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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 10, 1998
REGISTRATION NO. 333-
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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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SPECTRASITE HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATES OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
4899
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
56-2027322
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
8000 REGENCY PARKWAY
SUITE 570
CARY, NORTH CAROLINA 27511
(919) 468-0112
(ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
DAVID P. TOMICK
SPECTRASITE HOLDINGS, INC.
8000 REGENCY PARKWAY
SUITE 570
CARY, NORTH CAROLINA 27511
(919) 468-0112
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S AGENT FOR SERVICE)
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Please address a copy of all communications to:
TIMOTHY J. KELLEY
THOMAS D. TWEDT
DOW, LOHNES & ALBERTSON, PLLC
1200 NEW HAMPSHIRE AVENUE, N.W.
WASHINGTON, D.C. 20036
(202) 776-2000
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 to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES TO PROPOSED MAXIMUM AGGREGATE AMOUNT OF
BE REGISTERED OFFERING PRICE REGISTRATION FEE
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12% Senior Discount Notes Due 2008.... $128,916,137 $35,839
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(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f).
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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, AS AMENDED, 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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THIS INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL NOR IS IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED.
[SPECTRASITE LOGO]
SUBJECT TO COMPLETION, DATED NOVEMBER 10, 1998
PROSPECTUS
SPECTRASITE HOLDINGS, INC.
OFFER TO EXCHANGE SERIES B 12% SENIOR DISCOUNT NOTES DUE 2008
FOR ANY AND ALL OUTSTANDING 12% SENIOR DISCOUNT NOTES DUE 2008.
TERMS OF EXCHANGE OFFER
- - Expires 5:00 p.m., New York City time, , 1998, unless extended
- - Subject to certain customary conditions, which we may waive
- - All outstanding notes that are validly tendered and not withdrawn will be
exchanged
- - Tenders of outstanding notes may be withdrawn any time prior to the expiration
of the Exchange Offer
- - The exchange of notes will not be a taxable exchange for U.S. Federal tax
purposes
- - We will not receive any proceeds from the Exchange Offer
- - The terms of the notes we will issue in the Exchange Offer are substantially
identical to the outstanding notes, except that certain transfer restrictions
and registration rights relating to the outstanding notes will not apply to
the exchange notes
Each broker-dealer that receives registered 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 notes. The Letter of
Transmittal states that by so acknowledging and by delivering a Prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Broker-dealers may use this Prospectus in
connection with resales of notes received in exchange for the outstanding notes
where such notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. SpectraSite has agreed
that, for a period of 180 days after the expiration of the Exchange Offer or
until such broker-dealers have sold all registered notes held by them, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution."
FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER, SEE "RISK FACTORS" COMMENCING ON PAGE 12.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE NOTES TO BE DISTRIBUTED IN THE EXCHANGE OFFER, NOR
HAVE ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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CERTAIN INTRODUCTORY MATTERS
Our company was formed in 1997 by combining three existing companies: U.S.
Towers, Inc., a Delaware corporation; TeleSite Services, LLC, an Arkansas
limited liability company ("Telesite"); and Metrosite Management LLC, an
Arkansas limited liability company ("Metrosite"). We have grown since our
formation primarily through equity financings and either completed or pending
acquisitions. Because of the number of parties and transactions involved in our
development, we use the following terms in this Prospectus:
- "SpectraSite" refers to SpectraSite Holdings, Inc., a Delaware
corporation, and the "Company" and "we" or "our" each refers to
SpectraSite, its subsidiaries and all predecessor entities to SpectraSite
and its subsidiaries collectively, unless the context requires otherwise.
- The "Series A Investors" are Whitney Equity Partners, L.P. and Kitty Hawk
Capital Limited Partnership, III.
- The "Series B Investors" are Whitney Equity Partners, L.P., Whitney
Strategic Partners III, L.P., J.H. Whitney III, L.P., Waller-Sutton Media
Partners, L.P., Kitty Hawk Capital Limited Partnership, III, Kitty Hawk
Capital Limited Partnership, IV, Eagle Creek Capital, L.L.C., The North
Carolina Enterprise Fund, L.P., Finley Family Limited Partnership,
William R. Gupton, Jack W. Jackman and Alton D. Eckert.
- "Operations Data Adjustments" refers to pro forma adjustments to the
Company's financial statements which reflect the following transactions:
(i) the disposition of Metrosite; (ii) the acquisition of five towers
from H&K Investments LLC; (iii) the disposition of a minority interest in
Communications Management Specialists, LLC; (iv) the issuance of
SpectraSite's 12% Senior Discount Notes Due 2008; (v) the acquisition of
GlobalComm, Inc.; and (vi) the acquisition of 40 towers from Airadigm
Communications, Inc.
- "Balance Sheet Adjustments" refers to pro forma adjustments to the
Company's financial statements which reflect the acquisition of 40 towers
from Airadigm Communications, Inc.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-4 with the Securities and
Exchange Commission covering the notes, and this Prospectus is part of our
registration statement. For further information on the Company and the notes,
you should refer to our registration statement and its exhibits. This Prospectus
summarizes material provisions of contracts and other documents that we refer
you to. Since the Prospectus may not contain all the information that you may
find important, you should review the full text of these documents. We have
included copies of these documents as exhibits to our registration statement.
Following the Exchange Offer, we will file reports with the SEC pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act") In
addition, the indenture governing the outstanding notes and the notes to be
issued in this Exchange Offer requires that we file Exchange Act reports with
the SEC and provide those reports to the indenture trustee and holders of notes.
Our SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference rooms in Washington, D.C., New York and Chicago. Please call
the SEC at 1-800-SEC-0330 for more information on the public reference rooms and
their copy charges.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Prospectus under "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Industry Overview" and "Business" are
forward-looking. They include statements concerning (i) growth strategy, (ii)
liquidity and capital expenditures, (iii) construction and acquisition
activities, (iv) debt levels and ability to obtain financing and service debt,
(v) competitive conditions in the communications site and wireless carrier
industries, (vi) regulatory matters affecting the communications site and
wireless carrier industries, (vii) projected growth of the wireless
communications and wireless carrier industries and (viii) general economic
conditions. Actual results may differ materially from those suggested by the
forward-looking statements for various reasons, including those discussed under
"Risk Factors."
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PROSPECTUS SUMMARY
The following summary highlights selected information from this Prospectus
and may not contain all of the information that is important to you. This
Prospectus includes specific terms of the notes we are offering, as well as
information regarding our business and detailed financial data. We encourage you
to read this Prospectus in its entirety.
THE EXCHANGE OFFER
On June 26, 1998, we completed the private offering of $225,238,000
aggregate original principal amount at maturity of 12% Senior Discount Notes Due
2008. SpectraSite entered into a Registration Rights Agreement with the initial
purchasers of the notes in the private offering in which we agreed, among other
things, to deliver to you this Prospectus and to complete the Exchange Offer on
or prior to March 10, 1999. You are entitled to exchange in the Exchange Offer
your notes for registered notes with substantially identical terms. If the
Exchange Offer is not completed on or prior to March 10, 1999, the interest rate
on the notes will be increased at a rate of 0.50% per annum until, among other
things, the completion of the Exchange Offer. You should read the discussions
under the heading "-- Summary of Terms of the Exchange Notes" and "Description
of the Notes" for further information regarding the registered notes.
We believe that the notes issued in the Exchange Offer may be resold by you
without compliance with the registration and prospectus delivery provisions of
the Securities Act of 1933, as amended (the "Securities Act"), subject to
certain conditions. You should read the discussion under the headings
"-- Summary of the Exchange Offer" and "The Exchange Offer" for further
information regarding the Exchange Offer and resale of the registered notes.
THE COMPANY
We are one of the leading full service providers of tower related services
in the U.S. wireless communications industry. The Company develops and manages
build-to-suit tower networks and provides site acquisition and site management
services for major wireless communication companies such as AT&T Wireless,
Nextel and Sprint PCS, as well as numerous other entrepreneurial service
providers. We are capitalizing on the growing trend toward antennae co-location
and independent tower ownership, as leading wireless providers increasingly
redirect their capital outlays from tower development to subscriber acquisition
activities and local municipalities encourage multiple tenants on single towers.
As of September 30, 1998, we owned 45 towers and had an additional 100 towers
under construction or scheduled to be completed during 1998. In addition, we
plan to expand our tower inventory through future acquisitions or partnerings
with major wireless communications service providers and by building or
acquiring selective tower assets in strategic geographic areas that will be
attractive to multiple tenants.
Our primary focus is the ownership of multi-tenant towers and the leasing,
under long-term contracts, of antennae space on such towers to a variety of
wireless service providers, including personal communications service ("PCS"),
cellular, paging, specialized mobile radio ("SMR"), enhanced specialized mobile
radio ("ESMR") and other providers. We build towers suited for multi-tenant use
generally under build-to-suit programs and typically do not start construction
of a tower until an anchor tenant has agreed to lease antenna space on the
tower. The Company retains ownership of the tower and has the ability to
co-locate additional tenants. We believe that many wireless service providers
are using build-to-suit programs as an alternative to tower ownership and that
this outsourcing trend is likely to continue. Our build-to-suit programs provide
a comprehensive solution to those wireless service providers seeking to minimize
their capital expenditures, overhead and time associated with the build-out and
ongoing maintenance of their wireless network infrastructure.
We also offer comprehensive site acquisition services, including site
location analysis; site acquisition; zoning and land use permitting; Federal
Aviation Administration ("FAA") compliance analysis and filing; and contract,
title and building permit administration. The Company has provided an array of
site
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acquisition services for major wireless service providers in 22 states, covering
approximately 3,700 sites. In addition, we provide comprehensive site management
services for communications sites. We manage not only our own tower sites, but
also over 1,000 sites for carriers. Site acquisition and site management allow
us to offer a complete product line of tower services.
Our principal executive offices are located at 8000 Regency Parkway, Suite
570, Cary, North Carolina 27511, and our telephone number is (919) 468-0112.
BUSINESS AND GROWTH STRATEGIES
Our strategic objective is to be one of the largest owners and operators of
communications towers and to become the premier build-to-suit provider of tower
networks in the United States. Our strategy involves the following elements:
BUILD TOWERS IN AREAS OF INCREASING WIRELESS DEMAND. We are well
positioned to capitalize on the trend of wireless service providers outsourcing
their investment in, and ownership of, communications sites. Our turnkey
operation can develop and implement build-to-suit tower networks and then
provide efficient site management services for completed towers. Carriers value
our ability to serve all of their tower network development needs. In addition,
we selectively invest radio frequency ("RF") engineering and site acquisition
costs into sites that we believe have higher than average co-location
opportunities.
PARTNER WITH MAJOR WIRELESS SERVICE PROVIDERS TO ACQUIRE EXISTING TOWERS
AND BUILD-TO-SUIT CONTRACTS. We seek to partner with major wireless
communications service providers in order to assume ownership of their existing
towers directly or through joint ventures. We would also offer our construction
and program management expertise to our partners to facilitate timely and
efficient build-out of their tower networks. Our ability to offer end-to-end
tower development services positions us well for partnering opportunities with
carriers seeking to outsource communication site ownership, construction and
management.
ACQUIRE UNDERUTILIZED TOWERS. We intend to continue to make selective
acquisitions in the fragmented tower owner and operator industry. Our strategy
is to purchase under-utilized towers with high future co-location potential. We
regularly evaluate acquisition opportunities, engage in negotiations and submit
bids with respect to acquisitions of individual towers, groups of towers and
entities that own or manage towers and related businesses.
MAXIMIZE CO-LOCATION ON TOWERS. We work to maximize the number of tenants
on each of our towers in order to increase tower cash flow rapidly. Since most
tower costs are fixed, leasing available space on an existing tower generates
additional revenue with minimal additional expense. We have a separate sales
force to market available co-location opportunities to wireless communications
providers.
CAPITALIZE ON STRONG RELATIONSHIPS WITH MAJOR WIRELESS SERVICE PROVIDERS.
We have established a reputation as a highly professional, responsive
build-to-suit and site acquisition provider. Our experience is that a high
level of responsiveness and the rapid development of tower sites for an
existing customer ensures that we will continue to be an integral part of that
customer's build-out plans. Additionally, we believe that we can build upon
existing relationships with wireless service providers to source new build-to-
suit customers and acquisition opportunities.
LEVERAGE SITE ACQUISITION SERVICES. Over the last six years, the Company
has performed an array of site acquisition services covering approximately 3,700
sites for major wireless service providers, including ALLTEL, BellSouth
Mobility, GTE Mobility, Horizon, Nextel and Powertel. We anticipate that site
acquisition customers will continue to account for a significant portion of our
build-to-suit activity.
COMPANY STRENGTHS
The tower leasing business provides a diversified, stable, recurring cash
flow stream due to the long-term nature of the customer contracts, the
significant relocation costs for tower tenants and multiple customers from
different wireless segments. Local opposition to the proliferation of towers
also works as a
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barrier to entry in many markets. Once a tower is built for an anchor tenant,
co-location tenants provide high incremental cash flow margins due to low, fixed
tower maintenance expense. Leases are typically for an initial term of five
years with four or five additional five-year renewal periods and provide for
regular rent increases throughout their term. The term of the anchor tenant
lease typically matches the term of the ground lease underlying the tower.
Towers can accommodate a broad array of wireless communications carriers and,
therefore, revenues are not dependent upon any specific wireless segment or
technology.
We believe that the following strengths will enable us to successfully
expand our business:
BUILD-TO-SUIT FOCUS. Our team specializes in developing and building tower
networks to suit the needs of wireless communications carriers. We believe that
our primary focus on and expertise in build-to-suit programs is unique among our
major competitors.
EXPERIENCED MANAGEMENT. Our senior managers have acquired over 3,700
communications sites and built more than 1,000 towers. In addition, we provide
tower management services to approximately 1,100 sites, consisting of both
Company owned and carrier owned tower sites. We believe that our industry
experience allows us to offer quality service and proven results to wireless
communications providers in their network build-outs.
CAPABILITY TO MANAGE MULTIPLE PROJECTS. Our team successfully manages
multiple site acquisition and tower development projects in various locations at
the same time. We believe that the ability to undertake concurrent build-to-suit
programs in multiple markets is attractive to wireless service providers.
STANDARDIZED PROCEDURES AND SPECIFICATIONS. We use a pre-qualified pool of
architectural, engineering and construction contractors that work within the
Company's standard guidelines and have a demonstrated capacity for multiple
projects. In addition, our team can effectively and efficiently (i) plan the
project, (ii) secure the sites by purchase or lease, (iii) obtain zoning
approvals, and (iv) manage all site preparation and tower construction.
INTEGRATED PROVIDER OF SITE DEVELOPMENT SERVICES. We benefit from our
integrated, comprehensive site development and program management capabilities.
Wireless service providers prefer the flexibility of a vendor who can program
manage all direct and subcontract functions related to real estate, design,
construction and on-going operations.
RECENT EVENTS
AIRADIGM ACQUISITION. We have agreed to acquire 40 towers from Airadigm
Communications, Inc., and we may purchase an additional 7 towers. The total
purchase price for all 47 towers is $11.75 million. In connection with this
acquisition, we are negotiating with Airadigm for an exclusive multi-year
build-to-suit contract. We expect to complete this transaction in November 1998.
GLOBALCOMM ACQUISITION. In September 1998, we acquired GlobalComm, Inc., a
co-location marketing company, for approximately $2 million. GlobalComm's
founder and president, Michael Garrett, joined the Company and is now
responsible for our co-location marketing efforts. See "Management" and "Certain
Transactions -- GlobalComm Acquisition."
AMICA ACQUISITION. In August 1998, we acquired 14 ground leases and two
towers in inventory for an aggregate purchase price of approximately $474,000
from Amica Wireless PhoneService, Inc.
H&K ACQUISITION. In June 1998, we acquired five towers for an aggregate
purchase price of $1.4 million.
CMS DISPOSITION. In May 1998, we sold our minority interest in
Communications Management Specialists, LLC ("CMS") for $375,000.
ISSUANCE OF SERIES B PREFERRED STOCK. The Series B Investors agreed to
purchase 7,000,000 shares of SpectraSite's Series B Redeemable Preferred Stock
for an aggregate purchase price of $28 million. The Series B Investors acquired
the shares in three separate transactions in March, August and September, 1998.
See "Certain Transactions -- The Series A and Series B Preferred Stock
Offerings."
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WHALEN AGREEMENT. In February 1998, the Company entered into an agreement
with Whalen & Company, Inc. to jointly provide services for certain projects. We
expect such joint projects to generate additional build-to-suit opportunities.
In addition to various projects that the parties may pursue together, Whalen
agreed to bring us acquisition opportunities, and Whalen will receive a fee for
any such acquisitions we complete.
SUMMARY OF THE EXCHANGE OFFER
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Registration Rights Agreement............. You have the right to exchange your notes for registered
notes with substantially identical terms. The Exchange
Offer is intended to satisfy these rights. After the
Exchange Offer is complete, you will no longer be
entitled to any exchange or registration rights with
respect to your notes.
The Exchange Offer........................ We are offering to exchange $1,000 principal amount at
maturity of SpectraSite's Series B 12% Senior Discount
Notes Due 2008 which have been registered under the
Securities Act (the "Exchange Notes") for each $1,000
principal amount at maturity of SpectraSite's
outstanding 12% Senior Discount Notes Due 2008 which
were issued in June 1998 in a private offering (the "Old
Notes"). In order to be exchanged, an Old Notes must be
properly tendered and accepted. All outstanding Old
Notes that are validly tendered and not validly
withdrawn will be exchanged.
As of this date there is $225,238,000 aggregate
principal amount at maturity of Old Notes outstanding.
We will issue Exchange Notes on or promptly after the
expiration of the Exchange Offer.
Resales................................... We believe that the Exchange Notes may be offered for
resale, resold and otherwise transferred by you without
compliance with the registration and prospectus delivery
provisions of the Securities Act provided that:
- the Exchange Notes issued in the Exchange Offer are
being acquired in the ordinary course of your
business;
- you are not participating, do not intend to
participate, and have no arrangement or understanding
with any person to participate, in the distribution of
the Exchange Notes issued to you in the Exchange
Offer; and
- you are not an "affiliate," as defined under Rule 405
of the Securities Act, of ours.
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If our belief is inaccurate and you transfer any
Exchange Note issued to you in the Exchange Offer
without delivering a prospectus meeting the requirements
of the Securities Act or without an exemption from
registration of your Exchange Notes from such
requirements, you may incur liability under the
Securities Act. We do not assume or indemnify you
against such liability. Each broker-dealer that is
issued Exchange Notes for its own account in exchange
for Old Notes which were acquired by such broker-dealer
as a result of market-making or other trading
activities, must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities
Act in connection with any resale of the Exchange Notes.
A broker-dealer may use this Prospectus for an offer to
resell, resale or other retransfer of the Exchange Notes
issued to it in the Exchange Offer.
Record Date............................... We mailed this Prospectus and the related Exchange Offer
documents to persons who were registered holders of Old
Notes on , 1998.
Expiration Date........................... The Exchange Offer will expire at 5:00 p.m., New York
City time, , 1998, unless we decide to extend
the expiration date.
Conditions to the Exchange Offer.......... The Exchange Offer is subject to certain customary
conditions, which we may waive.
Procedures for Tendering Old Notes........ Each holder of Old Notes wishing to accept the Exchange
Offer must complete, sign and date the accompanying
Letter of Transmittal, or a facsimile thereof, or
arrange for The Depository Trust Company ("DTC") to
transmit certain required information to the Exchange
Agent in connection with a book-entry transfer or mail
or otherwise deliver such documentation, together with
your Old Notes, to the United States Trust Company of
New York, as Exchange Agent, at the address set forth
under "The Exchange Offer -- Exchange Agent."
By tendering your Old Notes in this manner, you will be
representing among other things, that:
- the Exchange Notes you acquire pursuant to the
Exchange Offer are being acquired in the ordinary course
of your business;
- you are not participating, do not intend to
participate, and have no arrangement or understanding
with any person to participate, in the distribution of
the Exchange Notes issued to you in the Exchange
Offer; and
- you are not an "affiliate" of ours.
Untendered Old Notes...................... If you are eligible to participate in the Exchange Offer
and you do not tender your Old Notes, you will not have
any further registration or exchange rights and your Old
Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of
the market for such Old Notes could be adversely
affected.
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Special Procedures for Beneficial
Owners.................................. If you beneficially own Old Notes registered in the name
of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender your Old Notes in
the Exchange Offer, you should contact such registered
holder promptly and instruct it to tender on your
behalf. If you wish to tender on your own behalf, you
must, prior to completing and executing the Letter of
Transmittal and delivering your Old Notes, either
arrange to have your Notes registered in your name or
obtain a properly completed bond power from the
registered holder. The transfer of registered ownership
may take considerable time.
Guaranteed Delivery Procedures............ If you wish to tender your Old Notes and time will not
permit your required documents to reach the Exchange
Agent by the Expiration Date, or the procedure for
book-entry transfer cannot be completed on time or
certificates for Exchange Notes cannot be delivered on
time, you may tender your Old Notes pursuant to the
procedures described in this Prospectus under the
heading "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights......................... You may withdraw the tender of your Old Notes at any
time prior to 5:00 p.m., New York City time, on
, 1998.
Certain U.S. Federal Tax Considerations... The exchange of notes will not be a taxable event for
United States federal income tax purposes.
Use of Proceeds........................... We will not receive any proceeds from the issuance of
Exchange Notes pursuant to the Exchange Offer. We will
pay all our expenses incident to the Exchange Offer.
Exchange Agent............................ United States Trust Company of New York is serving as
Exchange Agent in connection with the Exchange Offer.
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SUMMARY OF TERMS OF THE EXCHANGE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that the Exchange Notes will be registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
and will not be entitled to registration under the Securities Act. In this
regard, we use the term "Notes" when describing provisions that govern or
otherwise pertain to both the Old Notes and the Exchange Notes. The Exchange
Notes will evidence the same debt as the Old Notes and both the Old Notes and
the Exchange Notes are governed by the same indenture.
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Exchange Notes............................ Series B 12% Senior Discount Notes Due 2008 of
SpectraSite Holdings, Inc.
Maturity.................................. July 15, 2008
Accreted Value and Interest............... The initial accreted value of the Exchange Notes will be
$554.97 per $1,000 principal amount at maturity. The
Exchange Notes will accrete at a daily rate of 12% per
year, compounded semiannually, to an aggregate principal
amount of $225,238,000 by July 15, 2003. Cash interest
will begin to accrue on July 15, 2003, and we will pay
cash interest on January 15, 2004, and on each July 15
and January 15 thereafter, at a rate of 12% per year.
Optional Redemption....................... Except as described below, we cannot redeem the Notes
prior to July 15, 2003. After that date, we may redeem
all or a portion of the Notes at specified redemption
prices, plus accrued and unpaid interest, to the
applicable redemption date. In addition, on any one or
more occasions prior to July 15, 2001, we may redeem up
to 25% of the aggregate principal amount at maturity of
the Notes issued with the net cash proceeds from one or
more equity offerings. The redemption price would be
112% of the accreted value on the redemption date. You
should refer to the heading "Description of
Notes -- Optional Redemption" for further details.
Ranking................................... The Notes:
- are general unsecured obligations of SpectraSite;
- rank equal in right of payment with all existing and
future unsecured senior indebtedness of SpectraSite;
- are senior in right of payment to all future
subordinated indebtedness of SpectraSite; and
- are effectively subordinated to all indebtedness,
liabilities and other obligations of SpectraSite's
subsidiaries.
SpectraSite conducts all operations through its
subsidiaries, and SpectraSite's subsidiaries are not
guarantors of the Notes. As of September 30, 1998,
SpectraSite had no outstanding liabilities other than
the Notes, and SpectraSite's subsidiaries had
approximately $3.0 million of indebtedness and other
liabilities.
Certain Covenants......................... The indenture governing the Notes contains certain
covenants for your benefit which, among other things and
subject to certain qualifications, restrict our ability
to:
- incur indebtedness;
- make certain payments;
- issue preferred stock;
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<S> <C>
- enter into transactions with affiliates;
- create liens;
- sell assets; and
- consolidate, merge or sell substantially all of our
assets.
Change of Control......................... Upon the occurrence of a change of control of
SpectraSite, we will offer to repurchase your Notes, in
whole or in part, at a price equal to 101% of their
accreted value to the date of purchase prior to July 15,
2003 or 101% of their principal amount, plus accrued and
unpaid interest, if any, to the date of purchase on or
after July 15, 2003.
Form of Exchange Notes.................... The Exchange Notes will be represented by one or more
permanent global securities in bearer form deposited
with United States Trust Company of New York, as book
entry depositary, for the benefit of DTC. You will not
receive Exchange Notes in registered form unless one of
the events set forth under the heading "Description of
the Exchange Notes -- Book-Entry; Delivery and Form"
occurs. Instead, beneficial interests in the Exchange
Notes will be shown on, and transfers of these will be
effected only through, records maintained in book-entry
form by DTC with respect to its participants.
</TABLE>
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<PAGE> 12
SUMMARY FINANCIAL DATA
The following table sets forth summary historical financial data of the
Company and its predecessor, TeleSite, as derived from the audited financial
statements as of and for (i) the year ended December 31, 1996; (ii) the period
from January 1, 1997 to May 12, 1997; (iii) the period from the Company's
inception (April 25, 1997) to December 31, 1997; and (iv) the nine-month period
ended September 30, 1998. Operating results for the nine months ended September
30, 1998 are not necessarily indicative of the results that you should expect
for the entire year.
The combined financial data presented below for the nine months ended
September 30, 1997 were derived from the audited financial statements of
TeleSite for the period from January 1, 1997 to May 12, 1997 and the unaudited
financial statements of the Company from April 25, 1997 to September 30, 1997.
We have prepared the unaudited financial data on the same basis as the audited
financial statements and, in our opinion, included all adjustments (consisting
only of normal recurring adjustments) necessary to present the included
information fairly.
The unaudited pro forma statement of operations data give effect to the
Operations Data Adjustments as if such transactions occurred on January 1, 1997.
The unaudited pro forma balance sheet data as of September 30, 1998 give effect
to the Balance Sheet Adjustments as if such transactions occurred on September
30, 1998. The information set forth below should be read in conjunction with the
"Unaudited Pro Forma Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SPECTRASITE
---------------------------
TELESITE PRO
-------------------------- FORMA NINE MONTHS ENDED SEPTEMBER 30
(PREDECESSOR) JANUARY 1 - ---------------------------------
YEAR ENDED JANUARY 1 - APRIL 25 - DECEMBER PRO
DECEMBER 31, MAY 12, DECEMBER 31, 31, COMBINED SPECTRASITE FORMA
1996 1997 1997 1997 1997 1998 1998
------------ ----------- ------------ ------------ -------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Site acquisition revenue..... $8,841 $1,926 $ 5,002 $ 8,830 $ 5,353 $ 5,154 7,330
Site leasing revenue......... -- -- -- 1,066 -- 211 970
------ ------ ------- ------- ------- -------- --------
Total revenues................. 8,841 1,926 5,002 9,896 5,353 5,365 8,300
Cost of revenues:
Cost of site acquisition
revenue.................... 2,255 595 1,120 1,878 1,573 1,721 1,849
Cost of site leasing
revenue.................... -- -- -- 328 -- 142 378
------ ------ ------- ------- ------- -------- --------
Total cost of revenues......... 2,255 595 1,120 2,206 1,573 1,863 2,227
Gross profit................... 6,586 1,331 3,882 7,690 3,780 3,502 6,073
Selling, general and
administrative(a)............ 4,347 1,798 6,148 9,185 5,320 6,777 8,238
------ ------ ------- ------- ------- -------- --------
Operating income (loss)(a)..... 2,239 (467) (2,266) (1,495) (1,540) (3,275) (2,165)
OTHER DATA:
EBITDA(b)...................... $2,330 $ (411) $(1,777) $ 55 $ 1,268 $ (2,495) $ (757)
Adjusted EBITDA(c):
Site acquisition............. (742) (2,328) (550)
Site leasing................. (245) (549) 224
Depreciation and
amortization................. 91 56 489 1,550 272 780 1,409
Capital expenditures(d)........ 498 64 850 12,014 220 12,496 24,246
Cash interest expense(e)....... 64 31 64 95 71 211 211
SELECTED OPERATING DATA (AT END OF PERIOD):
Number of owned towers.............................................................................. 45 85
Number of mandated towers........................................................................... 126 126
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and short term investments..................................................................... $121,766 $121,766
Total assets........................................................................................ 163,171 163,171
Total liabilities................................................................................... 131,956 131,956
Preferred stock..................................................................................... 39,896 39,896
Total shareholders' deficiency...................................................................... (8,681) (8,681)
Invested equity capital............................................................................. 38,000 38,000
</TABLE>
10
<PAGE> 13
- ---------------
Notes to Summary Financial Data
(a) Selling, general and administrative expense and operating income
attributable to site acquisition activities for the period April
25 - December 31, 1997 were $2,706 and $1,110, respectively. In addition,
selling, general and administrative expense includes approximately $1,463 of
non-recurring charges primarily related to formation costs and the
operations of Metrosite.
(b) EBITDA consists of operating income (loss) before depreciation and
amortization. EBITDA is provided because it is a measure commonly used in
the industry. EBITDA is not a measurement of financial performance under
generally accepted accounting principles and should not be considered an
alternative to net income as a measure of performance or to cash flow as a
measure of liquidity. EBITDA is not necessarily comparable with similarly
titled measures for other companies.
(c) Adjusted EBITDA for any stated period means the sum of (i) the EBITDA of the
Company for the fiscal quarters included within the stated period, less the
Company's site leasing EBITDA for such stated period, plus (ii) the product
of the most recent quarter's site leasing EBITDA included within the stated
period and the total number of fiscal quarters within the stated period.
Site leasing EBITDA includes, for any stated period, the EBITDA directly
attributable to site rental revenue, license or management fees paid to
manage, lease or sublease space on communications sites owned, leased or
managed by the Company (collectively, "site leasing revenues"). For the
purposes of calculating Adjusted EBITDA, the site leasing EBITDA for the
most recent quarter included in the stated period shall be determined on a
pro forma basis after giving effect to acquisitions or dispositions, new
contracts and rent increases as if these events had occurred at the
beginning of the fiscal quarter, and eliminating losses related to
individual lease or site management contracts. In allocating corporate,
general administrative and other operating expenses that are not allocated
to any particular line of business in the financial statements of the
Company, such expenses shall be allocated to the Company's site leasing
business in proportion to its percentage of the total revenues for the
applicable period. Adjusted EBITDA for site leasing includes the acquisition
from Airadigm of certain towers without co-location tenants.
Adjusted EBITDA is presented as additional information because management
believes that it serves as a useful financial analysis tool for measuring
and comparing companies in several areas, such as liquidity, operating
performance and leverage. In addition, it is expected that certain debt
incurrence covenants of the Company will utilize Adjusted EBITDA to measure
compliance with such covenants. It is not, however, intended as an
alternative measure of operating results or cash flow from operations (as
determined in accordance with generally accepted accounting principles).
(d) Historical capital expenditures for TeleSite have been reduced for the
periods ended December 31, 1996 and May 12, 1997 by $340 and $258,
respectively. These expenditures were for land and construction in progress
which were sold prior to the closing of the acquisition of TeleSite. Pro
forma capital expenditures for the nine months ended September 30, 1998
includes the aggregate purchase price of $10,000 for the 40 towers to be
acquired from Airadigm. See "-- Recent Events."
(e) Cash interest expense does not include interest expense attributable to the
Notes. Total pro forma interest expense for the year ended December 31, 1997
and for the nine months ended September 30, 1998 would include interest
expense on the Notes, less interest expense related to the note payable
issued to Joe L. Finley III in connection with the acquisition of TeleSite
and Metrosite, of $15,824 and $9,134, respectively. Cash payment of interest
on the Notes does not commence until January 15, 2004.
11
<PAGE> 14
RISK FACTORS
Ownership of the Old Notes or the Exchange Notes involves a high degree of
risk. Holders of the Old Notes should consider carefully the risk factors below,
as well as the other information in this Prospectus, before tendering the Old
Notes in the Exchange Offer.
SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT THE
FINANCIAL HEALTH OF THE COMPANY.
The Company is and will continue to be highly leveraged. As of September
30, 1998, the Company had total consolidated indebtedness of approximately
$131.9 million, total redeemable preferred stock of $39.9 million and total
shareholders' deficiency of approximately $8.7 million. Also, the Company's pro
forma earnings would have been inadequate to service its pro forma fixed charges
by $18.5 million for the year ended December 31, 1997 and $14.7 million for the
nine months ended September 30, 1998. We expect that earnings will continue to
be inadequate to service the Company's fixed charges at least through fiscal
2000.
The degree to which the Company will be leveraged could have important
consequences. For example, it could
- make it more difficult for us to satisfy our obligations with respect to
the Notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to obtain additional financing;
- require the dedication of a substantial portion of our cash flow from
operations to the payment of principal of, and interest on, our
indebtedness, thereby reducing the availability of such cash flow to fund
our growth strategy, working capital, capital expenditures or other
general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry; and
- place us at a competitive disadvantage vis-a-vis less leveraged
competitors.
ABILITY TO SERVICE DEBT -- WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO
SERVICE OUR INDEBTEDNESS. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.
Our ability to make scheduled payments of principal of, or to pay interest
on, the Company's debt obligations, and our ability to refinance any such debt
obligations, or to fund planned capital expenditures, will depend on the
Company's future performance, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control. We anticipate substantial capital expenditures in
connection with our planned tower build out and acquisitions. Based on the
Company's current operations and anticipated revenue growth, we believe that, if
our business strategy is successful, cash flow from operations and available
cash, together with anticipated borrowings under the New Credit Facility, will
be sufficient to fund the anticipated capital expenditures through 1999.
Thereafter, however, or in the event we exceed our budgeted capital expenditures
for 1998 and 1999, we will need to seek additional equity or debt financing to
fund our business plan. Failure to obtain any such financing could require us to
significantly reduce planned capital expenditures or scale back the scope of
build-to-suit activity or acquisitions, any of which could have a material
adverse effect on our business, financial condition or results of operations. In
addition, we may need to refinance all or a portion of the Company's
indebtedness on or prior to its scheduled maturity. There can be no assurance
that we will generate sufficient cash flow from operations in the future, that
anticipated revenue growth will be realized or that future borrowings or equity
contributions will be available in amounts sufficient to service the Company's
indebtedness and make anticipated capital expenditures. In addition, there can
be no assurance that the Company will be able to effect any required refinancing
of its indebtedness on commercially reasonable terms or at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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<PAGE> 15
SUBORDINATION -- YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS EFFECTIVELY
JUNIOR TO THE COMPANY'S EXISTING INDEBTEDNESS AND POSSIBLY ALL FUTURE
BORROWINGS.
SpectraSite is a holding company with no business operations of its own.
SpectraSite's only significant asset is and will be the outstanding capital
stock of its subsidiaries. SpectraSite conducts all of its business operations
through its subsidiaries. Accordingly, SpectraSite's only source of cash to pay
interest on and the principal of the Notes is distributions with respect to its
ownership interest in its subsidiaries from the net earnings and cash flow
generated by such subsidiaries. We currently expect that SpectraSite's
subsidiaries will retain and use any earnings and cash flow to support their
operations, including to service their respective debt obligations. Even if we
decided to pay a dividend on or to make a distribution in respect of the capital
stock of SpectraSite's subsidiaries, there can be no assurance that the
subsidiaries will generate sufficient cash flow to pay such a dividend or
distribute such funds to SpectraSite or that applicable state law and
contractual restrictions, including negative covenants contained in the debt
instruments of such subsidiaries, will permit such dividends or distributions.
The Notes are not guaranteed by SpectraSite's subsidiaries. As a result, all
indebtedness, including trade payables, of such subsidiaries, including any
borrowings under the New Credit Facility, will be structurally senior to the
Notes. As of September 30, 1998, SpectraSite's subsidiaries had approximately
$3.0 million of liabilities, including trade payables, all of which will be
structurally senior in right of payment to the Notes. See "Capitalization."
