
under the Code, as such regulations are in effect from time to time.
"TRIBUNAL" means any government, arbitration panel, court or
--------
governmental department, commission, board, bureau, agency or instrumentality of
the United States of America or any state, province, commonwealth, nation,
territory, possession, county, parish, town, township, village, municipality or
other Government Entity, in each case having jurisdiction over the matter in
question, whether now or hereafter constituted and/or existing.
"UNVESTED SHARES" means the Class D Common Stock of Pinnacle Towers
---------------
issued pursuant to Section 1.1, the Class D Common issued pursuant to the
Contribution Agreement and the Class C Common issued upon the conversion of
Class D Common that are Unvested Shares at the time of that conversion, in each
case, except to the extent that such any such Shares have become and remain
Vested Shares in accordance with the terms of this Agreement.
"VESTED SHARE" at any time means any Incentive Share which has become,
------------
and which remains, a Vested Share in accordance with the terms of this
Agreement.
"WITHOUT-CAUSE PUT NOTICE" has the meaning set forth in Section
------------------------
2.3(c).
"WITHOUT-CAUSE PUT OPTION" has the meaning set forth in Section
------------------------
2.3(a).
"WITHOUT-CAUSE TERMINATION" has the meaning set forth in Section
-------------------------
2.3(a).
"WOLSEY" means Robert J. Wolsey.
------
"YIELD" has the meaning which the Company Charter assigns to that
-----
term.
* * * * *
-39-
<PAGE>
EXHIBIT B-1
STOCKHOLDERS AND INITIAL SHARES OF PINNACLE TOWERS
<TABLE>
<CAPTION>
============================================================
SHARES OF SHARES OF SHARES OF
CAPITAL CLASS A CLASS B CLASS D
STOCKHOLDER CONTRIBUTION COMMON COMMON COMMON
- ------------- ------------ --------- --------- ---------
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
The Fund $7,300,000 35,000 -0- -0-
- ------------------------------------------------------------
Wolsey 1,000,000 -0- 10,000 10,000
- ------------------------------------------------------------
Dell'Apa 150,000 -0- 1,500 10,000
- ------------------------------------------------------------
Craig -0- -0- -0- 10,000
- ------------------------------------------------------------
Craig Trust 50,000 -0- 500 -0-
---------- ------ ------ ------
============================================================
Total $8,500,000 35,000 12,000 30,000
============================================================
</TABLE>
-40-
<PAGE>
EXHIBIT B-2
SHARES OF THE COMPANY ISSUED
PURSUANT TO CONTRIBUTION AGREEMENT
----------------------------------
<TABLE>
<CAPTION>
==============================================
SHARES OF SHARES OF SHARES OF
CLASS A CLASS B CLASS D
STOCKHOLDER COMMON COMMON COMMON
- ------------- --------- --------- ---------
- ----------------------------------------------
<S> <C> <C> <C>
The Fund 73,000 -0- -0-
- ----------------------------------------------
Wolsey -0- 10,000 10,000
- ----------------------------------------------
Dell'Apa -0- 1,500 10,000
- ----------------------------------------------
Craig -0- -0- 10,000
- ----------------------------------------------
Craig Trust -0- 500 -0-
------ ------ ------
==============================================
Total 73,000 12,000 30,000
==============================================
</TABLE>
-41-
<PAGE>
EXHIBIT C
EXPENSES TO BE REIMBURSED
-42-
<PAGE>
Exhibit D
FORM OF CONSULTING AGREEMENT
-43-
<PAGE>
Exhibit E
FORM OF EMPLOYMENT AGREEMENT
-44-
<PAGE>
EXHIBIT 10.17
CAPITAL CONTRIBUTION AGREEMENT
------------------------------
THIS CAPITAL CONTRIBUTION AGREEMENT is dated as of the 26th day of
February, 1998 (as amended, restated or otherwise modified from time to time,
this "Agreement"), and entered into among ABRY Broadcast Partners II, L.P., a
Delaware limited partnership ("ABRY"), Pinnacle Towers Inc., a Delaware
corporation (the "Company") and wholly-owned subsidiary of Pinnacle Holdings
Inc., a Delaware corporation (the "Parent"), the Parent, the Lenders signatory
hereto, and NationsBank of Texas, N.A., a national banking association,
individually and as Administrative Lender (in such latter capacity, the
"Administrative Lender").
BACKGROUND:
----------
The Company, the Lenders and the Administrative Lender entered into a
Second Amended and Restated Credit Agreement, dated as of February 26, 1998 (as
amended, restated, or otherwise modified from time to time, the "Credit
Agreement");
The Parent has guaranteed the obligations of the Company under the Credit
Agreement;
It is a condition precedent to making Advances (as that term is defined in
the Credit Agreement) that the parties hereto execute, deliver, and perform this
Agreement;
NOW, THEREFORE, for valuable consideration hereby acknowledged, ABRY, the
Company, the Parent, the Lenders and the Administrative Lender agree as follows:
SECTION 1. Definitions. Unless specifically defined or redefined below,
-----------
capitalized terms used herein shall have the meanings ascribed thereto in the
Credit Agreement.
SECTION 2. Capital Contributions.
---------------------
(a) No later than the fortieth (40th) day following each Quarterly
Date throughout the term of this Agreement, or if later for any quarterly
period, the twelfth (12th) Business Day after receipt by ABRY of the report
referred to in the next two sentences for such quarterly period, ABRY
agrees to make a capital contribution to the Parent in immediately
available funds in an amount equal to 100% of the amount of the General and
Administrative Expenses for the fiscal quarter ending on such Quarterly
Date, as specified in the report described in the following two sentences,
and the Parent agrees in turn immediately to make a capital contribution to
the Company (in immediately available funds) in the amount so contributed
by ABRY; provided that this Agreement shall not require ABRY to make any
capital contributions in an amount which would cause the aggregate amount
of the capital contributions made by ABRY to the Parent or the Company to
exceed $50,000,000, including capital contributions previously made, except
that notwithstanding the foregoing, ABRY shall at all times until the
refinancing of the Credit Agreement maintain a commitment, and does hereby
commit, to fund to the Parent at least $10,000,000 in the aggregate of
additional capital in immediately available funds for the purpose of
funding General and Administrative Expenses. No later than
<PAGE>
the 20th day immediately following each Quarterly Date throughout the term
of this Agreement, the Company shall deliver to the Parent and ABRY (with a
copy to the Administrative Lender) a written report of the amount of
General and Administrative Expenses for the fiscal quarter ending on such
Quarterly Date as specified in the consolidated financial statements of the
Company for such fiscal quarter. In the event that the Company fails to
deliver to ABRY and the Parent the report specified in the preceding
sentence, then the Administrative Lender shall have the right to deliver
the consolidated financial statements of the Company for the fiscal quarter
ending on such Quarterly Date to ABRY and the Parent, and ABRY and the
Parent shall make the capital contributions required to be made by them by
this Section 2(a) based upon the amount of General and Administrative
Expenses set forth in such financial statements, and such financial
statements shall constitute the "report" referred to in the first sentence
of this Section 2(a) for such fiscal quarter. The Company shall confirm
with the Administrative Lender to its satisfaction that each such
contribution has been made in full.
(b) Upon the occurrence and continuation of an Event of Default under
Section 9.01(a) of the Credit Agreement, the Administrative Lender may
demand that ABRY, upon twelve (12) Business Days' notice, make a capital
contribution to the Parent in an amount sufficient to enable the Company
(after the Parent contributes such amount to the Company) to make all
payments necessary to cure the breaches thereunder, and the Parent agrees
in turn immediately to make a capital contribution to the Company (in
immediately available funds) in the amount so contributed by ABRY; provided
that this Agreement shall not require ABRY to make any capital
contributions in an amount which would cause the aggregate amount of the
capital contributions made by ABRY to the Parent or the Company to exceed
$50,000,000, including capital contributions previously made. Upon the
occurrence and continuation of an Event of Default under Section 9.01(c) of
the Credit Agreement with respect to the financial covenants set forth in
Sections 8.01(a), (b), (c), and (d), the Administrative Lender may demand
that ABRY, upon twelve (12) Business Days' notice, make a capital
contribution to the Parent in an amount equal to the amount sufficient to
cause the Company to be in compliance with all of the financial covenants
set forth in Sections 8.01(a), (b), (c), and (d) immediately following such
contribution, and the Parent agrees in turn immediately to make a capital
contribution to the Company (in immediately available funds) in the amount
so contributed by ABRY; provided that this Agreement shall not require ABRY
to make any capital contributions in an amount which would cause the
aggregate amount of the capital contributions made by ABRY to the Parent or
the Company to exceed $50,000,000, including capital contributions
previously made. The Company agrees to use all funds received pursuant to
the second sentence of this Section with respect to the financial covenant
set forth in Section 8.01(a) to permanently reduce the Available
Commitment. The amount required to cure the financial covenants in
Sections 8.01(b), (c), and (d) shall be equal to the amount which, assuming
that the Debt for Borrowed Money under the Credit Agreement had been
reduced by such amount, and the ratios referred to therein were recomputed
on a pro forma basis giving effect to such reduction (as if such
2
<PAGE>
reduction had occurred (i) on the first day of the twelve-month period
referred to in clause (b) of Section 8.01(b), for purposes of Section
8.01(b), (ii) on the last day of the fiscal quarter referred to in Section
8.01(c) for purposes of Section 8.01(c), and (iii) on the first day of the
twelve-month period referred to in clause (b) of Section 8.01(d) for
purposes of Section 8.01(d), would cause the Company to be in compliance
with such covenants.
(c) On each Quarterly Date throughout the term of this Agreement, or
if later, when ABRY receives the requisite report or notice for the
quarterly period in question, ABRY agrees to make a capital contribution to
the Parent in immediately available funds in an amount equal to 100% of the
amount equal to the difference between any cash distribution of 95% of
taxable income required to maintain the Parent's REIT Status minus the
amount of the maximum tax liability of ABRY and its partners (determined as
if each such partner were a corporation subject to United States federal
income tax and any state tax which would be applicable to a non-exempt
corporation) as a result of such operations of the Parent, the Company, and
its Subsidiaries on a consolidated basis, taking into account all tax
benefits available to such Persons as a result of such operations; provided
that this Agreement shall not require ABRY to make any capital
contributions in an amount which would cause the aggregate amount of the
capital contributions made by ABRY to the Parent or the Company to exceed
$50,000,000, including capital contributions previously made.
(d) Parent agrees to contribute to the capital of the Company (in
immediately available funds) all amounts contributed to the Parent by ABRY.