The Exchange Offer will likely close before the New Credit Facility is in
place. We expect that the New Credit Facility will, subject to certain limited
exceptions, prohibit dividends or other distributions by SpectraSite's
subsidiaries to SpectraSite. In addition, SpectraSite's subsidiaries will be
permitted under the terms of the indenture governing the Notes to incur certain
additional indebtedness that may restrict or prohibit the making of
distributions, the payment of dividends or the making of loans by such
subsidiaries to SpectraSite. If any or all of SpectraSite's subsidiaries become
subject to bankruptcy proceedings before payment of the Notes, the holders of
the Notes are not expected to have claims in such proceedings. Only after such
subsidiaries' creditors are fully paid would any remaining value of such
subsidiaries' assets be available to SpectraSite or its creditors, including the
holders of the shares of the notes. See "-- Substantial Leverage" and
"Description of New Credit Facility."
We expect that the New Credit Facility will permit distributions to
SpectraSite in an amount sufficient to pay scheduled interest payments on the
notes commencing in 2004, provided that there is no default or event of default
outstanding under the New Credit Facility, including under the financial
maintenance tests to be set forth in the New Credit Facility. Assuming the
Company can meet its scheduled build out program, we believe the Company can
comply with the covenants to be contained in the New Credit Facility and,
therefore, can make distributions to SpectraSite in amounts sufficient to pay
scheduled interest on the Notes, although no assurances can be given that the
Company can do so. If SpectraSite's subsidiaries are not able to make
distributions to SpectraSite, we will have to pursue other alternatives which
may include refinancing the New Credit Facility, seeking other sources of debt
or equity capital (if available), or other alternatives.
We currently anticipate that, in order to pay the principal of the Notes or
to redeem or repurchase the Notes upon a change of control under the indenture
governing the Notes, we will be required to adopt one or more alternatives, such
as refinancing the Company's indebtedness or selling its equity securities or
the equity securities or assets of its subsidiaries. There can be no assurance
that any of the foregoing actions could be effected on satisfactory terms, that
any of the foregoing actions would enable us to pay the principal of the Notes
or that any of such actions would be permitted by the terms of the Indenture
governing the Notes or any other debt instruments then in effect.
WE CANNOT ASSURE YOU THAT MANDATES WILL YIELD BINDING AGREEMENTS.
As of September 30, 1998, we had non-binding requests from customers (or
"mandates") to build up to 126 towers under build-to-suit programs. Although we
believe that the substantial majority of these mandates will result in long-term
anchor leases for specific communications towers, there are a number of steps
that need to occur before any such leases are executed. These steps include, in
some cases,
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<PAGE> 16
finalization of build-out plans by the customers who have awarded the mandates,
completion of due diligence by us and our customers and finalization of other
definitive documents between the parties. In addition, consistent with industry
practice, mandates are typically verbal agreements. As a result, there can be no
assurance as to the percentage of current and future non-binding mandates that
will ultimately result in binding anchor tenant leases and constructed towers.
THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH CONSTRUCTION AND ACQUISITION OF
TOWERS.
Our growth strategy depends on our ability to construct, acquire and
operate towers in conjunction with the expansion by wireless service providers
of their tower network infrastructure. Our ability to construct new towers can
be affected by a number of factors beyond our control, including zoning and
local permitting requirements, FAA considerations, availability of tower
components and construction equipment, availability of skilled construction
personnel and weather conditions. In addition, because the concern over tower
proliferation has grown in recent years, certain communities now restrict new
tower construction or delay granting permits required for construction. There
can be no assurance (i) of the number of mandates that the Company will be
awarded or the number of mandates that will result in towers; (ii) that we will
be able to overcome regulatory or other barriers to new construction; (iii) that
the number of towers planned for construction will be completed in accordance
with the requirements of our customers; or (iv) that there will be significant
need for the construction of new towers once the wireless service providers
complete their tower network infrastructure build-out. Anchor tenant leases may
contain penalty or forfeiture provisions in the event the towers are not
completed within specified time periods.
Our expansion plans call for a significant increase in construction
activity. There can be no assurance that we will be able to overcome the
barriers to new construction or that the number of towers planned for
construction will be completed. The failure to complete the necessary
construction could have a material adverse effect on our business, financial
condition and results of operations.
With respect to the acquisition of towers, we compete with certain wireless
service providers, broadcasters, site developers and other independent tower
owners and operators for acquisitions of towers, and we expect such competition
to increase. Increased competition for acquisitions may result in fewer
acquisition opportunities, as well as higher acquisition prices. We regularly
explore acquisition opportunities; however, there can be no assurance that we
will be able to identify towers or tower companies to acquire in the future.
WE ANTICIPATE SIGNIFICANT CAPITAL EXPENDITURES.
Our current plans call for at least $140 million of capital expenditures
through fiscal 1999 for the construction and acquisition of communication sites,
primarily towers. However, if acquisition or other opportunities present
themselves more rapidly than we currently anticipate or if estimates prove
inaccurate, we may seek additional sources of debt or equity capital prior to
the end of 1999 or scale back the scope of tower construction activity. The
availability of additional financing cannot be assured and could be restricted
by the terms of the New Credit Facility and the Indenture governing the Notes.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Description of Certain Indebtedness."
We cannot be certain that we will be able to identify, finance and complete
future acquisitions on acceptable terms or that we will be able to manage
profitably and market available space on the Company's towers. Our business plan
depends on the construction or acquisition of additional towers and the
profitable operation of our tower assets. Failure to execute our business plan
will have a material adverse effect on the Company's business, financial
condition or results of operations.
In addition, the time frame for the current wireless build-out cycle may be
limited to the next few years, and many PCS networks have already been
substantially completed in large markets. Failure to move quickly and
aggressively to obtain growth capital and capitalize on this infrastructure
development opportunity could have a material adverse effect on our business,
financial condition or results of operations with respect to both site
acquisition services and site leasing.
14
<PAGE> 17
Implementation of our strategy to expand our site leasing business may
impose significant strains on our management, operating systems and financial
resources. In addition, we anticipate that operating expenses will increase
significantly as we build and acquire additional tower assets. Failure to manage
growth or unexpected difficulties encountered during expansion could have a
material adverse effect on our business, financial condition or results of
operations. The pursuit and integration of build-to-suit prospects,
acquisitions, investments, joint ventures and strategic alliances will require
substantial attention from the senior management, which will limit the amount of
time available to devote to the existing operations. Future acquisitions could
result in the incurrence of debt and contingent liabilities and an increase in
amortization expenses related to goodwill and other intangible assets, which
could have a material adverse effect upon our business, financial condition or
results of operations.
TECHNOLOGY RISKS -- OUR BUSINESS DEPENDS ON DEMAND FOR WIRELESS COMMUNICATIONS.
Our business depends on demand for communications sites from wireless
service providers, which, in turn, depends on the demand for wireless services.
Success of the Company's business model requires us to secure co-location
tenants, and securing co-location tenants depends upon the demand for
communications sites from a variety of service providers in a particular market.
Factors outside of the Company's control affect the demand for wireless
communications services and competition for co-location tenants. A reduction in
demand for communications sites or increased competition for co-location tenants
could have a material adverse effect on the Company's business, financial
condition or results of operations.
Most types of wireless services currently require ground-based network
facilities, including communications sites for transmission and reception. The
extent to which wireless service providers lease such communications sites
depends on a number of factors beyond the Company's control, including the level
of demand for such wireless services, the financial condition and access to
capital of such providers, the strategy of providers with respect to owning or
leasing communications sites, government licensing of broadcast rights, changes
in telecommunications regulations and general economic conditions. In addition,
wireless service providers frequently enter into roaming agreements with
competitors allowing each other to utilize one another's wireless communications
facilities to accommodate customers who are out of range of their home
provider's services. Such roaming agreements may be viewed by wireless service
providers as a superior alternative to leasing antenna space on communications
sites we own. The proliferation of such roaming agreements could have a material
adverse effect on our business, financial condition or results of operations.
The wireless communications industry has undergone significant growth in
recent years. A slowdown in the growth of, or reduction in, demand in a
particular wireless segment could adversely affect the demand for communications
sites. Moreover, wireless service providers often operate with substantial
leverage, and financial problems for the Company's customers could result in
accounts receivable going uncollected, as well as the loss of customers and the
associated lease revenue. A slowdown in growth or reduction in demand affecting
the wireless communications industry could have a material adverse effect on our
business, financial condition or results of operations.
The emergence of new technologies could also have a negative impact on our
operations. For example, the Federal Communications Commission (the "FCC") has
granted license applications for three low-earth orbiting satellite systems that
are intended to provide mobile voice and data services. Although such systems
are highly capital-intensive and technologically untested, mobile satellite
systems could compete with land-based wireless communications systems, thereby
reducing the demand for the infrastructure services we provide. The occurrence
of any of these factors could have a material adverse effect on our business,
financial condition or results of operations.
COMPETITION -- WE COMPETE WITH COMPANIES WHO HAVE GREATER FINANCIAL RESOURCES.
The Company competes for site leasing tenants with (i) wireless service
providers that own and operate their own towers and lease, or may in the future
decide to lease, antennae space to other providers, (ii) site acquisition
companies which acquire antennae space on existing towers for wireless service
15
<PAGE> 18
providers, manage new tower construction and provide site acquisition services,
(iii) other independent tower construction companies and (iv) traditional local
independent tower operators. Wireless service providers that own and operate
their own towers generally are substantially larger and have greater financial
resources than the Company. We believe that tower location and capacity, price,
quality of service and density within a geographic market historically have been
and will continue to be the most significant competitive factors affecting the
site leasing business.
The Company competes for acquisition and new tower construction
opportunities primarily with site developers and other independent tower
companies. We believe that competition for tower acquisitions and new tower
construction opportunities will increase and that additional competitors will
enter the tower market. Some of these additional competitors have or are
expected to have greater financial resources than the Company.
CUSTOMER CONCENTRATION -- OUR HISTORICAL REVENUES COME FROM A FEW CUSTOMERS.
We currently derive almost all of our revenues from site acquisition
activities, and a significant portion of such revenues from a small number of
customers. For example, five customers each accounted for over 10% of the
Company's revenue during 1997, and those customers in the aggregate represented
over 90% of total revenue for the year ended December 31, 1997. For the nine
months ended September 30, 1998, only one customer accounted for over 10% of the
Company's revenue, but that customer represented almost 60% of the Company's
revenue for such period. Customers engage the Company for site acquisition
services on a project-by-project basis, and a customer can generally terminate
an assignment at any time without penalty. In addition, a customer's need for
site acquisition services can decrease, and there can be no assurance that we
will be successful in establishing relationships with new clients. Moreover,
there can be no assurance that our existing customers will continue to engage
the Company for additional projects. The loss of any significant site
acquisition customer could have a material adverse effect on our business,
financial condition or results of operations. See "Business -- Customers."
Approximately 78% of our current mandates are from AT&T Wireless, Airadigm,
Nextel and Sprint PCS. Mandates awarded under a build-to-suit program can be
decreased by the carrier at any time, and a carrier can generally discontinue a
build-to-suit program in its entirety at any time. Furthermore, there can be no
assurance that current build-to-suit customers will award additional mandates to
the Company. A material decrease in the number of mandates awarded by a
significant customer or the failure to secure additional mandates in the future
could have a material adverse effect on our business, financial condition or
results of operations.
PROJECT RISKS -- ANY FAILURE TO MEET CUSTOMER EXPECTATIONS COULD REQUIRE
ADDITIONAL EXPENDITURES TO CORRECT AND ADVERSELY AFFECT FUTURE ORDERS.
Most of the Company's site acquisition services and build-to-suit programs
involve projects which are critical to the operations of its customers'
businesses. Any failure to meet customer expectations in the performance of its
services could damage our reputation and adversely affect our ability to attract
new business. In addition, we could incur substantial costs and expend
significant resources correcting errors in its work and could become liable for
damages caused by such errors. When we bid on contracts where the pricing is
fixed, the Company could incur losses with regard to such projects if the
expenditures associated with such projects exceed our estimate in making its bid
pursuant to that contract.
REGULATORY COMPLIANCE AND APPROVAL -- OUR OPERATIONS REQUIRE COMPLIANCE WITH AND
APPROVAL FROM FEDERAL AND STATE REGULATORY AUTHORITIES.
The Company is subject to a variety of regulations, including those at the
federal, state and local level. Both the FCC and the FAA regulate towers and
other sites used for wireless communications transmitters and receivers. Such
regulations control siting and marking of towers and may, depending on the
characteristics of the tower, require registration of tower facilities. Wireless
communications devices operating on towers are separately regulated and
independently licensed based upon the regulation of the
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<PAGE> 19
particular frequency used. All proposals to construct new communications sites
or to modify existing communications sites are reviewed by both the FCC and the
FAA to ensure that a site will not present a hazard to aviation. Owners of
towers may have an obligation to paint them or install lighting to conform to
FCC and FAA standards and to maintain such painting or lighting. Tower owners
may also bear the responsibility for notifying the FAA of any tower lighting
failure. The Company generally indemnifies its customers against any failure by
the Company to comply with applicable standards. Failure to comply with
applicable requirements may lead to civil penalties.
Local regulations include city or other local ordinances, zoning
restrictions and restrictive covenants imposed by community developers. These
regulations vary greatly, but typically require tower owners to obtain approval
from local officials or community standards organizations prior to tower
construction. Local regulations can delay or prevent new tower construction or
site upgrade projects, thereby limiting the Company's ability to respond to
customers' demands. In addition, such regulations increase the costs associated
with new tower construction. There can be no assurance that existing regulatory
policies will not adversely affect the timing or cost of new tower construction
or that additional regulations will not be adopted that will increase such
delays or result in additional costs to the Company. Such factors could have a
material adverse effect on the Company's business, financial condition or
results of operations and on the Company's ability to implement or achieve its
business objectives in the future.
Our customers may also become subject to new regulatory policies which
adversely affect the demand for communications sites. In addition, if we pursue
international opportunities, we will be subject to regulation in foreign
jurisdictions.
REAL PROPERTY -- WE DO NOT OWN THE LAND UNDER OUR TOWERS.
Our real property interests relating to towers consist of leasehold
interests, private easements and licenses and easements and rights-of-way
granted by governmental entities. With respect to acquired towers, we generally
obtain title insurance on most leased properties and rely on title warranties
from sellers with respect to other acquired properties. Our ability to protect
our rights against persons claiming superior rights in towers depends on our
ability to (i) recover under title policies, the policy limits of which may be
less than the purchase price of a particular tower; (ii) in the absence of title
insurance coverage, realize on title warranties given by tower sellers, which
warranties often terminate after the expiration of a specific period (typically
one to three years); and (iii) realize on title covenants from landlords
contained in lease agreements.
ENVIRONMENTAL MATTERS -- WE ARE SUBJECT TO ENVIRONMENTAL LAWS THAT IMPOSE
LIABILITY WITHOUT REGARD TO FAULT.
Our 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. Under
certain of these 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 we
believe that we are in substantial compliance with and have no material
liability under all applicable environmental laws, there can be no assurance
that the costs of compliance with existing or future environmental laws and
liability related thereto will not have a material adverse effect on our
business, financial condition or results of operations. See
"Business -- Regulatory and Environmental Matters."
DAMAGED TOWERS -- OUR TOWERS ARE SUBJECT TO NATURAL DISASTERS.
Our towers are subject to risks associated with natural disasters such as
tornadoes, hurricanes and earthquakes. The Company maintains third party
insurance to protect us in the event of an accident involving a tower. A tower
accident for which we are uninsured or underinsured, or damage to a tower or
group of towers, could have a material adverse effect on our business, financial
condition or results of operations.
17
<PAGE> 20
RADIO FREQUENCY EMISSIONS -- RF EMISSIONS HAVE PERCEIVED HEALTH RISKS.
The Company and the wireless service providers that utilize the Company's
towers are subject to government requirements and other guidelines relating to
RF emissions. The potential connection between RF emissions and certain negative
health effects, including some forms of cancer, has been the subject of
substantial study by the scientific community in recent years. To date, the
results of these studies have been inconclusive. Although we have not been
subject to any claims relating to RF emissions, there can be no assurance that
we will not be subject to such claims.
KEY PERSONNEL -- OUR SUCCESS DEPENDS ON CERTAIN KEY SENIOR EXECUTIVES.
The Company's success depends to a significant extent upon the continued
services of Stephen H. Clark, its Chairman and Chief Executive Officer, Joe L.
Finley, III, its Vice Chairman and David P. Tomick, its Chief Financial Officer.
Mr. Finley has an employment agreement. The Company does not have an employment
agreement with Messrs. Clark or Tomick. Mr. Clark has entered into a
Confidentiality and Non-Competition Agreement with the Company, and his
compensation and other terms of employment will be determined by the Board of
Directors. See "Management." Although the Company maintains key person life
insurance on Mr. Clark such insurance would not adequately compensate for the
loss of the services of Mr. Clark. The loss of the services of Messrs. Clark,
Finley or Tomick or other key managers or employees, could have a material
adverse effect upon the Company's business, financial condition or results of
operations.
SIGNIFICANT STOCKHOLDERS -- A GROUP OF AFFILIATED STOCKHOLDERS CONTROLS THE
VOTING POWER OF THE COMPANY.
Affiliates of J. H. Whitney & Co. own approximately 8.36 million shares of
SpectraSite's Series A Preferred Stock and Series B Preferred Stock representing
approximately 72% of the voting power of SpectraSite's capital stock on a
fully-diluted basis as of October 31, 1998. Whitney also has the right to
appoint up to five members of SpectraSite's Board of Directors. Accordingly,
Whitney is able to influence the Company's management and operations. In
addition, action requiring the approval of SpectraSite's stockholders, such as
mergers, require Whitney's consent. There can be no assurance that Whitney's
interests will not conflict with the interests of holders of the Notes. See
"Certain Transactions -- Stockholders' Agreement."
LACK OF PUBLIC MARKET FOR THE NOTES -- YOU CANNOT BE SURE THAT AN ACTIVE TRADING
MARKET WILL DEVELOP FOR THE NOTES.
The Old Notes were not registered under the Securities Act or under the
securities laws of any state and may not be resold unless they are subsequently
registered or an exemption from the registration requirements of the Securities
Act and applicable state securities laws is available. The Exchange Notes will
be registered under the Securities Act, but will constitute a new issue of
securities with no established trading market, and there can be no assurance as
to (i) the liquidity of any such market that may develop, (ii) the ability of
holders of Exchange Notes to sell their notes or (iii) the price at which the
holders of Exchange Notes would be able to sell their notes. If such a market
were to exist, the Exchange Notes could trade at prices that may be higher or
lower than their principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar debentures and the
financial performance of the Company.
The Notes are designated for trading among qualified institutional buyers
in the PORTAL market. The Company has been advised by Credit Suisse First Boston
Corporation, Lehman Brothers Inc. and CIBC Oppenheimer Corp. that they presently
intend to make a market in the Notes. However, they are not obligated to do so,
and any market-making activity with respect to the Notes may be discontinued at
any time without notice. In addition, such market-making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act, and
may be limited during the Exchange Offer or the pendency of an applicable shelf
registration statement. There can be no assurance that an active trading market
will exist for the Notes or that such trading market will be liquid.
18
<PAGE> 21
EXCHANGE NOTES -- OUR AFFILIATES AND BROKER-DEALERS WHO PARTICIPATE IN THE
EXCHANGE OFFER MUST DELIVER A PROSPECTUS IN CONNECTION WITH RESALES OF THE
EXCHANGE NOTES.
We believe that the Exchange Notes issued pursuant to the Exchange Offer
may be offered for resale, resold and otherwise transferred by any holder
thereof (other than any such holder which is an "affiliate" of ours 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 Notes are acquired in the ordinary course of such holder's
business and that at the time of the consummation of the Exchange Offer such
holder has no arrangement or understanding with any person to participate in the
distribution of such Notes.
Any broker-dealer participating in the Exchange Offer that acquired Old
Notes for its own account may be a statutory underwriter. Each broker-dealer
that receives Exchange Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any resale
of such Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by any person
subject to the prospectus delivery requirements of the Securities Act (other
than certain broker-dealers that are excluded from participating in the Exchange
Offer). See "Plan of Distribution."
Any holder who is an "affiliate" of SpectraSite, who does not acquire the
Exchange Notes in the ordinary course of business or who tenders in the Exchange
Offer for the purpose of participating in a distribution of the Exchange Notes
could not resell the Exchange Notes and, in the absence of an exemption from
registration under the Securities Act must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Failure to comply with such requirements in such instance
may result in such holder incurring liability under the Securities Act for which
the holder is not indemnified by us.
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or register the Exchange Notes prior to offering
or selling such Notes. Upon consummation of the Exchange Offer, holders that
were not prohibited from participating in the Exchange Offer and did not tender
their Old Notes will not have any registration rights under the Registration
Rights Agreement with respect to such nontendered Old Notes, and accordingly,
such Notes will continue to be subject to the restrictions on transfer contained
in the legend thereon. In general, Old Notes may only be offered or sold
pursuant to Rule 144A or Rule 144 under the Securities Act or pursuant to some
other exemption under the Securities Act and applicable state securities laws or
pursuant to an effective registration statement under the Securities Act. See
"The Exchange Offer -- Consequences of Failure to Exchange."
OLD NOTES -- FOLLOWING THE EXCHANGE OFFER, OLD NOTES OUTSTANDING AFTER THE
EXCHANGE OFFER WILL NOT HAVE REGISTRATION RIGHTS AND WE EXPECT THE MARKET FOR
SUCH OLD NOTES TO BE ILLIQUID.
Issuance of the Exchange Notes pursuant to the Exchange Offer will be made
only after a timely receipt of your outstanding Old Notes, a properly completed
and duly executed Letter of Transmittal and all other required documents.
Therefore, if you want to tender your Old Notes, please allow sufficient time to
ensure timely delivery. We are under no duty to give notification of defects or
irregularities with respect to the tenders of Old Notes for exchange. Notes that
are not tendered or are tendered but not accepted will, following the
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof, and, upon consummation of the Exchange
Offer, certain registration rights with respect to the Old Notes under the
Registration Rights Agreement will terminate. In addition, any holder of Old
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities, and if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives Exchange Notes for its own
account in exchange for outstanding Old Notes, where such outstanding Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of the Exchange Notes. See "Plan of Distribution." To
the extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. See "The Exchange Offer."
19
<PAGE> 22
USE OF PROCEEDS
SpectraSite will not receive any cash proceeds from the issuance of the
Exchange Notes in exchange for the outstanding Old Notes. In consideration for
issuing the Exchange Notes, SpectraSite will receive Old Notes in like original
principal amount at maturity.
The net proceeds to the Company from the original issuance of the Old
Notes, after deducting discount and estimated expenses, was approximately $120
million. The Company has deposited $11.75 million of such proceeds into escrow
for the acquisition of up to 47 towers from Airadigm and has used (i)
approximately $500,000 to acquire 14 ground leases and two towers in inventory
from Amica, (ii) $1.9 million to acquire GlobalComm, Inc. and (iii) $2.3 million
to repay an outstanding note payable. The Company issued the note payable in
connection with the acquisition of Telesite and Metrosite in May 1997. The note
had a stated interest rate of 7%. See "Certain Transactions -- Telesite and
Metrosite Acquisition." The Company intends to use the remaining proceeds for
general corporate purposes, including working capital, and may use all or a
portion of such proceeds to acquire additional tower assets or related
businesses.
20
<PAGE> 23
CAPITALIZATION
The following table sets forth the consolidated cash and cash equivalents
and capitalization of the Company as of September 30, 1998 on an historical
basis. This table should be read in conjunction with the Company's historical
financial statements and the related notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
ACTUAL
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Cash and short term investments............................. $121,766
========
Long-term debt, including current maturities:
New Credit Facility(a).................................... --
12% Senior Discount Notes Due 2008........................ $128,916
Notes Payable and other................................... 133
--------
Total long-term debt, including current maturities..... 129,049
Redeemable preferred stock:
Series A Preferred Stock(b)............................... 11,100
Series B Preferred Stock(b)............................... 28,796
Shareholders' deficiency:
Common Stock.............................................. 1
Paid-in capital........................................... --
Accumulated deficit....................................... (8,682)
--------
Total shareholders' deficiency......................... (8,681)
--------
Total capitalization.............................. $160,264
========
</TABLE>
- ---------------
(a) Credit Suisse First Boston has committed, subject to certain standard
conditions, to provide a seven year $50 million credit facility to the
Company to fund the construction and acquisition of towers and to provide
for working capital. See "Description of -- New Credit Facility."
(b) Each share of Series A Preferred Stock and Series B Preferred Stock is
convertible into one share of common stock. Shares of Series A Preferred
Stock and Series B Preferred Stock accrue dividends at a rate of 8% per
annum, and must be redeemed by the Company on December 15, 2008. Accrued
dividends are payable at redemption or upon liquidation, dissolution or
winding-up of SpectraSite. See "Description of Capital Stock -- Preferred
Stock."
21
<PAGE> 24
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data present the unaudited pro
forma consolidated balance sheet of the Company as of September 30, 1998 and the
unaudited pro forma consolidated statements of operations of the Company for the
year ended December 31, 1997 and the nine months ended September 30, 1998. The
unaudited pro forma consolidated balance sheet reflects the Balance Sheet
Adjustments as if the underlying transaction had occurred on September 30, 1998.
The unaudited pro forma consolidated statements of operations reflect the
Operations Data Adjustments as if the underlying transactions had occurred on
January 1, 1997.
The unaudited pro forma financial data are based on the historical
financial statements of the Company and the assumptions and adjustments
described in the accompanying notes. The Company believes that such assumptions
are reasonable. The unaudited pro forma financial data do not purport to
represent what would actually have been included in the Company's financial
statements at such dates had the transactions occurred as of the dates assumed
or to project the Company's financial position or results of operations at any
future date or for any future period. The unaudited pro forma financial data
should be read in conjunction with "Capitalization," "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes thereto
included elsewhere in this Prospectus.
22
<PAGE> 25
SPECTRASITE HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PENDING ASSET
HISTORICAL (a) ACQUISITION PRO FORMA
-------------- ---------------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents...................... $ 76,204 $ -- $ 76,204
Investments....................................... 45,561 45,561
Accounts receivable............................... 1,467 -- 1,467
Prepaid expenses and other........................ 257 -- 257
-------- -------- --------
Total current assets...................... 123,489 -- 123,489
Property and equipment, net......................... 14,818 10,000 (b) 24,818
Goodwill, net....................................... 8,087 -- 8,087
Notes receivable.................................... 257 -- 257
Deposits............................................ 11,750 (10,000)(b) 1,750
Debt issuance costs, net............................ 4,596 4,596
Other............................................... 174 -- 174
-------- -------- --------
Total assets.............................. $163,171 $ -- $163,171
======== ======== ========
Current liabilities:
Accounts payable.................................. $ 2,262 $ -- $ 2,262
Accrued and other expenses........................ 645 -- 645
Current portion of long-term debt................. 128 -- 128
-------- -------- --------
Total current liabilities................. 3,035 -- 3,035
Long-term debt, less current portion................ 5 -- 5
Senior notes due 2008............................... 128,916 128,916
-------- -------- --------
Total liabilities......................... 131,956 -- 131,956
Preferred Stock (Series A).......................... 11,100 -- 11,100
Preferred Stock (Series B).......................... 28,796 -- 28,796
Shareholders' deficiency:
Common stock...................................... 1 -- 1
Accumulated deficit............................... (8,682) -- (8,682)
-------- -------- --------
Total shareholder's deficit............... (8,681) -- (8,681)
-------- -------- --------
Total liabilities, preferred stock and
shareholders' deficiency................ $163,171 $ -- $163,171
======== ======== ========
</TABLE>
23
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(a) Represents the historical consolidated balance sheet of the Company as of
September 30, 1998.
(b) The Company has agreed to purchase up to 47 towers from Airadigm and has
deposited the aggregate purchase price of $11,750 into escrow. The
adjustment represents the asset acquisition of the 40 towers accepted by the
Company for a total purchase price of $10,000 as if it had occurred on
September 30, 1998. The acquisition of the remaining 7 towers is subject to
additional due diligence by the Company.
24
<PAGE> 27
SPECTRASITE HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------
SPECTRASITE
TELESITE 4/25/97
1/1/97 - (INCEPTION) - COMBINED ACQUISITION
5/12/97 (a) 12/31/97 (b) 1997 (c) ADJUSTMENTS ACTIVITY SUBTOTAL
----------- ------------- -------- ----------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Site acquisition revenue...... $1,926 $ 5,002 $ 6,928 $ -- $1,902(h) $ 8,830
Site leasing revenue.......... -- -- -- -- 1,066(i) 1,066
------ ------- ------- ----- ------ -------
Total revenues.......... 1,926 5,002 6,928 -- 2,968 9,896
Cost of revenues:
Cost of site acquisition
revenue..................... 595 1,120 1,715 -- 163(h) 1,878
Cost of site leasing
revenue..................... -- -- -- -- 328(i) 328
------ ------- ------- ----- ------ -------
Total cost of
revenues.............. 595 1,120 1,715 -- 491 2,206
------ ------- ------- ----- ------ -------
Gross profit.................... 1,331 3,882 5,213 -- 2,477 7,690
Selling, general, &
administrative................ 1,742 5,659 7,401 (476)(d) 654(h)(i) 7,579
Depreciation and amortization... 56 489 545 190 (e) 871(h)(i) 1,606
------ ------- ------- ----- ------ -------
Operating income (loss)......... (467) (2,266) (2,733) 286 952 (1,495)
Other income (expense):
Equity in earnings (loss) of
affiliate..................... (1) 205 204 (204)(g) -- --
Interest income................. 121 121 -- -- 121
Interest expense................ (36) (164) (200) -- -- (200)
Other expense................... (56) (56) -- -- (56)
------ ------- ------- ----- ------ -------
(37) 106 69 (204) -- (135)
------ ------- ------- ----- ------ -------
Net income (loss)............... $ (504) $(2,160) $(2,664) $ 82 $ 952 $(1,630)
====== ======= ======= ===== ====== =======
<CAPTION>
OFFERING PRO FORMA
ADJUSTMENT (j) AS ADJUSTED
-------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Revenues
Site acquisition revenue...... $ -- $ 8,830
Site leasing revenue.......... -- 1,066
-------- --------
Total revenues.......... -- 9,896
Cost of revenues:
Cost of site acquisition
revenue..................... -- 1,878
Cost of site leasing
revenue..................... -- 328
-------- --------
Total cost of
revenues.............. -- 2,206
-------- --------
Gross profit.................... -- 7,690
Selling, general, &
administrative................ 7,579
Depreciation and amortization... -- 1,606
-------- --------
Operating income (loss)......... -- (1,495)
Other income (expense):
Equity in earnings (loss) of
affiliate..................... -- --
Interest income................. -- 121
Interest expense................ (15,824) (16,024)
Other expense................... -- (56)
-------- --------
(15,824) (15,959)
-------- --------
Net income (loss)............... $(15,824) $(17,454)
======== ========
</TABLE>
25
<PAGE> 28
SPECTRASITE HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
ACQUISITION OFFERING PRO FORMA
HISTORICAL (b) ADJUSTMENTS ACTIVITY SUBTOTAL ADJUSTMENT (j) AS ADJUSTED
-------------- ----------- ----------- -------- -------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Site acquisition revenue...... $ 5,154 $ -- $2,176(h) $ 7,330 $ -- $ 7,330
Site leasing revenue.......... 211 -- 759(i) 970 -- 970
------- ----- ------ ------- ------- --------
Total revenues........ 5,365 -- 2,935 8,300 -- 8,300
Cost of revenues:
Cost of site acquisition
revenue.................... 1,721 -- 128(h) 1,849 -- 1,849
Cost of site leasing
revenue.................... 142 -- 236(i) 378 -- 378
------- ----- ------ ------- ------- --------
Total cost of
revenues............ 1,863 -- 364 2,227 -- 2,227
------- ----- ------ ------- ------- --------
Gross profit.................... 3,502 -- 2,571 6,073 -- 6,073
Selling, general, &
administrative................ 6,516 (35)(d) 866(h)(i) 7,347 7,347
Depreciation and amortization... 261 -- 630(h)(i) 891 891
------- ----- ------ ------- ------- --------
Operating income (loss)......... (3,275) 35 1,075 (2,165) -- (2,165)
Other income (expense):
Interest income................. 2,110 (13)(g) -- 2,097 -- 2,097
Interest expense................ (4,335) -- -- (4,335) (9,134) (13,469)
Other expense................... 473 (446)(f) -- 27 -- 27
------- ----- ------ ------- ------- --------
(1,752) (459) -- (2,211) (9,134) (11,345)
------- ----- ------ ------- ------- --------
Net income (loss)............... $(5,027) $(424) $1,075 $(4,376) $(9,134) $(13,510)
======= ===== ====== ======= ======= ========
</TABLE>
26
<PAGE> 29
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1998
(a) Represents the historical Statement of Operations for the Company's
predecessor, TeleSite, for the period shown.
(b) Represents the historical Statement of Operations for the Company for the
period shown, which includes site acquisition activities during such period.
(c) Represents the combined historical Statements of Operations for the Company
and TeleSite for the period shown.
(d) Represents reductions to selling, general and administrative expenses as if
the sale of Metrosite had occurred on January 1, 1997.
(e) Represents an increase to amortization expense resulting from additional
amortization of goodwill as if the acquisition of TeleSite had occurred on
January 1, 1997. The terms of the purchase agreement provide for additional
consideration up to a maximum of 204,382 shares of SpectraSite's common
stock to be issued to the former owners of TeleSite if certain operating
goals are met in 1998. If such operating goals are met in 1998, these shares
will be valued at the time they are issued and will be accounted for as an
additional cost of the acquisition. Such amounts are not included in these
pro forma financial statements.
(f) Represents the elimination of the $257 gain on the sale of Metrosite and
the $189 gain on the sale of CMS as if the sale had occurred on January 1,
1997.
(g) Represents the elimination of the $204 of equity in earnings and the
elimination of $13 of interest income related to the note receivable
received as consideration on the sale of CMS for the respective period as if
the sale of CMS had occurred on January 1, 1997.
(h) Represents the results of operations of GlobalComm as if the transaction had
occurred on January 1, 1997. The adjustments are based on historical
revenues, historical expenses and straight-line amortization of goodwill
attributable to the acquisition.
(i) Represents the results of operations of H&K and the pending acquisition of
assets from Airadigm, as if such transactions had occurred on January 1,
1997. Adjustments for revenues are based on the existing lease terms of the
five H&K towers and the negotiated lease terms for the 40 Airadigm towers.
Cost of revenues represents the cost of the land leases underlying the
towers. Depreciation expense is straight-line depreciation of the aggregate
cost of the 45 towers.
(j) Represents interest expense at a rate of 12.0% per annum, compounded
semiannually, applied to the $125,000 gross proceeds received from the
private sale of the Notes, plus amortization of debt issuance costs, less
interest expense related to the note payable issued to Joe L. Finley III in
connection with the acquisition of TeleSite and Metrosite, as if the sale
of the Notes had occurred on January 1, 1997. The note payable to Mr.
Finley was repaid with a portion of the proceeds from the sale of the
Notes.
27
<PAGE> 30
SELECTED FINANCIAL DATA
The following table sets forth summary historical financial data of the
Company and its predecessor, TeleSite, as derived from the audited financial
statements as of and for (i) the year ended December 31, 1996; (ii) the period
from January 1, 1997 to May 12, 1997; (iii) the period from the Company's
inception (April 25, 1997) to December 31, 1997; and (iv) the nine-month period
ended September 30, 1998. Operating results for the nine months ended September
30, 1998 are not necessarily indicative of the results that you should expect
for the entire year.
The combined financial data presented below for the nine months ended
September 30, 1997 were derived from the audited financial statements of
TeleSite for the period from January 1, 1997 to May 12, 1997 and the unaudited
financial statements of the Company from April 25, 1997 to September 30, 1997.
We have prepared the unaudited financial data on the same basis as the audited
financial statements and, in our opinion, included all adjustments (consisting
only of normal recurring adjustments) necessary to present the included
information fairly.
<TABLE>
<CAPTION>
TELESITE TELESITE
-------------------------- -------------
(PREDECESSOR) SPECTRASITE COMBINED (PREDECESSOR) SPECTRASITE
-------------------------- ------------ ------------ ------------- -----------
YEAR ENDED JANUARY 1 - APRIL 25 - YEAR ENDED JANUARY 1 - APRIL 25 -
DECEMBER 31, MAY 12, DECEMBER 31, DECEMBER 31, MAY 12 SEPTEMBER
1996 1997 1997 1997 1997 30, 1997
------------ ----------- ------------ ------------ ------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Site acquisition
revenue.............. $8,841 $1,926 $ 5,002 $ 6,928 $1,926 $ 3,427
Site leasing revenue... -- -- -- -- -- --
------ ------ ------- ------- ------ -------
Total revenues........... 8,841 1,926 5,002 6,928 1,926 3,427
Cost of revenues:
Cost of site
acquisition
revenue.............. 2,255 595 1,120 1,715 595 978
Cost of site leasing
revenue.............. -- -- -- -- -- --
------ ------ ------- ------- ------ -------
Total cost of revenues... 2,255 595 1,120 1,715 595 978
------ ------ ------- ------- ------ -------
Gross profit............. 6,586 1,331 3,882 5,213 1,331 2,449
Selling, general and
administrative(a)...... 4,347 1,798 6,148 7,946 1,798 3,522
------ ------ ------- ------- ------ -------
Operating income
(loss)(a).............. 2,239 (467) (2,266) (2,733) (467) (1,073)
OTHER DATA:
EBITDA(b)................ $2,330 $ (411) $(1,777) $(2,188) $ (411) $ (857)
Depreciation and
amortization........... 91 56 489 545 56 216
Capital
expenditures(c)........ 498 64 850 914 64 156
Cash interest expense.... 64 31 64 95 31 40
Ratio of earnings to
fixed charges(d)....... 23.2x -- -- -- -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and short term investments..................................................................................
Total assets.....................................................................................................
Total liabilities................................................................................................
Preferred stock..................................................................................................
Shareholders' deficiency.........................................................................................
<CAPTION>
SPECTRASITE
-----------
COMBINED
----------- NINE
NINE MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 1997 30, 1998
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATING DATA:
Revenues:
Site acquisition
revenue.............. $ 5,353 $ 5,154
Site leasing revenue... -- 211
------- ---------
Total revenues........... 5,353 5,365
Cost of revenues:
Cost of site
acquisition
revenue.............. 1,573 1,721
Cost of site leasing
revenue.............. -- 142
------- ---------
Total cost of revenues... 1,573 1,863
------- ---------
Gross profit............. 3,780 3,502
Selling, general and
administrative(a)...... 5,320 6,777
------- ---------
Operating income
(loss)(a).............. (1,540) (3,275)
OTHER DATA:
EBITDA(b)................ $(1,268) $ (2,495)
Depreciation and
amortization........... 272 780
Capital
expenditures(c)........ 220 12,496
Cash interest expense.... 71 211
Ratio of earnings to
fixed charges(d)....... -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and short term inves.............. $ 121,766
Total assets........................... 163,171
Total liabilities...................... 131,956
Preferred stock........................ 39,896
Shareholders' deficiency............... (8,681)
</TABLE>
28
<PAGE> 31
- ---------------
Notes to Selected Financial Data
(a) Selling, general and administrative expense and operating income
attributable to site acquisition activities for the period April 25-December
31, 1997 were $2,706 and $1,110, respectively. In addition, selling, general
and administrative expense includes approximately $1,463 of non-recurring
charges primarily related to formation costs and the operations of
Metrosite.
(b) EBITDA consists of operating income (loss) before depreciation and
amortization. EBITDA is provided because it is a measure commonly used in
the industry. EBITDA is not a measurement of financial performance under
generally accepted accounting principles and should not be considered an
alternative to net income as a measure of performance or to cash flow as a
measure of liquidity. EBITDA is not necessarily comparable with similarly
titled measures for other companies.
(c) Capital expenditures for TeleSite have been reduced for the periods ended
December 31, 1996 and May 12, 1997 by $340 and $258, respectively. These
expenditures were for land and construction in progress which were sold
prior to the closing of the acquisition of TeleSite.
(d) The ratio of earnings to fixed charges is computed by dividing income (loss)
before income taxes and fixed charges by fixed charges. Fixed charges
consist of interest charges, amortization of debt discount and debt issuance
costs, and that portion of rental expense of the Company believes to be
representative of interest. For the combined year ended December 31, 1997
and for the nine months ended September 30, 1998, earnings were insufficient
to cover fixed charges by 2,663 and $5,027. For the year ended December 31,
1997 and the nine months ended September 30, 1998, after giving effect to
the Operations Data Adjustments, earnings would have been insufficient to
cover fixed charges by $17,454 and $13,510, respectively.
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<PAGE> 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company was founded in April 1997 and acquired all of the membership
interests in TeleSite and Metrosite on May 12, 1997. The Company has operated
the site acquisition services business for a limited period of time and had no
operations prior to May 12, 1997. The acquisitions were accounted for as a
purchase and, accordingly, the results of operations of the respective former
entities are included in the consolidated operations of the Company from the
date of acquisition.
The Company plans to continue to offer site acquisition services in the
future. However, its primary focus will be on the ownership of multi-tenant
towers and leasing of antenna space on such towers. As of September 30, 1998,
the Company had 45 towers in service. As a result of its limited operating
history and primary focus on tower ownership and leasing, management believes
that its results of operations for the period ended December 31, 1997 and for
the nine months ended September 30, 1998 are not indicative of the Company's
results of operations in the future.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------------- --------------------
1996 1997 1997 1998
(COMBINED) (COMBINED)
------ ---------- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues........................................ $8,841 $ 6,928 $ 5,353 $ 5,365
Cost of revenues................................ 2,255 1,715 1,573 1,863
------ ------- ------- -------
Gross profit.................................... 6,586 5,213 3,780 3,502
Selling, general and administrative............. 4,347 7,946 5,320 6,777
Operating income (loss)......................... $2,239 $(2,733) $(1,540) $(3,275)
====== ======= ======= =======
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE COMBINED RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
The following is a discussion of the financial condition and results of
operations of the Company for the nine month period ended September 30, 1998 and
for the period from inception (April 25, 1997) through September 30, 1997, and
Telesite's results of operations for the period from January 1, 1997 through May
12, 1997.
Cost of revenues increased to $1.9 million for the nine months ended
September 30, 1998 from $1.6 million for the nine months ended September 30,
1997. Gross profit decreased to $3.5 million for the nine months ended September
30, 1998 from $3.8 million for the nine months ended September 30, 1997. As a
percentage of total revenues, gross profit decreased to 65.3% for the nine
months ended September 30, 1998 from 70.6% for the nine months ended September
30, 1997, reflecting competitive pricing and margin pressure as the volume of
new site acquisition services projects coming to market has declined. Management
believes that the decline in the volume of site acquisition service projects is
generally a result of A-block and B-block PCS licensees completing the first
phase of construction in their initial markets and not yet commencing secondary
buildouts in such markets or in additional markets, and the C-block, D-block,
E-block and F-block licensees not yet commencing construction of tower networks
in their respective markets.
Selling, general and administrative expenses increased to $6.8 million for
the nine months ended September 30, 1998 from $5.3 million for the nine months
ended September 30, 1997. The increase is a result of expenses related to
additional corporate overhead to manage and operate the ongoing activities of
the Company. Marketing expenses related to tower development activities as well
as the site acquisition
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<PAGE> 33
operations also contributed to the increase in expenses. Telesite did not
actively market its services, but relied primarily on reputation in the industry
and customer referral to generate revenues. To support the Company's entry into
tower development and leasing, a marketing effort has been established which
promotes both the tower development and leasing as well as site acquisition
services. Amortization of goodwill was $374,000 in the nine months ended
September 30, 1998 compared to $181,000 in the nine months ended September 30,
1997.
Operating loss was $3.3 million for the nine months ended September 30,
1998, compared to $1.5 million for the nine months ended September 30, 1997.
COMBINED RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO
TELESITE'S RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996.
The following is a discussion of the financial condition and results of
operations of the Company for the nine month period ended September 30, 1998 and
for the period from inception (April 25, 1997) through September 30, 1997 and
through December 31, 1997, and Telesite's results of operations for the period
from January 1, 1997 through May 12, 1997, April 1, 1997 through May 12, 1997
and for the twelve month period ended December 31, 1996.
Total revenues decreased to $6.9 million for the twelve months ended
December 31, 1997 from $8.8 million for the twelve months ended December 31,
1996 due primarily to the decreased demand for site development services from
A-block and B-block PCS licensees as a result of their completing the first
phase of construction in their initial markets and not yet commencing secondary
build-outs in such markets or in additional markets, and the C-block, D-block,
E-block and F-block licensees not yet commencing construction of tower networks
in their respective markets.
Total costs of revenues decreased to $1.7 million for the twelve months
ended December 31, 1997 from $2.3 million for the twelve months ended December
31, 1996, due primarily to decreased site acquisition revenues. Gross profit
decreased to $5.2 million for 1997 from $6.6 million for 1996. As a percentage
of total revenues, gross profit increased to 75.3% for 1997 from 74.5% for 1996.
Selling, general and administrative expenses increased to $7.9 million for
the twelve months ended December 31, 1997 from $4.3 million for the twelve
months ended December 31, 1996. The increase is a result of the expenses related
to management of the ongoing activities of the Company, expenses related to the
implementation of tower development and marketing activities, one-time non-cash
charges of approximately $869,000 as a result of the formation of the Company,
amortization of goodwill of approximately $278,000 in connection with the
Company's acquisition of TeleSite and expenses incurred in connection with the
operations of Metrosite. The Company sold its interest in Metrosite during early
1998. The Company anticipates that in the future costs related to tower
development activities will be capitalized as part of the cost of the towers.
Operating loss was $2.7 million for the twelve months ended December 31,
1997 compared to $2.2 million during the twelve months ended December 31, 1996.
The change is a result of the decline in revenues and the increase in selling,
general and administrative expenses attributable to the commencement of
operations of the Company.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the Company had approximately $122 million of
cash and short term investments. SpectraSite Communications, Inc. ("SCI")
received a commitment from Credit Suisse First Boston Corporation, subject to
standard conditions, to provide a seven-year $50 million reducing revolving
credit facility to the Company to finance the construction and acquisition of
towers and for working capital and general corporate purposes.
SpectraSite is a holding company whose only significant asset is the
outstanding capital stock of its subsidiary, SCI. The Issuer's only source of
cash to pay interest on and principal of the Notes is distributions from SCI.
Prior to July 15, 2003, interest expense on the Notes will consist solely of
non-cash
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<PAGE> 34
accretion of an original issue discount and the Notes will not require annual
cash interest payments. After such time, the Notes will have accreted to
approximately $225 million and will require semi-annual cash interest payments
of $13.5 million. In addition, the Notes mature on July 15, 2008. Furthermore,
pursuant to the commitment letter, the New Credit Facility is expected to
provide for quarterly interest payments commencing as soon as any funds are
borrowed thereunder.
As a result of the issuance and sale of the Series B Preferred Stock and
the Notes, the Company realized net proceeds of $147.8 million, after deducting
fees and expenses. The Company has deposited $11.7 million of the proceeds in
escrow towards the acquisition of 47 towers from Airadigm and has used (i)
approximately $474,000 to acquire 14 ground leases and two towers in inventory
from Amica and to construct towers on the sites, (ii) $1.9 million for the
acquisition of GlobalComm and (iii) $2.3 million to repay outstanding
indebtedness. The remaining proceeds will be used for the construction and
acquisition of towers and for general working capital purposes.
Net cash provided by operations during the nine months ended September 30,
1998 was $340,000 compared to $184,000 having been provided by operations during
the comparable 1997 period. The increase in cash provided by operations was
primarily attributable to an increase in accounts payable, offset by the net
loss incurred during the period. The increase in accounts payable was primarily
the result of liabilities incurred in conjunction with the construction of
towers. Net cash used for investing for the nine months ended September 30, 1998
was $71.3 million compared to $5.2 million for the nine months ended September
30, 1997. The cash used for investing activities during the nine months ended
September 30, 1998 was primarily the result of the investment of unused proceeds
from the sale of the Notes in short-term investments, costs associated with
tower construction, acquisition of towers from Airadigm and the acquisition of
GlobalComm. The cash used for investing activities during the nine months ended
September 30, 1997 primarily related to the acquisition of Telesite. Net cash
provided by financing activities for the nine months ended September 30, 1998
was $144.9 million compared to $9.4 million for the same period in 1997. The
increase in cash provided by financing activities was attributable to the
proceeds from the sales of Series B Preferred Stock and the Notes.
The Company's ability to make scheduled payments of principal of, or to pay
interest on, its debt obligations, and its ability to refinance any such debt
obligations (including the Notes) or to fund planned capital expenditures, will
depend on its future performance, which, to a certain extent is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. The Company's business strategy
contemplates substantial capital expenditures in connection with its planned
tower buildout. Based on the Company's current operations and anticipated
revenue growth, management believes that cash flow from operations, available
cash of approximately $122 million and anticipated available borrowings under
the New Credit Facility will be sufficient to fund the Company's capital
expenditures of approximately $140 million through fiscal 1999. Thereafter,
however, or in the event the Company exceeds its currently anticipated capital
expenditures for fiscal 1998 or 1999, the Company anticipates that it will seek
additional equity or debt financing to fund its business plan. Failure to obtain
any such financing could require the Company to significantly reduce its planned
capital expenditures or scale back the scope of its tower buildout or
acquisition activities, any of which could have a material adverse effect on the
Company's business, prospects, financial condition or results of operations.
There can be no assurance that the Company will generate sufficient cash flow
from operations in the future, that anticipated revenue growth will be realized
or that future borrowings or equity contributions will be available in amounts
sufficient to service its indebtedness and make anticipated capital
expenditures.
Certain of the Company's expenses, such as those for marketing, wages and
benefits generally increase with inflation. However, the Company does not
believe that its financial results have been, or will be, adversely affected by
inflation in a material way.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosure about
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<PAGE> 35
Segments of an Enterprise and Related Information." SFAS No. 130 establishes
standards for the reporting and disclosure of comprehensive income and its
components in a full set of general purpose financial statements. SFAS No. 131
changes the manner in which public companies report segment information in
annual reports and requires companies to report selected segment information in
interim financial reports. The Company will be required to report financial and
descriptive information about the Company's operating segments. Both these
statements are effective for fiscal years beginning after December 15, 1997,
with reclassification of the financial statements for earlier periods required
for comparative purposes. The Company plans to adopt these statements for its
year ending December 31, 1998. SFAS No. 130 is not expected to have a
significant impact on the Company's historical financial statements, as the
Company has no items of other comprehensive income. SFAS No. 131 is not expected
to have a significant impact on the Company's historical financial statements,
as the Company operates in only one business segment.
YEAR 2000 COMPLIANCE
The Company is in the process of conducting a comprehensive review of its
computer systems to identify which of its systems will have to be modified,
upgraded or converted to recognize and process dates after December 31, 1999
(the "Year 2000 Issue"), and is in the initial stages of developing an
implementation plan to resolve the issue. Although the Company believes that
most, if not all, of its computer software and systems are Year 2000 compliant,
the Company expects to incur internal staff costs, as well as other expenses,
related to testing and updating its systems to prepare for the Year 2000. The
Company presently believes that, with minor modifications and upgrades to
existing software and successful conversion to new software, the Year 2000 Issue
will not pose significant operational problems for the Company's systems as so
modified, upgraded or converted. However, any delays or omissions by the Company
or its customers, suppliers or contractors to resolve the Year 2000 Issue could
materially adversely affect the Company's business, financial condition or
results of operations. There can be no assurance that amounts to be spent on
addressing the Year 2000 Issue will not be material.
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<PAGE> 36
INDUSTRY OVERVIEW
GENERAL
The Company was formed in 1997 through the combination of three existing
companies in the tower development, site acquisition and site management
businesses to capitalize on the trend toward co-location and independent tower
ownership in the wireless communications industry and has grown into a leading
build-to-suit provider of tower networks. As wireless services and current
wireless technologies are used in more applications, the cost of wireless
services to consumers declines and new wireless technologies are developed.
Changes in U.S. federal regulatory policy, including the implementation of the
Telecommunications Act of 1996 (the "1996 Telecom Act"), have led to a
significant number of competitors in the industry through the auction of
frequency spectrum for a wide range of uses, most notably PCS. This competition,
combined with a growing reliance on wireless services by consumers, has led to
an increased demand for higher quality, uninterrupted service and improved
coverage, which, in turn, has led to increased demand for communication sites as
new providers build out their networks and existing providers upgrade and expand
their networks to maintain their competitiveness. The Company believes that, as
the wireless communications industry has become more competitive, wireless
service providers have sought operating and capital efficiencies by outsourcing
certain network services and build-out activities and by co-locating
transmission equipment with other providers on multi-tenant towers. The need for
co-location has also been driven by the growing trend by municipalities to slow
the proliferation of towers by requiring that towers accommodate multiple
tenants.
All of these factors provide an opportunity for the Company to identify and
acquire communication sites, lease antennae space on such sites and provide
related network infrastructure and support services.
NETWORK AND TOWERS
Wireless service providers require wireless transmission "networks" in
order to provide service to their customers. Each of these networks is
configured specifically to meet the coverage requirements of the particular
provider and includes transmission equipment such as antennae placed at various
locations throughout the service area. These locations, or "communication
sites," are critical to the operation of a wireless network. A communication
site may have the capacity for multiple antennae installations, or "antennae
sites," depending on the size and type of the communication site. The potential
value of a tower generally depends on its location and the number of antennae
that it can support.
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<PAGE> 37
Set forth below is a diagram illustrating the basic functions of each of
the primary components of a wireless communication network.
[WIRELESS COMMUNICATIONS NETWORK DIAGRAM]
Communication sites consist of towers, rooftops and other structures upon
which antennae are placed. A typical tower includes a compound enclosing the
tower and an equipment shelter (which houses a variety of transmitting,
receiving and switching equipment). The tower can be either a self-support or
guyed model. There are two types of self-supported models: the lattice and the
monopole. A lattice model is usually tapered from the bottom up and can have
three or four sides of open-framed steel supports. A monopole is a free standing
tubular structure. Guyed towers gain their support capacity from a series of guy
cables attaching separate levels of the tower to anchor foundations in the
ground. Monopoles typically range in height from 50-200 feet, lattice towers can
reach up to 350 feet and guyed towers can reach 2000 feet or more.
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<PAGE> 38
[TYPES OF TOWERS DIAGRAM]
Rooftop sites are more common in urban areas where tall buildings are
generally available and multiple communication sites are required because of
high wireless traffic density. One advantage of a rooftop site is that zoning
regulations typically permit installation of antennae. In cases of such high
population density, neither height nor extended radius of coverage are as
important and the installation of a tower structure may prove to be impossible
because of zoning restrictions, land cost and land availability. Other
structures on which antennae have been installed include billboards, electric
transmission towers, silos, water tanks and smokestacks.
OPERATION OF TWO-WAY WIRELESS SYSTEMS. Wireless transmission networks use
a variety of radio frequencies to transmit voice and data. Wireless transmission
networks include two-way radio applications, such as cellular, PCS, SMR and ESMR
networks, and one-way radio applications, such as paging services. Each
application operates within a distinct radio frequency. Although cellular
currently represents the largest segment of the wireless communications
industry, other wireless technologies are expected to grow significantly.
Two-way wireless service areas are divided into multiple regions called
"cells," each of which contains a base station consisting of a low-power
transmitter, a receiver and signaling equipment, typically located on a tower.
The cells are usually configured in a grid pattern, although terrain factors
(including natural and man-made obstructions) and signal coverage patterns may
result in irregularly shaped cells and overlaps or gaps in coverage. Cellular
system cells generally have a radius ranging from two miles to 25 miles and PCS
and other higher frequency services system cells generally have a radius ranging
from one-quarter mile to 12 miles, depending on the technology being used, level
of customer usage, installation,
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<PAGE> 39
height and the terrain. Growing demand for cell sites is one of the primary
reasons for the expected growing demand for the Company's services. The base
station in each cell is connected by microwave, fiber optic cable or telephone
wires to a switch, which uses computers and specially developed software to
control the operation of the wireless telephone system for an entire service
area. The switch controls the transfer of calls from cells within the system and
connects calls to the local landline telephone system or to a long distance
telephone carrier.
Each wireless transmission network is planned to meet a certain level of
subscriber density and traffic demand in addition to providing a certain
geographic coverage. Each transmission requires a certain amount of radio
frequency, so a system's capacity is limited by the amount of frequency that is
available. The same frequency can be reused by each separate transmitter,
subject to certain interference limitations. The design of each wireless system
involves the placement of transmission equipment in locations that will make
optimal use of available frequency based upon projected usage patterns, subject
to the availability of such locations and the ability to use them for wireless
transmission under applicable zoning requirements.
WIRELESS COMMUNICATIONS. The wireless communications industry now provides
a broad range of services, including cellular, PCS, paging, SMR and ESMR. The
industry has benefited in recent years from increasing demand for its services
and industry experts expect this demand to continue to increase. The following
table sets forth industry estimates regarding projected subscriber growth for
certain types of wireless communications services:
<TABLE>
<CAPTION>
1997-2002 1997-2007
ESTIMATED PROJECTED PROJECTED COMPOUNDED COMPOUNDED
1997 2002 2007 ANNUAL ANNUAL
SUBSCRIBERS SUBSCRIBERS SUBSCRIBERS GROWTH RATE GROWTH RATE
----------- ----------- ----------- ----------- -----------
(IN MILLIONS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
Cellular...................... 53.0 84.2 95.7 9.7% 6.1%
PCS........................... 2.9 33.8 55.8 63.9% 34.6%
ESMR.......................... 1.3 7.7 11.6 42.8% 24.5%
</TABLE>
- ---------------
Source: Paul Kagan Associates, Inc. There can be no assurance that these
projections will prove to be accurate.
The Company believes that more communication sites will be required in the
future to accommodate the expected increase in demand for wireless
communications services. Current emerging wireless communications systems, such
as PCS and ESMR, represent an immediate and sizable market for providers of
communication site services as they build out large nationwide and regional
networks. The development of higher frequency technologies such as PCS offers
the Company opportunities as the reduced cell range of those technologies
require a more concentrated network of towers. While several PCS and ESMR
providers have already built limited networks in certain markets, these
providers still need to fill in "dead zones" and expand geographic coverage. The
Cellular Telecommunications Industry Association (the "CTIA") estimates that, as
of June 30, 1997, there were 38,650 antennae sites in the United States. In
November 1997, the PCIA estimated that the number of antennae sites in the
United States for both cellular and PCS providers will increase by an additional
100,000 antennae sites (more than one of which can be located on a single
communication site) over the next ten years as cellular systems expand coverage
and PCS systems are deployed.
As a result of advances in digital technology, ESMR operators have also
begun to design and deploy digital mobile telecommunications networks in
competition with cellular providers. In response to the increased competition,
cellular operators are re-engineering their networks by increasing the number of
sites, locating sites within a smaller radius, filling in "dead zones" and
converting from analog to digital cellular service in order to manage subscriber
growth, extend geographic coverage and provide competitive services. The demand
for communication sites is also being stimulated by the development of new
paging applications, such as e-mail and voicemail notification and two-way
paging, as well as other wireless data applications.
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Licenses are also being awarded, and technologies are being developed, for
numerous new wireless applications that will require networks of communication
sites. These potential applications include local multi-point distribution
services, such as wireless local loop, wireless cable television, data and
Internet access. Radio spectrum required for these technologies has, in many
cases, already been awarded and licensees have begun to build out and offer
services through local loop networks operated by Winstar and Teligent, through
new wireless cable networks operated by companies such as CellularVision, and
through data networks being constructed and operated by RAM Mobile Data, MTEL
and Ardis.
CHARACTERISTICS OF THE TOWER INDUSTRY
In addition to the increased demand for wireless services and the need to
develop and expand wireless communications networks, the Company believes that
other trends influencing the wireless communications industry have important
implications for independent tower operators. In this increasingly competitive
wireless industry environment, the Company believes that many providers are
dedicating their capital and operations primarily to those activities that
directly contribute to subscriber growth, such as marketing and distribution.
Management believes these providers, therefore, will seek to reduce costs and
increase efficiency through the outsourcing of infrastructure network functions
such as communication site ownership, construction, operation and maintenance.
As a result of FCC regulations mandating deployment of digital television
("DTV") transmitters, broadcast industry trade associations estimate that 66
percent of existing television broadcasters will require new or upgraded towers,
involving an estimated 1000 television towers. As a result of the increased
weight and windloading of DTV facilities and other tower constraints, a number
of FM broadcast stations that have collocated their FM antennas on television
towers will be forced to relocate to other existing towers or to construct new
transmission facilities. The mandatory timetable for deploying DTV transmitters,
which will begin in 1999 and extend to 2003 for various categories of stations
will create a spike in demand. This is expected to drive the scarcity value of
towers upward but could entail scarcities in the supply of construction crews
with relevant training and experience. In order to speed new network deployment
and expansion and generate efficiencies, providers are increasingly co-locating
transmission equipment with that of other wireless service providers. The trend
towards co-location has been furthered by the "Not-In-My-Backyard" arguments
generated by local zoning and planning authorities in opposition to the
proliferation of towers.
Management believes that, in addition to the favorable growth and
outsourcing trends in the wireless communications industry and high barriers to
entry as a result of regulatory and local zoning restrictions associated with
new tower sites, tower operators benefit from several favorable characteristics.
The ability of tower operators to provide antennae sites to customers on
multiple tenant towers diversifies them against the specific technology, product
and market risks typically faced by an individual provider. The emergence of new
technologies, providers, products and markets may allow independent tower
operators to further diversify against such risks. The Company believes that
independent tower operators also benefit from the contract nature of the site
leasing business and the predictability and stability of these recurring
revenues. In addition, the site leasing business has low variable operating
costs and significant operating leverage. Towers generally are fixed cost assets
with minimal variable operating costs associated with additional tenants. A
tower operator can generally expect to experience increasing margins when new
tenants are added to existing towers.
The site leasing business typically experiences low customer churn rates as
a result of the high costs that would be incurred by a wireless service provider
were it to relocate an antennae to another site and consequently be forced to
re-engineer its network. Moving a single antenna may alter the pre-engineered
maximum signal coverage, requiring a reconfiguration of the network at
significant cost to maintain the same coverage. Municipal approvals are becoming
increasingly difficult to obtain and may also affect the provider's decision to
relocate. The Company believes that the costs associated with network
reconfiguration and municipal approval and the time required to complete these
activities are usually not justified by the potential savings in reduced site
rental expense.
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BUSINESS
SPECTRASITE FORMATION AND ORGANIZATION
Integrated Site Development, Inc. ("ISD"), a Delaware corporation which has
since been renamed SpectraSite Holdings, Inc., was incorporated on April 25,
1997. ISD, U.S. Towers, Inc. (since renamed SpectraSite Communications, Inc.),
Metrosite and TeleSite were combined to form the Company through a series of
transactions effected as of May 12, 1997, and on October 31, 1997, TeleSite was
merged into SpectraSite Communications. On February 27, 1998, the Company sold
Metrosite to an unaffiliated third party for approximately $299,000 in cash,
plus certain royalty payments which continue for a period of six years.
Metrosite primarily provides site acquisition services to municipal governments.
As a result of the foregoing transactions and as of the date hereof, SpectraSite
Communications is a wholly owned subsidiary of SpectraSite, and substantially
all of the Company's operations are conducted through SpectraSite
Communications.
OVERVIEW
SpectraSite is one of the leading full service providers of tower related
services in the U.S. wireless communications industry. The Company develops and
manages build-to-suit tower networks and provides site acquisition services for
major wireless communication companies such as AT&T Wireless, Nextel and Sprint
PCS, as well as numerous other entrepreneurial service providers. SpectraSite's
business enjoys favorable unit economics which include stable and recurring
revenues, low operating costs, minimal post-construction capital requirements,
high customer retention levels and a diversified asset and customer base. The
Company is capitalizing on the growing trend toward antennae co-location and
independent tower ownership, as leading wireless providers increasingly redirect
their capital outlays from tower development to subscriber acquisition
activities and local municipalities encourage multiple tenants on single towers.
The Company builds towers suited for multi-tenant use generally under
build-to-suit programs and typically does not start construction of a tower
until an anchor tenant has agreed to lease antenna space on such tower. The
Company has the capacity to develop a large number of towers as (i) a typical
tower takes approximately two months to construct, once zoning approval is
obtained, (ii) the Company utilizes a standard set of proprietary building
specifications, and (iii) SpectraSite capitalizes on its program management
expertise and its established relationships with highly experienced,
pre-qualified third-party engineers and construction firms that specialize in
the wireless communications industry. As of September 30, 1998, the Company
owned 45 towers and had an additional 100 towers either under construction or
scheduled to be constructed for anchor tenants during 1998. In addition, the
Company plans to expand its tower inventory through future acquisitions or
partnerings with wireless service providers and by building selective tower
assets in strategic geographic areas that will be attractive to and usable by
multiple tenants. The Company also assists in the acquisition of antenna
locations on behalf of cellular and PCS carriers and has provided an array of
site acquisition services for major wireless service providers in 22 states,
covering approximately 3,700 sites. In addition, the Company manages 1,030
communication sites for carriers. Site acquisition and site management allow
SpectraSite to offer a complete product line of tower services and further
allows the Company to access customers in the early stages of their tower
network development.
The Company's primary focus is the ownership of multi-tenant towers and the
leasing, under long-term contracts, of antennae space on such towers to a
variety of wireless service providers, including PCS, cellular, paging, SMR,
ESMR and other providers. Since a typical tower has and will have multiple
antennae positions that are leased to different wireless providers and the
towers are dispersed geographically, the Company will benefit from a recurring
revenue base that is diversified in terms of customer mix, geographic presence
and industry segment (PCS, cellular, paging, ESMR and SMR). The relatively low,
fixed costs associated with maintaining a tower network allow for incremental
leasing revenue from co-location tenants to result in disproportionately greater
increases in tower cash flow. Management believes that tower cash flow margins
will range from approximately 35% to 80% depending upon the level of
co-location. Additionally, the capital requirements beyond initial construction
are
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minimal. Assuming a conservative level of tenants per tower, the payback period
on construction investment is approximately five years, while the usable life of
the tower asset is estimated at over 30 years. The tower franchise is further
enhanced by the high cost of antenna relocation, which reduces customer
turnover, and the high barriers to entry resulting from local opposition to the
proliferation of towers.
Under a build-to-suit program for an anchor wireless service provider, the
Company is awarded non-binding mandates and undertakes all site development
activities and costs. In return, the anchor wireless service provider enters
into a long-term lease. The Company retains ownership of the tower and has the
ability to co-locate additional tenants. Management believes that many wireless
service providers are using build-to-suit programs as an alternative to tower
ownership and that this outsourcing trend is likely to continue. The Company's
build-to-suit programs provide a comprehensive solution to those wireless
service providers seeking to minimize their capital expenditures, overhead and
time associated with the build-out and on-going maintenance of their wireless
network infrastructure. The Company believes that its site leasing business will
continue to grow, particularly through greater acceptance of build-to-suit
programs.
The Company also offers comprehensive site acquisition services, including
site location analysis; site acquisition; zoning and land use permitting; FAA
compliance analysis and filing; and contract, title and building permit
administration. One of the three businesses that combined to form SpectraSite in
1997 has been providing site acquisition services since 1992 and has developed
standard procedures for efficiently and effectively identifying locations,
obtaining compliance approvals and acquiring sites. The Company is typically
paid fees for site acquisition services on a project by project basis and as of
September 30, 1998, the Company had a backlog from third parties to assist in
the acquisition of approximately 1,170 sites.
Management believes that the number of communication sites (which include
towers, rooftops and other structures) in use will continue to increase with the
growth in demand for wireless services. This increase is the result of several
factors, including (i) the continuing build-out of higher frequency technologies
(such as PCS) which have a reduced cell range and thus require a concentrated
network of towers; (ii) the need to expand the capacity of existing networks;
(iii) the issuance of new wireless network licenses requiring the construction
of new wireless networks; and (iv) the emergence of new wireless technologies.
In November 1997, the PCIA estimated that the number of antenna sites in the
United States for both cellular and PCS providers will increase by an additional
100,000 antenna sites (more than one of which can be located on a single
communication site) over the next ten years as cellular systems expand coverage
and PCS systems are deployed. Management believes that wireless service
providers have begun to focus their capital and operations primarily on
activities that build subscriber growth, such as marketing and customer
services, and, therefore, will increasingly seek to outsource communication site
ownership, construction, management and maintenance. The Company believes that
it will benefit from this trend.
RECENT EVENTS
AIRADIGM ACQUISITION. The Company and Airadigm entered into an agreement,
dated August 14, 1998, covering the Company's acquisition of up to 47
communications towers and certain related assets from Airadigm. Pursuant to the
agreement, the Company has agreed to acquire 40 of the towers and has identified
7 towers as to which additional due diligence would be required before the
Company would accept such towers. The Company has deposited the aggregate
purchase price of $11.75 million in an escrow account pending resolution of the
issues identified with respect to the remaining 7 towers. The Company and
Airadigm are also negotiating an exclusive multi-year build-to-suit contract.
The towers are located primarily in Wisconsin, and Airadigm is or will be the
anchor tenant on all towers purchased or mandated in connection with this
transaction. The Company expects to consummate this transaction in November
1998.
GLOBALCOMM ACQUISITION. As of September 23, 1998, the Company acquired all
of the shares of capital stock of GlobalComm, Inc. for approximately $2 million
in cash. GlobalComm provides co-location marketing services to Bell South
Mobility and other wireless communications providers in North Carolina,
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South Carolina and eastern Tennessee. The founder and president of GlobalComm,
Michael Garrett, joined the Company as Vice President -- Co-location Marketing
and, in this capacity, Mr. Garrett is responsible for marketing available
antennae space on all of the Company's owned towers. See "Management" and
"Certain Transactions -- GlobalComm Acquisition."
AMICA ACQUISITION. As of August 20, 1998, the Company acquired 14 ground
leases and two towers in inventory from Amica for an aggregate cash purchase
price of $473,996. The Company has begun constructing towers on the sites. Amica
will be the anchor tenant on all 14 towers.
H&K ACQUISITION. On June 29, 1998, the Company acquired all of the
membership interests of H&K Investments LLC for an aggregate purchase price of
$1.4 million. H&K owned five towers; three of the towers are located in Kansas
and two are in Missouri. Each of the towers has multiple tenants, and Sprint PCS
is the anchor tenant on all five towers.
CMS DISPOSITION. In May 1998, the Company sold its 33% interest in CMS to
the other owners for $375,000. As payment, the Company received a note payable
over 60 months and bearing interest at 8.5% per annum. CMS provides construction
management services to telecommunications companies.
ISSUANCE OF SERIES B PREFERRED STOCK. Pursuant to a Stock Purchase
Agreement, dated as of March 23, 1998 (the "Series B Agreement"), by and among
SpectraSite and the Series B Investors, the Series B Investors agreed to
purchase 7,000,000 shares of the Series B Preferred Stock for an aggregate
purchase price of $28 million. As of March 23, 1998, the Series B Investors
purchased the first installment of 4,250,000 shares of Series B Preferred Stock
for $17 million and as of August 27, 1998, the Series B Investors (other than
Whitney Equity Partners, L.P.) purchased 2,074,126 shares for an aggregate
purchase price of $8,296,504, and as of September 21, 1998, Whitney Equity
Partners, L.P. purchased the remaining 675,874 shares of Series B Preferred
Stock for an aggregate purchase price of $2,703,496. See "Certain
Transactions -- The Series A and Series B Preferred Stock Offerings."
WHALEN AGREEMENT. In February 1998, the Company entered into an agreement
with Whalen & Company, Inc. to jointly provide services for certain projects.
Management expects such joint projects to generate additional build-to-suit
opportunities. Whalen has been involved in program and project management since
1985 and has participated in the development of over 120 network systems and
10,000 sites in seven countries, including 42 states in the United States, for
various technologies including PCS, cellular and ESMR. In addition to various
projects that the parties may pursue together, Whalen agreed to bring
acquisition opportunities to the Company, and Whalen will receive a fee for any
such acquisitions completed by the Company.