(e) In consideration for each capital contribution made by ABRY to
the Parent, the Parent shall issue to ABRY shares of the Parent's Class E
Common Stock in accordance with Stockholders Agreement. Each capital
contribution by ABRY to the Parent or by the Parent to the Company required
under any of the Sections 2(a), (b) and (c) hereunder shall not be subject
to any repayment obligation by the Company to the Parent or by the Parent
to ABRY (other than the obligation of the Parent or the Company, as the
case may be, to make distributions in respect of its capital stock (if and
when such distributions are made) in the manner provided in its certificate
of incorporation). Any Subordinated Debt issued to ABRY (including without
limitation the $12,500,000 Subordinated Debt described in Section 3(l) of
this Agreement) shall not be deemed to be a capital contribution for
purposes of this Agreement.
SECTION 3. Representations and Warranties. Each of ABRY, the Parent, and
------------------------------
the Company represents and warrants, as to itself, to the Lenders and the
Administrative Lender that:
(a) Each of ABRY and the Parent is a limited partnership or
corporation, respectively, duly organized, validly existing, and in good
standing under the Laws of the State of Delaware;
3
<PAGE>
(b) Each of ABRY and the Parent is qualified to do business in all
jurisdictions where the nature of its business or properties require such
qualification except where the failure to so qualify would not cause a
Material Adverse Change;
(c) Each of ABRY, the Parent, and the Company has duly authorized the
execution, delivery, and performance of this Agreement;
(d) no consent of the partners of ABRY or stockholders of the Parent
or the Company (except any consent already obtained) is required as a
prerequisite to the validity and enforceability of this Agreement to be
executed by ABRY, the Parent, or the Company;
(e) Each of ABRY, the Parent, and the Company has full legal right,
power, and authority to execute, deliver, and perform under this Agreement;
(f) this Agreement constitutes the legal, valid, and binding
obligations of ABRY, Parent, and the Company enforceable in accordance with
the terms hereof (subject as to enforcement of remedies to any applicable
Debtor Relief Laws);
(g) the execution and delivery of this Agreement, and performance
hereunder, do not conflict with, or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any Lien upon any properties
of ABRY, the Parent or the Company under, or require any consent (other
than consents already obtained), approval, or other action by, notice to,
or filing with any Tribunal or Person pursuant to, the governance documents
of ABRY, the Parent, or the Company, any award of any arbitrator, or any
agreement, instrument, or Law to which ABRY, the Parent, the Company or any
of its properties is subject;
(h) ABRY is Solvent;
(i) the value of the consideration received and to be received by
ABRY is reasonably worth at least as much as the liability and obligation
of ABRY hereunder, and such liability and obligation may reasonably be
expected to benefit ABRY directly or indirectly;
(j) ABRY is familiar with, and has independently reviewed books and
records regarding, the financial condition of the Company and the Parent;
(k) neither the Lenders nor any of its officers or agents has made
any representation, warranty or statement to ABRY regarding the financial
condition of the Company or the Parent in order to induce ABRY to execute
this Agreement; and
4
<PAGE>
(l) on or prior to the Closing Date, ABRY has made capital
contributions to the Parent equal in the aggregate to $34,000,000 and has
funded $12,500,000 in the form of Subordinated Debt to the Parent.
SECTION 4. Breach of this Agreement. In the event of a breach by the
------------------------
Company, ABRY, or the Parent of this Agreement, the Administrative Lender shall
have all rights and remedies afforded to it at law or in equity, including the
right to demand specific performance. In addition, this Agreement shall be
deemed to be a Loan Paper, and a breach of any covenant by the Company, ABRY, or
the Parent of any of its respective obligations hereunder shall be an Event of
Default under the Credit Agreement.
SECTION 5. Further Assurances. Each of ABRY, the Company, and the Parent
------------------
shall execute and deliver such further agreements, documents, instruments, and
certificates in form and substance satisfactory to the Administrative Lender, as
the Administrative Lender or any Lender may reasonably deem necessary in
connection with this Agreement.
SECTION 6. Miscellaneous.
-------------
(a) ABRY and the Parent each hereby agrees that its obligations under
the terms of this Agreement shall not be released, diminished, impaired,
reduced, or affected by the occurrence of any one or more of the following
events: (i) the taking or accepting of any other security or guaranty for
any or all of the Obligations; (ii) any release, surrender, exchange,
subordination, or loss of any security at any time existing in connection
with any or all of the Obligations; (iii) the modification of, amendment
to, or waiver of compliance with any terms of the Credit Agreement or any
other Loan Paper without the notification of ABRY or the Parent (the right
to such notification being herein specifically waived by ABRY and the
Parent); provided, ABRY and the Parent do not waive their right to notice
--------
and consent to any amendment or modification of, the Credit Agreement,
which modification or amendment could increase the amount of the liability,
or the likelihood that ABRY or the Parent will be required to make any
capital contribution, pursuant hereto (it being expressly understood that
nothing herein shall be construed to refer to course of dealing by the
Administrative Lender or the Lenders); (iv) the insolvency, bankruptcy, or
lack of corporate or other power of the Company, whether now existing or
hereafter occurring; (v) pursuant to this Agreement, any renewal or
extension of the payment of any or all of the Obligations, either with or
without notice to or consent of ABRY and the Parent, or any adjustment,
indulgence, forbearance, or compromise that may be granted or given by the
Lenders to the Company, ABRY, the Parent, or any other Person liable for
the Obligations provided, ABRY and the Parent do not waive their right to
--------
notice and consent to any renewal or extension of the Credit Agreement,
which could increase the amount of the liability of ABRY or the Parent or
the likelihood that ABRY or the Parent will be required to make a capital
contribution hereunder (it being expressly understood that nothing herein
shall be construed to refer to course of dealing by the Administrative
Lender or the Lenders); (vi) any neglect, delay, omission, failure, or
refusal of the Lenders to take or prosecute any action for the
5
<PAGE>
collection of any of the Obligations or to foreclose or take or prosecute
any action in connection with any instrument or agreement evidencing or
securing all or any part of the Obligations; (vii) any failure of the
Lenders to notify ABRY or the Parent of any renewal, extension, or
assignment of the Obligations or any part thereof (provided that, any
--------
renewal or extension of the Obligations to the extent the same could
increase the amount of the liability, or the likelihood that ABRY and the
Parent will be required to make any capital contribution pursuant to, this
Agreement will require the consent of ABRY), or the release of any
security, or of any other action taken or refrained from being taken by the
Lenders, it being understood that (except as specifically provided in this
Agreement) the Lenders shall not be required to give ABRY and the Parent
any notice of any kind under any circumstances whatsoever with respect to
or in connection with the Obligations (it being expressly understood that
nothing herein shall be construed to refer to course of dealing by the
Administrative Lender or the Lenders); (viii) the unenforceability of all
or any part of the Obligations against the Company or any other Person by
reason of the fact that the Obligations, and/or the interest paid or
payable with respect thereto, exceeds the amount permitted by Law, the act
of creating the Obligations, or any part thereof, is ultra vires, or the
----- -----
officers creating same acted in excess of their authority, or the Note
being nonrecourse as to the Company, or for any other reason; or (ix) any
payment by the Company or any other Person to the Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason any Lender is required to refund such payment or pay the amount
thereof to another Person.
(b) This Agreement shall be an absolute and continuing obligation of
payment of ABRY and the Parent, and the circumstances that at any time or
from time to time the Obligations under the Credit Agreement may be paid in
full shall not affect the obligation of ABRY or the Parent to make any
capital contribution which may be required hereby, subject to the terms of
this Agreement.
(c) If ABRY or the Parent becomes liable for any indebtedness owing
by the Company to the Lenders by endorsement or otherwise, other than this
Agreement, such liability shall not be in any manner impaired or affected
hereby, and the rights of the Lenders hereunder shall be cumulative of any
and all other rights which the Lenders may ever have against ABRY or the
Parent. The exercise by the Lenders of any Right or remedy hereunder or
under any other instrument shall not preclude the concurrent or subsequent
exercise of any other Right or remedy.
(d) It shall not be necessary for the Lenders, in order to enforce
the right to require ABRY or the Parent to make a capital contribution
pursuant to this Agreement, first to institute suit or exhaust their
remedies against the Company, or other Persons liable for the Obligations,
or to enforce their Rights against any security which shall ever have been
given to secure the Obligations, this Agreement being in no way conditional
or contingent.
6
<PAGE>
(e) ABRY and the Parent each hereby waives all rights by which it
might be entitled to require suit on an accrued right of action in respect
of any of the Obligations or require suit against the Company or any other
Person, whether arising pursuant to Section 34.02 of the Texas Business and
Commerce Code, as amended, Section 17.001 of the Texas Civil Practice and
Remedies Code, as amended, and Rule 31 of the Texas Rules of Civil
Procedure, as amended, or otherwise.
(f) The Obligations shall not be reduced, discharged, or released
because or by reason of any existing or future offset, claim or defense of
the Company or any other Person against the Lenders or against payment of
the Obligations, whether such offset, claim, or defense arises in
connection with the Obligations or otherwise.
SECTION 7. Waiver of Subrogation.
---------------------
(a) ABRY and the Parent shall not assert, enforce, or otherwise exercise
(a) any right of subrogation to any of the rights or liens of the Lenders or any
other beneficiary against the Company or any other Person obligated to the
Lenders or any collateral or other security, or (b) any right of recourse,
reimbursement, contribution, indemnification, or similar right against the
Company or any other Person on all or any part of the Obligations or any
guarantor thereof, and ABRY hereby waives any and all of the foregoing rights
and the benefit of, and any right to participate in, any collateral or other
security given to the Lenders or any other beneficiary to secure payment of the
Obligations. The provisions of this Section 7 shall survive for a period of a
year and one day following the termination of this Agreement, and any
satisfaction and discharge of the Company by virtue of any payment, court order,
or Law.
(b) The provisions of this Section 7 shall be valid and effective if and
to the extent that as a result of a final, non-appealable decision by a court of
competent jurisdiction, it is determined that (i) ABRY or the Parent is an
"insider" (as that term is used in 11 U.S.C. (S) 547) of any other Person (which
other Person is the subject of a proceeding under a Debtor Relief Law), and (ii)
a transfer of an interest in property of such other Person to the Lenders is an
avoidable transfer under 11 U.S.C. (S) 547 (or other applicable Debtor Relief
Law) and recoverable under 11 U.S.C. (S) 550 (or other applicable Debtor Relief
Law) and such transfer otherwise would not have been so avoidable and so
recoverable but for the determination under clause (i) above that ABRY and the
----------
Parent is an "insider" of such other Person.
SECTION 8. Termination of this Agreement. This Agreement shall terminate
-----------------------------
when all Obligations of the Company under the Credit Agreement are paid in full
and no commitments remain outstanding thereunder. As of the date hereof, the
Capital Contribution Agreement dated as of June 11, 1997 between ABRY, the
Company, and the Administrative Lender is hereby terminated.
SECTION 9. Counterparts. This Agreement may be executed in any number
------------
of counterparts, all of which taken together shall constitute one and the same
instrument. In
7
<PAGE>
making proof of any such agreement, it shall not be necessary to produce or
account for any counterpart other than one signed by the party against which
enforcement is sought.
SECTION 10. ENTIRE AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL
----------------
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 11. GOVERNING LAW. (A) THIS AGREEMENT SHALL BE DEEMED A CONTRACT
-------------
MADE UNDER THE LAWS OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF TEXAS, EXCEPT TO THE EXTENT FEDERAL LAWS GOVERN
THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF ALL OR ANY PART OF
THIS AGREEMENT. WITHOUT EXCLUDING ANY OTHER JURISDICTION, EACH OF ABRY, THE
PARENT, AND THE COMPANY AGREES THAT THE COURTS OF TEXAS WILL HAVE JURISDICTION
OVER PROCEEDINGS IN CONNECTION HEREWITH.
(B) EACH OF THE COMPANY, THE PARENT, AND ABRY HEREBY WAIVES PERSONAL
SERVICE OF ANY LEGAL PROCESS UPON IT. IN ADDITION, EACH OF THE COMPANY, THE
PARENT, AND ABRY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE COMPANY, THE PARENT,
OR ABRY AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON RECEIPT BY IT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE LENDER OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 12. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
--------------------
THE COMPANY, THE PARENT, ABRY AND EACH LENDER HEREBY WAIVES ANY RIGHT THAT IT
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT,
EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, OR ANY
RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE
SITTING WITHOUT A JURY.
SECTION 13. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, at the address or number listed below such Person set
forth on the signature page. All such notices and other communications shall,
when mailed, telecopied, telegraphed, telexed or cabled, be effective when
received.
8
<PAGE>
SECTION 14. Assignment. This Agreement is not assignable, except that
either the Parent or the Company may assign its rights to the Administrative
Lender for the benefit of the Lenders, and the Administrative Lender and each of
the Lenders may assign or otherwise transfer all or any portion of its rights
and obligations hereunder in connection with an assignment under the Credit
Agreement to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof granted to the
Administrative Lender and the Lenders herein or otherwise.
9
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
COMPANY: PINNACLE TOWERS INC.
1549 Ringling Boulevard
3rd Floor ______________________________________
Sarasota, Florida 34236 By:
Telephone: (941) 364-8886 Its:
Telecopy: (941) 364-8761
PARENT: PINNACLE HOLDINGS INC.
1549 Ringling Boulevard
3rd Floor _______________________________________
Sarasota, Florida 34236 By:
Telephone: (941) 364-8886 Its:
Telecopy: (941) 364-8761
ABRY BROADCAST PARTNERS II, L.P.
18 Newbury Street By ABRY Capital, L.P.
Boston, MA 02116 Its General Partner
Telephone: By ABRY Holdings, Inc.,
Telecopy: Its General Partner
_______________________________________
By:
Its:
NATIONSBANK OF TEXAS N.A., as
Administrative Lender, and individually
as a Lender
901 Main Street
64th Floor
Dallas, TX 75202
Attn: Mr. Roselyn Reid _______________________________________
Telephone: (214) 508-0860 By: Roselyn Reid
Telecopy: (214) 508-9390 Its: Vice President
10
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS
Address: L.P.
85 Broad
17th Floor ______________________________
New York, New York 10001 By:
Its:
Attn.: Rich Katz
Telephone: (212) 902-5492
Telecopy: (212) 357-4451
11
<PAGE>
EXHIBIT 10.18
THE SECURITY REPRESENTED BY THIS CERTIFICATE WAS ORIGINALLY ISSUED ON FEBRUARY
11, 1998, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT").
---
CONVERTIBLE PROMISSORY NOTE DUE 1998
$12,500,000 February 11, 1998
FOR VALUE RECEIVED, Pinnacle Holdings Inc., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of ABRY BROADCAST PARTNERS
--------
II, L.P., a Delaware limited partnership, or its assigns (in any event, the
"Holder"), on December 31, 1998 (the "Maturity Date"), the principal amount of
- ------- -------------
TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($12,500,000), to the extent not
paid on or prior to the Maturity Date (such unpaid principal amount at any time
being the "Principal Amount"), together with interest thereon calculated from
----------------
the date hereof in accordance with the provisions of this Note (the unpaid
amount of any such accrued interest at any time being the "Interest Amount" and
---------------
the sum of the Principal Amount and the Interest Amount at any time being the
"Total Amount").
- -------------
This Note was initially issued in consideration for a loan made by
ABRY Broadcast Partners II, L.P. to the Borrower on February 11, 1998 in the
amount of $12,500,000 (the "Loan").
----
Certain capitalized terms which are used and not otherwise defined in
this Note are defined in Section 8 below.
1. INTEREST.
--------
(A) RATE AND ACCRUAL. Interest will accrue, on a daily basis, on the
----------------
Principal Amount from time to time at the rate of 11% per annum. Interest
will be computed on the basis of a 365 or 366 day year, as applicable, and
the actual number of days elapsed.
(B) PAYMENT. All unpaid accrued interest shall be due and payable on
-------
the earlier to occur of an Event of Default or the Maturity Date, and in
addition shall be due and payable upon any prepayment of the Loan. Accrued
interest may be prepaid at any time and from time to time, at the
Borrower's option, without premium or penalty.
2. PAYMENT OF THE PRINCIPAL AMOUNT. The Borrower will repay the
-------------------------------
entire Principal Amount to the holder of this Note on the earlier to occur of an
Event of Default or the Maturity Date. The Borrower may, at its option, prepay
at any time and from time to time all or any part of the Principal Amount,
without premium or penalty. Any prepayment of all or any portion of the
Principal Amount will be accompanied by a payment of all unpaid accrued interest
on the entire Principal Amount.
<PAGE>
3. APPLICATION AND METHOD OF PAYMENTS. Any amount paid to the Holder
----------------------------------
by the Borrower in respect of this Note will be applied first, to reduce the
Interest Amount, and second, to reduce the Principal Amount. All payments in
respect of this Note will be made by wire transfer of immediately available
funds to an account designated by the Holder, and any payment so received after
1:00 p.m. Boston, Massachusetts time, on any day will be deemed to have been
received on the following Business Day. Any amount which (but for the
application of this sentence) would become payable in respect of this Note on a
day which is not a Business Day will instead become due and payable on the next
succeeding Business Day, and interest accruing on the Principal Amount will
reflect any such extension.
4. TRANSFER AND EXCHANGE. Upon surrender of this Note to the
---------------------
Borrower at its office described in the Subscription Agreement for exchange, the
Borrower at its expense will execute and deliver in exchange therefor a new Note
or Notes, as requested by the surrendering Holder, which represent the aggregate
the unpaid Principal Amount of the surrendered Note, registered as such Holder
may request, dated so that there will be no loss of interest on such surrendered
Note and otherwise of like tenor. The issuance of new Notes will be made without
charge to the holder(s) of the surrendered Note for any issuance tax in respect
thereof or other cost incurred by the Borrower in connection with such issuance.
5. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to
-----------
the Borrower of the loss, theft, destruction or mutilation of this Note and, in
the case of any such loss, theft or destruction of this Note, upon delivery of
an unsecured indemnity agreement in such reasonable amount as the Borrower may
determine or, in the case of any such mutilation, upon the surrender of this
Note to the Borrower at its office described in the Subscription Agreement for
cancellation, the Borrower at its expense will execute and deliver, in lieu
thereof, a new Note of the same class and of like tenor, dated so that there
will be no loss of interest on such lost, stolen, destroyed or mutilated Note.
6. CONVERSION OF NOTE.
------------------
(A) CONVERSION ON FIRST ANNIVERSARY. If all or any portion of the
-------------------------------
Principal Amount or the Interest Amount is not paid in full on or prior to
the Maturity Date, then on the first anniversary of the Date of Issuance of
this Note the Total Amount of this Note will automatically convert into
fully paid and nonassessable shares (calculated to the nearest 1/1000th of
a share) of the Borrower's Class E Common Stock, par value $0.001 per share
("Class E Common"). The number of shares of Class E Common issuable upon
--------------
any such conversion shall be equal to the Total Amount as of the close of
business on the Maturity Date divided by $100.00.
(B) PROCEDURE FOR CONVERSION. If all or any portion of the Principal
------------------------
Amount or the Interest Amount is not paid in full on or prior to the
Maturity Date, then promptly thereafter the Holder will surrender this Note
to the Borrower at the office of the Borrower described in the Subscription
Agreement. This Note will be deemed to have been converted into Class E
Common as of the close of business on the Maturity Date, and the Holder
will be treated for all purposes as the record holder(s) of such Class E
Common at such time. As promptly as practicable on or after the surrender
of this Note, and in any event within 5 Business Days, the Borrower will
issue and deliver to the
2
<PAGE>
surrendering Holder a certificate or certificates representing the Class E
Common issuable upon such conversion, in each case registered in the name
of the Holder, and the Borrower will cancel this Note.
(C) TAXES ON CONVERSION. The Borrower will pay any and all taxes that
-------------------
may be payable in respect of the issue or delivery of shares of Class E
Common on conversion of this Note. The Borrower will not, however, be
required to pay any income taxes of the Holder, and no such issue or
delivery will be made unless and until the Person requesting such issue has
paid to the Borrower the amount of any such tax or has established to the
satisfaction of the Borrower that such tax has been paid.
(D) APPLICATION OF RELATED AGREEMENT. It is the express intent of the
--------------------------------
Borrower and the Holder that all Class E Common issued upon the conversion
of this Note shall be treated as if the Holder had acquired such Class E
Common pursuant to Section 1.3(b) of the Subscription Agreement for all
purposes, with the effect that the holder thereof will have all rights, and
be subject to all obligations, of ABRY Broadcast Partners II, L.P. pursuant
to the Subscription Agreement with respect to such Class E Common.