BUSINESS AND GROWTH STRATEGIES
The Company's strategic objective is to become the premier build-to-suit
provider of tower networks in the United States and to be one of the largest
owners and operators of communication towers. The Company's strategy involves
the following elements:
BUILD TOWERS IN AREAS OF INCREASING WIRELESS DEMAND. SpectraSite is well
positioned to capitalize on the trend of wireless service providers outsourcing
their investment in, and ownership of, communications sites. The Company's
turnkey operation can develop and implement build-to-suit tower networks and
then provide efficient site management services for completed towers. Carriers
value SpectraSite's ability to serve all of their tower network development
needs. In addition, the Company selectively invests RF engineering and site
acquisition costs into sites that management believes have higher than average
co-location opportunities.
PARTNER WITH MAJOR WIRELESS SERVICE PROVIDERS TO ACQUIRE EXISTING TOWERS
AND BUILD-TO-SUITE CONTRACTS. SpectraSite seeks to partner with major wireless
communications service providers in order to assume ownership of their existing
towers directly or through joint ventures. The Company also offers construction
and program management expertise to potential partners to facilitate timely and
efficient build-out of their tower networks. The Company's ability to offer
end-to-end tower development
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services position it well for partnering opportunities with carriers seeking to
outsource communication site ownership, construction and management.
ACQUIRE UNDERUTILIZED TOWERS. The Company intends to continue to make
selective acquisitions in the fragmented tower owner and operator industry.
Management's strategy is to acquire towers that can service multiple tenants and
will be attractive to wireless providers based upon their location, height and
available capacity. Additionally, the Company's strategy is to purchase
under-utilized towers with high future co-location potential. Management
believes that there are small and large acquisition candidates and that the
number of available towers will grow as large PCS and other telecommunications
providers divest their tower holdings. SpectraSite has strict valuation criteria
and believes that certain tower properties can be purchased at reasonable price
levels. The Company regularly evaluates acquisition opportunities, engages in
negotiations and submits bids with respect to acquisitions of individual towers,
groups of towers and entities that own or manage towers and related businesses,
any of which may be material.
MAXIMIZE CO-LOCATION ON TOWERS. The Company's strategy for its owned and
managed towers is to maximize the number of tenants on each tower in order to
rapidly increase tower cash flow. Since most tower costs are fixed, leasing
available space on an existing tower results in minimal additional expenses and,
therefore, generates a disproportionately large increase in tower cash flow
margins. The Company generally constructs towers to accommodate from three to
six tenants in addition to the anchor tenant. The Company has created a separate
sales force to market available co-location opportunities to wireless
communication providers.
CAPITALIZE ON STRONG RELATIONSHIPS WITH MAJOR WIRELESS SERVICE
PROVIDERS. SpectraSite has established a reputation as a highly professional,
responsive build-to-suit and site acquisition provider. This has been achieved
through ongoing investment in the development of multi-level customer
relationships. The Company's sales force implements a dual marketing strategy
that focuses Company resources on the client's decision maker at the local level
while solidifying relationships with the customer's senior management. The
Company's experience is that a high level of responsiveness and the rapid
development of tower sites for an existing customer ensures that SpectraSite
will continue to be an integral part of that customer's build-out plans.
Additionally, management believes that it will be able to build upon its
existing relationships with wireless service providers to source new
build-to-suit customers.
LEVERAGE SITE ACQUISITION SERVICES. Over the last six years, the Company
has performed an array of site acquisition services covering approximately 3,700
sites for major wireless service providers, including ALLTEL, BellSouth
Mobility, GTE Mobility, Horizon, Nextel and Powertel. The Company has a broad
field organization that allows it to identify and participate in site
acquisition projects across the country. Knowledge of local markets and strong
customer relationships with wireless service providers are competitive strengths
that position the Company to further capitalize on the site acquisition and
build-to-suit needs of the wireless communications industry. The Company
anticipates that site acquisition customers will continue to account for a
significant portion of its build-to-suit mandates and as of September 30, 1998,
approximately 64% of such mandates were from service providers for which the
Company has previously provided site acquisition services.
COMPANY STRENGTHS
The tower leasing business provides a diversified, stable, recurring cash
flow stream due to the long-term nature of the customer contracts, the
significant relocation costs for tower tenants and multiple customers from
different wireless segments. Once a tower is built for an anchor tenant,
co-location tenants provide high incremental cash flow margins due to low, fixed
tower maintenance expense. Leases are typically for an initial term of five
years with four or five additional five-year renewal periods and provide for
regular rent increases throughout their term. The term of the anchor tenant
lease is designed to match the term of the ground lease underlying the tower.
Towers can accommodate a broad array of wireless communication carriers and,
therefore, revenues are not dependent upon any specific wireless segment or
technology. Penetration of PCS, cellular and ESMR was approximately 21% as of
December 31, 1997 and is expected to reach 54% by 2007, according to Paul Kagan
Associates, Inc. Since towers are a basic
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component of a wireless communication network, the Company believes that it is
well positioned to benefit from the proliferation of wireless communication
services.
Management believes that the following strengths will enable the Company to
successfully expand its business:
BUILD-TO-SUIT FOCUS. The Company specializes in developing and building
tower networks to suit the needs of wireless communication carriers. Management
believes that its primary focus on and expertise in build-to-suit programs is
unique among its major competitors. The Company has assembled the resources,
tools and proven personnel which combine to form the program management
organization needed for managing high-speed tower development projects. In
addition, the Company offers professional site leasing and asset management
services for the towers it builds, as well as for towers owned by carriers.
EXPERIENCED MANAGEMENT. The Company's senior managers have acquired over
3,700 communication sites and built more than 1,000 towers. In addition, the
Company provides tower management services to 1,075 sites, consisting of both
Company owned and carrier owned tower sites. Management believes that its
industry experience allows it to offer quality service and proven results to
wireless communication providers in their network build-outs.
CAPABILITY TO MANAGE MULTIPLE PROJECTS. The Company has been able to
successfully manage multiple site acquisition and tower development projects in
various locations at the same time. SpectraSite utilizes a pre-qualified pool of
local contractors and advisors to build its towers, which allows management to
focus its resources and capital on managing multiple construction projects
simultaneously. The Company's diversified and outsourced labor pool provides
flexibility to handle varying numbers of build-to-suit programs in a variety of
local markets. Management believes that the ability to undertake concurrent
build-to-suit programs in multiple markets is attractive to wireless service
providers.
STANDARDIZED PROCEDURES AND SPECIFICATIONS. The Company has developed
detailed site acquisition procedures and construction specifications and
procedures that allow it to rapidly construct tower networks. Wireless carriers
require aggressive network build-out schedules, and uniform procedures and
specifications allow for reduced employee training time, improved vendor
performance and quicker identification of potential tower sites. The Company
uses a pre-qualified pool of architectural, engineering and construction
contractors that work within its standard guidelines and have a proven capacity
for multiple projects. In addition, the Company is organized to efficiently (i)
plan the project; (ii) secure the sites by purchase or lease; (iii) obtain
zoning approvals; and (iv) manage all site preparation and tower construction.
INTEGRATED PROVIDER OF SITE DEVELOPMENT SERVICES. The Company benefits
from its integrated, comprehensive site development and program management
capabilities, as wireless service providers prefer the flexibility of a vendor
who can program manage all direct and subcontract functions related to real
estate, design, construction and on-going operations. The Company's efficient
site acquisition business provides a competitive advantage by (i) maintaining a
comprehensive project management database; (ii) allowing management to position
the Company with customers as an end-to-end, full service provider of tower
development services; and (iii) permitting tower development mandates to be
fulfilled more rapidly by performing site acquisition services rather than
finding third parties to achieve the same task. The Company has assisted in the
acquisition of sites in 22 states and has a solid customer base that includes
Nextel, Sprint PCS and SBC Communications.
COMPANY SERVICES
The Company's business is divided into three areas: (i) tower development,
(ii) tower operations, including leasing of tower space, and (iii) site
acquisition. These services are centrally managed with proprietary documentation
and through a program and site management database which contains information on
all aspects of individual tower sites.
TOWER DEVELOPMENT. The Company offers comprehensive build-to-suit program
management and also selectively builds towers in strategic geographic locations
for anchor tenant and co-location marketing opportunities. Under its
build-to-suit programs, the Company generally constructs tower networks only
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after having signed an antenna site lease agreement with an anchor tenant and
having made the determination that the initial or planned capital investment for
such tower network would not exceed a targeted multiple of tower cash flow after
a certain period of time. In selling its build-to-suit programs, the Company's
representatives utilize their existing relationships in the wireless
communications industry to target wireless service providers interested in
outsourcing their network build-out. Proposals for build-to-suit towers are made
by the Company's sales representatives in response to specific requests for
quotes or proposals from carriers. Although the terms vary from proposal to
proposal, the Company typically offers a five-year lease agreement with four or
five additional five-year renewal periods. The term of the anchor tenant lease
is designed to match the term of the ground lease underlying the tower. While
the proposed monthly rent also varies, anchor tenants will generally pay lower
monthly rents than subsequent tenants.
Build-to-suit proposal requests typically require the Company to offer a
fixed monthly lease rate for all towers included in the proposed network
build-out. To arrive at this average monthly rate, the Company will analyze a
number of factors including projected construction cost, projected average
monthly ground lease rate, zoning and permitting issues and co-location
opportunities.
If a wireless provider accepts the terms of the proposal submitted by the
Company, the provider will award the Company a mandate (i) to pursue specific
sites, (ii) to identify appropriate sites within specific search rings, or (iii)
to build a tower network within a general area. These mandates are in the form
of non-binding agreements and either party may terminate the mandate at any
time.
Based on the status of the sites the Company has been given a mandate to
pursue, the Company will provide the site development activities required to:
secure and complete a ground lease; obtain zoning approval and other required
permits; design the network and construct all towers within the network. Prior
to starting construction on each site, the Company will enter into an antenna
site lease agreement with a provider. Certain of the build-to-suit agreements
contain penalty provisions in the event the towers are not completed within
specified time periods.
The Company invests resources in RF engineering and site acquisition of
potential tower sites we believe have higher than average co-location
opportunities. The Company does not commence tower construction until an anchor
tenant signs a lease.
The Company also selectively pursues acquisitions of revenue-producing
communication sites. The Company's goal is to acquire towers that have an
initial or planned capital investment not exceeding a targeted multiple of tower
cash flow after a certain period of time. Tower cash flow is determined by
subtracting from gross tenant revenues the direct expenses associated with
operating the communication site, such as ground lease payments, real estate
taxes, utilities, insurance and maintenance.
The Company has had discussions with a number of wireless communication
providers regarding possible strategic partnerships and other investment
arrangements. The Company has no present agreement regarding the terms of any
such transaction. If and when additional attractive opportunities become
available, the Company contemplates pursuing such opportunities. Nonetheless,
there can be no assurance that any such future strategic business arrangement
will be entered into or the timing thereof. Specifically, any decision by the
Company as to whether or not to pursue any such strategic partnership or similar
business arrangement will be based upon, among other things, the relative
attractiveness of available alternative business and investment opportunities,
the regulatory environment for wireless communication properties, future
developments relating to the Company, general economic conditions and other
future developments.
TOWER OPERATIONS. The tower operations business consists of (i) the
leasing of antenna space on tower sites to wireless service providers, and (ii)
the maintenance and management of tower sites. These services are provided for
Company-owned towers and for carrier-owned towers. When the Company provides
site leasing services for carrier-owned towers, the Company receives a
percentage of the revenues of the leases it obtains on behalf of the carrier.
When the Company performs site management services for carrier-owned towers, the
carrier pays the Company a fixed monthly fee for each managed site. The Company
generally receives monthly lease payments from customers payable under written
antenna site
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leases. The majority of the Company's outstanding customer leases, and the new
leases typically entered into by the Company, have original terms of five years
(with four or five renewal periods of five years each) and usually provide for
periodic price increases. Monthly lease pricing varies with the number and type
of antennae installed on a communication site.
Management believes that the site leasing portion of the Company's business
has significant potential for growth, and the Company intends to expand its site
leasing business through (i) increasing activity from its build-to-suit programs
and (ii) selective acquisitions, such as the recent acquisition of GlobalComm.
Once acquired or constructed, the Company maintains and manages its
communication sites through a combination of in-house personnel and independent
contractors. In-house personnel are responsible for oversight and supervision of
all aspects of site maintenance and management and are particularly responsible
for monitoring security access and lighting, RF emission and interference
issues, signage, structural engineering and tower capacity, tenant relations and
supervision of independent contractors. Independent contractors are hired
locally by the Company to perform routine maintenance functions, such as
landscaping, pest control, snow removal, site access and equipment installation
oversight. Independent contractors are engaged by the Company on a fixed fee or
time and materials basis.
SITE ACQUISITION. The Company offers a full range of site acquisition
services. Site acquisition typically occur in four phases: (i) network
pre-design; (ii) communication site selection; (iii) communication site
acquisition; and (iv) local zoning and permitting. The Company offers each phase
of its site acquisition services to its customers.
During the initial phase, network pre-design, the Company performs
pre-design analysis by investigating those areas of the BTA that are designated
as a priority by the customer. The Company will then identify, to the extent
possible, all sites which met the customer's RF requirements. Geographic
Information Systems ("GIS") specialists create maps of the sites, analyzing for
a number of factors, including which areas may have the most favorable zoning
regulations and availability of co-location opportunities. A preliminary zoning
analysis is typically conducted, and the Company will determine those areas of
the BTA where zoning approval is likely, along with a possible time frame for
approval. These initial services are intended to eliminate costly redesigns once
a project is commenced which can result in significant savings of both time and
money.
In the second phase, site selection, the Company determines which sites (i)
most closely meet the RF engineering requirements of the customer; (ii) can be
leased or purchased; (iii) have the potential to be zoned for site construction
or co-location based on the then current zoning requirements; and (iv) are
suitable for the construction of a site. GIS specialists select the most
suitable sites based on demographics, traffic patterns and signal
characteristics. Typically, the Company will identify two or three potential
sites for each location in the RF engineering plan, with the intent of
co-locating on an existing site or constructing a new site on the location most
advantageous to the customer. FAA approval, when necessary, is also typically
sought at this time.
In the third phase, site acquisition, the Company secures the right from
the property owner to construct a tower or co-locate on the site. Depending on
the type of interest in the property that the Company believes will best suit
the needs of the customer, the Company will negotiate and enter into on behalf
of the customer (i) a contract of sale pursuant to which the customer acquires
fee title to the property; (ii) a long-term ground or rooftop lease pursuant to
which the customer acquires a leasehold interest in the property (typically a
five-year lease with four or five renewal periods of five years each); (iii) an
easement agreement pursuant to which the customer acquires an easement over the
property; or (iv) an option to purchase or lease the property pursuant to which
the customer has a future right to acquire fee title to the property or acquire
a leasehold interest. It is during this phase of the site acquisition services
that the Company generally obtains a title report on the site, conducts a survey
of the site, performs soil analysis of the site and obtains an environmental
survey of the site.
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The final phase, local zoning and permitting, includes preparing all
appropriate zoning applications and providing representation at any zoning
hearings that may be conducted. The Company also obtains all necessary
entitlement land use permits necessary to commence construction on the site or
install equipment on the site.
SpectraSite Services is headquartered in Little Rock and has offices in
Atlanta, Chattanooga, Cincinnati, Louisville, Memphis, Orlando and Raleigh. Once
the Company is hired on a site acquisition project, a site acquisition team is
dispatched to the project site. A temporary field office is established for the
duration of the project. The site acquisition team is typically composed of
permanent Company employees and supplemented with local hires employed only for
that particular project. A team leader is assigned to each phase of the site
acquisition project and reports to a project manager who oversees all team
leaders. Upon the completion of a site acquisition project, the field office is
typically closed and all permanent Company employees are either relocated to
another project or directed to return to headquarters or one of the other
division offices.
The Company generally sets prices for each site acquisition service
separately. Customers are billed for these services on a fixed price or time and
materials basis and the Company may negotiate fees on individual sites or for
groups of sites.
CUSTOMERS
The Company has performed site acquisition, tower construction and site
leasing services for several of the largest wireless service providers. The
majority of the Company's contracts have historically been for PCS customers.
The Company also serves ESMR, SMR and cellular wireless providers. In both its
site acquisition and site leasing businesses, the Company works with national,
local and regional operators. For the year ended December 31, 1997, Powertel,
Sprint PCS, GTE Mobility, Intercel and Horizon accounted for 38.9%, 18.8%,
14.7%, 13.0% and 11.2%, respectively, of the Company's revenue, and for the nine
months ended September 30, 1998, Powertel accounted for 59.2% of the Company's
revenue. No other customer accounted for more than 10% of the Company's revenue
during the nine months ended September 30, 1998. See "Risk Factors -- Customer
Concentration."
SALES AND MARKETING
The Company's sales and marketing goals are (i) to further cultivate
existing customers in order to obtain mandates for build-to-suit programs and to
maximize sales of site acquisition services; (ii) to position the Company to
become a market leader in the site leasing business; (iii) to use existing
relationships and develop new relationships with wireless service providers to
lease antennae space on Company owned or managed communication sites; and (iv)
to form affiliations with select communications system vendors who utilize
end-to-end services, including those provided by the Company, which will enable
the Company to market its services and products through additional channels of
distribution. Historically, the Company has capitalized on the strength of its
experience, performance and relationships with wireless service providers to
obtain build-to-suit mandates, and expects to continue to enhance and leverage
these attributes to sell site acquisition services, build-to-suit programs and
antennae space on Company owned or managed communication sites.
The Company currently has a sales force of three full-time representatives
supplemented by members of the Company's executive management team. Maintaining
and cultivating relationships with wireless service providers is a main focus of
senior management. The Company's strategy is to delegate sales efforts to those
Company employees who have the best relationships with the wireless service
providers. The representatives are assigned specific accounts based on
historical experience with a provider and the quality of the relationship
between the Company representative and such provider. Most wireless service
providers have national corporate headquarters with regional offices. The
Company believes that most decisions for site acquisition and site leasing
services are made by providers at the regional level with input from their
corporate headquarters. The Company's sales representatives work with provider
representatives at the local level and at the national level when appropriate.
The Company's sales staff compensation is heavily
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weighted to incentive-based goals and measurements. In addition to its marketing
and sales staff, the Company relies upon its executive and operations personnel
on the national and field office levels to identify sales opportunities within
existing customer accounts, as well as acquisition opportunities.
COMPETITION
The Company competes with (i) other independent tower owners, some of which
also provide site leasing and site acquisition services; (ii) carriers, which
own and operate their own tower networks; (iii) service companies that provide
engineering and site acquisition services; and (iv) other potential competitors,
such as utilities, outdoor advertising companies and broadcasters, some of which
have already entered the tower industry. Wireless service providers that own and
operate their own tower networks generally are substantially larger and have
greater financial resources than the Company. The Company believes that tower
location, capacity, price, quality of service and density within a geographic
market historically have been and will continue to be the most significant
competitive factors affecting tower leasing companies. The Company also competes
for development and new tower construction opportunities with wireless service
providers, site developers and other independent tower operating companies and
believes that competition for site acquisition will increase.
The Company's principal competitors include American Tower Corporation,
Crown Castle International Corp., OmniAmerica, Inc. Pinnacle Tower, SBA
Communications Corporation, TeleCom Towers (an affiliate of Cox Enterprises,
Inc.) and Unisite.
Towers are not the only kind of platform for radio transmitters. The FCC
has issued authorizations or is reviewing applications for several companies
proposing to provide various kinds of low-earth-orbit ("LEO") satellite
communication systems, and it continues to issue authorizations for
geosynchronous satellite systems. Iridium, for example, will soon commence
space-borne provision of cellular telephone service, and Teledesic plans to
provide high-speed data services through LEO satellites. In 1997, the FCC
allocated one gigahertz of spectrum in the 47 GHz band for any use consistent
with the spectrum allocation table. It is as yet unclear which of these new
technologies will be commercially feasible, and to what extent they will offer
significant competitive alternatives to terrestrial structures.
EMPLOYEES
As of September 30, 1998, the Company had 100 employees, none of whom are
represented by a collective bargaining agreement. The Company considers its
employee relations to be good. Due to the nature of the site acquisition
business of the Company, it may experience increases and decreases in employees
as site acquisition contracts are completed.
PROPERTIES
The Company is headquartered in Cary, North Carolina, where it currently
leases approximately 5,800 square feet of space. The Company also leases offices
in Little Rock, Arkansas; Birmingham, Alabama; Atlanta, Georgia; Cincinnati,
Ohio; and New Orleans, Louisiana. The Company opens and closes project offices
from time to time in connection with its site acquisition business, which
offices are generally leased for periods not exceeding 18 months.
LEGAL PROCEEDINGS
From time to time, the Company is involved in various legal proceedings
relating to claims arising in the ordinary course of business. The Company is
not a party to any such legal proceeding, the adverse outcome of which,
individually or in the aggregate, is expected to have a material adverse effect
on the Company's business, financial condition or results of operations.
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INTERNATIONAL
The Company's primary focus is on its domestic operations. From time to
time, however, the Company may evaluate international opportunities and take
advantage of those that it feels may be profitable for the Company. Currently,
the Company is not considering any significant international projects.
REGULATORY AND ENVIRONMENTAL MATTERS
Federal Regulations. Both the FCC and FAA regulate towers used for
wireless communications transmitters and receivers. Such regulations control the
siting and marking of towers and may, depending on the characteristics of
particular towers, require registration of tower facilities. Wireless
communications devices operating on towers are separately regulated and
independently licensed based upon the particular frequency used.
Pursuant to the requirements of the Communications Act of 1934, as amended,
the FCC, in conjunction with the FAA, has developed standards to consider
proposals for new or modified antennae. These standards mandate that the FCC and
the FAA consider the height of proposed antennae, the relationship of the
structure to existing natural or man-made obstructions and the proximity of the
antennae to runways and airports. Proposals to construct or to modify existing
antennae above certain heights are reviewed by the FAA to ensure the structure
will not present a hazard to aviation. The FAA may condition its issuance of
no-hazard determination upon compliance with specified lighting and marking
requirements. The FCC will not license the operation of wireless
telecommunications devices on towers unless the tower has been registered with
the FCC or a determination has been made that such registration is not
necessary. The FCC will not register a tower unless it has been cleared by the
FAA. The FCC may also enforce special lighting and painting requirements. Owners
of wireless transmissions towers may have an obligation to maintain painting and
lighting to conform to FCC standards. Tower owners may also bear the
responsibility of notifying the FAA of any tower lighting outage. The Company
generally indemnifies its customers against any failure to comply with
applicable regulatory standards. Failure to comply with the applicable
requirements may lead to civil penalties.
In 1995, the FCC adopted regulations making the owners of towers, rather
than radio licensees, primarily responsible for compliance with antenna
structure painting and lighting requirements. These rule changes are based on
statutory amendments adopted by Congress in 1992 extending regulatory
jurisdiction to tower owners. Radio licensees are now secondarily responsible
for tower maintenance if the tower owners are unwilling or unable to perform
those duties. Currently, these requirements apply to antenna structures that are
more than 200 feet in height, or that may interfere with the approach or
departure space of a nearby airport runway.
The regulatory requirements adopted in 1995 require tower owners to
register existing structures by state, in accordance with filing windows, over a
two year period between July 1, 1996, and June 30, 1998. The FCC has recognized
that, with the proliferation of inexpensive, satellite-based locating devices
such as Global Positioning System receivers, some structures whose positions
were previously determined with area maps can now be easily located with a
higher degree of accuracy. Accordingly, the FCC has granted an amnesty when
tower owners submit location data differing slightly in longitude or latitude
from the site data previously submitted to the FCC by radio licensees. Under the
amnesty policy, the FCC will under some circumstances refrain from imposing
monetary penalties upon tower owners or the radio licensees that use their
structures. For towers that do not conform with radio licensees' construction
permits, however, the FCC will determine on a case-by-case basis whether and to
what extent towers may need to be moved or modified.
The 1996 Telecom Act amended the Communications Act of 1934 by limiting
state and local zoning authorities' jurisdiction over the construction,
modification and placement of towers. The new law preserves local zoning
authority but prohibits any action that would (i) discriminate between different
providers of wireless services or (ii) ban altogether the construction,
modification or placement of radio communication towers. The 1996 Telecom Act
also requires the federal government to help licensees for wireless
48
<PAGE> 51
communications services gain access to preferred sites for their facilities.
This may require that federal agencies and departments work directly with
licensees to make federal property available for tower facilities.
Owners and operators of antennae may be subject to, and, therefore, must
comply with, Environmental Laws. The FCC's decision to license a proposed tower
may be subject to environmental review pursuant to the National Environmental
Policy Act of 1969 ("NEPA"), which requires federal agencies to evaluate the
environmental impacts of their decisions under certain circumstances. The FCC
has issued regulations implementing NEPA. Such regulations place responsibility
on each applicant to investigate any potential environmental effects of
operations and to disclose any significant effects on the environment in an
environmental assessment prior to constructing a tower. In the event the FCC
determines the proposed tower would have a significant environmental impact
based on the standards the FCC has developed, the FCC would be required to
prepare an environmental impact statement. This process could significantly
delay the registration of a particular tower.
As an owner and operator of real property, the Company is subject to
certain Environmental Laws which may impose strict, joint and several liability
for the cleanup of on-site or off-site contamination and related personal or
property damages. The Company is also subject to certain Environmental Laws that
govern tower placement, including pre-construction environmental studies.
Operators of towers must also take into consideration certain RF emissions
regulations that impose a variety of procedural and operating requirements. The
potential connection between RF emissions and certain negative health effects,
including some forms of cancer, has been the subject of substantial study by the
scientific community in recent years. To date, the results of these studies have
been inconclusive. The Company believes that it is in substantial compliance
with and has no material liability under all applicable Environmental Laws.
Nevertheless, there can be no assurance that the costs of compliance with
existing or future Environmental Laws and liability related thereto will not
have a material adverse effect on the Company's business, prospects, financial
condition or results of operations.
STATE AND LOCAL REGULATIONS. Most states regulate certain aspects of real
estate acquisition and leasing activities. Where required, the Company conducts
the site acquisition portions of its site acquisition services business through
licensed real estate brokers or agents, who may be employees of the Company or
hired as independent contractors. Local regulations include city and other local
ordinances, zoning restrictions and restrictive covenants imposed by community
developers. These regulations vary greatly, but typically require tower owners
to obtain approval from local officials or community standards organizations
prior to tower construction. Local zoning authorities generally have been
hostile to construction of new transmission towers in their communities because
of the height and visibility of the towers. Companies owning or seeking to build
towers have encountered an array of obstacles arising from state and local
regulation of tower site and construction, including environmental assessments,
fall radius assessments, marketing/lighting requirements, and concerns with
interference to other electronic devices. The delays resulting from the
administration of such restrictions can last for several months, and when
appeals are involved, can take several years.
49
<PAGE> 52
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND OTHER KEY EMPLOYEES
The executive officers, directors and key employees of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Stephen H. Clark................... 54 Chairman of the Board of Directors and Chief
Executive Officer
Joe L. Finley, III................. 49 Vice Chairman of the Board of Directors
David P. Tomick.................... 46 Chief Financial Officer and Secretary
Terry L. Armant.................... 50 Vice President -- Operations
Frank L. Marco..................... 39 Vice President -- Towers
John F. Ricci...................... 31 Vice President -- Marketing
Michael Garrett.................... 35 Vice President -- Co-location Marketing
Tracy E. Gill...................... 38 President -- Services Division
Cathy M. Antee..................... 39 Controller and Assistant Secretary
Michael R. Stone................... 36 Director
James R. Matthews.................. 31 Director
W. Chris Hegele.................... 48 Director
Andrew J. Armstrong, Jr............ 41 Director
</TABLE>
STEPHEN H. CLARK is Chairman of the Board of Directors and Chief Executive
Officer of the Company. Mr. Clark has 21 years of general management experience
in high growth, start-up companies in the communications, technology and
manufacturing sectors. In 1994, he co-founded PCX Corporation ("PCX"), a
manufacturer of electrical distribution systems. Prior to starting PCX, Mr.
Clark co-founded and served as Chairman and President of Margaux, a supplier of
building automation systems. Prior to starting Margaux, he worked at several
technology based, start-up companies. Mr. Clark has a BA in physics and an MBA
from the University of Colorado.
JOE L. "BUD" FINLEY, III is Vice Chairman of the Board of Directors. Mr.
Finley has 25 years experience in commercial real estate and mortgage finance.
He founded the predecessor to TeleSite in 1992 and has successfully managed the
rapid growth of that business during the past 6 years. Prior to founding
TeleSite, Mr. Finley was a co-founder of CIERRA, Inc., an environmental
consulting firm. Mr. Finley is a graduate of the University of Arkansas.
DAVID P. TOMICK is Chief Financial Officer and Secretary of the Company.
Mr. Tomick has extensive experience raising capital in both private and public
markets for high growth companies in the telecommunications industry. From 1994
to 1997, Mr. Tomick was Chief Financial Officer of Masada Security, Inc., a
company engaged in the security monitoring business. From 1988 to 1994, he was
Vice President -- Finance of Falcon Cable TV, a multiple system operator of
cable television systems, where he was responsible for debt management, mergers
and acquisitions, equity origination and investor relations. Prior to 1988, he
managed a team of corporate finance professionals focusing on the communications
industry for The First National Bank of Chicago. Mr. Tomick holds a Master of
Management degree from the Kellogg Graduate School of Management at Northwestern
University.
TERRY L. ARMANT is Vice President -- Operations of the Company. Prior to
joining SpectraSite in August 1998, Mr. Armant was Director -- System
Implementation at AT&T Wireless Services. In this position, he was responsible
for site acquisition, construction, equipment installation and site management
for the Northeast region. Mr. Armant oversaw eight departments and a staff of
over 115.
FRANK L. MARCO is Vice President -- Towers of the Company. From 1993 to
1997, Mr. Marco was a Project Director and a Regional Director for SBA
Communications Corporation. In 1997, he co-founded Princeton Towers, Inc., a
wireless communication site development company. Before joining SBA, Mr. Marco
was a customer service manager for McCaw Cellular Communications, Inc.
50
<PAGE> 53
JOHN F. RICCI is Vice President -- Marketing of the Company. Prior to
joining SpectraSite in June 1998, Mr. Ricci was Director, Program management and
Due Diligence for SBA Communications Corporation, in which capacity he analyzed
build-to-suit, speculative construction and merger opportunities nationwide. Mr.
Ricci was instrumental in developing marketing and budget materials for SBA's
build-to-suit tower program.
MICHAEL GARRETT is Vice President -- Co-location Marketing of the Company.
Prior to joining SpectraSite in September 1998, Mr. Garrett was president of
GlobalComm, which he founded in 1995.
TRACY E. GILL is President -- Services Division of the Company. Mr. Gill
leads the Company's real estate division and has worked with SpectraSite's
predecessor since 1993 in the acquisition and permitting of antenna sites. From
1985 to 1993, he managed the planning, site selection, site design, permitting,
site development, construction, and development of commercial buildings for New
England Security.
CATHY M. ANTEE is Controller and Assistant Secretary of the Company. From
1995 to 1997, Ms. Antee was Controller of Masada Security, Inc. Prior to 1995,
Ms. Antee was employed by Parisian, Inc., a Birmingham-based retailer, most
recently as Treasury Director and Director of Investor Relations. She is a
certified public accountant.
MICHAEL R. STONE has been a director of the Company since its formation in
May 1997. Mr. Stone has been employed by J.H. Whitney & Co. since 1989 and has
served as a General Partner since 1992. Previously, he was with Bain & Company.
JAMES R. MATTHEWS has been a director of the Company since August 1998. Mr.
Matthews has been employed by J.H. Whitney & Co. since 1994 and has served as a
Principal since 1998. Previously, he was with Gleacher & Co. Inc. and Salomon
Brothers Inc.
W. CHRIS HEGELE has been a director of the Company since its formation in
May 1997. Mr. Hegele has been employed by Kitty Hawk Capital since 1984 and has
been a General Partner since 1986. Previously, Mr. Hegele was employed by Arthur
Andersen & Co.
ANDREW J. ARMSTRONG, JR. has been a director since March 31, 1998. Mr.
Armstrong is a General Partner of Waller-Sutton Media Partners, L.P. and
President of Waller Capital Corporation, where he has been employed since 1985.
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation paid by
or incurred on behalf of the Company to its Chief Executive Officer and the only
other executive officer whose salary and bonus exceeded $100,000 for the year
ended December 31, 1997 (together, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------------
ANNUAL COMPENSATION(a) NUMBER OF
------------------------------------------ SECURITIES
OTHER UNDERLYING OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ANNUAL($)(b) SARS(#)
--------------------------- ---- --------- -------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Stephen H. Clark............. 1997 107,046 -0- -- 425,000
Chairman and Chief
Executive Officer
Joe L. Finley, III........... 1997 248,548 -0- 2,576 -0-
Vice Chairman
</TABLE>
- ---------------
(a) Amounts shown for 1997 include compensation paid by the Company to the Named
Executive Officers from April 25, 1997, the date of SpectraSite's inception,
through December 31, 1997.
51
<PAGE> 54
(b) The amount reported as Other Annual compensation for Mr. Finley is for an
automobile allowance. The Company has not included the value of incidental
perquisites furnished or paid to Mr. Clark, since the value of such
perquisites did not exceed the lesser of 10% of salary and bonus reported
for 1997.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(a) IN 1997 SHARE DATE PRESENT VALUE(b)
---- ------------ ------------ --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Stephen H. Clark 265,000(c) 27% $2.89 06/24/02 0.87
160,000(d) 17% 2.89 06/24/07 0.87
</TABLE>
- ---------------
(a) All options become exercisable immediately upon a change in control;
provided, however, that no options become exercisable upon a change in
control as to which a performance milestone has not been achieved as of the
date of the change in control. The shares of common stock issuable upon
exercise of the options are subject to certain rights of first refusal. See
"-- 1997 Stock Option Plan."
(b) The present value of the options granted was estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions:
dividend yield of 0%, volatility of .70, risk free interest rate of 6.0% and
expected option lives of seven years.
(c) The options are incentive stock options which vest in equal installments
over a period of four years.
(d) The options are non-qualified stock options which vest upon the first to
occur of the (i) seventh anniversary of the date of grant or (ii) the
Company achieving certain performance goals based upon the number of towers
constructed.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS DECEMBER 31, 1997($)
AT DECEMBER 31, 1997 UNEXERCISABLE
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen H. Clark -0- 425,000 $0 $0
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Finley has an employment agreement with the Company for an initial term
expiring on May 31, 1999 (the "Initial Term"), and thereafter his employment is
subject to automatic renewal on a year-to-year basis. The agreement provides for
a base salary of $350,000 per year for the Initial Term. Base salary after the
Initial Term shall be determined by the Board of Directors. Mr. Finley is also
entitled to the other benefits afforded executive employees of the Company. The
agreement can be terminated by either Mr. Finley or the Company giving notice to
the other of an intention not to renew at least 90 days prior the last day of
the Initial Term. After the Initial Term, the agreement may be terminated at any
time with 90 days prior notice to the other party. The agreement also may be
terminated by liquidation, dissolution or discontinuance of the business of the
Company, or by "permanent disability" or "for cause" (as such terms are defined
in the agreement). The agreement requires Mr. Finley to maintain the
confidentiality of certain proprietary information. In addition, Mr. Finley has
agreed not to compete with the Company for up to three years following
termination of employment with the Company.
52
<PAGE> 55
The Company does not have an employment agreement with Mr. Clark. However,
Mr. Clark and SpectraSite have entered into a Confidentiality and
Non-Competition Agreement, dated as of May 12, 1997, pursuant to which Mr. Clark
agreed (i) to treat as confidential certain information he receives about the
Company or its business, operations or properties, (ii) not to compete with the
Company for three years after the termination of his employment with the
Company, and (iii) to assign to the Company all of his interest in certain
intellectual property conceived or developed by him while employed by the
Company.
1997 STOCK OPTION PLAN
The Company established the SpectraSite Holdings, Inc. Stock Option Plan
(the "1997 Option Plan") effective June 24, 1997. The 1997 Option Plan has a
term of ten years and provides for the issuance of incentive stock options
("ISOs") and non-qualified stock options ("NQSOs") to key employees, directors,
advisors and consultants of the Company (as well as any subsidiary of the
Company). An aggregate of 1,817,700 shares of the Common Stock have been
reserved for issuance under the 1997 Option Plan, of which options to purchase
1,573,900 shares have been granted and remain outstanding as of October 31,
1998. The number of shares available for grant as options may be adjusted in the
event of a stock split, stock dividend, combination of shares, spin-off,
spin-out or other similar change, exchange or reclassification of the Common
Stock at the discretion of the Board, and shares subject to an option which
expires, is terminated or canceled, or is repurchased by the Company, shall be
available for future grants under the 1997 Option Plan.
The 1997 Option Plan may be administered by the Board or by a duly
appointed committee having powers specified by the Board (the "Committee"). Once
the Company becomes subject to the reporting requirements of the Exchange Act,
the Committee shall consist solely of directors who are "non-employee"
directors, for purposes of Section 16 of the Securities Act, and "outside"
directors, for purposes of Section 162(m) of the Internal Revenue Code. The
specific terms of any option awarded under the 1997 Option Plan will be
reflected in a stock option agreement executed by the Company and the optionee.
The Committee has the discretion to determine which eligible individuals
will receive options, the number of shares to be covered by the options, the
exercise date of the options, whether the options should be ISOs or NQSOs, and
the terms and conditions of the options. The exercise price of any ISO may not
be less than the fair market value of the stock on the date the option is
granted, provided the exercise price of any ISO shall be not less than 110% of
the fair market value of a share of stock on the date the option is granted in
the event the optionee owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company. Payment of the option price
is to be made in cash, by check, in cash equivalent or by any other form
permitted by the Committee (including by promissory note to the Company). Only
employees are eligible to receive ISOs, and at the time an ISO is granted, the
fair market value of the Common Stock for which the ISO will vest in any year
may not exceed $100,000. Options awarded under the 1997 Option Plan generally
are not assignable or transferable except by the laws of descent and
distribution.
Generally, the Company expects the Committee to award options that vest and
become exercisable either (i) according to a four year vesting schedule, whereby
25% of the total grant of shares becomes vested every year for four consecutive
years, or (ii) upon the seventh anniversary of the grant date, subject to
acceleration based on the optionee's successful achievement of performance
milestones. In the event of a merger, consolidation, corporate reorganization,
or any transaction in which all or substantially all of the assets of the
Company are sold, leased, transferred or otherwise disposed of (a "Transfer of
Control"), all outstanding options shall immediately vest and become exercisable
as of a date prior to the Transfer of Control, as determined by the Board.
Notwithstanding the foregoing, no options will become exercisable upon a
Transfer of Control as to which a performance milestone has not been achieved as
of the date of the change in control.
53
<PAGE> 56
Once vested, an option may remain exercisable until the earliest of: (i)
ten years from the date of grant (five years from the date of grant in the event
the optionee owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company), or (ii) three months from the
date on which the optionee terminates employment with the Company, or (iii) if
the optionee's employment ceases by reason of his or her death or disability, 12
months from the date on which the optionee's employment terminated. In no event
shall an ISO be exercisable after one month following the date an optionee's
employment with the Company is terminated for cause, as determined by the
Committee.
Generally, the Company expects the Committee to award options subject to a
right of first refusal. When an optionee proposes to sell, pledge or otherwise
transfer any shares acquired upon the exercise of an option (the "Transfer
Shares"), the Company would have the right to repurchase the shares under a
right of first refusal, in accordance with the terms set forth in the individual
option agreements. If the Company fails to exercise the right of first refusal,
the optionee may conclude the proposed transfer, but the subsequent transferee
would be required, as a condition of such transfer, to hold the shares subject
to the Company's right of first refusal with respect to any subsequent transfer.
The Company's right of first refusal would not apply to transfers of shares: (i)
in connection with a Change in Control, (ii) to one or more members of the
optionee's immediate family, (iii) which constitutes a pledge to the Company as
security for a loan by the Company to the optionee in connection with exercise
of an option, or (iv) which has been approved by the Board. In addition, the
Company's right of first refusal would terminate (i) upon a Change in Control,
unless the successor assumes the 1997 Option Plan, or (ii) the Common Stock is
traded on a public market.
The 1997 Option Plan may be amended, suspended or terminated by the Board
in whole or in part at any time, provided that no such amendment, suspension or
termination of the 1997 Option Plan may adversely affect the rights of or
obligations to the optionees without such optionees' consent. The Board must
obtain stockholder approval for any change in the 1997 Option Plan that would
(i) extend the period during which options may be granted beyond June 24, 2007,
(ii) materially increase the number of shares which may be issued under the 1997
Option Plan, or (iii) materially modify the requirements as to eligibility for
participation under the 1997 Option Plan.
The grant of an option under the 1997 Option Plan will not have any
immediate effect on the federal income tax liability of the Company or the
optionee. If the Board grants an optionee a NQSO, then the optionee will
recognize ordinary income at the time he or she exercises the NQSO equal to the
difference between the fair market value of the Common Stock and the exercise
price paid by the optionee, and the Company will receive a deduction for the
same amount.
If the Board grants an optionee an ISO, then the optionee generally will
not recognize any taxable income at the time he or she exercises the ISO (other
than potential liability for alternative minimum tax) but will recognize income
only at the time he or she sells the Common Stock acquired by exercise of the
ISO. Upon sale of the common stock acquired upon exercise of the ISO, the
optionee will recognize income equal to the difference between the exercise
price paid by the optionee and the amount received upon sale, and such income
generally will be eligible for capital gain treatment. The Company generally is
not entitled to an income tax deduction for the grant of an ISO or as a result
of either the optionee's exercise of an ISO or the optionee's sale of the common
stock acquired through exercise of an ISO. However, if the optionee sells the
common stock either (i) within two years of the date of the grant to him or her
of the ISO, or (ii) within one year of the date of the transfer to him or her of
the common stock following exercise of the ISO, then the option is treated for
federal income tax purposes as if it were a NQSO; the income recognized by the
optionee will not be eligible for capital gain treatment and the Company will be
entitled to a federal income tax deduction equal to the amount of income
recognized by the optionee.
54
<PAGE> 57
CERTAIN TRANSACTIONS
TELESITE AND METROSITE ACQUISITION
On May 12, 1997, in connection with the formation of the Company, the
Company purchased the outstanding membership units of TeleSite and Metrosite for
an aggregate purchase price of $7,233,125 which included 81,753 shares of common
stock valued at $71,125 in the aggregate. In addition, as part of the
acquisition consideration, 408,764 shares of common stock were issued into
escrow and are to be released upon the acquired business achieving certain
operating goals. Joe L. Finley, III, the Vice Chairman of the Company's Board of
Directors, members of Mr. Finley's family and entities controlled by Mr. Finley
received all of the aggregate purchase price, which amount included a note
payable to Mr. Finley in the original principal amount of $2,312,000, and all of
the common stock issued in connection with the acquisition. The Company used
$2,331,953 of the proceeds from the sale of the Old Notes to pay the outstanding
principal amount of and accrued interest on the note payable. See "Use of
Proceeds." The escrow arrangement provides that the Company may repurchase the
shares held in escrow if the acquired business does not achieve the specified
operating goals, and in May 1998, the Company exercised its option to repurchase
204,382 shares of the common stock held in escrow for an aggregate repurchase
price of $204.38.
GLOBALCOMM ACQUISITION
As of September 23, 1998, the Company acquired all of the shares of capital
stock of GlobalComm, Inc. for approximately $2 million in cash. In connection
with this acquisition, the founder and president of GlobalComm, Michael Garrett,
joined the Company as Vice President -- Co-location Marketing, and SpectraSite
granted Mr. Garrett an option to purchase 100,000 shares of its common stock for
a nominal price per share. This option vests in equal installments over a
three-year period, with the first installment vesting on June 30, 1999.
REPURCHASE OF COMMON STOCK FROM FORMER EMPLOYEE
In an agreement dated September 15, 1998, a former employee agreed to
release the Company from any potential claims and to sell 125,000 shares of
SpectraSite common stock to the Company for an agreed upon price. In addition,
the agreement provided that shareholders of SpectraSite would have an option to
purchase the former employee's remaining 37,605 shares of SpectraSite common
stock for the same price per share, provided that the Company advise the former
employee in writing of the exercise of all or any portion of such option by
November 15, 1998. On October 9, 1998, the Company paid the former employee
$500,000 for his shares and the release under the agreement.
THE SERIES A AND SERIES B PREFERRED STOCK OFFERINGS
Pursuant to a Stock Purchase Agreement, dated as of May 12, 1997 (the
"Series A Agreement"), the Series A Investors purchased an aggregate of
3,462,830 shares of SpectraSite's Series A Preferred Stock for an aggregate
purchase price of $10 million in a transaction exempt from registration under
the Securities Act. Each share of Series A Preferred Stock is currently
convertible into one share of common stock (subject to adjustment upon the
happening of certain events), accrues dividends at a rate of 8% per annum and
entitles the holder to certain voting rights. See "Description of Capital
Stock."
Pursuant to the Series B Agreement, the Series B Investors agreed to
purchase shares of SpectraSite's Series B Preferred Stock for an aggregate
purchase price of $28 million. Each share of Series B Preferred Stock is
currently convertible into one share of common stock (subject to adjustment upon
the happening of certain events), accrues dividends at a rate of 8% per annum
and entitles the holder to certain voting rights. See "Description of Capital
Stock." In addition, SpectraSite is obligated under the Series A Agreement and
the Series B Agreement to pay the Whitney Funds a monitoring fee of $10,000 in
the aggregate per month until SpectraSite completes an initial public offering
of its common stock.
The Series B Investors, including the holders of the Series A Preferred
Stock and certain other stockholders of SpectraSite, are entitled to certain
rights under the Stockholders' Agreement and the Registration Rights Agreement,
each as defined herein and described below.
55
<PAGE> 58
STOCKHOLDERS' AGREEMENT
As of March 23, 1998, SpectraSite and all of its stockholders and warrant
holders (collectively, the "Stockholders") entered into the Second Amended and
Restated Stockholders' Agreement (the "Stockholders' Agreement"), which sets
forth certain agreements relating to issuances and transfers of SpectraSite's
capital stock and to the governance of SpectraSite. The following summary of the
Stockholders' Agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Stockholders' Agreement.
PREEMPTIVE RIGHTS. If SpectraSite wishes to issue any of its common stock
or any securities exercisable for, convertible into or exchangeable for common
stock, it shall so notify the Stockholders, and each Stockholder will have the
right (subject to certain exceptions) to acquire its pro rata share of the
offered securities and of any offered securities not purchased by the other
Stockholders. Without the consent of the Whitney funds, SpectraSite may not
issue or sell any capital stock or any securities exercisable for, convertible
into or exchangeable for capital stock unless the purchaser agrees to become a
party to the Stockholders' Agreement, but in any event such purchaser will not
be entitled to the preemptive rights provided in the Stockholders' Agreement.
RIGHTS OF FIRST REFUSAL. With the exception of the Whitney funds, if a
Stockholder desires to sell or otherwise dispose of its stock to a third party,
other than to certain permitted transferees, it must first offer such stock
either to SpectraSite and then to the other Stockholders, or just to certain
Stockholders, depending on the identity of the selling Stockholder, on the same
terms and conditions that the third party has offered to buy such stock. If
SpectraSite and such other Stockholders do not agree to buy all of the offered
stock, the selling Stockholder may either sell the remaining stock not agreed to
be bought by such other Stockholders to the third party, or choose not to sell
any of the offered stock to the third party or the other Stockholders. If any
stock is sold to the third party, it must agree to become a party to the
Stockholders' Agreement.
BRING-ALONG RIGHTS. If the Whitney funds propose to sell or otherwise
dispose of all, but not less than all, of their stock to a third party (other
than certain permitted transferees), the Whitney funds may require the other
Stockholders to sell their stock to the third party for a purchase price equal
to the fair market value thereof, as determined by a nationally recognized
investment bank or appraisal firm, and otherwise on the terms of the Whitney
funds' sale to the third party.
BOARD OF DIRECTORS. The Stockholders' Agreement provides that the
Stockholders will nominate to SpectraSite's seven member Board of Directors (i)
three nominees designated by the Whitney Funds, (ii) one nominee designated by
Waller-Sutton, (iii) two nominees designated by the management of SpectraSite
("Management"), and (iv) one independent nominee acceptable to the Whitney
Funds, Waller-Sutton, Kitty Hawk III, Kitty Hawk IV and Management. In addition,
the Stockholders have agreed to elect two nominees of the Whitney Funds and one
nominee of Management to SpectraSite's audit committee and compensation
committee. As long as the Preferred Stock owned by the Whitney Funds exceeds a
specified amount, the Whitney Funds also have the right (a) to cause the size of
SpectraSite's board of directors to be increased to nine and (b) to appoint two
additional directors. However, if the Preferred Stock owned by the Whitney Funds
drops below a specified amount, then the Whitney Funds will only be permitted to
appoint one director. The rights of the Whitney Funds and Waller-Sutton to
appoint directors terminate when the Preferred Stock owned by such stockholders
drops below a specified level.
In a separate letter agreement, the Whitney funds have agreed to nominate
W. Chris Hegele as one of their three nominees under the Stockholders' Agreement
to serve as a member of the Board of Directors; provided, however, that Mr.
Hegele has agreed to promptly resign from the Board upon the written request of
the Whitney funds. In addition, the Company has agreed that, if a representative
of Kitty Hawk IV is not serving as a member of the Board of Directors, Kitty
Hawk IV will have the right to designate a representative who may consult with
management on significant business issues and attend meetings of the Board of
Directors except in certain limited circumstances.
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CO-SALE RIGHTS. If any of the Whitney funds desires to sell any of its
Series B Preferred Stock or any shares of common stock issued upon conversion of
any of its Series B Preferred Stock, to a third party, it shall notify
Waller-Sutton, Kitty Hawk IV or Eagle Creek (the "Co-Sale Parties"), and each
Co-Sale Party shall have the right to sell its pro rata share of Series B
Preferred Stock, or any shares of common stock issued upon conversion of any of
its Series B Preferred Stock, to the third party, on the same terms and
conditions that the third party has offered to buy such stock from the Whitney
Funds. If any of the Co-Sale Parties desires to sell any of its Series B
Preferred Stock, or any shares of common stock issued upon conversion of any of
its Series B Preferred Stock, to a third party, it shall notify the Whitney
Funds, and each of the Whitney Funds shall have the right to sell its pro rata
share of Series B Preferred Stock, or any shares of Common Stock issued upon
conversion of any of its Series B Preferred Stock, to the third party, on the
same terms and conditions that the third party has offered to buy such stock
from such Co-Sale Party. If any stock is sold to any such third party, it must
agree to become a party to the Stockholders' Agreement.
CONSENT RIGHTS. So long as the Whitney funds and Waller-Sutton own a
specified amount of Preferred Stock, SpectraSite may not take any of the
following actions without the prior consent of the Whitney Funds and
Waller-Sutton: (a) engage in any business other than its business or the
business of its subsidiaries as of the date of the Stockholders' Agreement, (b)
amend its Certificate of Incorporation in any way adverse to the holders of the
Series B Preferred Stock, (c) enter into any agreement or make any payment to a
holder of Series A Preferred Stock that would be to the advantage of such holder
to the detriment of the holders of the Series B Preferred Stock, (d) liquidate
or dissolve, or (e) file a petition in bankruptcy.
REGISTRATION RIGHTS AGREEMENT
As of March 23, 1998, SpectraSite, the Series A Investors, the Series B
Investors and certain members of the Company's management entered into the
Amended and Restated Registration Rights Agreement (the "Registration Rights
Agreement"), which sets forth certain agreements relating to registration of
SpectraSite's capital stock under the Securities Act. The following summary of
the Registration Rights Agreement does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the Registration Rights
Agreement.
Any one or more of the Whitney funds, Waller-Sutton, Eagle Creek, Kitty
Hawk IV, Kitty Hawk III and NCEF (collectively, the "Institutional Investors"),
holding at least 75% of the Preferred Stock may at any time after May 12, 1998,
request SpectraSite to register under the Securities Act all or any portion of
the Common Stock issued upon conversion of the Preferred Stock (the "Restricted
Stock"); provided, however, that at the time of the request, the Institutional
Investors making such request must own in the aggregate 5% or more of the total
shares of Restricted Stock on a diluted basis. However, no request may be made
within 360 days of the effective date of an under-written public offering of
SpectraSite's securities in which holders of Restricted Stock were entitled to
join. SpectraSite will use its best efforts to cause the Restricted Stock held
by such requesting Institutional Investors, as well as any Restricted Stock or
other common stock requested to be included, to be registered, subject to
certain limitations.
If SpectraSite at any time proposes to register any of its securities under
the Securities Act for sale to the public (other than on a Form S-4, S-8 or
other form of registration statement not available for registering the
Restricted Stock for sale to the public), SpectraSite will give written notice
to all holders of Restricted Stock and to Stephen H. Clark, Robert M. Long and
Finley LP (collectively, the "Registration Stockholders") of SpectraSite's
intention to register its securities. SpectraSite will use its best efforts, to
the extent requested by the holders of the Restricted Stock or the Registration
Stockholders to cause the Restricted Stock and the common stock held by the
Registration Stockholders to be included in the proposed registration to be
filed by SpectraSite, subject to certain limitations. In addition, Institutional
Investors have a right to require SpectraSite to file a registration statement
on Form S-3 provided that the anticipated aggregate offering price of such
registration shall be equal to or greater than $1 million.
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OWNERSHIP OF CAPITAL STOCK
The table below sets forth, as of October 31, 1998, certain information
with respect to the beneficial ownership of SpectraSite's capital stock by (i)
each person who is known by the Company to be the beneficial owner of more than
5% of any class or series of capital stock of the Company; (ii) each of the
directors and executive officers individually; and (iii) all directors and
executive officers as a group. At September 30, 1998, the Company had
outstanding the following shares of capital stock: Common Stock -- 1,161,135
shares; Series A Preferred Stock -- 3,462,830 shares; and Series B Preferred
Stock -- 7,000,000 shares.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF
SHARES OF TOTAL VOTING
COMMON POWER OF
SERIES A SERIES B STOCK BENEFICIALLY
COMMON PREFERRED PREFERRED BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNER STOCK STOCK STOCK OWNED(a) COMMON STOCK
------------------------ --------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Stephen H. Clark(b)................. 843,185 -- -- 843,185 7.2%
Joe L. Finley(c).................... 286,135 -- 50,000 336,135 2.9%
Michael R. Stone(d)................. -- 3,203,118 5,161,219 8,364,337 72.3%
James R. Matthews(d)................ -- 3,203,118 5,161,219 8,364,337 72.3%
W. Chris Hegele(e).................. 32,761 259,712 368,659 661,132 5.7%
Andrew J. Armstrong, Jr.(f)......... -- -- 1,228,862 1,228,862 10.6%
Whitney Equity Partners, L.P.(d).... -- 3,203,118 1,720,406 4,923,524 42.5%
Whitney Strategic Partners III,
L.P.(d)........................... -- -- 80,961 80,961 0.7%
J. H. Whitney III, L.P.(d).......... -- -- 3,359,852 3,359,852 29.0%
Waller-Sutton Media Partners,
L.P.(f)........................... -- -- 1,228,862 1,228,862 10.6%
Kitty Hawk Capital Limited
Partnership, III(e)............... 32,761 259,712 61,443 353,916 3.1%
Kitty Hawk Capital Limited
Partnership, IV(e)................ -- -- 307,216 307,216 2.7%
All directors and executive officers
as a group (13 persons)(g)........ 1,228,806 3,462,830 6,808,740 11,433,651 97.3%
</TABLE>
- ---------------
(a) Each share of Series A Preferred Stock and each share of Series B Preferred
Stock is immediately convertible into one share of the Common Stock (subject
to certain adjustments) and, therefore, the holders of Series A Preferred
Stock and Series B Preferred Stock are deemed to be the beneficial owners of
the shares of common stock into which their Preferred Stock can be
converted. The amounts and percentages of common stock beneficially owned
are reported on the basis of regulations of the Commission governing the
determination of beneficial ownership of securities. Under the rules of the
Commission, a person is deemed to be a "beneficial owner" of a security if
that person has or shares "voting power," which includes the power to vote
or to direct the voting of such security, or "investment power," which
includes the power to dispose of or to direct the disposition of such
security. A person is also deemed to be a beneficial owner of any securities
of which that person has a right to acquire beneficial ownership within 60
days. Under these rules, more than one person may be deemed to be a
beneficial owner of securities as to which such person has an economic
interest.
(b) Includes 106,250 shares of common stock issuable upon the exercise of
options and excludes 618,750 shares issuable upon the exercise of
outstanding options which are not exercisable within 60 days. The business
address for Mr. Clark is 8000 Regency Parkway, Suite 570, Cary, North
Carolina 27511.
(c) Of the shares reported as beneficially owned by Mr. Finley, 81,753 shares
are held by Finley Family Limited Partnership and 204,382 are held in
escrow. Mr. Finley disclaims beneficial ownership of all such shares, and
the shares held in escrow are not considered issued and outstanding for
financial
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<PAGE> 61
reporting purposes in accordance with generally accepted accounting
principles. The address for Mr. Finley and Finley Family Limited Partnership
is 10770 Samples Road, Alexander, Arkansas 72002.
(d) Mr. Stone is a managing member of each of the general partners of each of
the Whitney funds, and Mr. Matthews is a Principal of the Whitney funds.
Messrs. Stone and Matthews disclaim beneficial ownership of the shares held
by such entities. The business address for Mr. Stone, Mr. Matthews and the
Whitney funds is 177 Broad Street, Stamford, Connecticut 06901.
(e) Mr. Hegele is a general partner of Kitty Hawk Partners Limited Partnership,
III, the general partner of Kitty Hawk Capital Limited Partners III, and a
managing member of Kitty Hawk Partners Limited Liability Company, IV, the
general partner of Kitty Hawk Capital Limited Partners IV. Mr. Hegele
disclaims beneficial ownership of the shares held by Kitty Hawk Capital
Limited Partners III and Kitty Hawk Capital Limited Partners IV. The
business address for Mr. Hegele, Kitty Hawk Capital Limited Partners III and
Kitty Hawk Capital Limited Partners IV is 2700 Coltsgate Road, Suite 202,
Charlotte, North Carolina 28211.
(f) Mr. Armstrong is a principal of Waller-Sutton Management, Inc., which is the
general partner of Waller-Sutton Media Partners, L.P. Mr. Armstrong
disclaims beneficial ownership of the shares held by such entity. The
business address for Mr. Armstrong and Waller-Sutton Media Partners, L.P. is
c/o Waller-Sutton Management Group, Inc., 1 Rockefeller Plaza, New York, New
York 10020.
(g) Includes 172,975 shares of common stock issuable upon the exercise of
options, but excludes 1,243,925 shares of common stock issuable upon the
exercise of options which are not exercisable within 60 days.
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<PAGE> 62
DESCRIPTION OF CAPITAL STOCK
The following summary of the terms and provisions of SpectraSite's capital
stock (the "Capital Stock") does not purport to be complete and is qualified in
its entirety by reference to the actual terms and provisions of, including
certain defined terms used herein, of the Capital Stock contained in
SpectraSite's Certificate of Incorporation, as amended. In addition, the
following disclosure does not reflect amendments to SpectraSite's Certificate of
Incorporation to be effected in connection with the acquisition of tower assets
from Nextel. Such amendments include, but are not limited to, an increase in the
authorized number of shares of common stock and preferred stock, creation of
Class B common shares, and designation of the rights and preferences of the
Series C Preferred Stock and the Series E Preferred Stock.
SpectraSite's Certificate of Incorporation, as amended, authorizes
20,000,000 shares of common stock, $0.001 par value per share (the "Common
Stock"), and 10,462,830 shares of preferred stock, of which 3,462,830 shares
have been designated as 8% Series A Cumulative Convertible Redeemable Preferred
Stock (the "Series A Preferred Stock") and 7,000,000 shares have been designated
as 8% Series B Cumulative Convertible Redeemable Preferred Stock (the "Series B
Preferred Stock" and, together with the Series A Preferred Stock, the "Preferred
Stock"). As of October 31, 1998, there were (i) 1,161,135 shares of Common Stock
issued and outstanding, (ii) 3,462,830 shares of Series A Preferred Stock issued
and outstanding and (iii) 7,000,000 shares of Series B Preferred Stock issued
and outstanding. In addition, (i) 243,800 shares of Common Stock are reserved
for issuance upon exercise of stock options available for future grant under the
1997 Option Plan; (ii) 1,573,900 shares of Common Stock are reserved for
issuance upon exercise of outstanding stock options granted under the 1997
Option Plan; (iii) 10,462,830 shares of Common Stock are reserved for issuance
upon the conversion of the Preferred Stock and (iv) 204,382 shares of Common
Stock are held in escrow. See "Certain Transactions -- TeleSite and Metrosite
Acquisition."
COMMON STOCK
SpectraSite has one class of authorized Common Stock. The Common Stock is
entitled to one vote per share. All outstanding shares of Common Stock are
validly issued, fully paid and nonassessable. The holders of Common Stock have
no cumulative rights, preemptive rights (other than such rights granted under
the Stockholders' Agreement), subscription, redemption, sinking fund or
conversion rights and preferences. Subject to preferences that may be applicable
to the Preferred Stock or any preferred stock which SpectraSite may issue in the
future, holders of the Common Stock will be entitled to receive such dividends
as may be declared by the board of directors out of funds legally available
therefor. The rights and preferences of holders of Common Stock are subject to
the rights of the holders of Preferred Stock and will be subject to the rights
of any series of preferred stock which SpectraSite may issue in the future.
PREFERRED STOCK
CONVERSION. Each holder of Preferred Stock has the right to convert his or
her shares at any time. Each share of Preferred Stock is currently convertible
into one share of Common Stock, subject to adjustment in the event of (i) any
dividend or distribution in shares of Common Stock; (ii) subdivision,
combination or reclassification of SpectraSite's outstanding Common Stock; (iii)
any issue of Common Stock at below a specified price per share; (iv) any issue
of rights, options or warrants to subscribe for or purchase shares of Common
Stock at below a specified price per share; (v) any issue of rights for the
purchase of shares of Common Stock or other securities convertible or
exchangeable into shares of Common Stock at below a specified price per share;
and (vi) any distribution by SpectraSite to the holders of Common Stock of any
shares of its Capital Stock, other than Common Stock, or evidence of
indebtedness, cash or other assets. The Preferred Stock will automatically
convert into Common Stock upon the completion by SpectraSite of a firm
commitment underwritten initial public offering raising gross proceeds of at
least $30 million at an offering price per share greater than or equal to $4.47.
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DIVIDENDS. The holders of outstanding shares of Preferred Stock are
entitled, in preference to the holders of any and all other classes of Capital
Stock of SpectraSite, to receive, out of funds legally available therefor,
cumulative dividends on the Preferred Stock in cash at a rate per annum of 8% of
the original issue price subject to proration for partial years. The original
issue price equals $2.89 per share for Series A Preferred Stock and $4.00 per
share for Series B Preferred Stock (the "Original Issue Price") and dividends
begin to accrue, for each series of Preferred Stock, upon the original date of
issue of such series. No dividends will be paid on the Common Stock until all
accumulated and unpaid dividends have been paid on the Preferred Stock or with
the prior written consent of 75% of the holders of outstanding Preferred Stock
voting as a single class. Accrued and unpaid dividends on the Preferred Stock
will be payable only upon liquidation, dissolution or winding-up of SpectraSite
or upon redemption of the Preferred Stock.
LIQUIDATION. In the event of any liquidation, dissolution or winding-up of
SpectraSite, either voluntary or involuntary, before any distribution or payment
to holders of Common Stock or other Capital Stock, other than the Preferred
Stock, the holders of shares of Preferred Stock shall be entitled to be paid an
amount equal to the applicable Liquidation Preference. The Liquidation
Preference, for this purpose, is equal to the Original Issue Price plus all
unpaid accrued and accumulated dividends on the Preferred Stock. If the assets
of SpectraSite are insufficient to permit payment in full to all the holders of
Preferred Stock, the assets shall be distributed ratably to the holders of
Preferred Stock. Any remaining assets available for distribution shall be
distributed to holders of Common Stock.
REDEMPTION RIGHTS. On December 15, 2008, SpectraSite is obligated, to the
extent it may under applicable law, to redeem all of the outstanding shares of
Preferred Stock at the then applicable Liquidation Preference. If SpectraSite is
unable to fully redeem all of the outstanding shares of Preferred Stock, it must
take all actions necessary to eliminate any restrictions on its ability to so
redeem the shares. Dividends shall continue to accrue and cumulate on any
unredeemed shares.
VOTING. Holders of Preferred Stock are entitled to such number of votes
equal to the whole number of shares of Common Stock into which such holder's
Preferred Stock is convertible immediately after the close of business on the
record date of the meeting.
SPECIAL REQUIRED APPROVAL
SpectraSite may not take the following actions without approval by vote or
written consent of the holders of 75% of all issued shares of Preferred Stock,
voting as a single class: (i) through May 11, 2007, the consummation of any sale
or lease of all or substantially all SpectraSite's assets or any merger,
consolidation, refinancing or recapitalization, subject to certain conditions;
(ii) any amendment, restatement or modification of SpectraSite's Certificate of
Incorporation, By-Laws or other government documents which adversely affects the
rights of holders of Preferred Stock; (iii) any declaration of a dividend or any
distribution with respect to the Common Stock or any other capital stock (other
than the Preferred Stock); (iv) the purchase, redemption or retirement of any
shares of capital stock or other equity securities; (v) the authorization,
creation or issuance of any shares of capital stock or other securities which
would adversely affect, or are ranked prior to or pari passu with, the Preferred
Stock; (vi) engaging in any business in which SpectraSite was not engaged as of
the date of the Certificate of Incorporation; (vii) voluntary dissolution,
liquidation or winding-up of SpectraSite; (viii) the sale of assets of
SpectraSite having a fair market value in excess of $250,000; or (ix) entering
into any transaction or agreement with any affiliate of SpectraSite or amend or
terminate any existing agreement with an affiliate of SpectraSite.
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DESCRIPTION OF NEW CREDIT FACILITY
A wholly owned subsidiary of SpectraSite, SpectraSite Communications or
"SCI", received a commitment letter from Credit Suisse First Boston Corporation
("CSFB") on December 22, 1997, which has been renewed through December 31, 1998
(the "Commitment Letter"), pursuant to which CSFB will commit to the full $50
million of the New Credit Facility but has the right to arrange a syndicate to
provide any portion thereof. The Exchange Offer, however, is not contingent on
the execution of the New Credit Facility, and it is expected that the New Credit
Facility will not be entered into prior to the closing of the Exchange Offer.
The following is a summary of certain provisions of the New Credit Facility and,
therefore, does not purport to be complete and is subject to, and is qualified
in its entirety by, the final terms of the New Credit Facility which may differ
from the provisions contained in the Commitment Letter and described in this
summary. In addition, the Commitment Letter is subject to various conditions,
and there can be no assurances that SCI will be able to enter into a definitive
credit agreement implementing the terms and conditions of the Commitment Letter.
The New Credit Facility is expected to provide for revolving credit loans
of $50 million to finance the construction and acquisition of towers and for
working capital and general corporate purposes. The New Credit Facility is
expected to mature seven years after the closing of the New Credit Facility,
with reductions to the amount of the commitment commencing after two years. In
addition, SCI may be required to prepay the New Credit Facility in part upon the
occurrence happening of certain events, such as a sale of assets, the incurrence
of certain additional indebtedness, the issuance of equity, the receipt of
insurance proceeds and the generation of excess cash flow. During any period for
which SCI, SpectraSite and SCI's subsidiaries have earnings before interest,
taxes, depreciation and amortization ("EBITDA") of less than $8 million on an
annualized basis, the amount that SCI may borrow or have outstanding will be
limited to a specified percentage of the construction or acquisition cost of
certain of SCI's towers.
SCI's obligations under the New Credit Facility are expected to be
guaranteed by SpectraSite and by each direct and indirect subsidiary of SCI and
secured by (i) substantially all the tangible and intangible assets of SCI,
SpectraSite and all of their direct and indirect subsidiaries, and (ii) a pledge
of all of the capital stock of SCI and of all of the direct and indirect
subsidiaries of SCI and SpectraSite.
It is anticipated that SCI will be required to pay quarterly a commitment
fee of 0.50% per annum in respect of the unused portion of the New Credit
Facility, which fee will be reduced to 0.375% when the ratio of SCI's total debt
to EBITDA is reduced below a specified level.
The loans under the New Credit Facility are expected to bear interest, at
SCI's option, at either (i) CSFB's base rate plus an applicable margin of 1.5%
per annum initially, which margin after a period of time may decrease based on a
leverage ratio, or (ii) the reserve adjusted "LIBOR rate" plus an applicable
margin of 2.5% per annum initially, which margin after a period of time may
decrease based on a leverage ratio.
The New Credit Facility is expected to contain a number of covenants that,
among other things, may restrict the ability of SpectraSite, SCI and their
respective subsidiaries to dispose of assets, incur additional indebtedness,
incur guaranty obligations, pay dividends or make capital distributions, create
liens on assets, make investments, make acquisitions, engage in mergers or
consolidations, engage in certain transactions with subsidiaries and affiliates
and otherwise restrict corporate activities. In addition, the New Credit
Facility is expected to require compliance with certain financial covenants,
including requiring SpectraSite, SCI and their respective subsidiaries on a
consolidated basis to maintain a maximum ratio of total debt to adjusted EBITDA,
a minimum interest coverage ratio, a minimum nontower cash flow, and a
requirement that the average remaining term on eligible tower leases shall not
at any time be less than three years. SpectraSite does not expect that such
covenants will materially impact the ability of SCI and its subsidiaries to
operate their respective businesses.
The Commitment Letter states that the New Credit Facility will contain a
general limitation on capital distributions and dividends, but the terms of the
limitation have not been negotiated. It is anticipated that, as long as there is
no default under the New Credit Facility, SCI will be permitted to
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distribute to SpectraSite sufficient amounts to permit SpectraSite to make
interest payments on the Notes when due.
The New Credit Facility is expected to contain customary events of default,
including the failure to pay principal when due or any interest or other amount
that becomes due within a period of time after the due date thereof, any
representation or warranty being made by SCI that is incorrect in any material
respect on or as of the date made, a default in the performance of any negative
covenants or a default in the performance of certain other covenants or
agreements for a specified period, default in certain other indebtedness,
certain insolvency events, certain change of control events and a default under
the Indenture.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by SpectraSite to Credit Suisse First
Boston Corporation, Lehman Brothers, Inc. and CIBC Oppenheimer Corp. (the
"Initial Purchasers"). The Initial Purchasers subsequently placed the Old Notes
with (i) qualified institutional buyers in reliance on Rule 144A under the
Securities Act and (ii) qualified buyers outside the United States in reliance
upon Regulation S under the Securities Act. As a condition to the Initial
Purchasers purchase of the Old Notes, SpectraSite entered into the Registration
Rights Agreement with the Initial Purchasers pursuant to which SpectraSite has
agreed, for the benefit of the holders of the Old Notes, at Issuer's cost, to
file a registration statement for the Exchange Offer (the "Exchange Offer
Registration Statement") (of which this Prospectus is a part) no later than
November 15, 1998, with the SEC with respect to the Exchange Offer. Upon the
Exchange Offer Registration Statement being declared effective, SpectraSite will
offer the Exchange Notes in exchange for tender of the Old Notes. For each Old
Note tendered to SpectraSite pursuant to the Exchange Offer, the holder of such
Old Note will receive an Exchange Note having an original principal amount at
maturity equal to that of the tendered Old Note.