7. COVENANTS. So long as all or any portion of the Principal Amount
---------
or the Interest Amount, except to the extent that the holder of this Note
otherwise consents in writing:
(A) DISTRIBUTIONS. The Borrower will not, directly or indirectly
-------------
declare or pay any dividends or make any distributions upon, or directly or
indirectly redeem, purchase or otherwise acquire or permit any Subsidiary
to redeem, purchase or otherwise acquire, any of its capital stock or other
equity securities (including warrants, options and other rights to acquire
capital stock or other equity securities), except for (1) dividends payable
in shares of common stock issued upon the outstanding shares of common
stock, and (2) repurchases of Class C Common or Class D Common (as those
terms are defined in the Subscription Agreement) from employees of the
Borrower and its Subsidiaries upon termination of employment pursuant to
arrangements approved by the Borrower's board of directors so long as no
Event of Default is in existence immediately prior to and immediately after
any such repurchase.
(B) USE OF PROCEEDS. The Borrower will not use any proceeds from the
---------------
Loan, or permit any of its respective Subsidiaries to use any of such
proceeds, directly or indirectly, for the purposes of purchasing or
carrying any "margin securities" within the meaning of Regulation G or T
promulgated by the Board of Governors of the Federal Reserve Board or for
the purpose of arranging for the extension of credit secured, directly or
indirectly, in whole or in part by collateral that includes any "margin
securities".
(C) RESERVATION OF STOCK. From and after the same have been created
--------------------
and/or authorized, the Borrower will reserve and keep available at all
times from its authorized and unissued shares of capital stock, free from
preemptive rights, solely for issuance upon the conversion of this Note, a
sufficient number of shares of Class E Common to permit conversion in full
of this Note, and will take all actions which may be required so that
3
<PAGE>
such shares may, when issued upon any such conversion, be validly issued,
fully paid and nonassessable.
8. DEFINED TERMS. As used in this Note, the following capitalized
-------------
terms have the following respective meanings:
"BANKRUPTCY CODE" means The United States Bankruptcy Code of 1978, as
---------------
amended from time to time, or any successor federal statute.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
------------
banks generally are open in both Boston, Massachusetts, and Phoenix,
Arizona, for the conduct of substantially all of their activities.
"DATE OF ISSUANCE" means February 11, 1998.
----------------
"EVENT OF DEFAULT" shall be deemed to have occurred if:
----------------
(a) the Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part
of its or his property, (ii) make a general assignment for the benefit of
its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (vi) take any action for the
purpose of effecting any of the foregoing, or
(b) a proceeding or case shall be commenced against the Borrower or
any of its Subsidiaries (other than by the Holder, in such Person's
capacity as the Holder), without its application or consent, in any court
of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of all or any substantial part of its assets, or (iii) similar relief
under any law relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts, and in each case such proceeding
or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for
relief against such Person shall be entered in an involuntary case under
the Bankruptcy Code.
"PERSON" means an individual, a partnership, a corporation, an
------
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorpo rated organization and a governmental entity or
any department, agency or political subdivision thereof.
"SUBSCRIPTION AGREEMENT" means the Second Amended and Restated
----------------------
Subscription and Stockholders Agreement dated as of May 16, 1996 by and
among the Borrower, Pinnacle Towers Inc., ABRY Broadcast Partners II, L.P.,
Robert J. Wolsey,
4
<PAGE>
James M. Dell'Apa, Michael D. Craig and the Gardere & Wynne Savings and
Retirement Plan Trust for the Benefit of Michael D. Craig, as amended and
as in effect from time to time.
"SUBSIDIARY" has the meaning set forth in the Subscription Agreement.
----------
9. AMENDMENT AND WAIVER. The provisions of this Note may be
--------------------
modified, amended or waived, and the Borrower may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only with the prior written consent of the Holder.
10. REMEDIES. The Holder will have all rights and remedies set forth
--------
in this Note and all rights and remedies which the Holder has under any law. Any
Person having any rights under any provision of this Note will be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any such provision and to exercise
all other rights granted by law. All such rights and remedies will be cumulative
and non exclusive, and may be exercised singularly or concurrently. One or more
successive actions may be brought against the Borrower, either in the same
action or in separate actions, as often as the Holder(s) deem advisable, until
the Total Amount of this Note has been paid in full.
11. SUCCESSORS AND ASSIGNS. All covenants and agreements contained
----------------------
in this Note by or on behalf of the Borrower or the Holder will bind and inure
to the benefit of their respective successors and assigns whether so expressed
or not. In addition, and whether or not any express assignment has been made,
the provisions of this Note which are for the benefit of the Holder are also for
the benefit of, and enforceable by, any subsequent Holder.
12. SEVERABILITY. Whenever possible, each provision of this Note
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Note is held to be prohibited by or invalid
under applicable law, then such provision will be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of this
Note.
13. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings
------------------------------------
of this Note are inserted for convenience only and do not constitute a
substantive part of this Note. The use of the word "including" in this Note is
by way of example rather than by limitation.
14. JURISDICTION AND VENUE. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
----------------------
THE BORROWER WITH RESPECT TO THIS NOTE OR ANY OTHER AGREEMENT CONTEMPLATED
HEREBY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN
BOSTON, MASSACHUSETTS, AND BY EXECUTION AND DELIVERY OF THIS NOTE THE BORROWER
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. THE BORROWER HEREBY WAIVES ANY
5
<PAGE>
CLAIM THAT BOSTON, MASSACHUSETTS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM
BASED ON LACK OF VENUE. THE BORROWER DESIGNATES AND APPOINTS CT CORPORATION
SYSTEM, INC. (AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY THE
BORROWER WITH THE CONSENT OF THE HOLDER) TO RECEIVE ON ITS BEHALF, SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF SUCH PROCESS SO SERVED WILL BE MAILED BY REGISTERED MAIL TO
THE BORROWER AT ITS ADDRESS PROVIDED IN THE SUBSCRIPTION AGREEMENT, EXCEPT THAT
UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY WILL
NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. TO THE EXTENT PERMITTED BY LAW,
IF ANY AGENT APPOINTED BY THE BORROWER REFUSES TO ACCEPT SERVICE, THE BORROWER
AGREES THAT SERVICE UPON IT IN ANY MANNER IN WHICH NOTICES MAY BE GIVEN TO THE
BORROWER AS PROVIDED IN THE SUBSCRIPTION AGREEMENT SHALL CONSTITUTE SUFFICIENT
NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE HOLDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. TO THE
EXTENT PROVIDED BY LAW, SHOULD THE BORROWER, AFTER BEING SO SERVED, FAIL TO
APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN
THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF, THE BORROWER
WILL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY THE
COURT AGAINST THE BORROWER AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT,
PROCESS OR PAPERS. THE CHOICE OF FORUM FOR THE BORROWER SET FORTH IN THIS
SECTION 14 WILL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY THE HOLDER OF ANY
JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING BY THE HOLDER OF ANY ACTION
TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND THE BORROWER
HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
15. WAIVER OF RIGHT TO JURY TRIAL. THE HOLDER AND THE BORROWER
-----------------------------
HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY in any
litigation in any court with respect to, in connection with, or arising out of
this Note or any other agreement contemplated hereby or the validity,
protection, interpretation, collection or enforcement thereof; AND THE BORROWER
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO INTERPOSE
ANY SETOFF OR COUNTERCLAIM OR CROSS-CLAIM in connection with any such
litigation, irrespective of the nature of such setoff, counterclaim or cross-
claim except to the extent that the failure so to assert any such setoff,
counterclaim or cross-claim would permanently preclude the prosecution of or
recovery upon same. Notwithstanding anything contained in this Note to the
contrary, no claim may be made by the Borrower against the Holder for any lost
profits or any special, indirect or consequential damages in respect of any
breach or wrongful conduct (other than willful misconduct constituting actual
fraud) in connection with, arising out of or in any way related to the
transactions contemplated by or consummated in connection with the Loan or the
issuance of this Note or any act, omission or event occurring in connection
therewith; and the
6
<PAGE>
Borrower hereby waives, release and agree not to sue upon any such claim for any
such damages. THE BORROWER AND THE HOLDER AGREE THAT THIS SECTION 15 IS A
SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND ACKNOWLEDGE THAT ABRY BROADCAST
PARTNERS II, L.P. WOULD NOT HAVE MADE THE LOAN IN RESPECT OF WHICH THIS NOTE WAS
INITIALLY ISSUED IF THIS SECTION 15 WERE NOT PART OF THIS NOTE.
16. TIME OF ESSENCE. Time is of the essence for the performance by
---------------
the Borrower of the obligations set forth in this Note.
17. CANCELLATION. After the entire Total Amount of this Note has
------------
been paid in full, this Note will be surrendered to the Borrower for
cancellation and will not be reissued; provided that such cancellation will not
adversely affect any provisions of this Note which by its terms may apply after
such payment in full.
18. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE DOMESTIC LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER
OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE COMMONWEALTH OF
MASSACHUSETTS.
19. TRANSFER. The owner of this Note is the Holder, with respect to
--------
principal and interest. Transfer of this Note may be effected by the Holder,
only by surrender of this Note to the Borrower and either reissuance by the
Borrower of this Note to a new holder or holders or the issuance of a new Note
to the new holder or holders. It is intended that interest paid on this Note
qualify for the exemption from U.S. withholding tax as a portfolio debt
instrument under Section 871(h) and 881(c) of the Internal Revenue Code.
* * * *
7
<PAGE>
The Borrower has executed and delivered this Note as of the date first
above written.
PINNACLE HOLDINGS INC.
By: ______________________________
Name:
Title:
8
<PAGE>
EXHIBIT 10.19
SERVICES AGREEMENT
THIS AGREEMENT is entered into by and between Pinnacle Towers Inc.
("Contractor") and Pinnacle Towers Inc. II ("Customer"), and is effective as of
________________, 1998 (the "Effective Date").
W I T N E S S E T H
--------------------
WHEREAS, Customer desires for Contractor to provide Customer with certain
Services as requested by Customer; and
WHEREAS, Customer is willing to provide such services;
NOW, THEREFORE, in consideration of the representations and agreements
contained herein, the parties hereby agree as follows:
SCOPE OF SERVICES
-----------------
TOWERS/SITES COVERED UNDER THE AGREEMENT. With respect to each
----------------------------------------
telecommunication towers listed on Exhibit D. Contractor will provide
---------
certain services as more particularly described in the Description of
Services attached hereto as Exhibit A (hereinafter referred to as
---------
"Services"). Exhibit D may be amended from time to time upon written
---------
notice from Contractor to Customer to include each telecommunication
tower purchased by Customer from Contractor or one of Contractor's
affiliates, unless Contractor elects not to include one or more such
towers on Exhibit D.
---------
BILLING AND PAYMENTS
--------------------
BILLING. Contractor will bill Customer for Services, at such
-------
intervals as Contractor may reasonably designate, according to the
Compensation Schedule attached hereto as Exhibit B. If Contractor
---------
decides to change the frequency of billing, Contractor will give
notice of such change to Customer 45 days before the change is
effective.
PAYMENTS. Within 30 days after receipt of a bill from Contractor,
--------
Customer will pay such bill in full. Contractor may charge a service
charge of 1.5% per month or the maximum legal interest rate, whichever
is less, for any overdue amount.
<PAGE>
PERFORMANCE OF SERVICES
-----------------------
INDEPENDENT CONTRACTOR. Contractor is an independent contractor in
----------------------
the performance of this Agreement. All persons furnished, used,
retained or hired by or on behalf of contractor in the performance of
the Services will be considered to be the employees or agents of
Contractor.
LIMITED WARRANTY.
-----------------
EXPRESS WARRANTY. Contractor warrants that all services performed by
----------------
Contractor under this Agreement will be performed in a professional
and workmanlike manner.
EXCLUSIVE REMEDY. Customer's sole and exclusive remedy for breach of
----------------
the warranty set forth in Section 4.1 or for any other defect in the
Services shall be to request, within thirty (30) days following
performance of the particular defective Service, correction or
reperformance of such Service. If Customer makes such a request,
Contractor will promptly correct or reperform without charge any
Service found actually to be defective.
LIMITATION OF LIABILITY.
------------------------
LIMITATION OF DAMAGES. CONTRACTOR WILL NOT BE LIABLE TO
---------------------
CUSTOMER,WHETHER IN CONTRACT OR IN TORT OR UNDER ANY OTHER LEGAL
THEORY, INCLUDING NEGLIGENCE, FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE, OR SIMILAR DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THE PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT,
OR FOR ANY CLAIM MADE AGAINST CUSTOMER BY ANY OTHER PARTY, EVEN IF
CONTRACTOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH CLAIM.
LIMITATION OF AMOUNT OF DAMAGES. CONTRACTOR'S LIABILITY FOR ANY CLAIM
-------------------------------
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT WILL NOT EXCEED THE
AMOUNT OF PAYMENT RECEIVED BY CONTRACTOR PAID BY CUSTOMER FOR THE
SERVICES DURING THE 12 MONTH PERIOD IMMEDIATELY PRECEDING THE TIME
WHEN SUCH CLAIM IS MADE.
<PAGE>
ALLOCATIONS OF RISKS. This Agreement allocates fairly between
--------------------
Contractor and Customer the risks of errors and omissions in the
Services. This allocation is the result of negotiations between the
parties, is accepted by both parties, and is reflected in the pricing
for the Services, other fees payable, the limited warranties and
remedies provided, the disclaimer of liability for certain damages
including without limitation, indirect, special, incidental,
consequential and punitive damages, and the limitation of liability.
The parties stipulate that, in any proceeding regarding any dispute
under this Agreement, all these provisions should be recognized and
enforced.
SURVIVAL. The provisions of this Section 5 will survive any
--------
termination or expiration of this Agreement.
TERM AND TERMINATION.
--------------------
TERM OF AGREEMENT. This Agreement is effective for an initial term of
-----------------
one (1) year commencing on the Effective Date and, unless terminated
as provided herein, will be extended automatically for an indefinite
term.
TERMINATION WITHOUT CAUSE. Either Customer or Contractor may
-------------------------
terminate this Agreement at any time for its convenience without
charge or liability by giving ninety (90) day written notice of
termination to the other party.
TERMINATION FOR CAUSE. Notwithstanding anything to the contrary
---------------------
elsewhere in this Agreement, each party, by written notice to the
other, may terminate this Agreement or suspend its further performance
without terminating this Agreement if the other party:
terminates or suspends doing business; becomes subject to any
bankruptcy or insolvency proceeding under federal or state law (unless
removed or dismissed within 60 days from filing therefore), becomes
insolvent, becomes subject to direct control of a trustee, receiver or
similar authority, or makes an assignment for the benefit of
creditors; or;
materially breaches any obligation under this Agreement and has not
cured such breach (or, if the breach is such that the cure would take
longer period, commenced to cure and proceeded diligently therewith)
within 30 days of receiving written notice from the terminating party
specifying such breach or failure.
<PAGE>
OBLIGATIONS UPON TERMINATION Upon termination, Customer will pay
----------------------------
Contractor promptly for all Services performed prior to termination.
INDEMNITY. Customer will indemnify Contractor, its affiliates and
---------
their respective employees, officers, agents and directors from and
against all injuries, losses, damages, costs, expenses and other
liabilities, including without limitation, attorney's fees and
expenses of litigation, which may arise out of, result from or be
connected with any Hazardous Substances, Environmental Conditions
and/or any other related circumstances, activity, and/or incident.
SURVIVAL. The provisions of this Section 7 shall survive any
--------
termination or expiration of this Agreement.
MISCELLANEOUS.
-------------
EXCUSABLE DELAYS. Except with respect to Customer's obligation to pay
----------------
for Services promptly, neither party will be deemed to be in default
of any provisions of this Agreement or liable for delays in
performance resulting from acts or events beyond the reasonable
control of such party. Such acts or events include, without
limitation, acts of God, civil or military authority, civil
disturbance, war, strikes, fires, other catastrophes, or other events
beyond a party's reasonable control.
INCORPORATION OF EXHIBITS. The Exhibits referenced in and attached to
-------------------------
this Agreement will be deemed an integral part hereof to the same
extent as if written at length herein.
NOTICES. All notices permitted or required to be given under this
-------
Agreement will be in writing and will be deemed duly given upon
personal delivery or transmission by facsimile machine to the address
or facsimile numbers set forth below or to such other address or
facsimile number as the receiving party may have designated by 10 days
prior written notice given in accordance with this provision.
IF TO CONTRACTOR: IF TO CUSTOMER:
- ----------------- ---------------
PINNACLE TOWERS INC. PINNACLE TOWERS INC. II
1549 RINGLING BLVD., 3/RD/ FLOOR 1549 RINGLING BLVD., 3/RD /FLOOR
SARASOTA, FL. 34236 SARASOTA, FL. 34236
ATTENTION: ______________________ ATTENTION:_________________________
FACSIMILE NO.:___________________ FACSIMILE NO.:_____________________
<PAGE>
AMENDMENT. Except as specified in Section 1 and in Exhibit B, this
--------- ---------
Agreement may be modified only by Amendment executed in writing by a
duly authorized representative for each party.
ASSIGNMENT. Neither Customer nor Contractor may assign this Agreement
----------
in whole or in part without the prior written consent of the other,
except that Contractor may assign this Agreement and all rights and
obligations hereunder to a successor in interest or any present of
future affiliate of Contractor, upon which Assignment by Contractor or
Customer will release Contractor from any liability or obligation
under this Agreement.
SEVERABILITY. If any provision of this Agreement is held by a court
------------
of competent jurisdiction to be contrary to law, the remaining
provisions of this Agreement will remain in full force and effect.
GOVERNING LAW. This Agreement is governed by and will be construed in
-------------
accordance with the Laws of the State of Delaware, United States of
America.
ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
----------------
parties concerning the Services and there are no oral or written
representations, understandings or agreements between the parties
respecting the subject matter of this Agreement which are not fully
expressed herein.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
duplicate originals by its duly authorized representative on the respective
dates entered below.
Pinnacle Towers Inc. Pinnacle Towers Inc. II
By: _______________________________ By:________________________________
Print Name: ________________________ Print Name:________________________
Title:______________________________ Title: ____________________________
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges
(In thousands)
<TABLE>
<CAPTION>
Pro Forma
as Adjusted
1995 1996 1997 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss $(645) $(2,016) $(8,461) $(26,961)
Fixed charges:
Interest expense and amortization
of deferred debt issuance costs 205 1,252 7,151 24,787
Rentals:
Buildings 10 32 62 62
Land 29 124 427 427
----- ------- ------- --------
Total fixed charges 244 1,408 7,640 25,276
----- ------- ------- --------
Net loss before interest and
fixed charges $(401) $ (608) $ (821) $ (1,685)
===== ======= ======= ========
Ratio of earnings to fixed
charges (a) (a) (a) (a)
=== === === ===
</TABLE>
(a) As a result of the loss incurred in 1995, 1996 and 1997, the Company was
unable to fully cover the indicated fixed charges. Earnings did not cover fixed
charges by $645, $2,016, $8,461, and $26,961 in 1995, 1996, 1997, and 1997 Pro
Forma as Adjusted.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 21.1
Pinnacle Holdings Inc.'s Subsidiaries
1. Pinnacle Towers Inc., a Delaware corporation, is a wholly-owned
subsidiary of the Company
a. Tower Systems, Inc., a Florida corporation, is a wholly-owned
subsidiary of Pinnacle Towers Inc.
b. Coverage Plus Antenna Systems, Inc., a Florida corporation, is a
wholly-owned subsidiary of Pinnacle Towers Inc.
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 23.2
Consent of Independent Certified Public Accountants
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Pinnacle Holdings Inc. of the following:
(1) our report dated March 4, 1998 relating to the consolidated financial
statements of Pinnacle Holdings Inc., (2) our report dated February 9, 1998
relating to the combined financial statements of Shore Communications. (3) our
report dated February 9, 1998 relating to the combined financial statements of
Tidewater Communications and (4) our report dated February 9, 1998 relating to
the combined financial statements of Majestic Communications, which appear in
such Prospectus. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
Price Waterhouse LLP
Tampa, Florida
- --------------------------------------------------------------------------------
March 31, 1998
<PAGE>
Exhibit 23.3
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the use in this
Registration Statement of our report dated February 20,1998, on the Tower
Operations of Southern Communications Services, Inc. and to all references to
our Firm included in or made a part of this Registration Statement.
Arthur Andersen LLP
Atlanta, Georgia
April 1, 1998
<PAGE>
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
PINNACLE HOLDINGS INC.
(Exact name of obligor as specified in its charter)
Delaware 65-0652634
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1549 Ringling Boulevard, 3rd Floor
Sarasota, Florida 34236
(Address of principal executive offices) (Zip code)
----------------------
10% Senior Discount Notes 2008
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 30th day of March, 1998.