Based upon interpretations by the staff of the SEC set forth in certain
no-action letters to third parties (including 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)), SpectraSite believes that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Old Notes will in general be freely tradeable
after the Exchange Offer without compliance with the registration and prospectus
delivery requirements of the Securities Act. However, any purchaser of Old Notes
who is an "affiliate" of SpectraSite (within the meaning of Rule 405 under the
Securities Act), who does not acquire the Exchange Notes in the ordinary course
of business or who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes could not rely on the
position of the staff of the SEC enunciated in such no-action letters and, in
the absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Failure to comply with such requirements in such instance
may result in such holder incurring liability under the Securities Act for which
the holder is not indemnified by SpectraSite.
As contemplated by the above mentioned no-action letters and the
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to SpectraSite in the Letter of Transmittal that (i) the
Exchange Notes are to be acquired by the holder or the person receiving such
Exchange Notes, whether or not such person is the holder, in the ordinary course
of business, (ii) the holder or any such other person is not engaging in the
distribution of the Exchange Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) neither the holder nor any such other
person is an "affiliate" of SpectraSite within the meaning of Rule 405 under the
Securities Act, and (v) the holder or any such other person acknowledges that if
such holder or any other person participates in the Exchange Offer for the
purpose of distributing the Exchange Notes it must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale of the Exchange Notes and cannot rely on the above mentioned
no-action letters. As indicated above, each broker-dealer that receives an
Exchange Note for its own account in exchange for Old Notes (a "Participating
Broker-Dealer") must acknowledge that it (i) acquired the Old Notes for its own
account as a result of market-making activities or other trading activities,
(ii) has not entered into any arrangement or understanding with SpectraSite or
any "affiliate" of SpectraSite (within the meaning of Rule 405 under the
Securities Act) to distribute the Exchange Notes to be received in the Exchange
Offer and (iii) will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes. For a
description of the procedures for resales by Participating Broker-Dealers, see
"Plan of Distribution."
In the event that changes in the law or the applicable interpretations of
the staff of the SEC do not permit SpectraSite to effect such an Exchange Offer,
or if for any other reason the Exchange Offer is
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commenced and not consummated within 120 days of the date of the original
issuance of the Old Notes, SpectraSite will (i) file a shelf registration
statement covering resales of the Old Notes (the "Shelf Registration
Statement"); (ii) use reasonable best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act and (iii) use
reasonable best efforts to keep effective the Shelf Registration Statement until
the earlier of (i) two years after the date of the original issuance of the Old
Notes, subject to extension under certain circumstances, or (ii) such time as
all of the applicable Old Notes have been sold thereunder. SpectraSite will, in
the event of the filing of the Shelf Registration Statement, provide to each
applicable holder of the Old Notes copies of the prospectus which is a part of
the Shelf Registration Statement. A holder of the Old Notes that sells such Old
Notes pursuant to the Shelf Registration Statement generally will be required to
be named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such a holder (including certain indemnification obligations). In
addition, each holder of the Old Notes will be required to deliver information
to be used in connection with the Shelf Registration Statement in order to have
their Old Notes included in the Shelf Registration Statement and to benefit from
the provisions set forth in the foregoing paragraph.
The Registration Rights Agreement provides that SpectraSite will file an
Exchange Offer Registration Statement with the Commission no later than November
15, 1998. In the event that (i) by November 15, 1998, neither the Exchange Offer
Registration Statement nor the Shelf Registration Statement has been filed with
the Commission; (ii) by the 120th day after the date of filing the Exchange
Offer Registration Statement, the original issuance of the Old Notes neither the
Exchange Offer is consummated nor the Shelf Registration Statement is declared
effective; or (iii) after either the Exchange Offer Statement or Shelf
Registration Statement is declared effective, such Registration Statement
thereafter ceases to be effective or usable (subject to certain exceptions,
including an exception for a period not to exceed 60 days in any 12-month period
during which the Company effects a material corporate transaction (a "Suspension
Period" as further defined in the Registration Rights Agreement)) in connection
with resales of the Old Notes or Exchange Notes in accordance with and during
the periods specified in the Registration Rights Agreement (each such event
referred to in clauses (i) through (iii) above a "Registration Default"), the
sole remedy available to holders of the Old Notes will be the immediate
assessment of cash interest on the Old Notes (whether or not cash interest is
then payable on the Old Notes under the Indenture) ("Additional Interest") as
follows: the interest rate on the Old Notes will increase by 0.50% per annum
from and including the date on which any such Registration Default shall occur
but excluding the date on which all Registration Defaults have been cured. All
Additional Interest will be payable to holders of the Old Notes in cash on each
January 15 and July 15, commencing with the first such date occurring after any
such Additional Interest commences to accrue, until such Registration Default is
cured. After the date on which such Registration Default is cured, the interest
rate on the Old Notes will revert to 12% per annum.
Holders of Old Notes will be required to make certain representations to
SpectraSite (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement, if required, and to
provide comments on the Shelf Registration Statement within the time periods set
forth in the Registration Rights Agreement in order to have their Old Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Additional Interest set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
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TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, SpectraSite will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. SpectraSite will issue $1,000 original principal amount at
maturity of Exchange Notes in exchange for each $1,000 original principal amount
at maturity of outstanding Old Notes accepted in the Exchange Offer. Holders may
tender some or all of their Old Notes pursuant to the Exchange Offer. However,
Old Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that (i) the Exchange Notes have been registered under
the Securities Act and hence will not bear legends restricting the transfer
thereof and (ii) the holders of the Exchange Notes will not be entitled to
certain rights under the Registration Rights Agreement, including the provisions
providing for an increase in the interest rate on the Old Notes in certain
circumstances relating to the timing of the Exchange Offer, all of which rights
will terminate when the Exchange Offer is terminated. The Exchange Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits of
the Indenture. As of the date of this Prospectus, $225,238,000 aggregate
original principal amount at maturity of Old Notes were outstanding. SpectraSite
has fixed the close of business on , 1998 as the record date for the
Exchange Offer for purposes of determining the persons to whom this Prospectus
and the Letter of Transmittal will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Delaware General Corporation Law or the Indenture in connection with the
Exchange Offer. SpectraSite intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
SpectraSite shall be deemed to have accepted validly tendered Old Notes
when, as and if SpectraSite has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from SpectraSite.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. SpectraSite will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
SpectraSite shall keep the Exchange Offer open for at least 30 days (or
longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to holders of Old Notes. The term "Expiration Date" shall mean
5:00 p.m., New York City time, on , 1998, unless SpectraSite, in its
sole discretion, extends the Exchange Offer, in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended.
In order to extend the Exchange Offer, SpectraSite will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 10:00 a.m., New York City time,
on the next business day after the previously scheduled expiration date.
SpectraSite reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or
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termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal or transmit an Agent's
Message in connection with a book-entry transfer, and mail or otherwise deliver
such Letter of Transmittal or such facsimile, or Agent's Message, together with
the Old Notes and any other required documents, to the Exchange Agent prior to
5:00 p.m., New York City time, on the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange Agent prior to
the Expiration Date along with the Letter of Transmittal, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes into the Exchange Agent's account at DTC or the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date or (iii) the
holder must comply with the guaranteed delivery procedures described below. To
be tendered effectively, the Old Notes, or Book-Entry Confirmation, as the case
may be, 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. DELIVERY OF
DOCUMENTS TO THE BOOK ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURE
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
DTC has authorized DTC participants that hold Old Notes on behalf of
beneficial owners of Old Notes through DTC to tender their Old Notes as if they
were holders. To effect a tender of Old Notes, DTC participants should either
(i) complete and sign the Letter of Transmittal (or a manually signed facsimile
thereof), have the signature thereon guaranteed if required by the instructions
to the Letter of Transmittal, and mail or deliver the Letter of Transmittal (or
such manually signed facsimile) to the Exchange Agent pursuant to the procedure
set forth in "Procedures for Tendering" or (ii) transmit their acceptance to DTC
through the DTC Automated Tender Offer Program ("ATOP") for which the
transaction will be eligible and follow the procedure for book-entry transfer
set forth in "-- Book-Entry Transfer."
By executing the Letter of Transmittal or Agent's Message, each holder will
make to SpectraSite the representations set forth above in the third paragraph
under the heading "-- Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by SpectraSite will
constitute agreement between such holder and SpectraSite in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal or Agent's Message.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL OR AGENT'S
MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Old 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. See "Instructions
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to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member of the Medallion System (an
"Eligible Institution") unless the Old Notes tendered pursuant thereto are
tendered (i) by a registered holder who has not completed the box entitled
"Special Registration Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. In the
event that signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantee must be by an
Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to
SpectraSite of their authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by SpectraSite in its sole discretion, which determination
will be final and binding. SpectraSite reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes SpectraSite's
acceptance of which would, in the opinion of counsel for SpectraSite, be
unlawful. SpectraSite also reserves the right in its sole discretion to waive
any defects, irregularities or conditions of tender as to particular Old Notes.
SpectraSite's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as
SpectraSite shall determine. Although SpectraSite intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither
SpectraSite, the Exchange Agent nor any other person shall incur any liability
for failure to give such notification. Tenders of Old Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Old 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 the Letter of Transmittal, as soon as practicable
following the Expiration Date.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
For each Old Note accepted for exchange, the holder of such Old Note will
receive an Exchange Note having a principal amount at maturity equal to that of
the surrendered Old Note. For purposes of the Exchange Offer, SpectraSite shall
be deemed to have accepted properly tendered Old Notes for exchange when, as and
if SpectraSite has given oral or written notice thereof to the Exchange Agent.
In all cases, the issuance of Exchange Notes for Old Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Notes or a
timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal or Agent's Message and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer, such unaccepted or
non-exchanged Old Notes will be returned without expense to the tendering holder
thereof (or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described below, such non-exchanged Old Notes
will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the Expiration Date.
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BOOK-ENTRY TRANSFER
The Exchange Agent will establish a new account or utilize an existing
account with respect to the Old Notes at DTC promptly after the date of this
Prospectus, and any financial institution that is a participant in DTC and whose
name appears on a security position listing as the owner of Old Notes may make a
book-entry tender of Old Notes by causing DTC to transfer such Old Notes into
the Exchange Agent's account in accordance with DTC's procedures for such
transfer. However, although tender of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
validly executed, with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be received by the Exchange Agent at its address set forth below under
the caption "Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedures described below must be complied with. The
confirmation of book-entry transfer of Old Notes into the Exchange Agent's
account at DTC as described above is referred to herein as a "Book-Entry
Confirmation." Delivery of documents to DTC in accordance with DTC's procedures
does not constitute delivery to the Exchange Agent.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Old Notes stating (i) the aggregate principal
amount of Old Notes which have been tendered by such participant, (ii) that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and (iii) that SpectraSite may enforce such agreement against the
participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States (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 or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old 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) (or in the case of a book-entry
transfer, an Agent's Message) together with the certificate(s) representing
the Old Notes (or a confirmation of book-entry transfer of such Notes into
the 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) the certificate(s) representing all tendered Old Notes in proper
form for transfer (or a confirmation of book-entry transfer of such Old
Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), together with a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message)
and all other documents required by the Letter of Transmittal are received
by the Exchange Agent upon five New York Stock Exchange trading days after
the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on , 1998;
otherwise such tenders are irrevocable.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter 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 Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case of
Old Notes transferred by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited), (iii) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Old Notes register the transfer of such Old Notes
into the name of the person withdrawing the tender and (iv) specify the name in
which any such Old 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 SpectraSite, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
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
Notwithstanding any other term of the Exchange Offer, SpectraSite shall not
be required to accept for exchange, or Exchange Notes for, any Old Notes, and
may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of SpectraSite, might materially impair the
ability of SpectraSite to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to SpectraSite or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the SEC is proposed, adopted or enacted, which, in the sole judgment of
SpectraSite, might materially impair the ability of SpectraSite to proceed
with the Exchange Offer or materially impair the contemplated benefits of
the Exchange Offer to SpectraSite; or
(c) any governmental approval has not been obtained, which approval
SpectraSite shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If SpectraSite determines in its sole discretion that any of the conditions
are not satisfied, SpectraSite may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Old Notes (see
"-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn. SpectraSite shall keep the Exchange Offer open for at
least 30 days (or longer if required by applicable law, including in connection
with any material modification or waiver of the terms or conditions of the
Exchange Offer that requires such extension under applicable law) after the date
notice of the Exchange Offer is mailed to holders of Old Notes.
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EXCHANGE AGENT
United States Trust Company 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 Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway, 13th floor
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attn: Corporate Trust
Attn: Corporate Trust Services
By Hand: By Facsimile:
United States Trust Company of New York (212) 780-0592
111 Broadway, Lower Level
Corporate Trust Window Confirm by Telephone:
New York, New York 10006 (800)548-6565
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by SpectraSite. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of SpectraSite and its affiliates or its agents.
SpectraSite has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. SpectraSite, 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 SpectraSite. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in SpectraSite's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by SpectraSite. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only (i) to SpectraSite (upon redemption thereof or otherwise),
(ii) so long as the Old Notes are eligible for resale pursuant to Rule 144A, to
a person inside the United States whom the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel
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reasonably acceptable to SpectraSite), (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Regulation S under
the Securities Act, or (iv) pursuant to an effective registration statement
under the Securities Act, in each case in accordance with any applicable
securities laws of any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based upon interpretations by
the staff of the SEC set forth in certain no-action letters issued to third
parties (including 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)), SpectraSite believes
that a holder or other person who receives Exchange Notes, whether or not such
person is the holder (other than a person that is an "affiliate" of SpectraSite
within the meaning of Rule 405 under the Securities Act) who receives Exchange
Notes in exchange for Old Notes in the ordinary course of business and who is
not participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes, will be allowed to resell the Exchange Notes to the public
without further registration under the Securities Act and without delivering to
the purchasers of the Exchange Notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the SEC enunciated in the above mentioned
no-action letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
As contemplated by the above mentioned no-action letters and the
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to SpectraSite in the Letter of Transmittal that (i) the
Exchange Notes are to be acquired by the holder or the person receiving such
Exchange Notes, whether or not such person is the holder, in the ordinary course
of business, (ii) the holder or any such other person is not engaging in the
distribution of the Exchange Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) neither the holder nor any such other
person is an "affiliate" of SpectraSite within the meaning of Rule 405 under the
Securities Act, and (v) the holder or any such other person acknowledges that if
such holder or other person participates in the Exchange Offer for the purpose
of distributing the Exchange Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the Exchange Notes and cannot rely on the above mentioned no-action
letters. As indicated above, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Old Notes must acknowledge
that it (i) acquired the Old Notes for its own account as a result of
market-making activities or other trading activities, (ii) has not entered into
any arrangement or understanding with SpectraSite or any "affiliate" of
SpectraSite (within the meaning of Rule 405 under the Securities Act) to
distribute the Exchange Notes to be received in the Exchange Offer and (iii)
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. For a description of the
procedures for resales by Participating Broker-Dealers, see "Plan of
Distribution.
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DESCRIPTION OF THE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes (which they replace) except that (i) the issuance of the
Exchange Notes has been registered under the Securities Act and, therefore, the
Exchange Notes will not bear legends restricting the transfer thereof, and (ii)
the holders of Exchange Notes will not be entitled to certain rights under the
Registration Rights Agreement, including the provisions providing for an
increase in the interest rate on the Old Notes in certain circumstances relating
to the timing of the Exchange Offer, which rights will terminate when the
Exchange Offer is consummated. A copy of the Indenture, dated June 26, 1998 (the
"Indenture"), between SpectraSite and United States Trust Company of New York,
as trustee, has been filed as an exhibit to the exchange offer registration
statement of which this Prospectus forms a part. The following summary of
certain provisions of the Indenture and does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Indenture, including the definitions of certain terms therein and those
terms made a part thereof by the Trust Indenture Act of 1939, as amended.
Whenever particular defined terms of the Indenture are incorporated herein by
reference. For definitions of certain capitalized terms used in the following
summary, see "-- Certain Definitions."
GENERAL
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of
SpectraSite in the Borough of Manhattan, The City of New York (which initially
shall be the corporate trust office of the Trustee, at 114 West 47th Street,
25th Floor, New York, New York 10036), except that, at the option of
SpectraSite, payment of interest may be made by check mailed to the registered
holders of the Notes at their registered addresses.
The Exchange Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge will be made for any registration of transfer or exchange of
Notes, but SpectraSite may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
For United States federal income tax purposes, a significant amount of
original issue discount, taxable as ordinary income, will be recognized by a
Holder as such discount is amortized from the Issue Date. However, Holders will
not receive any payments on the Notes until January 15, 2004. For a description
of certain tax matters related to an investment in the Notes, see "Certain U.S.
Federal Tax Considerations."
TERMS OF THE NOTES
The Notes are unsecured, senior obligations of SpectraSite, limited to
$225.2 million aggregate principal amount at maturity, and will mature on July
15, 2008. Until July 15, 2003, the Notes will accrue at a rate of 12% per annum
and be compounded semi-annually on each Semi-Annual Accrual Date with respect to
the Notes, but, except as described herein, will not be payable in cash.
Interest on the Accreted Value of each Note as of July 15, 2003 will accrue at
the same rate but will be paid semi-annually commencing January 15, 2004, to
Holders of record at the close of business on the January 1 or July 1
immediately preceding the interest payment date of January 15 and July 15 of
each year. Interest on the Notes will be paid on a 360-day year, twelve 30-day
month basis.
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the Notes are not be
redeemable at the option of SpectraSite prior to July 15, 2003. Thereafter, the
Notes will be redeemable, at SpectraSite's option, in whole or in part, at any
time or from time to time, upon not less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed as a percentage of the Accreted Value),
plus accrued and unpaid interest, if any, on such Accreted Value to the
redemption date (subject to the right of Holders of record on the relevant
record
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date to receive interest due on the relevant interest payment date), if redeemed
during the 12-month period commencing on July 15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2003........................................................ 106.000%
2004........................................................ 104.000%
2005........................................................ 102.000%
2006 and thereafter......................................... 100.000%
</TABLE>
In addition, at any time and from time to time prior to July 15, 2001,
SpectraSite may redeem in the aggregate up to 25% of the aggregate principal
amount at maturity of the Notes with the proceeds of one or more Equity
Offerings, at a redemption price (expressed as a percentage of the Accreted
Value thereof) of 112% plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least 75% of the aggregate principal amount at
maturity of the Notes must remain outstanding after each such redemption
(excluding Notes held by SpectraSite or any of its Subsidiaries); provided
further, that such redemption shall occur within 60 days of the date of closing
of such Equity Offering.
SELECTION AND NOTICE
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by
such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. Notices of redemption shall be mailed by first class
mail at least 30 but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at its registered address. 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. If any Note is to be redeemed in part only, the notice of
redemption relating 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.
MANDATORY REDEMPTION
SpectraSite is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
RANKING
The indebtedness evidenced by the Notes is unsecured Senior Indebtedness of
SpectraSite, will rank pari passu in right of payment with all existing and
future Senior Indebtedness of SpectraSite and will be senior in right of payment
to all existing and future Subordinated Obligations of SpectraSite. The Notes
will also be effectively subordinated to all existing and future Secured
Indebtedness of SpectraSite to the extent of the value of the assets securing
such Indebtedness and structurally subordinated to all existing and future
Indebtedness of any Subsidiary of SpectraSite.
At September 30, 1998, SpectraSite would have had no indebtedness
outstanding other than the Notes, and SpectraSite's subsidiaries would have had
approximately $[3.3] million of liabilities, including trade payables. Although
the Indenture contains limitations on the amount of additional Indebtedness
which SpectraSite may Incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness or Secured Indebtedness. See "-- Certain
Covenants -- Limitation on Indebtedness."
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All of the operations of SpectraSite are conducted through its subsidiaries
and, therefore, SpectraSite is dependent upon the cash flow of its subsidiaries
to meet its obligations, including its obligations under the Notes.
SpectraSite's subsidiaries will not be guarantors of the Notes and are separate
entities with no obligation to make payments on the Notes or to make funds
available therefor. Claims of creditors of such subsidiaries, including trade
creditors, secured creditors and creditors holding indebtedness and guarantees
issued by such subsidiaries, and claims of preferred stockholders (if any) of
such subsidiaries generally will have priority with respect to the assets and
earnings of such subsidiaries over the claims of creditors of SpectraSite,
including holders of the Notes. The Notes, therefore, will be effectively
subordinated to all Indebtedness (including all obligations under the New Credit
Facility), preferred stock (if any) and other liabilities and commitments
(including trade payables and lease obligations) of SpectraSite's subsidiaries.
At September 30, 1998, the total liabilities of SpectraSite's subsidiaries would
have been approximately $3.0 million, including trade payables. It is expected
that the provisions of the New Credit Facility will contain substantial
restrictions on the ability of SCI to dividend or distribute cash or assets to
SpectraSite. Although the Indenture limits the incurrence of Indebtedness and
preferred stock of certain of SpectraSite's subsidiaries, such limitation is
subject to a number of significant qualifications. Moreover, the Indenture does
not impose any limitation on the incurrence by such subsidiaries of liabilities
that are not considered Indebtedness or Preferred Stock under the Indenture. See
"-- Certain Covenants -- Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries" and "Risk Factors -- Holding Company Structure;
Effective Subordination; Restrictions on Access to Cash Flow of Subsidiaries."
As of the date of the Indenture, all of SpectraSite's Subsidiaries are
Restricted Subsidiaries. However, under certain circumstances, SpectraSite may
designate current or future Subsidiaries as Unrestricted Subsidiaries, which
will not be subject to many of the restrictive covenants set forth in the
Indenture.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require SpectraSite to repurchase
all or any part of such Holder's Notes at a purchase price in cash equal to 101%
of the Accreted Value thereof as of the date of repurchase, plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date):
(i) Prior to the first public offering of common stock of SpectraSite,
the Permitted Holders cease to be the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a
majority in the aggregate of the total voting power of the Voting Stock of
SpectraSite, whether as a result of issuance of securities of SpectraSite,
any merger, consolidation, liquidation or dissolution of SpectraSite, any
direct or indirect transfer of securities by SpectraSite or otherwise (for
purposes of this clause (i) and clause (ii) below, the Permitted Holders
shall be deemed to beneficially own any Voting Stock of an entity (the
"specified entity") held by any other entity (the "parent entity") so long
as the Permitted Holders beneficially own (as so defined), directly or
indirectly, in the aggregate a majority of the voting power of the Voting
Stock of the parent entity);
(ii) subsequent to the first public offering of common stock of
SpectraSite, any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above, except that
for purposes of this clause (ii) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of SpectraSite; provided, however, that
the Permitted Holders "beneficially own" (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of SpectraSite than such other person and
do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of
SpectraSite (for the purposes of this clause (ii), such other person shall
be deemed to beneficially own any Voting Stock of a specified entity held
by a parent entity, if such other person is
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the beneficial owner (as defined in this clause (ii)), directly or
indirectly, of more than 35% of the voting power of the Voting Stock of
such parent entity and the Permitted Holders "beneficially own" (as
defined in clause (i) above), directly or indirectly, in the aggregate a
lesser percentage of the voting power of the Voting Stock of such parent
entity and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors of such parent entity);
(iii) during any period of two consecutive years (or, in the case this
event occurs within the first two years after the Issue Date, such shorter
period as shall have begun on the Issue Date), individuals who at the
beginning of such period constituted the Board of Directors of SpectraSite
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of SpectraSite was
approved by a vote of a majority of the directors of SpectraSite then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of
SpectraSite then in office;
(iv) the merger or consolidation of SpectraSite with or into another
Person or the merger of another Person with or into SpectraSite, or the
sale of all or substantially all the assets of SpectraSite to another
Person (other than a Permitted Holder or a Person that is controlled by the
Permitted Holders), and, in the case of any such merger or consolidation,
the securities of SpectraSite that are outstanding immediately prior to
such transaction and which represent 100% of the aggregate voting power of
the Voting Stock of SpectraSite are changed into or exchanged for cash,
securities or property, unless pursuant to such transaction such securities
are changed into or exchanged for, in addition to any other consideration,
securities of the surviving corporation that represent immediately after
such transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving corporation.
Within 30 days following any Change of Control, SpectraSite shall mail a
notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require SpectraSite
to purchase such Holder's Notes at a purchase price in cash equal to 101% of the
Accreted Value thereof as of the date of repurchase, plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest on the relevant interest
payment date); (2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical income, cash
flow and capitalization after giving effect to such Change of Control); (3) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (4) the instructions determined by
SpectraSite, consistent with this covenant, that a Holder must follow in order
to have its Notes purchased.
The phrase "all or substantially all," as used with respect to a sale of
assets in the definition in the Indenture of "Change of Control," varies
according to the facts and circumstances of the subject transaction, has no
clearly established meaning under New York law (the law governing the Indenture)
and is subject to judicial interpretation. Accordingly, in certain
circumstances, there may be a degree of uncertainty in ascertaining whether a
particular transaction would involve a disposition of "all or substantially all"
of the assets of a Person and therefore it may be unclear whether a Change of
Control has occurred.
SpectraSite will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, SpectraSite will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this paragraph by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
SpectraSite and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that SpectraSite would decide to do so in the future. Subject to the
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limitations discussed below, SpectraSite could, in the future, enter into
certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect SpectraSite's capital structure or credit rating.
Restrictions on the ability of SpectraSite to incur additional Indebtedness are
contained in the covenants described under "-- Certain Covenants -- Limitation
on Indebtedness" and "-- Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries." Such restrictions can only be waived with the consent
of the holders of a majority in principal amount at maturity of the Notes then
outstanding. Except for the limitations contained in such covenants, however,
the Indenture will not contain any covenants or provisions that may afford
holders of the Notes protection in the event of a highly leveraged transaction.
The New Credit Facility is expected to limit SpectraSite's access to cash
flow of its Subsidiaries and, therefore, restrict SpectraSite's ability to
purchase any Notes. The New Credit Facility is also expected to provide that the
occurrence of certain change of control events with respect to SpectraSite will
constitute a default thereunder. In the event that a Change of Control occurs at
a time when SpectraSite's Subsidiaries are prohibited from making distributions
to SpectraSite to purchase Notes, SpectraSite could cause its Subsidiaries to
seek the consent of the lenders under the new Credit Facility to allow such
distributions or could attempt to refinance the borrowings that contain such
prohibition. If SpectraSite does not obtain such a consent or repay such
borrowings, SpectraSite will remain prohibited from purchasing Notes. In such
case, SpectraSite's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture which would, in turn, constitute a default under
the New Credit Facility. Future Indebtedness of SpectraSite and its Subsidiaries
may contain prohibitions on the occurrence of certain events that would
constitute a Change of Control or require such indebtedness to be purchased on a
Change of Control. Moreover, the exercise by the Holders of their right to
require SpectraSite to purchase the Notes could cause a default under such
indebtedness, even if the Change of Control itself does not, due to the
financial effect of such purchase on SpectraSite. Finally, SpectraSite's ability
to pay cash to the Holders of Notes following the occurrence of a Change of
Control may be limited by SpectraSite's then existing financial resources,
including its ability to access the cash flow of its Subsidiaries. See "Risk
Factors -- Repurchase of the Notes upon a Change of Control" and "Risk
Factors -- Holding Company Structure; Effective Subordination; Restrictions on
Access to Cash Flow of Subsidiaries." There can be no assurance that sufficient
funds will be available when necessary to make any required purchases.
The provisions under the Indenture relative to SpectraSite's obligation to
make an offer to repurchase the Notes as a result of a Change of Control may be
waived or modified with the written consent of the holders of a majority in
principal amount at maturity of the Notes.
SpectraSite will not be required to make an offer pursuant to this Section
upon a Change of Control if a third party, in the manner, at the times and
otherwise in compliance with the requirements set forth in the Indenture
applicable to a Change of Control made by SpectraSite, makes an offer to
purchase and purchases all Notes validly tendered and not withdrawn under such
offer.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
Limitation on Indebtedness. (a) SpectraSite will not Incur, directly or
indirectly, any Indebtedness unless, on the date of such Incurrence and after
giving effect to such Incurrence and the application of the net proceeds
therefrom, the Indebtedness to Adjusted EBITDA Ratio of SpectraSite would be
less than 7.00:1. Accrual of interest, accretion or amortization of original
issue discount and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this covenant.
(b) Notwithstanding the foregoing paragraph (a) and regardless of the
amount of outstanding Indebtedness of SpectraSite, SpectraSite may Incur any or
all of the following Indebtedness: (i) Indebtedness of SpectraSite owing to and
held by any Restricted Subsidiary; provided, however, that any subsequent
issuance or transfer of any Capital Stock or any other event which results in
any such
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Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of any such Indebtedness (except to another Restricted Subsidiary) will
be deemed, in each case, to constitute the Incurrence of such Indebtedness by
SpectraSite; (ii) Indebtedness represented by the Notes and the Exchange Notes;
(iii) Indebtedness of SpectraSite (other than the Indebtedness described in
clauses (i) or (ii) above) outstanding on the Issue Date; (iv) Indebtedness
(including Capitalized Lease Obligations) of SpectraSite Incurred to finance the
acquisition, construction or improvement of fixed or capital assets in an
aggregate principal amount at any one time outstanding not to exceed $5.0
million (together with the amount of any Indebtedness then outstanding and
Incurred pursuant to clause (b)(vi) of the "Limitation on Indebtedness and
Preferred Stock of Restricted Subsidiaries" covenant); provided, that such
Indebtedness is Incurred within 180 days after the date of such acquisition,
construction or improvement and does not exceed the fair market value of such
acquired, constructed or improved assets, as determined in good faith by the
Board of Directors of SpectraSite; (v) Refinancing Indebtedness Incurred in
respect of any Indebtedness Incurred pursuant to paragraph (a) or pursuant to
clause (ii), (iii) or this clause (v); (vi) Indebtedness (A) in respect of
performance bonds, bankers' acceptances, letters of credit and surety or appeal
bonds provided by SpectraSite in the ordinary course of its business and which
do not secure other Indebtedness and (B) under Currency Agreements and Interest
Rate Agreements Incurred which, at the time of Incurrence, is in the ordinary
course of business; provided, however, that, in the case of Currency Agreements
and Interest Rate Agreements, such Currency Agreements and Interest Rate
Agreements are directly related to Indebtedness permitted to be Incurred by
SpectraSite pursuant to the Indenture; (vii) Indebtedness represented by
Guarantees by SpectraSite of Indebtedness otherwise permitted to be Incurred
pursuant to the Indenture; (viii) Indebtedness of any other Person existing at
the time such other Person is merged with or into SpectraSite outstanding on or
prior to the date on which such Person was merged with or into SpectraSite
(other than Indebtedness Incurred in connection with, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Person was merged with
or into SpectraSite); provided, however, that on the date of such merger and
after giving effect thereto, SpectraSite would have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to paragraph (a) above; (ix)
Indebtedness Incurred by SpectraSite's Subsidiaries not otherwise prohibited by
the terms of the Indenture; (x) the Incurrence by SpectraSite of Indebtedness
not to exceed, at any one time outstanding (together with the amount of any
Indebtedness then outstanding and Incurred pursuant to clause (b)(ix) of the
"Limitation on Indebtedness and Preferred Stock of Restricted Subsidiaries"
covenant), 1.5 times the aggregate Net Cash Proceeds received by SpectraSite
from the issue or sale of Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of
SpectraSite and other than an issuance or sale to an employee stock ownership
plan or to a trust established by SpectraSite or any of its Restricted
Subsidiaries), less the amount of such Net Cash Proceeds used to make Restricted
Payments pursuant clause 3(B) of paragraph (a) of the "Limitation on Restricted
Payments" covenant or applied pursuant to clause (i)(B) of paragraph (b) of the
"Limitation on Restricted Payments" covenant; provided, however, that,
immediately prior to the consummation of each such issuance or sale of Capital
Stock, SpectraSite would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) above; and (xi) other
Indebtedness in an aggregate principal amount outstanding at any time not to
exceed $5.0 million (together with the amount of any Indebtedness and Preferred
Stock then outstanding and Incurred pursuant to clause (b)(x) of the "Limitation
on Indebtedness and Preferred Stock of Restricted Subsidiaries" covenant).
(c) Notwithstanding the foregoing, SpectraSite shall not Incur any
Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof are
used, directly or indirectly, to Refinance any Subordinated Obligations unless
such new Indebtedness shall (i) be subordinated to the Notes to at least the
same extent as such Subordinated Obligations being Refinanced and (ii) have a
Stated Maturity that is no earlier than the Stated Maturity of the Subordinated
Obligations being Refinanced.
(d) For purposes of determining compliance with the foregoing covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, SpectraSite, in its sole discretion,
will classify such item of Indebtedness and only be required to include
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the amount and type of such Indebtedness in one of the above clauses and (ii) an
item of Indebtedness may be divided and classified in more than one of the types
of Indebtedness described above.
Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries. (a) SpectraSite shall not permit any Restricted Subsidiary to
Incur, directly or indirectly, any Indebtedness or Preferred Stock unless, on
the date of such Incurrence and after giving effect to such Incurrence and the
application of the net proceeds therefrom, the Indebtedness to Adjusted EBITDA
Ratio of SpectraSite would be less than 7.00:1. Accrual of interest, accretion
or amortization of original issue discount and the payment of interest in the
form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
(b) Notwithstanding the foregoing paragraph (a) and regardless of the
amount of outstanding Indebtedness of the Restricted Subsidiaries, any
Restricted Subsidiary may Incur any or all of the following Indebtedness: (i)
Indebtedness Incurred under the New Credit Facility in an aggregate principal
amount outstanding at any time not to exceed the greater of (A) $50.0 million
and (B) the product of (x) $200,000 and (y) the number of Completed Towers on
the date of such Incurrence, less the aggregate amount of all proceeds from all
Asset Dispositions of Tower Assets of SpectraSite that have been applied since
the Issue Date to permanently reduce the outstanding amount of such Indebtedness
pursuant to the "Limitation on Sale of Assets and Subsidiary Stock" covenant;
(ii) Indebtedness or Preferred Stock of a Restricted Subsidiary issued to and
held by SpectraSite or a Restricted Subsidiary; provided, however, that any
subsequent issuance or transfer of any Capital Stock which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness or Preferred Stock (other than to the Company or a
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness or Preferred Stock by SpectraSite thereof; (iii)
Indebtedness or Preferred Stock of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary was
acquired by SpectraSite (other than Indebtedness or Preferred Stock Incurred in
connection with, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by SpectraSite); provided, however, that on the date of such
acquisition and after giving effect thereto, SpectraSite would have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) of the "Limitation on Indebtedness" covenant above; (iv)
Indebtedness or Preferred Stock outstanding on the Issue Date (other than
Indebtedness described in clauses (i), (ii) or (iii) of this paragraph); (v)
Refinancing Indebtedness Incurred in respect of Indebtedness or Preferred Stock
referred to in clauses (iii) or (iv) of this paragraph or this clause (v);
provided, however, that to the extent such Refinancing Indebtedness directly or
indirectly Refinances Indebtedness or Preferred Stock of a Subsidiary described
in clause (iii), such Refinancing Indebtedness shall be Incurred only by such
Subsidiary; (vi) Indebtedness (including Capitalized Lease Obligations) Incurred
to finance the acquisition, construction or improvement of fixed or capital
assets in an aggregate principal amount at any one time outstanding not to
exceed $5.0 million (together with the amount of any Indebtedness then
outstanding and Incurred pursuant to clause (b)(iv) of the "Limitation on
Indebtedness" covenant); provided, that such Indebtedness is Incurred within 180
days after the date of such acquisition, construction or improvement and does
not exceed the fair market value of such acquired, constructed or improved
assets, as determined in good faith by the Board of Directors of SpectraSite;
(vii) Indebtedness (A) in respect of performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds provided in the ordinary course of
its business and which do not secure other Indebtedness and (B) under Currency
Agreements and Interest Rate Agreements Incurred which, at the time of
Incurrence, is in the ordinary course of business; provided, however, that, in
the case of Currency Agreements and Interest Rate Agreements, such Currency
Agreements and Interest Rate Agreements are directly related to Indebtedness
permitted to be Incurred pursuant to the Indenture; (viii) Indebtedness
represented by Guarantees of Indebtedness otherwise permitted to be Incurred
pursuant to the Indenture; (ix) the Incurrence of Indebtedness not to exceed, at
any one time outstanding (together with the amount of any Indebtedness then
outstanding and Incurred pursuant to clause (b)(x) of the "Limitation on
Indebtedness" covenant), 1.5 times the aggregate Net Cash Proceeds received by
SpectraSite from the issue or sale of Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than an
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issuance or sale to a Subsidiary of SpectraSite and other than an issuance or
sale to an employee stock ownership plan or to a trust established by
SpectraSite or any of its Restricted Subsidiaries), less the amount of such Net
Cash Proceeds used to make Restricted Payments pursuant clause 3(B) of paragraph
(a) of the "Limitation on Restricted Payments" covenant or applied pursuant to
clause (i)(B) of paragraph (b) of the "Limitation on Restricted Payments"
covenant; provided, however, that, immediately prior to the consummation of each
such issuance or sale of Capital Stock, SpectraSite would have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of the
"Limitation on Indebtedness" covenant above; and (x) other Indebtedness and
Preferred Stock in an aggregate principal and/or liquidation amount outstanding
at any time not to exceed $5.0 million (less the amount of any Indebtedness then
outstanding and Incurred pursuant to clause (b)(xi) of the "Limitation on
Indebtedness" covenant).