THE BANK OF NEW YORK
By: /s/ THOMAS B. ZAKRZEWSKI
---------------------------
Name: THOMAS B. ZAKRZEWSKI
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
---------
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business September 30, 1997, published in accordance
with a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 5,004,638
Interest-bearing balances .......... 1,271,514
Securities:
Held-to-maturity securities ........ 1,105,782
Available-for-sale securities ...... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve.... 34,334,590
Assets held in trading accounts ...... 2,035,284
Premises and fixed assets (including
capitalized leases) ................ 671,664
Other real estate owned .............. 13,306
Investments in unconsolidated
subsidiaries and associated
companies .......................... 210,685
Customers' liability to this bank on
acceptances outstanding ............ 1,463,446
Intangible assets .................... 753,190
Other assets ......................... 1,784,796
-----------
Total assets ......................... $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices ................ $27,270,824
Noninterest-bearing ......12,160,977
Interest-bearing .........15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 14,687,806
Noninterest-bearing .........657,479
Interest-bearing .........14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury ........................... 283,793
Trading liabilities .................. 1,553,539
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,245,014
With remaining maturity of more than
one year through three years...... 0
With remaining maturity of more than
three years ...................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,473,588
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 2,193,031
-----------
Total liabilities .................... 52,718,298
-----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 25,428
Cumulative foreign currency transla-
tion adjustments ................... ( 16,342)
------------
Total equity capital ................. 4,818,697
-----------
Total liabilities and equity
capital ............................ $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
+++
J. Carter Bacot +
Thomas A. Renyi ++ Directors
Alan R. Griffith +
+++
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,693,923
<SECURITIES> 0
<RECEIVABLES> 1,647,575
<ALLOWANCES> (70,000)
<INVENTORY> 0
<CURRENT-ASSETS> 1,037,447
<PP&E> 147,527,231
<DEPRECIATION> (8,658,273)
<TOTAL-ASSETS> 143,177,903
<CURRENT-LIABILITIES> 17,098,983
<BONDS> 109,564,802
1,761,039
0
<COMMON> 270
<OTHER-SE> 14,752,809
<TOTAL-LIABILITY-AND-EQUITY> 143,177,903
<SALES> 12,880,631
<TOTAL-REVENUES> 12,880,631
<CGS> 2,632,274
<TOTAL-COSTS> 10,248,357
<OTHER-EXPENSES> 11,784,434
<LOSS-PROVISION> (1,536,077)
<INTEREST-EXPENSE> 6,925,094
<INCOME-PRETAX> (8,461,171)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,461,171)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,461,171)
<EPS-PRIMARY> (27.28)
<EPS-DILUTED> 0
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL EXHIBIT 99.1
To Tender for Exchange
10% Senior Discount Notes due 2008
(CUSIP NO. 72346N-AA-9)
of
PINNACLE HOLDINGS INC.
(a Delaware corporation)
Pursuant to the Prospectus dated March , 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
To: The Bank of New York, as Exchange Agent
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Section, Floor 21W
By Overnight Courier or By Hand:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Section Floor 21W
By Facsimile: (212) 571-3083
Confirm by Telephone: (212) 815-6333
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges that he or she has received the Prospectus
dated March __, 1998 (the "Prospectus") of Pinnacle Holdings Inc. (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute the Company's offer (the "Exchange Offer") to exchange up to
$325,000,000 in aggregate principal amount of the Company's 10% Senior Discount
Notes due 2008 (CUSIP No. 72346N-AB-7), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is a part (the "New Notes"), for
a like principal amount of the Company's outstanding 10% Senior Discount Notes
due 2008 (CUSIP No. 72346N-AA-9) (the "Original Notes"), of which $325,000,000
aggregate principal amount is outstanding. The term "Expiration Date" shall
mean 5:00 p.m., New York City time, on ___________, 1998, unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended. Capitalized terms used but not defined herein have the
meaning given to them in the Prospectus.
1
<PAGE>
The Letter of Transmittal is to be used by holders of Original Notes
whether (i) certificates representing the Original Notes are to be physically
delivered herewith, (ii) the guaranteed delivery procedures described in the
Prospectus are to be utilized, or (iii) tenders are to be made by book-entry
transfer to the account maintained by the Exchange Agent at The Depository Trust
Company, New York, New York ("DTC" or the "Book-Entry Transfer Facility"),
pursuant to the procedures set forth in the Prospectus. Delivery of documents
to DTC does not constitute delivery to the Exchange Agent.
Unless the context requires otherwise, the term "Holder" with respect to
the Exchange Offer means any person in whose name Original Notes are registered
on the books of the Company or the Registrar or any other person who has
obtained a properly completed bond power from the registered holder or any
person whose Original Notes are held of record by the Book-Entry Transfer
Facility who desires to deliver such Original Notes by book-entry transfer at
the Book-Entry Transfer Facility. The undersigned has completed, executed and
delivered this Letter of Transmittal to indicate the action the undersigned
desires to take with respect to the Exchange Offer. Holders who wish to tender
their Original Notes must complete this Letter of Transmittal in its entirety.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX BELOW
<TABLE>
<CAPTION>
===============================================================================================================================
DESCRIPTION OF 10% SENIOR DISCOUNT NOTES DUE 2008 BEING TENDERED
- -------------------------------------------------------------------------------------------------------------------------------
NAMES AND ADDRESSES OF AGGREGATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT TENDERED
REGISTERED HOLDER(S) CERTIFICATE REPRESENTED BY (MUST BE IN INTEGRAL
(PLEASE FILL IN, IF BLANK) NUMBER(S) CERTIFICATE(S) (1) MULTIPLES OF $1,000) (2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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Total
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(1) Need not be completed by Holders tendering by book-entry transfer.
(2) Unless otherwise indicated in the column labeled "Principal Amount Tendered," any tendering Holder will be deemed to have
tendered the full aggregate amount represented by such Original Notes.
=================================================================================================================================
</TABLE>
Holders of Original Notes who wish to tender and whose Original Notes are
not immediately available or who cannot deliver their Original Notes and all
other documents required hereby to the Exchange Agent prior to the Expiration
Date or whose Original Note(s) cannot be delivered on a timely basis pursuant to
the rules for book-entry transfer may tender Original Notes according to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Procedures for Tendering." See Instruction 1 below.
2
<PAGE>
[_] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:______________________________________________
Account Number:_____________________________________________________________
Transaction Code Number:____________________________________________________
[_] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s):_______________________________________________
Name of Eligible Institution that guaranteed delivery:______________________
Account Number (if delivered by book-entry transfer):_______________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENT OR SUPPLEMENT TO THE
PROSPECTUS.
Name:_______________________________________________________________________
Address:____________________________________________________________________
- --------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
(See Instructions 3, 4 and 5)
To be completed ONLY if certificates for Original Notes in a principal amount
not tendered, or New Notes issued in exchange for Original Notes accepted for
exchange, are to be issued in the name of someone other than the undersigned or
if Original Notes tendered by book-entry transfer which are not exchanged and/or
any New Notes are to be returned by credit to an account maintained by DTC other
than the account designated above.
Issue certificate(s) to:
DTC Account Number:__________________________________________________
Name:________________________________________________________________
(Please Print)
Address:_____________________________________________________________
________________________________________________________________
________________________________________________________________
(Including Zip Code)
_____________________________________________________________________
(Identification or Social Security No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Original Notes in a principal amount
not tendered, or New Notes issued in exchange for Original Notes accepted for
exchange, are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Deliver certificate(s) to:
Name:________________________________________________________________
(Please Print)
Address: ___________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Including Zip Code)
_____________________________________________________________________
(Identification or Social Security Number)
- --------------------------------------------------------------------------------
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Original Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Original Notes tendered in accordance with this Letter of
Transmittal, the undersigned exchanges, assigns and transfers to, or upon the
order of, the Company, all right, title and interest in and to the Original
Notes tendered hereby and accepted for exchange pursuant to the Exchange Offer.
The undersigned hereby irrevocably constitutes and appoints the Exchange Agent
its, his or her agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Original Notes with full power of substitution to (i) deliver
certificates for such Original Notes to the Company or its agent or transfer
ownership of such Original Notes on the account books maintained by DTC,
together in either such case with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Company upon receipt by the Exchange
Agent, as the undersigned's agent, of the New Notes and (ii) present such
Original Notes for cancellation and transfer on the books of the Company and
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Original Notes, all in accordance with the terms of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT IT, HE OR SHE HAS FULL
POWER AND AUTHORITY TO TENDER, SELL, ASSIGN AND TRANSFER THE ORIGINAL NOTES
TENDERED HEREBY AND THAT THE COMPANY WILL ACQUIRE GOOD AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES AND
NOT SUBJECT TO ANY ADVERSE CLAIM, WHEN THE SAME ARE ACQUIRED BY THE COMPANY.
THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE EXCHANGE AGENT OR THE COMPANY TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE ASSIGNMENT, TRANSFER AND EXCHANGE OF THE ORIGINAL NOTES TENDERED
HEREBY.
The undersigned also acknowledges that the Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") that the New Notes issued in exchange for the
Original Notes pursuant to the Exchange Offer may be offered for resale, resold
or otherwise transferred by Holders thereof (other than any Holder that is an
affiliate of the Company within the meaning of Rule 405 of the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes are acquired in the ordinary
course of such Holders' business and such Holders have no arrangements with any
person to participate in the distribution of the New Notes. If the undersigned
is not a broker-dealer or is a broker-dealer but will not receive New Notes for
its own account in exchange for Original Notes, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Original Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a Prospectus in connection with any resale of such New Notes,
however, by so acknowledging and by delivering a Prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
By acceptance of the Exchange Offer, such broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby acknowledges and agrees that, upon
receipt of notice by the Company of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires the
making of any changes in the Prospectus in order to make the Statements therein
not misleading (which notice the Company agrees to deliver promptly to such
broker-dealer), such broker-dealer will suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented Prospectus
to such broker-dealer.
The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of such Holder's
business, (ii) such Holder has no arrangement with any other person to
participate in the distribution of such New Notes and (iii) such Holder is not
an "affiliate" of the Company as defined under Rule 405 of the Securities Act,
or if such Holder is an affiliate, that such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
4
<PAGE>
The undersigned understands that, upon acceptance by the Company of the
Original Notes tendered under the Exchange Offer, the undersigned will be deemed
to have accepted the New Notes and will be deemed to have relinquished all
rights with respect to the Original Notes so accepted.
The undersigned understands that the Company may accept the undersigned's
tender at any time on or after the Expiration Date by delivering oral or written
notice of acceptance to the Exchange Agent. Tenders of Original Notes may be
withdrawn at any time prior to the Expiration Date, unless theretofore accepted
for exchange as provided in the Exchange Offer.