(c) For purposes of determining compliance with the foregoing covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, SpectraSite, in its sole discretion,
will classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of the above clauses and (ii) an
item of Indebtedness may be divided and classified in more than one of the types
of Indebtedness described above.
SpectraSite will not permit any Unrestricted Subsidiary to Incur any
Indebtedness other than Non-Recourse Debt.
Limitation on Restricted Payments. (a) SpectraSite will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to make any Restricted
Payment if at the time SpectraSite or such Restricted Subsidiary makes such
Restricted Payment: (1) a Default or Event of Default will have occurred and be
continuing (or would result therefrom); (2) SpectraSite could not Incur at least
$1.00 of additional Indebtedness under paragraph (a) of the "Limitation on
Indebtedness" covenant; or (3) the aggregate amount of such Restricted Payment
and all other Restricted Payments (the amount so expended, if other than in
cash, to be determined in good faith by the Board of Directors of SpectraSite,
whose determination will be evidenced by a resolution of such Board of
Directors) declared or made subsequent to the Issue Date would exceed the sum
of: (A) (x) the aggregate EBITDA (or, in the event such EBITDA shall be a
deficit, minus such deficit) accrued subsequent to the Issue Date to the most
recent date for which financial information is available to SpectraSite, taken
as one accounting period, (y) less 1.4 times Consolidated Interest Expense for
the same period; (B) (x) 100% of the aggregate Net Cash Proceeds (less the
aggregate amount of such Net Cash Proceeds used to Incur Indebtedness pursuant
to clause (b)(x) of the "Limitation on Indebtedness" covenant and clause (b)(ix)
of the "Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries" covenant) and (y) 70% of the GAAP purchase accounting valuation of
Qualified Proceeds (with each such valuation calculated as of the sale date of
the Capital Stock received as consideration therefor), in each case received by
SpectraSite from the issue or sale of Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of SpectraSite and other than an issuance or sale to an employee
stock ownership plan or to a trust established by SpectraSite or any of its
Restricted Subsidiaries); (C) the amount by which Indebtedness of SpectraSite is
reduced on SpectraSite's balance sheet upon the conversion or exchange (other
than by a Restricted Subsidiary) subsequent to the Issue Date of any
Indebtedness of SpectraSite convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of SpectraSite (less the amount of any cash, or the
fair value of any other property, distributed by SpectraSite upon such
conversion or exchange); (D) an amount equal to the sum of (i) the net reduction
in Investments in Unrestricted Subsidiaries resulting from dividends, repayments
of loans or advances or other transfers of assets to SpectraSite or any
Restricted Subsidiary from Unrestricted Subsidiaries and (ii) the portion
(proportionate to SpectraSite's equity interest in such Subsidiary) of the fair
market value of the net assets of an Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, that
the foregoing sum shall not exceed, in the case of any Unrestricted Subsidiary,
the amount of Investments previously made by SpectraSite or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments; (E) dividends and
distributions received by SpectraSite subsequent to the Issue
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Date from Unrestricted Subsidiaries, to the extent such dividends and
distributions are not otherwise included in calculating EBITDA; and (F) Net Cash
Proceeds received by SpectraSite subsequent to the Issue Date from Investments
that are not Permitted Investments, to the extent not otherwise included in
calculating EBITDA.
(b) The provisions of the foregoing paragraph (a) will not prohibit: (i)
any purchase, redemption, defeasance or other acquisition of Capital Stock of
SpectraSite or Subordinated Obligations made by exchange for, or out of the net
proceeds of the substantially concurrent sale of, Capital Stock of SpectraSite
(other than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of SpectraSite or an employee stock ownership plan or to a trust
established by SpectraSite or any of its Subsidiaries); provided, however, that
(A) such purchase, redemption, defeasance or other acquisition will be excluded
in the calculation of the amount of Restricted Payments and (B) to the extent
applied toward any such purchase, redemption, defeasance or other acquisition,
the Net Cash Proceeds from such sale will be excluded from clause (3)(B) of
paragraph (a) above, clause (b)(x) of the "Limitation on Indebtedness" covenant
and clause (b)(ix) of the "Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries" covenant; (ii) any purchase, redemption, defeasance or
other acquisition of Subordinated Obligations made by exchange for, or out of
the net proceeds of the substantially concurrent sale of, Subordinated
Obligations of SpectraSite; provided, however, that (A) the principal amount of
such new Indebtedness does not exceed the principal amount of the Subordinated
Obligations being so redeemed, repurchased, acquired or retired for value (plus
the amount of any premium required to be paid under the terms of the instrument
governing the Subordinated Obligations being so redeemed, repurchased, acquired
or retired), (B) such new Indebtedness is subordinated to the Notes at least to
the same extent as such Subordinated Obligations so purchased, exchanged,
redeemed, repurchased, acquired or retired for value, (C) such new Indebtedness
has a final scheduled maturity date later than the earlier of the final
scheduled maturity date of the Subordinated Obligations being so redeemed,
repurchased, acquired or retired and the final scheduled maturity date of the
Notes and (D) such new Indebtedness has an Average Life equal to or greater than
the Average Life of the Notes; provided further, however, that such purchase,
redemption, defeasance or other acquisition will be excluded in the calculation
of the amount of Restricted Payments; (iii) dividends paid within 60 days after
the date of declaration thereof if at such date of declaration such dividend
would have complied with this covenant; provided, however, that the amount of
such dividend will be included in the calculation of the amount of Restricted
Payments; and (iv) purchases of outstanding shares of SpectraSite's capital
stock from deceased shareholders in an amount not to exceed $1.0 million in the
aggregate; provided, however, that such purchases will be included in the
calculation of the amount of Restricted Payments; provided, however, that, at
the time of, and after giving effect to, any Restricted Payment permitted by
clauses (i), (ii) and (iv), no Default or Event of Default shall have occurred
and be continuing.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. SpectraSite will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock to SpectraSite or a Restricted Subsidiary or pay any Indebtedness or other
obligation owed to SpectraSite, (ii) make any loans or advances to SpectraSite
or (iii) transfer any of its property or assets to SpectraSite or any Restricted
Subsidiary, except: (1) any encumbrance or restriction pursuant to the New
Credit Facility or any agreement in effect at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by SpectraSite or a Restricted Subsidiary (other than
Indebtedness Incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Subsidiary or was acquired by SpectraSite or a Restricted Subsidiary) and
outstanding on such date; (3) any encumbrance or restriction pursuant to an
agreement effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (1) or (2) of this covenant or contained in any
amendment to an agreement referred to in clause (1) or (2) of this covenant;
provided, however, that the encumbrances and restrictions with respect to such
Restricted
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Subsidiary contained in any such refinancing agreement or amendment taken as a
whole are no less favorable to the Noteholders than the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in such
predecessor agreements as determined in good faith by the Board of Directors of
SpectraSite; (4) in the case of clause (iii), any encumbrance or restriction
that restricts in a customary manner the subletting, assignment or transfer of
any property or asset that is subject to a lease, license or other contract; (5)
in the case of clause (iii), contained in security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance
or restrictions restrict the transfer of the property subject to such security
agreements or mortgages; (6) any restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition; and (7)
customary provisions with respect to the disposition or distribution of assets
or property in joint venture and other similar agreements.
Limitation on Sales of Assets and Subsidiary Stock. (a) SpectraSite will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
consummate any Asset Disposition unless (i) SpectraSite or such Restricted
Subsidiary receives consideration at the time of such Asset Disposition at least
equal to the fair market value (including as to the value of all non cash
consideration), as determined in good faith by the Board of Directors of
SpectraSite of the shares and assets subject to such Asset Disposition and (ii)
except in the case of a Tower Asset Exchange, at least 75% of the consideration
thereof received by SpectraSite or such Restricted Subsidiary is in the form of
cash or cash equivalents.
Within 365 days after the receipt of any Net Available Cash from an Asset
Disposition, SpectraSite or the applicable Restricted Subsidiary may apply such
Net Available Cash to: (A) prepay, repay, redeem or purchase Indebtedness (other
than Disqualified Stock) of a Wholly Owned Subsidiary (provided, that the
applicable Restricted Subsidiary, whether or not a Wholly Owned Subsidiary, also
may prepay, repay, redeem or purchase its own outstanding Indebtedness) or
Senior Indebtedness (in each case other than Indebtedness owed to SpectraSite or
an Affiliate of SpectraSite); (B) acquire all or substantially all of the assets
of an entity engaged in a Permitted Business; (C) acquire Voting Stock of an
entity engaged in a Permitted Business from a Person that is not a Subsidiary of
SpectraSite; provided, that, (x) after giving effect thereto, SpectraSite or its
Restricted Subsidiary owns a majority of such Voting Stock and (y) such
acquisition is otherwise made in accordance with the Indenture, including,
without limitation, the "Limitation on Restricted Payments" covenant; or (D)
make a capital expenditure or acquire other long-term assets that are used or
useful in a Permitted Business. To the extent of the balance of such Net
Available Cash after application in accordance with clauses (A), (B), (C) or
(D), SpectraSite shall make an Offer (as defined below) to Holders of the Notes
to purchase Notes pursuant to and subject to the conditions set forth in
paragraph (b) of this covenant.
Notwithstanding the foregoing provisions, SpectraSite and its Restricted
Subsidiaries shall not be required to apply any Net Available Cash in accordance
herewith except to the extent that the aggregate Net Available Cash from all
Asset Dispositions which are not applied in accordance with this covenant
exceeds $2.5 million. Pending application of Net Available Cash pursuant to this
covenant, such Net Available Cash shall be invested in Permitted Investments.
For the purposes of this covenant, the following are deemed to be cash: (x)
the assumption by the transferee of Indebtedness of SpectraSite (other than
Disqualified Stock of SpectraSite and other than Indebtedness that is
subordinated to the Notes) or Indebtedness of any Restricted Subsidiary and the
release of SpectraSite or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition; (y) securities received
by SpectraSite or any Restricted Subsidiary from the transferee that are
converted by SpectraSite or such Restricted Subsidiary into cash within 20 days
of the applicable Asset Disposition (to the extent of the cash received); and
(z) any liabilities (as shown on SpectraSite's or such Restricted Subsidiary's
most recent balance sheet) of SpectraSite or any Restricted Subsidiary (other
than contingent liabilities and liabilities that are by their terms subordinated
to the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases SpectraSite
or any such Restricted Subsidiary from further liability.
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(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to paragraph (a) of this covenant, SpectraSite will be required
to purchase Notes tendered pursuant to an offer by SpectraSite for the Notes
(the "Offer") at a purchase price of 100% of their Accreted Value as of the date
of purchase (without premium) plus accrued and unpaid interest to the date of
purchase in accordance with the procedures (including prorating in the event of
oversubscription) set forth in the Indenture. If the aggregate purchase price of
Notes tendered pursuant to the Offer is less than the Net Available Cash
allotted to the purchase of the Notes, SpectraSite may use any remaining Net
Available Cash for general corporate purposes not otherwise prohibited by the
Indenture. If the aggregate purchase price of Notes tendered pursuant to the
Offer is greater than the Net Available Cash allotted to the purchase of the
Notes, the Trustee will select the Notes to be purchased on the basis set forth
under "-- Selection and Notice" above. Upon completion of any required Offer to
the holders of the Notes, the amount of Net Available Cash will be reset at
zero. SpectraSite shall not be required to make an Offer for Notes pursuant to
this covenant if the Net Available Cash available therefor (after application of
the proceeds as provided in the second paragraph of this "Limitation on Sales of
Assets and Subsidiary Stock" covenant) are less than $5.0 million for all Asset
Dispositions (which lesser amounts shall be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) SpectraSite will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, SpectraSite will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
(d) The provisions of this covenant shall not apply to any transaction that
is permitted under the provisions of the covenant described under "-- Merger and
Consolidation."
Limitation on Transactions with Affiliates. (a) SpectraSite will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter into
or conduct any transaction or series of transactions (including the purchase,
sale, lease or exchange of any property, employee compensation arrangements or
the rendering of any service) with any Affiliate of SpectraSite (an "Affiliate
Transaction") unless (i) the terms of such transaction, taken as a whole, are no
less favorable to SpectraSite or such Restricted Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate; (ii) in the
event such Affiliate Transaction involves an aggregate amount in excess of $1.0
million, the terms of such transaction are set forth in writing and shall have
been approved by a majority of the members of the Board of Directors having no
personal stake in such Affiliate Transaction (and such majority determines that
such Affiliate Transaction satisfies the criteria in clause (i) above) and (iii)
in the event such Affiliate Transaction involves an aggregate amount in excess
of $5.0 million, SpectraSite has received a written opinion from a nationally
recognized independent investment banking firm that such Affiliate Transaction
is fair to SpectraSite and its Restricted Subsidiaries from a financial point of
view.
(b) The provisions of the foregoing paragraph (a) shall not prohibit (i)
any Restricted Payment permitted to be made pursuant to the "Limitation on
Restricted Payments" covenant, (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors, or any arrangements relating thereto, (iii)
the grant of a stock options or similar rights to employees and directors of
SpectraSite pursuant to plans approved by the Board of Directors, (iv) loans or
advances to employees in the ordinary course of business in accordance with the
past practices of SpectraSite or its Restricted Subsidiaries, but in any event
not to exceed $1.0 million in the aggregate outstanding at any one time, (v) the
payment of reasonable fees to directors of SpectraSite and its Restricted
Subsidiaries who are not employees of SpectraSite or its Restricted
Subsidiaries, (vi) any transaction between SpectraSite and a Restricted
Subsidiary or between Restricted Subsidiaries, (vii) the issuance or sale of any
Capital Stock (other than Disqualified Stock) of SpectraSite and (viii) any
transaction consummated pursuant to the terms of any agreement described in
SpectraSite's final offering
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circular, dated June 23, 1998, to which SpectraSite is a party, in each case as
such agreement is in effect on the Issue Date and without giving any effect to
any subsequent amendments, modifications or alterations thereof.
Limitation on Liens. SpectraSite will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or permit to exist any
Lien on any of its property or assets (including Capital Stock), whether owned
on the Issue Date or thereafter acquired, securing any obligation, other than
Permitted Liens, unless contemporaneously therewith effective provision is made
to secure the Notes equally and ratably with (or on a senior basis to, in the
case of Subordinated Obligations) such obligation for so long as such obligation
is so secured.
Limitation on Sale or Issuance of Capital Stock of Restricted
Subsidiaries. SpectraSite (i) will not, and will not permit any Restricted
Subsidiary of SpectraSite to, transfer, convey, sell, lease or otherwise dispose
of any Capital Stock of any Restricted Subsidiary to any Person (other than to
SpectraSite or a Wholly Owned Subsidiary), unless (a) such transfer, conveyance,
sale, lease or other disposition is of (x) all of the Capital Stock of such
Restricted Subsidiary or (y) a majority of the issued and outstanding Capital
Stock of such Restricted Subsidiary; provided, however, that SpectraSite's
minority equity interest in such Person after giving effect to any such
disposition shall be deemed to constitute an Investment by SpectraSite in such
Person; and (b) the net cash proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the "Limitation on
Sales of Assets and Subsidiary Stock" covenant and (ii) will not permit any
Restricted Subsidiary to issue any of its Capital Stock (other than, to the
extent necessary or mandated by applicable law, shares of its Capital Stock
constituting directors' qualifying shares or the ownership by foreign nationals
of Capital Stock of any Restricted Subsidiary) to any Person other than to
SpectraSite or a Wholly Owned Subsidiary.
Limitation on Sale/Leaseback Transactions. SpectraSite will not, and will
not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction with respect to any property unless (i) SpectraSite or such
Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount
equal to the Attributable Indebtedness with respect to such Sale/Leaseback
Transaction pursuant to the "Limitation on Indebtedness" covenant and (B) create
a Lien on such property securing such Attributable Indebtedness without equally
and ratably securing the Notes pursuant to the "Limitation on Liens" covenant,
(ii) the net cash proceeds received by SpectraSite or any Restricted Subsidiary
in connection with such Sale/Leaseback Transaction are at least equal to the
fair value (as determined in good faith by the Board of Directors of
SpectraSite) of such property and (iii) the transfer of such property is
permitted by, and SpectraSite or such Restricted Subsidiary applies the proceeds
of such transaction in compliance with, the "Limitation on Sales of Assets and
Subsidiary Stock" covenant.
SEC Reports. Notwithstanding that SpectraSite may not be required to
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, SpectraSite will file with the SEC (unless the SEC does not permit
such filing) and provide the Trustee and Noteholders with the annual reports and
such information, documents and other reports which are specified in Sections 13
and 15(d) of the Exchange Act. SpectraSite also will comply with the other
provisions of TIA sec. 314(a).
MERGER AND CONSOLIDATION
SpectraSite will not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to, any Person, unless: (i) the resulting,
surviving or transferee Person (the "Successor Issuer") will be a Person
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia and the Successor Issuer (if not
SpectraSite) will expressly assume, by supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of SpectraSite under the Notes and the Indenture; (ii) immediately
after giving effect to such transaction on a pro forma basis (and treating any
Indebtedness which becomes an obligation of the Successor Issuer or any
Restricted Subsidiary as a result of such transaction as having been Incurred by
the Successor Issuer or such Restricted Subsidiary at the time of such
transaction), no Default or Event of Default will have occurred
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and be continuing; (iii) except in the case of a merger of SpectraSite into a
Wholly Owned Subsidiary or a merger entered into solely for the purpose of
reincorporating SpectraSite in another jurisdiction, immediately after giving
effect to such transaction on a pro forma basis as if such transaction had
occurred at the beginning of the applicable four quarter period, SpectraSite or
the Person formed by or surviving any such consolidation or merger (if other
than SpectraSite), or to which such conveyance, transfer, lease or other
disposition shall have been made, would have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to paragraph (a) of the "Limitation on
Indebtedness" covenant above; (iv) SpectraSite will have delivered to the
Trustee an Officer's Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture, as set forth in the Indenture.
The Successor Issuer will succeed to, and be substituted for, and may
exercise every right and power of, SpectraSite under the Indenture, and the
predecessor Issuer in the case of a conveyance, transfer or lease of all or
substantially all its assets will be released from the obligations under the
Indenture and the Notes, including without limitation the obligation to pay the
principal of and interest on the Notes.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Note when due, continued for 30 days, (ii) a default
in the payment of principal of any Note when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
(iii) the failure by SpectraSite to comply with its obligations under "-- Merger
and Consolidation," (iv) the failure by SpectraSite to comply for 30 days after
notice with any of its obligations under the covenants described under
"-- Change of Control" or "-- Certain Covenants" (in each case, other than a
failure to purchase Notes), (v) the failure by SpectraSite to comply for 60 days
after notice with its other agreements contained in the Indenture, (vi) the
failure by SpectraSite or any Significant Subsidiary of SpectraSite to pay any
Indebtedness within any applicable grace period after final maturity or the
acceleration of any such Indebtedness by the holders thereof because of a
default if the total amount of such Indebtedness unpaid or accelerated exceeds
$5.0 million or its foreign currency equivalent (the "cross acceleration
provision"), (vii) certain events of bankruptcy, insolvency or reorganization of
SpectraSite or any Significant Subsidiary of SpectraSite (the "bankruptcy
provisions"); (viii) any final judgment or decree for the payment of money in
excess $5.0 million (net of any amounts with respect to which a creditworthy
insurance company has acknowledged full liability (subject to any deductible
amounts of less than $5.0 million required to be paid by SpectraSite in
accordance with the applicable insurance policy)) is rendered against
SpectraSite or any Significant Subsidiary of SpectraSite and either (A) an
enforcement proceeding has been commenced by any creditor upon such judgment or
decree or (B) such judgment or decree remains outstanding for a period of 60
days following such judgment and is not discharged, waived or stayed within 10
days after notice (the "judgment default provision") or (ix) the failure of the
Series B Investors to have purchased 2,750,000 shares of the Series B Preferred
Stock for an aggregate purchase price of $11.0 million by April 1, 1999.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is 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.
However, a default under clauses (iv), (v) and (viii) will not constitute
an Event of Default until the Trustee or the Holders of 25% in aggregate
principal amount at maturity of the outstanding Notes notify SpectraSite as
provided in the Indenture of the default and SpectraSite does not cure such
default within the time specified in clauses (iv) and (v) hereof after receipt
of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount at maturity of the outstanding
Notes by notice to SpectraSite may declare the Accreted Value of and accrued but
unpaid interest on all the Notes to be due and payable. Upon such a declaration,
such Accreted Value and interest will be due and payable immediately. If an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization of SpectraSite occurs and is
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continuing, the Accreted Value of and accrued interest on all the Notes will
ipso facto become immediately due and payable without any declaration or other
act on the part of the Trustee or any Holders. Under certain circumstances, the
Holders of a majority in aggregate principal amount at maturity of the
outstanding Notes may rescind any such acceleration with respect to the Notes
and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the 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 or security against any
loss, liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder shall
have previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in aggregate principal amount at maturity of the
outstanding Notes shall have requested the Trustee to pursue the remedy, (iii)
such Holders shall have offered the Trustee reasonable security or indemnity
against any loss, liability or expense, (iv) the Trustee shall not have complied
with such request within 60 days after the receipt of the request and the offer
of security or indemnity and (v) the Holders of a majority in principal amount
at maturity of the outstanding Notes shall not have given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the Holders of a majority in principal amount at maturity
of the outstanding Notes are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the Default
within the earlier of 90 days after it occurs or 30 days after it is known to a
Trust Officer or written notice of it is received by the Trustee. Except in the
case of a Default in the payment of principal of, premium (if any) or interest
on any Note, the Trustee may withhold notice if and so long as a committee of
its Trust Officers in good faith determines that withholding notice is not
opposed to the interests of the Noteholders. In addition, SpectraSite is
required to deliver to the Trustee, within 120 days after the end of each fiscal
year, a certificate indicating whether the signers thereof know of any Default
that occurred during the previous year. SpectraSite also is required to deliver
to the Trustee, within 30 days after its knowledge of the occurrence thereof,
written notice of any event which would constitute certain Defaults, their
status and what action SpectraSite is taking or proposes to take in respect
thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the Holders of a majority in principal amount at maturity of the
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange for the Notes) and any past default or compliance with any
provisions may be waived with the consent of the Holders of a majority in
principal amount at maturity of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange for the Notes). However,
without the consent of each Holder of an outstanding Note affected, no amendment
may, among other things, (i) reduce the amount of Notes whose Holders must
consent to an amendment, (ii) reduce the rate of or extend the time for payment
of interest on any Note, (iii) reduce the principal of or extend the Stated
Maturity of any Note, (iv) reduce the premium payable upon the redemption of any
Note or change the time at which any Note may be redeemed as described under
"-- Optional Redemption," (v) make any Note payable in money other than that
stated in the Note, (vi) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder's Notes or (vii) make any change in the amendment
provisions which require each Holder's consent or in the waiver provisions.
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Without the consent of any Holder, SpectraSite and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation of the obligations of
SpectraSite under the Indenture, to provide for uncertificated Notes in addition
to or in place of certificated Notes (provided that the uncertificated Notes are
issued in registered form for purposes of Section 163(f) of the Code, or in a
manner such that the uncertificated Notes are as described in Section
163(f)(2)(B) of the Code), to add Guarantees with respect to the Notes, to
secure the Notes, to add to the covenants of SpectraSite for the benefit of the
Noteholders or to surrender any right or power conferred upon SpectraSite, to
make any change that does not materially adversely affect the rights of any
Holder and to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the TIA.
The consent of the Noteholders is not necessary under the Indenture to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, SpectraSite is
required to mail to Noteholders a notice briefly describing such amendment.
However, the failure to give such notice to all Noteholders, or any defect
therein, will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Noteholder may transfer or exchange Notes in accordance with the
Indenture. Upon any transfer or exchange, the registrar and the Trustee may
require a Noteholder, among other things, to furnish appropriate endorsements
and transfer documents and SpectraSite may require a Noteholder to pay any taxes
required by law or permitted by the Indenture, including any transfer tax or
other similar governmental charge payable in connection therewith. SpectraSite
is not required to transfer or exchange any Note selected for redemption or to
transfer or exchange any Note for a period of 15 days prior to a selection of
Notes to be redeemed. The Notes will be issued in registered form and the
registered holder of a Note will be treated as the owner of such Note for all
purposes.
DEFEASANCE
SpectraSite at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. SpectraSite at any time may terminate its obligations under the covenants
described under "-- Certain Covenants" (other than the covenant described under
"Merger and Consolidation"), the operation of the cross acceleration provision,
the bankruptcy provisions with respect to Significant Subsidiaries and the
judgment default provision described under "-- Defaults" and the limitations
contained in clauses (iii) under "-- Merger and Consolidation" ("covenant
defeasance").
SpectraSite may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If SpectraSite exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If SpectraSite exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (v), (vi), (vii) (with respect only
to Significant Subsidiaries) or (viii) under "-- Defaults" above or because of
the failure of SpectraSite to comply with clause (iii) under "-- Merger and
Consolidation."
In order to exercise either defeasance option, SpectraSite must irrevocably
deposit or cause to be deposited in trust (the "defeasance trust") with the
Trustee money or U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide cash at such times and in such amounts as will be sufficient to pay
principal and interest when due on all the Notes (except lost, stolen or
destroyed Notes which have been replaced or repaid) to maturity or redemption,
as the case may be, and must comply with certain other conditions, including
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delivery to the Trustee of an Opinion of Counsel to the effect that holders of
the Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be subject to
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law).
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of SpectraSite,
as such, shall have any liability for any obligations of SpectraSite under the
Notes, the Indenture or for any claim based on, in respect of, or by reason of
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities law, and it is the view of the
SEC that such a waiver is against public policy.
CONCERNING THE TRUSTEE
United States Trust Company of New York is the Trustee under the Indenture
and has been appointed by SpectraSite as Registrar and Paying Agent with regard
to the Notes.
The Holders of a majority in principal amount at maturity of the
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that if an Event of
Default occurs (and is not cured), the Trustee will be required, in the exercise
of its power, to use the degree of care of a prudent man in the conduct of his
own affairs. Subject to such provisions, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request of
any Holder of Notes, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or expense
and then only to the extent required by the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it and the Notes are governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
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"Accreted Value" means, as of any date (the "Specified Date"), with respect
to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each a
"Semi-Annual Accrual Date"), the Accreted Value will equal the amount set
forth opposite such date below:
<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
- ------------------------ --------------
<S> <C>
June 26, 1998..................................... $ 554.97
January 15, 1999.................................. 591.90
July 15, 1999..................................... 627.41
January 15, 2000.................................. 665.06
July 15, 2000..................................... 704.96
January 15, 2001.................................. 747.26
July 15, 2001..................................... 792.09
January 15, 2002.................................. 839.62
July 15, 2002..................................... 890.00
January 15, 2003.................................. 943.40
July 15, 2003..................................... 1,000.00
</TABLE>
(ii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (A) the Accreted Value for
the Semi-Annual Accrual Date immediately preceding such Specified Date and
(B) an amount equal to the product of (1) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for
the immediately preceding Semi-Annual Accrual Date multiplied by (2) a
fraction, the numerator of which is the number of days elapsed from the
immediately preceding Semi-Annual Accrual Date to the Specified Date, using
a 360-day year of twelve 30-day months, and the denominator of which is
180; or
(iii) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal $1,000.00.
"Adjusted EBITDA" as of any date of determination means the sum of (i) the
EBITDA of SpectraSite for the four most recent full fiscal quarters ending prior
to such date, less SpectraSite's Tower EBITDA for such four-quarter period, plus
(ii) the product of four times SpectraSite's Tower EBITDA for the most recent
quarterly period, which Tower EBITDA for the most recent quarterly period shall
be determined on a pro forma basis after giving effect to (A) all acquisitions
or dispositions of assets made by SpectraSite and its Subsidiaries from the
beginning of such quarter through and including such date of determination
(including any related financing transactions) as if such acquisitions and
dispositions had occurred at the beginning of such quarter, (B) any new lease or
Site Management Contract entered into by SpectraSite or any Restricted
Subsidiary in the ordinary course of business with respect to Tower Assets from
the beginning of such quarter through and including such date of determination
as if such new lease or Site Management Contract had been signed at the
beginning of such quarter and the rent required by the terms of such lease or
Site Management Contract for such quarter had been received by SpectraSite or a
Restricted Subsidiary during such quarter, (C) the loss from the beginning of
such quarter through and including such date of determination of any lease or
Site Management Contract of SpectraSite 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 SpectraSite or any Restricted Subsidiary from
the beginning of such quarter through and including such date of determination
related to leases or Site Management Contracts on Tower Assets as if such
increased rental rate had been in effect at the beginning of such quarter and
such increased amount of rent had been received by SpectraSite or a Restricted
Subsidiary during such quarter. For purposes of making the computation referred
to above, (1) acquisitions that have been made by SpectraSite or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing
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transactions, during the reference period or subsequent to such reference period
and on or prior to the date of determination shall be deemed to have occurred on
the first day of the reference period and EBITDA for such reference period shall
be calculated without giving effect to clause (ii) of the proviso set forth in
the definition of Consolidated Net Income, and (2) the EBITDA attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the date of determination shall be excluded.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For 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. For
purposes of the covenants in the Indenture, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of SpectraSite or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by SpectraSite
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (i) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than SpectraSite or a
Restricted Subsidiary), (ii) all or substantially all the assets of any division
or line of business of SpectraSite or any Restricted Subsidiary or (iii) any
other assets of SpectraSite or any Restricted Subsidiary outside of the ordinary
course of business of SpectraSite or such Restricted Subsidiary (other than, in
the case of (i), (ii) and (iii) above, (v) a disposition by a Restricted
Subsidiary to SpectraSite or by SpectraSite or a Restricted Subsidiary to a
Wholly Owned Subsidiary, (w) for purposes of the covenant described under
"-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock"
only, a disposition that constitutes a Restricted Payment permitted by the
covenant described under "-- Certain Covenants -- Limitation on Restricted
Payments", (x) a disposition of assets with a fair market value of less than
$500,000, (y) grants of leases or licenses in the ordinary course of business,
and (z) disposals of cash equivalents).
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the product of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of SpectraSite or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other day on
which banking institutions in New York State are authorized or required by law
to close.
"Capitalized Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent
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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.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participation or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Completed Tower" means a wireless transmission tower with, as of any date
of determination, (i) at least one anchor tenant that has executed a definitive
lease with SpectraSite or any of its Restricted Subsidiaries and (ii) capacity
for at least three tenants.
"Consolidated Indebtedness" as of any date of determination means (without
duplication) (i) the total amount of Indebtedness of SpectraSite and its
Restricted Subsidiaries, (ii) the total amount of Indebtedness of any other
Person, to the extent that such Indebtedness has been Guaranteed by SpectraSite
or one or more of its Restricted Subsidiaries, (iii) the aggregate liquidation
value of all Disqualified Stock of SpectraSite and all preferred stock of
Restricted Subsidiaries of SpectraSite, in each case, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the total interest
expense of SpectraSite and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by SpectraSite or its Restricted Subsidiaries, without duplication, (i)
interest expense attributable to capital leases and to leases constituting part
of a Sale/Leaseback Transaction, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) net costs associated with
Hedging Obligations (including amortization of fees), (vii) Preferred Stock
dividends paid in respect of all Preferred Stock of SpectraSite and its
Subsidiaries held by Persons other than SpectraSite or a Wholly Owned
Subsidiary, (viii) interest incurred in connection with Investments in
discontinued operations, (ix) interest accruing on any Indebtedness of any other
Person to the extent such Indebtedness is Guaranteed by (or secured by the
assets of) SpectraSite or any Restricted Subsidiary and (x) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than SpectraSite) in connection with Indebtedness Incurred
by such plan or trust.
"Consolidated Net Income" means, for any period, the net income (loss) of
SpectraSite and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person (other than SpectraSite) if
such Person is not a Restricted Subsidiary, except that (A) subject to the
exclusion contained in (iv) below, SpectraSite's equity in the net income
of any such Person (other than an Unrestricted Subsidiary) for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period to
SpectraSite or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause (iii) below)
and (B) solely for purposes of calculating the Indebtedness to Adjusted
EBITDA Ratio, SpectraSite's equity in a net loss of any such Person (other
than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income,
(ii) any net income (loss) of any Person acquired by SpectraSite or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition,
(iii) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions (other than any restrictions
contained in the New Credit Facility), directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to SpectraSite, except that (A) subject
to the exclusion contained in (iv) below
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SpectraSite's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up to
the aggregate amount of cash actually distributed by such Restricted
Subsidiary during such period to SpectraSite or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution paid to another Restricted Subsidiary, to
the limitation contained in this clause) and (B) solely for purposes of
calculating the Indebtedness to Adjusted EBITDA Ratio, SpectraSite's
equity in a net loss of any such Restricted Subsidiary for such period
shall be included in determining such Consolidated Net Income,
(iv) any gain or loss realized upon the sale or other disposition of
any assets of SpectraSite, its consolidated Subsidiaries or any other
Person (including pursuant to any Sale/Leaseback Transaction) which is not
sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital
Stock of any Person,
(v) any net income or loss of any Unrestricted Subsidiary, whether or
not distributed to SpectraSite or one of its Subsidiaries,
(vi) any extraordinary gain or loss, and
(vii) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of the covenant described
under "-- Certain Covenants -- Limitation on Restricted Payments" only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
SpectraSite or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Tangible Assets" means, with respect to SpectraSite, the
total consolidated tangible assets of SpectraSite and its Restricted
Subsidiaries, as shown on the most recent internal consolidated balance sheet of
SpectraSite and such Restricted Subsidiaries calculated on a consolidated basis
in accordance with GAAP.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement designed to protect
such Person against fluctuations in currency values as to which such Person is a
party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or
(iii) is redeemable at the option of the holder thereof, in whole or in part, in
each case on or prior to the 91st day after the Stated Maturity of the Notes;
provided, however, that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the 91st day after the
Stated Maturity of the Notes shall not constitute Disqualified Stock if the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are not more favorable to the holders of such Capital Stock than the provisions
described under "-- Change of Control" and "-- Certain Covenants -- Limitation
on Sales of Assets and Subsidiary Stock."
"EBITDA" for any period means the sum of Consolidated Net Income, plus the
following to the extent deducted in calculating such Consolidated Net Income:
(a) Consolidated Interest Expense, (b) all income tax expense of SpectraSite and
its consolidated Restricted Subsidiaries, (c) depreciation expense of
SpectraSite and its consolidated Restricted Subsidiaries, (d) amortization
expense of SpectraSite and its consolidated Restricted Subsidiaries (excluding
amortization expense attributable to a prepaid cash item
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that was paid in a prior period), (e) all other non-cash charges of SpectraSite
and its consolidated Restricted Subsidiaries (excluding any such non-cash charge
to the extent that it represents an accrual of or reserve for cash expenditures
in any future period), and (f) any premium or penalty paid in connection with
repurchasing, redeeming, retiring, defeasing or acquiring any Indebtedness prior
to maturity to the extent deducted in calculating Consolidated Net Income, in
each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to SpectraSite by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders, without in any event giving effect to
any restrictions or limitations contained in the New Credit Facility.