The undersigned understands that the Company reserves the right, at any
time and from time to time, in its sole discretion, (such to its obligations
under the Registration Rights Agreement) (i) to delay accepting any Original
Notes or to delay the issuance and exchange of New Notes for Original Notes, to
extend the Exchange Offer, or if any of the conditions set forth in the
Prospectus under the caption "The Exchange Offer - Conditions to the Exchange
Offer" shall not have been satisfied to terminate the Exchange Offer, by giving
oral or written notice of such delay, extension or termination to the Exchange
Agent or (ii) to amend the terms of the Exchange Offer in any manner.
If any tendered Original Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Original
Notes will be returned, without expense to the tendering Holder thereof, to the
undersigned at the address shown below or at a different address as may be
indicated herein under "Special Delivery Instructions" (or, in the case of
Original Notes tendered by book-entry transfer, such Original Notes will be
credited to the account of such Holder maintained at the Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of the
Exchange Offer.
All authority conferred or aimed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Original Notes pursuant to the
procedures described under the caption "The Exchange Offer - Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. Any tender of Original Notes
pursuant to this Letter of Transmittal may be withdrawn only in accordance with
the applicable procedures set forth in the Prospectus.
The New Notes exchanged for the tendered Original Notes will be issued to
the undersigned and mailed to the address (or credited to the account maintained
at the Book-Entry Transfer Facility above) unless otherwise indicated under the
"Special Registration Instructions" or the "Special Delivery Instructions"
above.
The undersigned understands that the Company has no obligation pursuant to
the "Special Registration Instructions" and "Special Delivery Instructions" to
transfer any Original Notes from the name of the registered Holder(s) thereof if
the Company does not accept for exchange any of the Original Notes so tendered.
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available or (ii) who cannot deliver their Original
Notes (or complete the procedures for book-entry transfer), this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date may tender their Original Notes according to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer - Guaranteed Delivery Procedures." See Instruction 1
printed below regarding the completion of this Letter of Transmittal.
5
<PAGE>
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PLEASE SIGN HERE WHETHER OR NOT
ORIGINAL NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X
- -------------------- _________________________________________________
Date
X
- ---------------------------- _________________________________________________
Signature(s) of Registered Date
Holder(s) or Authorized
Signatory
Area Code and Telephone Number:_________________________________________________
The above lines must be signed by the registered Holder(s) as their name(s)
appear(s) on the Original Notes or on a security position listing at the Book-
Entry Transfer Facility as the owner of the Original Notes or by person(s)
authorized to become registered Holder(s), a copy of which must be transmitted
with this Letter of Transmittal. If Original Notes to which this Letter of
Transmittal relate are held of record by two or more joint Holders, then all
such Holders must sign this Letter of Transmittal. If required by Instruction 4
hereto, the signatures on the above lines must be guaranteed by an Eligible
Institution.
If signature is by a trustee, executor, administrator, guardian, attorney-
in-fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, then such person must (i) set forth his or her full
title below and (ii) unless waived by the Company, submit evidence satisfactory
to the Company of such person's authority so to act with this Letter. See
Instruction 4 regarding the completion of this Letter of Transmittal printed
below.
Name(s)_________________________________________________________________________
_________________________________________________________________________
(Please Print)
Capacity (full title)___________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No._____________________________________________________
Tax Identification or
Social Security No(s).__________________________________________________________
Please Complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 4)
Authorized Signature:___________________________________________________________
Dated _________, 1998
Name and Title:_________________________________________________________________
(Please Print)
Name of Firm:___________________________________________________________________
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND ORIGINAL NOTES OR BOOK-ENTRY
CONFIRMATIONS. Certificates for all physically tendered Original Notes, or
confirmation of a book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility of Original Notes tendered electronically, together
in each case with a properly completed and duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal or
the Prospectus, 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 unless the
tendering Holder complies with the guaranteed delivery procedures described in
the following paragraph. The method of delivery of Original Notes, this Letter
of Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
Instead of delivery by mail, it is recommended that the Holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. No Letter of Transmittal, certificates representing
Original Notes or any other required documents should be sent to the Company.
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available, or (ii) who cannot deliver their Original
Notes (or complete the procedure for book-entry transfer), this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, must tender their Original Notes according to the
guaranteed delivery procedure set forth in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through a firm that is a member
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 Securities Exchange Act of 1934, as
amended (each an "Eligible Institution"); (ii) prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail, hand delivery or overnight courier, setting forth the name
and address of the Holder, any certificate numbers and the principal amount of
such Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five (5) New York Stock Exchange trading days after
the Expiration Date, this Letter of Transmittal (or facsimile hereof) together
with certificate(s) representing the Original Notes (or, with respect to a book-
entry transfer, confirmation of a book-entry transfer of the Original Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility) and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered
Original Notes in proper form for transfer (or, with respect to a book-entry
transfer, confirmation of a book-entry transfer of the Original Notes into the
Exchange Agent's Account at the Book-Entry Transfer Facility), must be received
by the Exchange Agent within five (5) New York Stock Exchange trading days after
the Expiration Date, all as provided in the Prospectus under the caption "The
Exchange Offer - Guaranteed Delivery Procedures." Any Holder who wishes to
tender his, her or its Original Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery from the Eligible Institution prior to 5:00 p.m.,
New York City time, on the Expiration Date. Upon request to the Exchange Agent,
a duplicate Notice of Guaranteed Delivery will be sent to Holders. A Notice of
Guaranteed Delivery has been included with the Prospectus and the Letter of
Transmittal for use by Holders who wish to tender their Original Notes according
to the guaranteed delivery procedures set forth above.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Notes, and withdrawal of tendered
Original Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Original Notes determined by the Company not to be validly
tendered or any Original Notes the acceptance of which would, in the opinion of
counsel for the Company, be unlawful. The Company also reserves the absolute
right to waive any defects, irregularities or conditions of tender to particular
Original Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Original Notes will render such
tenders invalid unless such defects or irregularities are cured within such time
as the Company shall determine. Any Original Notes 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 this Letter of
Transmittal, as soon as practicable following the Expiration Date.
7
<PAGE>
No alternative, conditional or contingent tender will be accepted. All
tendering Holders, by execution of this Letter of Transmittal, waive any rights
to receive any notice of the acceptance of their tender.
2. TENDER OF HOLDER. Only a Holder of Original Notes may tender such
Original Notes in the Exchange Offer. Any beneficial owner of Original Notes who
is not the registered Holder and who wishes to tender should arrange with such
registered Holder to execute and deliver this Letter of Transmittal on such
owner's behalf or must, prior to completing and executing this Letter of
Transmittal and delivering his Original Notes, either make appropriate
arrangements to register ownership of the Original Notes in such owner's name or
obtain a properly completed bond power from the registered Holder.
3. PARTIAL TENDERS; WITHDRAWALS. (Not applicable to Holders who tender by
book-entry transfer.) Tenders of Original Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Original Notes evidenced by a certificate is tendered, the tendering Holder
should fill in the principal amount tendered in the fourth column of the box
entitled "Description of 10% Senior Discount Notes Due 2008 Being Tendered"
above. The entire principal amount of any Original Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
If the entire principal amount of all Original Notes evidenced by a certificate
is not tendered, then Original Notes for the principal amount of Original Notes
not tendered and a certificate or certificates representing New Notes (subject
to the denomination requirements discussed in the Prospectus) issued in exchange
for any Original Notes accepted will be sent to the Holder at its, his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal promptly after the Original Notes are accepted
for exchange.
A tender pursuant to the Exchange Offer may be withdrawn subject to the
procedures set forth in this Letter of Transmittal and the Prospectus at any
time prior to the acceptance thereof on the Expiration Date. To withdraw a
tender of Original Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 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 having deposited the Original Notes to be withdrawn (the "Depositor"),
(ii) specify the serial numbers on the particular certificates evidencing the
Original Notes to be withdrawn and the name of the registered Holder thereof (if
certificates have been delivered or otherwise identified to the Exchange Agent)
or the name and number of the account at DTC to be credited with withdrawn
Original Notes (if the Original Notes have been tendered pursuant to the
procedures for book-entry transfer), (iii) be signed by the Holder in the same
manner as the original signature on the Letter of Transmittal by which such
Original Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Registrar with
respect to the Original Notes register the transfer of such Original Notes into
the name of the person withdrawing the tender and (iv) specify the name in which
any such Original Notes 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 notices will be determined by the Company in its sole
discretion, which determination shall be final, and binding on all parties. Any
Original Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Original Notes so withdrawn are validly retendered. Properly
withdrawn Original Notes may be retendered by following one of the procedures
described in the Prospectus under the caption "The Exchange Offer - Procedures
for Tendering" at any time prior to the Expiration Date.
4. SIGNATURES ON THE LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof) is
signed by the registered Holder(s) of the Original Notes tendered hereby, the
signature must correspond (i) with the name(s) as written on the face of the
certificate without alteration, enlargement or any change whatsoever, or (ii) in
the case of Original Notes held by book-entry, with the name as contained on the
security position listing at the Book-Entry Transfer Facility.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder of Original Notes tendered and the New Notes issued in
exchange therefor are to be issued (or any untendered principal amount of
Original Notes is to be reissued) to the registered Holder, then such Holder
need not and should not endorse any tendered Original Notes, nor provide a
separate bond power. In any other case such Holder must either properly endorse
the certificates tendered or transmit a properly completed separate bond power
with this Letter of Transmittal with the signatures on the endorsement or bond
power guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered Holder of any Original Notes or if delivery of the Original Notes is
to be made to a person other than the registered Holder, such Original Notes
must be
8
<PAGE>
endorsed or accompanied by appropriate bond powers, in either case signed as the
name of the registered Holder appears on the Original Notes.
If this Letter of Transmittal (or facsimile hereof) or any Original Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Except as otherwise provided below, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. Signatures on this
Letter of Transmittal need not be guaranteed if (a) this Letter of Transmittal
is signed by the registered Holder(s) of the Original Notes tendered herewith in
connection with the Exchange Offer and such Holder(s) have not completed the box
set forth herein entitled "Special Registration Instructions" or "Special
Delivery Instructions," (b) such Original Notes are tendered for the account of
an Eligible Institution, or (c) such Original Notes are tendered for the account
of DTC.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders
should indicate, in the applicable box or boxes, the name and address to which
New Notes or substitute Original Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent,or the account number at the
Book-Entry Transfer Facility to which the New Notes are to be credited, if
different from the name and address, or account number of the person signing
this Letter of Transmittal. In the case of issuance in a different name or to a
different account number, the taxpayer identification or social security number
of the person named (or to whose account the New Notes are credited) must also
be indicated. Holders tendering Original Notes by book-entry transfer may
request that Original Notes not exchanged be credited to such Holders' accounts
maintained at the Book-Entry Transfer Facility.
6. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Original Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Original Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be issued in the name or credited to the account of, any person other than the
registered Holder of the Original Notes tendered hereby, or if tendered Original
Notes are registered in the name of any person other than the person signing
this Letter of Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Original Notes pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered Holder or
on 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
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Original Notes listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS. The Company reserves the right, in its sole
discretion, to amend, waive or modify specified conditions in the Exchange Offer
in the case of any Original Notes tendered.
8. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any tendering
Holder whose Original Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated herein for further
instructions. This Letter of Transmittal and any related documents cannot be
processed until the procedures for replacing mutilated, lost, stolen or
destroyed certificates have been followed.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Holder whose tendered Original
Notes are accepted for exchange is required to provide the Company (as payor),
through the Exchange Agent, with such Holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 or otherwise establish a basis for
exemption from backup withholding. If such Holder is an individual, the TIN is
such Holder's social security number. If the Exchange Agent is not provided with
the correct TIN or an adequate basis for exemption, the Holder may be subject to
a $50 penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
delivery of such Holder's New Notes may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on the
Substitute Form W-9 enclosed herewith. A foreign individual may qualify as an
exempt recipient by submitting to the Exchange Agent a properly completed IRS
Form W-8 (which the Exchange Agent will provide upon request) signed under
penalty of perjury, attesting to the Holder's exempt status.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made with respect to
Original Notes exchanged in the Exchange Offer, each Holder is required to
provide the Exchange Agent with either: (i) the Holder's correct TIN by
completing the form below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Holder is awaiting a TIN) and that (A) the Holder
has not been notified by the IRS that he or she is subject to backup withholding
as a result of a failure to report all interest or dividends or (B) the IRS has
notified the Holder that he or she is no longer subject to backup withholding,
or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
Original Notes. If the Original Notes are held in more than one name or are not
held in the name of the actual owner, consult the Substitute Form W-9 for
additional guidance regarding which number to be reported.
10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Name (if joint names, list first and circle the
name of the person or entity whose number you
enter in Part 1 below.)
SUBSTITUTE Social Security Number
FORM W-9 ______________________________________________________ OR
DEPARTMENT OF THE TREASURY ______________________________________________________ Employer Identification Number
INTERNAL REVENUE SERVICE Address
______________________________________________________
City, State and Zip Code _________________________________
---------------------------------------------------------- PART 3-AWAITING TIN [_]
Payer's Request for Taxpayer
Identification Number (TIN) PART 1-PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND CERTIFY
BY SIGNING AND DATING BELOW.
- ------------------------------------------------------------------------------------------------------------------------------------
PART 2-CERTIFICATION-Under Penalties of Perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me),
and
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the "IRS") that
I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS-You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to
backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS
that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE____________________________________________________ DATE____________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver such an application in the near future. I understand
that if I do not provide a taxpayer identification number within sixty (60)
days, 31% of all reportable payments made to me thereafter will be withheld
until I provide such a number.
- ----------------------- ---------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CERTIFICATE SURRENDERED PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
ORIGINAL NOTES TENDERED ORIGINAL NOTES ACCEPTED
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Delivery Prepared by ________ Checked by ___________ Date ________________
12
<PAGE>
EXHIBIT 99.2
PINNACLE HOLDINGS INC.
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
As set forth in the Prospectus dated March __, 1998 (the "Prospectus") in
the section entitled "The Exchange Offer - Procedures for Tendering" and in the
accompanying Letter of Transmittal (the "Letter of Transmittal") and Instruction
1 thereto, this form or one substantially equivalent thereto must be used to
accept the Exchange Offer if certificates representing 10% Senior Discount Notes
due 2008 (the "Original Notes") of Pinnacle Holdings Inc. (the "Company") are
not immediately available or time will not permit the holder's Original Notes or
other required documents to reach the Exchange Agent, or complete the procedures
of book-entry transfer, prior to the Expiration Date (as defined in the
Prospectus) of the Exchange Offer. This form may be delivered by hand or sent
by overnight courier, facsimile transmission or registered or certified mail to
the Exchange Agent and must be received by the Exchange Agent prior to 5:00
p.m., New York City time on , 1998.
To: The Bank of New York, as Exchange Agent
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Section, Floor 21W
By Overnight Courier or By Hand:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Section, Floor 21W
By Facsimile: (212) 571-3083
Confirm by Telephone: (212) 815-6333
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION VIA FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to Pinnacle Holdings Inc. the principal
amount of the Original Notes listed below, upon the terms of and subject to the
conditions set forth in the Prospectus and the related Letter of Transmittal and
the instructions thereto (which together constitute the "Exchange Offer"),
receipt of which is hereby acknowledged, pursuant to the guaranteed delivery
procedures set forth in the Prospectus, as follows:
<TABLE>
<CAPTION>
CERTIFICATE NOS. AGGREGATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT TENDERED (MUST BE
---------------
REPRESENTED BY CERTIFICATE(S) IN INTEGRAL MULTIPLES OF $1,000)
----------------------------- ----------------------------------
<S> <C> <C>
________________________ __________________________ _____________________________________
________________________ __________________________ _____________________________________
________________________ __________________________ _____________________________________
</TABLE>
The Book-Entry Transfer Facility Account Number
(if the Original Notes will be tendered by book-
entry transfer)
________________________ __________________________________________________
Account Number Principal Amount Tendered
(must be in integral multiples of $1,000)
Name of Record Holder(s)
_________________________
_________________________
(Please Print or Type)
Address:_________________
_________________________
Area Code & Tel. No._________
Signature(s)_________________
_____________________________
Dated:______________, 1998
This Notice of Guaranteed Delivery must be signed by the registered
Holder(s) of Original Notes exactly as its (their) name(s) appear(s) on the
Original Notes or by person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted with the Notice of Guaranteed Delivery.
If Original Notes to which this Notice of Guaranteed Delivery relates are held
of record by two or more joint holders, then all such holders must sign this
Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person must
provide evidence satisfactory to the Company of such person's authority to so
act, together with the following information:
Please print name(s) and address(es)
Name(s):________________________________________________________________________
________________________________________________________________________
Capacity:_______________________________________________________________________
Address(es):____________________________________________________________________
____________________________________________________________________
2
<PAGE>
GUARANTEE
---------
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office in the United States,
guarantees (a) that the above-named person(s) "own(s)" the principal amount of
$__________ 10% Senior Discount Notes due 2008 of Pinnacle Holdings Inc. (the
"Original Notes") tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, (b) that such tender of such
Original Notes complies with Rule 14e-4, and (c) to deliver to the Exchange
Agent the certificates representing the Original Notes tendered hereby to
confirmation of book-entry transfer of such Original Notes into the Exchange
Agent's account at ____________________, in proper form for transfer, together
with the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees and any other required
documents, within five (5) New York Stock Exchange trading days after the
Expiration Date.
________________________________ ___________________________________
Name of Firm Authorized Signature
________________________________ ___________________________________
Address Title
________________________________ Name:______________________________
Zip Code Please Type or Print
________________________________ Name:______________________________
Area Code and Tel. No.__________ Dated:________________________,1998
NOTE: DO NOT SEND CERTIFICATES REPRESENTING ORIGINAL NOTES WITH THIS FORM.
CERTIFICATES REPRESENTING ORIGINAL NOTES SHOULD BE SENT ONLY WITH A
LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT 99.3
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Section, Floor 21W
Re: Pinnacle Holdings Inc. (the "Issuer")
Pursuant to The Exchange Offer section of the Prospectus dated March ,
1998 (the "Prospectus"), which prospectus is attached hereto as Exhibit I, we
appoint you as Exchange Agent subject to the terms hereof.
As Exchange Agent, you are hereby instructed to perform the specific
exchange agency duties set forth in The Exchange Offer section of the
Prospectus.
You will be acting solely as agent for the Issuer hereunder and will owe no
fiduciary duties to any person by reason of this appointment.
You will perform such duties and only such duties as are specifically set
forth herein, and no implied covenants or obligations shall be read into this
appointment against you. Without limiting and in furtherance of the foregoing,
you shall not be liable or responsible for any of the provisions of the
Prospectus except for those expressly referred to hereinabove.
In the absence of willful misconduct or gross negligence on your part, you
shall not be liable for any action taken, suffered, or omitted or for any error
of judgment made by you in the performance of your duties hereunder. You shall
not be liable for any error of judgment made in good faith unless you shall have
been grossly negligent in ascertaining the pertinent facts.
You may rely and shall be protected in acting or refraining from acting
upon any communication authorized hereby and upon any oral or written
instruction, notice, request, direction, consent, report, certificate, form of
note certificate or other instrument, paper or document in good faith believed
by you to be genuine.
You may consult with counsel of your choice and the advice of such counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by you hereunder in good faith and in reliance
thereon.
You shall not be required to advance, expend or risk you own funds or
otherwise incur or become exposed to financial liability in the performance of
your duties hereunder.
You may perform your duties and exercise your rights hereunder directly or
by or through agents or attorneys and shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed by you
with due care hereunder.
You make no representations as to (i) the validity or adequacy of the
Issuer's power to make this appointment, or (ii) the Exchange Offer.
In consideration of your acceptance of the foregoing appointment by the
Issuer, the Issuer hereby agrees:
(1) to pay to you from time to time reasonable compensation for all
services rendered by you under the foregoing appointment;
(2) to reimburse you upon your request for all reasonable expenses,
disbursements and advances incurred or made by you in accordance with any of
your agency duties (including the reasonable compensation and the expenses and
disbursements of your agents and counsel) except that any such expense,
disbursement or advance as may be attributable to your gross negligence or
willful misconduct; and
(3) to indemnify you for, and to hold you harmless against, any loss,
liability or expense, incurred without gross negligence or willful misconduct on
your part, arising out of or in connection with the acceptance or administration
of the agency created under the foregoing appointment, including the costs and
expenses (including the reasonable fees and
<PAGE>
expenses of your counsel) of defending yourself against any claim or liability
in connection with the exercise or performance of any of your duties thereunder
and/or enforcing this indemnification provision.
PINNACLE HOLDINGS INC.
By:__________________________________________
Name:_____________________________________
Title:____________________________________
Accepted:
THE BANK OF NEW YORK
By:____________________________
Name:_______________________
Title:______________________