"Equity Offering" means a public or private issuance by SpectraSite of
common stock of SpectraSite for cash.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in (i)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the actual obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.
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"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal in respect of (A) indebtedness of such Person for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such Person is
responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable;
(ii) all Capitalized Lease Obligations of such Person and all
Attributable Debt in respect of Sale/ Leaseback Transactions entered into
by such Person;
(iii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business);
(iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit and
other contingent liabilities (but only to the extent such contingent
liabilities are not reflected as liabilities on the consolidated balance
sheet of such Person) securing obligations (other than obligations
described in clauses (i) through (iii) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following payment on the
letter of credit);
(v) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, the liquidation preference
with respect to, any Preferred Stock (but excluding, in each case, any
accrued dividends);
(vi) all obligations of the type referred to in clauses (i) through
(v) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(vii) all obligations of the type referred to in clauses (i) through
(vi) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(viii) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above or the accreted value thereof, in the case of Indebtedness issued with
original issue discount, and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.
"Indebtedness to Adjusted EBITDA Ratio" as of any date of determination
means the ratio of (i) Consolidated Indebtedness as of such date to (ii)
Adjusted EBITDA.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement designed to protect such Person against fluctuations in interest
rates as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock,
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<PAGE> 97
Indebtedness or other similar instruments issued by such Person. For purposes of
the definitions of "Unrestricted Subsidiary" and "Restricted Payment" and the
"Limitation on Restricted Payments" covenant, (i) "Investment" shall include the
portion (proportionate to SpectraSite's equity interest in such Subsidiary) of
the fair market value of the net assets of any Subsidiary of SpectraSite at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, SpectraSite shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (x) SpectraSite's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to SpectraSite's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so re-designated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors and
evidenced by a resolution of such Board of Directors.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and proceeds from the
sale or other disposition of any securities received as consideration, but only
as and when received, but excluding any other consideration received in the form
of assumption by the acquiring Person of Indebtedness or other obligations
relating to such properties or assets or received in any other non cash form)
therefrom, in each case net of (i) all legal, title, accounting, investment
banking and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition, (ii) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon or other security arrangement of any kind with respect to such assets,
or which must by its terms, 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 required to be
made to minority interest holders in Restricted Subsidiaries or joint ventures
as a result of such Asset Disposition, (iv) the deduction of appropriate amounts
to be provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by SpectraSite or any Restricted Subsidiary after such Asset
Disposition, and (v) any reserves established in respect of the sales price of
such asset for post-closing adjustments, indemnification purposes or employee
termination expenses.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, printing costs, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees and expenses
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result thereof.
"New Credit Facility" means that certain credit facility to be entered into
by a wholly owned subsidiary of SpectraSite, SpectraSite Communications, Inc.
("SCI"), pursuant to a commitment letter from Credit Suisse First Boston to SCI
dated December 22, 1997, which has been renewed through December 31, 1998,
including any collateral documents, instruments and agreements executed in
connection therewith, and the term New Credit Facility shall also include any
amendments, supplements, modifications, extensions, renewals, restatements or
refundings thereof and any credit facilities that replace, refund or refinance
any part of the loans, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing facility that increases
the amount borrowable thereunder or alters the maturity thereof.
"Non-Recourse Debt" means Indebtedness (i) as to which neither SpectraSite
nor any Restricted Subsidiary (a) provides any Guarantee or credit support of
any kind (including any undertaking,
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Guarantee, indemnity, agreement or instrument that would constitute
Indebtedness) or (b) is directly or indirectly liable (as a guarantor or
otherwise) and (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of SpectraSite or any Restricted Subsidiary to declare a
default under such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Permitted Business" means any business conducted by SpectraSite and its
Restricted Subsidiaries on the Issue Date and any other business related,
ancillary or complementary to any such business.
"Permitted Holders" means any or all of Stephen H. Clark, Joe L. Finley,
Whitney Equity Partners, L.P., J.H. Whitney III, L.P., Whitney Strategic
Partners III, L.P., Waller-Sutton Media Partners, L.P., Kitty Hawk Capital
Limited Partnership, III, Kitty Hawk Capital Limited Partnership, IV, Eagle
Creek Capital, L.L.C., The North Carolina Enterprise Fund, L.P., Finley Family
Limited Partnership, and their respective Affiliates.
"Permitted Investment" means an Investment by SpectraSite or any Restricted
Subsidiary in (i) SpectraSite, a Wholly Owned Subsidiary or a Person which will,
upon the making of such Investment, become a Wholly Owned Subsidiary; provided,
however, that a loan or other extension of credit by SpectraSite or a Restricted
Subsidiary to a Restricted Subsidiary that is not a Wholly Owned Subsidiary also
will constitute a "Permitted Investment"; and provided further, however, that a
Permitted Business is the primary business of the Person in which any such
Investment is made; and (ii) another Person if as a result of such Investment
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, SpectraSite or a Restricted
Subsidiary; provided, however, that such Person's primary business is a
Permitted Business; (iii) Temporary Cash Investments; (iv) receivables owing to
SpectraSite or any Restricted Subsidiary, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include such
concessionary trade terms as SpectraSite or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made in the ordinary
course of business consistent with past practice of SpectraSite or such
Restricted Subsidiary, but in any event not to exceed $2.0 million in the
aggregate outstanding at any one time; (vii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to SpectraSite or any Restricted Subsidiary or in satisfaction of
judgments; (viii) any Person to the extent such investment represents the
non-cash portion of the consideration received for an Asset Disposition as
permitted pursuant to the covenant described under "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock"; (ix) Capital
Stock of SpectraSite or any Restricted Subsidiary purchased, redeemed or
otherwise acquired or retired for value from members of SpectraSite's management
or employees, but in any event not to exceed $500,000 in the aggregate in any
twelve-month period; (x) other Investments in Permitted Businesses not to
exceed, at any one time outstanding (each such Investment being measured as of
the date made and without giving effect to subsequent changes in value), the
greater of (A) $5.0 million and (B) 5% of SpectraSite's Consolidated Tangible
Assets, (xi) any Interest Rate Agreement or Currency Agreement, (xii) any
acquisition of assets solely in exchange for the issuance of Capital Stock
(other than Disqualified Stock) of SpectraSite, (xiii) prepaid expenses,
negotiable instruments held for collection and lease, utility and workers'
compensation, performance and other similar deposits and (xiv) deposits of
proceeds from Asset Dispositions with a "qualified intermediary," "qualified
trustee" or similar person for purposes of facilitating a "like-kind" exchange
made in accordance with the applicable provisions of the Internal Revenue Code
of 1986, as amended; provided, however, that the making of any Permitted
Investment pursuant to this clause (xiv) will not in any manner violate the
covenant described under "-- Certain Covenants -- Limitation on Sales of Assets
and Subsidiary Stock."
"Permitted Liens" means, with respect to any Person, (a) pledges or
deposits by such Person under workmen's compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits
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in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits or cash or United
States government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for the
payment of rent, in each case incurred in the ordinary course of business; (b)
Liens imposed by law, such as carriers', warehousemen's, landlords' and
mechanics' Liens, in each case for sums not yet due or being contested in good
faith by appropriate proceeding, or judgment Liens not giving rise to an Event
of Default so long as any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally terminated
or the period within which such proceedings may be initiated shall not have
expired; (c) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings; (d) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; (e) minor survey exceptions, minor
encumbrances, easements or reservations of, or rights of others for, licenses,
rights of way, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of real
properties or liens incidental to the conduct of the business of such Person or
to the ownership of its properties which were not incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under the Indenture, secured by
a Lien on the same property securing such Hedging Obligations; (g) leases and
subleases of real property which do not interfere with the ordinary conduct of
the business of SpectraSite or any of its Restricted Subsidiaries, and which are
made on customary and usual terms applicable to similar properties; (h) Liens
existing as of the date on which the Notes are originally issued and Liens
created by the Indenture; (i) Liens created solely for the purpose of securing
the payment of all or a part of the purchase price of assets or property
acquired or constructed in the ordinary course of business after the date on
which the Notes are originally issued; provided, however, that (A) the aggregate
principal amount of Indebtedness secured by such Liens shall not exceed the
aggregate purchase price of the assets or property so acquired or constructed,
(B) the Indebtedness secured by such Liens shall have otherwise been permitted
to be issued under the Indenture and (C) such Liens shall not encumber any other
assets or property of SpectraSite or any of its Restricted Subsidiaries and
shall attach to such assets or property within 90 days of the construction or
acquisition of such assets or property; (j) Liens on the assets or property of a
Restricted Subsidiary of SpectraSite existing at the time such Restricted
Subsidiary became a Subsidiary of SpectraSite and not incurred as a result of
(or in connection with or in anticipation of) such Restricted Subsidiary
becoming a Subsidiary of SpectraSite; provided, however, that (A) any such Lien
does not by its terms cover any property or assets after the time such
Restricted Subsidiary becomes a Subsidiary which were not covered immediately
prior to such transaction, (B) the incurrence of the Indebtedness secured by
such Lien shall have otherwise been permitted to be issued under the Indenture,
and (C) such Liens do not extend to or cover any other property or assets of
SpectraSite or any of its Restricted Subsidiaries; (k) Liens securing
Indebtedness outstanding under the New Credit Facility; (l) Liens extending,
renewing or replacing in whole or in part a Lien permitted by the Indenture;
provided, however, that (A) such Liens do not extend beyond the property subject
to the existing Lien and improvements and construction on such property and (B)
the Indebtedness secured by the Lien may not exceed the Indebtedness secured at
the time by the existing Lien; (m) Liens Incurred in the ordinary course of
business by SpectraSite or any Restricted Subsidiary of SpectraSite with respect
to obligations that do not exceed $5.0 million at any one time outstanding and
that (i) are not Incurred in connection with the borrowing of money or the
obtaining of advances of credit (other than trade credit in the ordinary course
of business) and (ii) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by SpectraSite or such Restricted Subsidiary; (n) Liens in favor of
SpectraSite or a Wholly Owned Subsidiary; (o) any interest in or title of a
lessor to any property subject to a Capitalized Lease Obligation permitted to be
Incurred under the Indenture and (p) Liens on the Capital Stock of Unrestricted
Subsidiaries.
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"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"Principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Qualified Proceeds" means assets that are used or useful in, or Capital
Stock of any Person engaged in, a Permitted Business.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, purchase, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of SpectraSite or any Restricted Subsidiary existing on the date of
the Indenture or Incurred in compliance with the Indenture (including
Indebtedness of SpectraSite that Refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that Refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being Refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being Refinanced and (iii)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is equal
to or less than the sum of the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced; provided further, however, that
Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that
Refinances Indebtedness of SpectraSite or (y) Indebtedness of SpectraSite or a
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.
"Restricted Payment" with respect to any Person means (i) the declaration
or payment of any dividends or any other distributions of any sort in respect of
its Capital Stock or similar payment to the direct or indirect holders of its
Capital Stock (other than dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) and dividends or distributions
payable solely to SpectraSite or a Restricted Subsidiary, and other than pro
rata dividends or other distributions made by a Subsidiary that is not a Wholly
Owned Subsidiary to minority stockholders (or owners of an equivalent interest
in the case of a Subsidiary that is an entity other than a corporation)), (ii)
the purchase, redemption or other acquisition or retirement for value of any
Capital Stock of SpectraSite held by any Person or of any Capital Stock of a
Restricted Subsidiary held by any Person (other than SpectraSite or a Restricted
Subsidiary), including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of SpectraSite that is not Disqualified Stock),
other than as permitted by clause (ix) of the definition of "Permitted
Investments"; (iii) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of acquisition); or (iv) the making of any Investment in any Person (other
than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of SpectraSite other than an
Unrestricted Subsidiary.
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"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby SpectraSite or a Restricted Subsidiary
transfers such property to a Person and SpectraSite or a Restricted Subsidiary
leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of SpectraSite secured by a
Lien.
"Semi-Annual Accrual Date" has the meaning set forth in the definition of
the term "Accreted Value."
"Senior Indebtedness" means (i) Indebtedness of SpectraSite, whether
outstanding on the Issue Date or thereafter Incurred, and (ii) accrued and
unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to SpectraSite to the
extent post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness of SpectraSite for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
SpectraSite is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the Notes; provided, however, that Senior Indebtedness shall not
include (1) any obligation of SpectraSite to any Subsidiary, (2) any liability
for Federal, state, local or other taxes owed or owing by SpectraSite, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness of SpectraSite (and any accrued and unpaid
interest respect thereof) which is subordinate or junior in any respect to any
other Indebtedness or other obligation of SpectraSite, (5) that portion of any
Indebtedness which at the time of Incurrence is Incurred in violation of the
Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of SpectraSite within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Site Management Contract" means any agreement pursuant to which
SpectraSite or any of its Restricted Subsidiaries has the right to substantially
control Tower Assets and the revenues derived from the rental or use thereof.
"Specified Date" has the meaning set forth in the definition of the term
"Accreted Value."
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of SpectraSite unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of SpectraSite (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
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 (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within one year of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any
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foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $500.0 million (or the
foreign currency equivalent thereof) and whose long-term debt is rated "A" (or
such similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) or any money market fund sponsored by a registered broker dealer or mutual
fund distributor, (iii) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (i) above
entered into with a bank meeting the qualifications described in clause (ii)
above, (iv) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of SpectraSite) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard & Poor's Ratings Group, and (v) investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by Standard & Poor's Ratings Group or "A" by Moody's Investors
Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture.
"Tower Asset Exchange" means any transaction in which SpectraSite or a
Restricted Subsidiary exchanges assets for Tower Assets or Tower Assets and cash
or cash equivalents where the fair market value (evidenced by a resolution of
the Board of Directors set forth in an Officer's Certificate delivered to the
Trustee) of the Tower Assets and cash or cash equivalents received by
SpectraSite 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 wireless communication transmission towers and related
assets that are located on the site of a transmission tower.
"Tower EBITDA" means, for any period, the EBITDA of SpectraSite and its
Restricted Subsidiaries for such period that is directly attributable to site
rental revenue, license or management fees paid to manage, lease or sublease
space on communication sites owned, leased or managed by SpectraSite
(collectively, "site leasing revenues"), all determined on a consolidated basis
and in accordance with GAAP. Tower EBITDA will not include revenue derived from
the sale of assets. In allocating, corporate, general, administrative and other
operating expenses that are not allocated to any particular line of business in
the financial statements of SpectraSite, such expenses shall be allocated to
SpectraSite's site leasing business in proportion to the percentage of
SpectraSite's total revenues for the applicable period that were site leasing
revenues.
"Unrestricted Subsidiary" means (i) any Subsidiary of SpectraSite that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
SpectraSite (including any newly acquired or newly formed Subsidiary of
SpectraSite) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, SpectraSite or any other Restricted Subsidiary of
SpectraSite that is not a Subsidiary of the Subsidiary to be so designated;
provided, however, that either (A) the Subsidiary to be so designated has total
consolidated assets of $1,000 or less or (B) if such Subsidiary has consolidated
assets greater than $1,000, then such designation would be permitted under
"Limitation on Restricted Payments." The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) SpectraSite would have
been permitted to incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) of the "Limitation on Indebtedness" covenant above and (y) no
Default shall have occurred and be continuing. Any such designation by the Board
of Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such
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designation and an Officer's Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at SpectraSite's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers, or trustee thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of SpectraSite all
the Capital Stock of which (other than directors' qualifying shares) is owned by
SpectraSite or another Wholly Owned Subsidiary.
BOOK-ENTRY; DELIVERY AND FORM
The Exchange Notes will be issued in the form of a Global Senior Note. The
Global Senior Note will be deposited with, or on behalf of, the Depository and
registered in the name of the Depository or its nominee. Except as set forth
below, the Global Senior Note may be transferred, in whole and not in part, only
to the Depository or another nominee of the Depository. Investors may hold their
beneficial interests in the Global Senior Note directly through the Depository
if they have an account with the Depository or indirectly through organizations
which have accounts with the Depository.
Notes that are issued as described below under "-- Certificated Notes" will
be issued in definitive form. Upon the transfer of a Senior Note in definitive
form, such Senior Note will, unless the Global Senior Note has previously been
exchanged for Notes in definitive form, be exchanged for an interest in the
Global Senior Note representing the principal amount at maturity of Notes being
transferred.
The Depository has advised SpectraSite as follows: The Depository is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depository was created to hold securities of institutions that have accounts
with the Depository ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include securities brokers and dealers (which may
include the Initial Purchasers), banks, trust companies, clearing corporations
and certain other organizations. Access to the Depository's book-entry system is
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
whether directly or indirectly.
Upon the issuance of the Global Senior Note, the Depository will credit, on
its book-entry registration and transfer system, the principal amount at
maturity of the Notes represented by such Global Senior Note to the accounts of
participants. The accounts to be credited shall be designated by the Initial
Purchasers of the Notes. Ownership of beneficial interests in the Global Senior
Note will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in the Global Senior Note will
be shown on, and the transfer of those ownership interests will be effected only
through, records maintained by the Depository (with respect to participants'
interest) and such participants (with respect to the owners of beneficial
interests in the Global Senior Note other than participants). The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and laws may impair
the ability to transfer or pledge beneficial interests in the Global Senior
Note.
So long as the Depository, or its nominee, is the registered holder and
owner of the Global Senior Note, the Depository or such nominee, as the case may
be, will be considered the sole legal owner and
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holder of the related Notes for all purposes of such Notes and the Indenture.
Except as set forth below, owners of beneficial interests in the Global Senior
Note will not be entitled to have the Notes represented by the Global Senior
Note registered in their names, will not receive or be entitled to receive
physical delivery of certificated Notes in definitive form and will not be
considered to be the owners or holders of any Notes under the Global Senior
Note. SpectraSite understands that under existing industry practice, in the
event an owner of a beneficial interest in the Global Senior Note desires to
take any action that the Depository, as the holder of the Global Senior Note, is
entitled to take, the Depository would authorize the participants to take such
action, and that the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of principal of and interest on Notes represented by the Global
Senior Note registered in the name of and held by the Depository or its nominee
will be made to the Depository or its nominee, as the case may be, as the
registered owner and holder of the Global Senior Note.
SpectraSite expects that the Depository or its nominee, upon receipt of any
payment of principal of or interest on the Global Senior Note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Senior
Note as shown on the records of the Depository or its nominee. SpectraSite also
expects that payments by participants to owners of beneficial interests in the
Global Senior Note held through such participants will be governed by standing
instructions and customary practices and will be the responsibility of such
participants. SpectraSite will not have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in the Global Senior Note for any Senior Note or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests or for any other aspect of the relationship between the
Depository and its participants or the relationship between such participants
and the owners of beneficial interests in the Global Senior Note owning through
such participants.
Unless and until it is exchanged in whole or in part for certificated Notes
in definitive form, the Global Senior Note may not be transferred except as a
whole by the Depository to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Senior Note among participants
of the Depository, it is under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any time. Neither
the Trustee nor SpectraSite will have any responsibility for the performance by
the Depository or its participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
CERTIFICATED NOTES
The Notes represented by the Global Senior Note are exchangeable for
certificated Notes in definitive form of like tenor as such Notes in
denominations of U.S. $1,000 and integral multiples thereof if (i) the
Depository notifies SpectraSite that it is unwilling or unable to continue as
Depository of the Global Senior Note or if at any time the Depository ceases to
be a clearing agency registered under the Exchange Act and a successor
Depository is not appointed by SpectraSite within 90 days, (ii) SpectraSite in
its discretion at any time determines not to have all of the Notes represented
by the Global Senior Note or (iii) an Event of Default has occurred and is
continuing. Any Senior Note that is exchangeable pursuant to the preceding
sentence is exchangeable for certificated Notes issuable in authorized
denominations and registered in such names as the Depository shall direct.
Subject to the foregoing, the Global Senior Note is not exchangeable, except for
a Global Senior Note of the same aggregate denomination to be registered in the
name of the Depository or its nominee. In addition, such certificates will bear
the legend referred to under "Transfer Restrictions" (unless SpectraSite
determines otherwise in accordance with applicable law) subject, with respect to
such Notes, to the provisions of such legend.
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
GENERAL
The following is a summary of the material United States federal income,
estate and gift tax consequences of the purchase, ownership and disposition of
the Notes, but is not purported to be a complete analysis of all potential tax
effects. This summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), existing and proposed regulations promulgated thereunder,
published rulings and court decisions, all as in effect and existing on the date
hereof and all of which are subject to change at any time, which change may be
retroactive or prospective. Unless otherwise specifically noted, this summary
applies only to those persons that hold the Notes as capital assets within the
meaning of Section 1221 of the Code. This discussion assumes that the Notes will
be treated as indebtedness for United States federal income tax purposes.
THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND DOES NOT ADDRESS THE TAX
CONSEQUENCES TO TAXPAYERS WHO ARE SUBJECT TO SPECIAL RULES (SUCH AS FINANCIAL
INSTITUTIONS, TAX-EXEMPT ORGANIZATIONS, INSURANCE COMPANIES, S CORPORATIONS,
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, BROKER-DEALERS,
TAXPAYERS SUBJECT TO THE ALTERNATIVE MINIMUM TAX AND PERSONS THAT WILL HOLD THE
NOTES AS PART OF A POSITION IN A "STRADDLE" OR AS PART OF A "CONSTRUCTIVE SALE"
OR A "HEDGING" OR "CONVERSION" TRANSACTION) OR ADDRESS ASPECTS OF FEDERAL
TAXATION THAT MIGHT BE RELEVANT TO A PROSPECTIVE INVESTOR BASED UPON SUCH
INVESTOR'S PARTICULAR TAX SITUATION. THIS SUMMARY DOES NOT ADDRESS ANY TAX
CONSEQUENCES ARISING UNDER ANY STATE, MUNICIPALITY, FOREIGN COUNTRY OR OTHER
TAXING JURISDICTION. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX
ADVISORS REGARDING THE UNITED STATES FEDERAL TAX CONSEQUENCES OF OWNING AND
DISPOSING OF THE NOTES (INCLUDING THE INVESTOR'S STATUS AS A UNITED STATES
HOLDER OR A NON-UNITED STATES HOLDER), AS WELL AS ANY TAX CONSEQUENCES THAT MAY
ARISE UNDER THE LAWS OF ANY STATE, MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING
JURISDICTION.
EFFECT OF EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES
SpectraSite believes that the exchange of Old Notes for Exchange Notes
pursuant to the Exchange Offer will not be treated as an "exchange" for federal
income tax purposes because the Exchange Notes will not be considered to differ
materially in kind or extent from the Old Notes. Rather, the Exchange Notes
received by a holder will be treated as a continuation of the Old Notes in the
hands of such holder. As a result, holders will not recognize any taxable gain
or loss or any interest income as a result of exchanging Old Notes for Exchange
Notes pursuant to the Exchange Offer, the holding period of the Exchange Notes
will include the holding period of the Old Notes, and the basis of the Exchange
Notes will equal the basis of he Old Notes immediately before the exchange.
UNITED STATES HOLDERS
GENERAL. The following is a general discussion of certain United States
federal income tax consequences of the ownership and sale or other disposition
of the Notes by a beneficial owner that, for United States federal income tax
purposes, is a "United States person" (a "United States Holder"). For purposes
of this discussion, a "United States person" means a citizen or individual
resident (as defined in Section 7701(b) of the Code) of the United States; a
corporation or partnership (including any entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized
under the laws of the United States, any State thereof or the District of
Columbia unless, in the case of a partnership, otherwise provided by regulation;
an estate the income of which is subject to United States federal income tax
without regard to its source; or a trust if a court within the United States is
able to
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exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. Notwithstanding the preceding sentence, certain trusts
in existence on August 20, 1996, and treated as United States persons prior to
such date that elect to continue to be so treated shall also be considered to be
United States persons.
ORIGINAL ISSUE DISCOUNT. Because the Notes were issued at a discount from
their "stated redemption price at maturity," the Notes have original issue
discount ("OID") for federal income tax purposes. For federal income tax
purposes, the amount of OID on a Note generally equals the excess of the "stated
redemption price at maturity" of the Note over its "issue price." The issue
price of the Notes is the first price at which a substantial amount of the Notes
is sold (excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters or wholesalers). The stated
redemption price at maturity of a Note is the sum of all cash payments to be
made on such Note (whether denominated as principal or interest), other than
payments of "qualified stated interest." Qualified stated interest is stated
interest that is unconditionally payable at least annually at a single fixed
rate that appropriately takes into account the length of the interval between
payments. Because there will be no required payment of interest on the Notes
prior to January 15, 2004, none of the interest payments on the Notes will
constitute qualified stated interest; and, accordingly, each Note bears OID in
an amount equal to the excess of (i) the sum of its principal amount and all
stated interest payments, over (ii) its issue price.
A United States Holder is required to include OID in income periodically
over the term of a Note before receipt of the cash or other payment attributable
to such income, regardless of such Holder's method of tax accounting. The amount
of OID required to be included in a United States Holder's gross income for any
taxable year is the sum of the "daily portions" of OID with respect to the Note
for each day during the taxable year or portion of a taxable year during which
such Holder holds the Note. The daily portion is determined by allocating to
each day of any "accrual period" within a taxable year a pro rata portion of an
amount equal to the "adjusted issue price" of the Note at the beginning of the
accrual period multiplied by the "yield to maturity" of the Note. For purposes
of computing OID, SpectraSite will use six-month accrual periods that end on the
days in the calendar year corresponding to the maturity date of the Notes and
the date six months prior to such maturity date, with the exception of an
initial short accrual period. A United States Holder is permitted to use
different accrual periods; provided that each accrual period is no longer than
one year, and each scheduled payment of interest or principal occurs on either
the first or last day of an accrual period. The adjusted issue price of a Note
at the beginning of any accrual period is the issue price of the Note increased
by the amount of OID previously includible in the gross income of the Holder and
decreased by any payments previously made on the Note. The yield to maturity is
the discount rate that, when used in computing the present value of all payments
of principal and interest to be made on a Note, produces an amount equal to the
issue price of the Note. Under these rules, United States Holders are required
to include in gross income increasingly greater amounts of OID in each
successive accrual period. Payments of stated interest on a Note will not be
separately included in income, but rather will be treated first as payments of
previously accrued OID and then as payments of principal and, consequently, will
reduce a United States Holder's basis in a Note as described below under
"-- United States Holders -- Sale, Exchange or Redemption of the Notes."
SpectraSite intends to treat the possibility of (i) an optional redemption,
as described under "Description of the Notes -- Optional Redemption," and (ii) a
repurchase pursuant to a Change in Control, as described under "Description of
the Notes -- Change of Control, " as remote under the applicable Treasury
regulations SpectraSite does not intend to treat the possibilities described in
(i) or (ii) above as (x) affecting the determination of the yield to maturity of
the Notes, or (y) giving rise to any additional accrual of OID or recognition of
ordinary income upon the redemption, sale or exchange of a Note.
ACQUISITION PREMIUM. A United States Holder that purchases a Note for an
amount that is greater than its adjusted issue price as of the purchase date
will be considered to have purchased such Note at an "acquisition premium." The
amount of OID that such Holder must include in its gross income with respect to
such Note for any taxable year is generally reduced by the portion of such
acquisition premium
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properly allocable to such year. The information reported by SpectraSite to the
record Holders of the Notes on an annual basis will not account for an offset
against OID for any portion of the acquisition premium. Accordingly, each United
States Holder should consult its own tax advisor as to the determination of the
acquisition premium amount and the resulting adjustments to the amount of
reportable OID.
AMORTIZABLE BOND PREMIUM. A United States Holder that purchases a Note for
an amount in excess of its principal amount will be considered to have purchased
the Note at a premium and may elect to amortize such premium, using a constant
yield method, over the remaining term of the Note (or, if a smaller amortization
allowance would result, by computing such allowance with reference to the amount
payable on an earlier call date and amortizing such allowance over the shorter
period to such call date). The amount amortized in any year will be treated as a
reduction of the United States Holder's interest income from the Note. Bond
premium on a Note held by a United States Holder that does not make such an
election will decrease the gain or increase the loss otherwise recognized on
disposition of the Note. The election to amortize bond premium on a constant
yield method, once made, applies to all debt obligations held or subsequently
acquired by the electing United States Holder on or after the first day of the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service (the "Service").
MARKET DISCOUNT. If a United States Holder purchases, subsequent to its
original issuance, a Note for an amount that is less than its "revised issue
price" as of the purchase date, the amount of the difference generally will be
treated as "market discount," unless such difference is less than a specified de
minimis amount. The Code provides that the revised issue price of a Note equals
its issue price plus the amount of OID includable in the income of all holders
for periods prior to the purchase date (disregarding any deduction for
acquisition premium) reduced by the amount of all prior cash payments on the
Note. Subject to a de minimis exception, a United States Holder will be required
to treat any gain recognized on the sale, exchange, redemption, retirement or
other disposition of the Note as ordinary income to the extent of the accrued
market discount that has not previously been included in income. In addition,
the United States Holder may be required to defer, until the maturity date of
the Note or its earlier disposition in a taxable transaction, the deduction of
all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue market discount on a constant interest method. A
United States Holder of a Note may elect to include market discount in income
currently as it accrues (under either the ratable or constant interest method).
This election to include currently, once made, applies to all market discount
obligations acquired in or after the first taxable year to which the election
applies and may not be revoked without the consent of the Service. If the United
States Holder of a Note makes such an election, the foregoing rules with respect
to the recognition of ordinary income on sales and other dispositions of such
instruments, and with respect to the deferral of interest deductions on debt
incurred or maintained to purchase or carry such debt instruments, would not
apply.
ELECTION TO TREAT ALL INTEREST AS OID. A United States Holder of a Note
may elect, subject to certain limitations, to include all interest that accrues
on a Note in gross income on a constant yield basis. For purposes of this
election, interest includes stated interest, OID, market discount, de minimis
OID, de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. Special rules and limitations
apply to taxpayers who make this election; therefore, United States Holders
should consult their tax advisors as to whether they should make this election.
THE AHYDO RULE. The Notes constitute "applicable high yield discount
obligations" ("AHYDOs"). Accordingly, pursuant to Sections 163(e) and 163(i) of
the Code, SpectraSite is not entitled to deduct OID that accrues with respect to
such Notes until amounts attributable to such OID are paid in cash. In addition,
to the extent that the yield to maturity of the Notes exceeds the sum of the
applicable federal rate for the month in which the Notes were issued (5.93%)
plus 6 percentage points (the "Excess
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Yield"), the "disqualified portion" of the OID accruing on the Notes will be
permanently disallowed and characterized as a nondeductible dividend with
respect to SpectraSite and also will be treated as a dividend distribution (to
the extent of available current and accumulated earnings and profits) solely for
purposes of the dividends received deductions of Sections 243, 246 and 246A of
the Code with respect to Holders that are U.S. corporations. The disqualified
portion of OID for any accrual period will equal the product of (i) a percentage
determined by dividing the Excess Yield by the yield to maturity, and (ii) the
OID for the accrual period. Subject to otherwise applicable limitations, such a
corporate Holder will be entitled to a dividend received deduction with respect
to the disqualified portion of the accrued OID if SpectraSite has sufficient
current or accumulated "earnings and profits." To the extent that SpectraSite's
earnings and profits are insufficient, any portion of the OID that otherwise
would have been recharacterized as a dividend for purposes of the dividends
received deduction will continue to be treated as ordinary OID income in
accordance with the rules described above under "-- United States Holders --
Original Issue Discount." Treatment of the Notes as AHYDOs will not disqualify
interest or OID with respect to Notes from the portfolio interest exception
described below under " -- Foreign Holders -- Interest;" provided that all
applicable requirements for the exception are otherwise satisfied.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES. Generally, a sale, exchange or
redemption of the Notes will result in taxable gain or loss equal to the
difference between the amount of cash or other property received and the United
States Holder's adjusted tax basis in the Notes. A United States Holder's
adjusted tax basis for determining gain or loss on the sale or other disposition
of a Note will initially equal the cost of the Note to such Holder and will be
increased by (i) any amounts included in income as OID, and (ii) any market
discount previously included in income by such Holder, and decreased by (a) any
principal and stated interest payments received by the such Holder, and (b) any
amortized premium previously deducted from income by such Holder. Except as
described above with respect to market discount, such gain or loss will be
capital gain or loss. Capital gain or loss will be long-term gain or loss if the
Note is held by the United States Holder for more than one year, otherwise such
gain or loss will be short-term.
United States Holders that are corporations will generally be taxed on net
capital gains at a maximum rate of 35%. In contrast, United States Holders that
are individuals will generally be taxed on net capital gains at a maximum rate
of (i) 39.6% for property held for 12 months or less, and (ii) 20% for property
held more than 12 months. Special rules (and generally lower maximum rates)
apply for individuals in lower tax brackets. Any capital losses realized by a
United States Holder that is a corporation generally may be used only to offset
capital gains. Any capital losses realized by a United States Holder that is an
individual generally may be used only to offset capital gains plus $3,000 of
other income per year.
FOREIGN HOLDERS
The following is a general discussion of certain United States federal
income, estate and gift tax consequences of the ownership and sale or other
disposition of the Notes by any beneficial owner of a Note that is not a United
States Holder (a "Non-United States Holder"). Resident alien individuals are
subject to United States federal income tax with respect to the Notes as if they
were United States Holders.
INTEREST. Under current United States federal income tax law, and subject
to the discussion of backup withholding below, interest (including OID) paid on
the Notes to a Non-United States Holder will not be subject to the normal 30%
United States federal withholding tax; provided that (i) the interest is
"effectively connected with the conduct of a trade or business in the United
States" by the Non-United States Holder and the Non-United States Holder timely
furnishes SpectraSite with two duly executed copies of Internal Revenue Service
("I.R.S.") Form 4224 (or any successor form), or (ii) all of the following
conditions of the portfolio interest exception (the "Portfolio Interest
Exception") are met: (A) the Non-United States Holder does not, actually or
constructively, own 10% or more of the total combined voting power of all
classes of stock of SpectraSite entitled to vote, (B) the Non-United States
Holder is not a controlled foreign corporation that is related, directly or
indirectly, to SpectraSite through stock ownership, (C) the Non-United States
Holder is not a bank receiving interest (including OID)
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pursuant to a loan agreement entered into in the ordinary course of its trade or
business, and (D) either (1) the Non-United States Holder certifies to
SpectraSite or its agent, under penalties of perjury, that it is a Non-United
States Holder and provides its name and address, or (2) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Notes in such capacity, certifies to SpectraSite or
its agent, under penalties of perjury, that such statement has been received
from the beneficial owner of the Notes by it or by a Financial Institution
between it and the beneficial owner and furnishes SpectraSite or its agent with
a copy thereof. The foregoing certification may be provided by the Non-United
States Holder on I.R.S. Form W-8 (or any successor form). Such certificate is
effective with respect to payments of interest (including OID) made after the
issuance of the certificate in the calendar year of its issuance and the two
immediately succeeding calendar years.
On October 14, 1997, final regulations were published in the Federal
Register (the "1997 Final Regulations") that affect the United States federal
income taxation of Non-United States Holders. The 1997 Final Regulations are
effective for payments after December 31, 1999, regardless of the issue date of
the instrument with respect to which such payments are made, subject to certain
transition rules discussed below. The discussion under this heading and under
"-- Backup Withholding Tax and Information Reporting," below, is not intended to
be a complete discussion of the provisions of the 1997 Final Regulations.
Prospective Holders of the Notes are urged to consult their tax advisors
concerning the tax consequences of their investment in light of the 1997 Final
Regulations.
The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the beneficial owner
certificate described above. Qualified intermediaries include: (i) foreign
financial institutions or foreign clearing organizations (other than a United
States branch or United States office of such institution or organization), or
(ii) foreign branches or offices of United States financial institutions or
foreign branches or offices of United States clearing organizations, which, as
to both (i) and (ii), have entered into withholding agreements with the Service.
In addition to certain other requirements, qualified intermediaries must obtain
withholding certificates, such as revised I.R.S. Form W-8 (discussed below),
from each beneficial owner. Under another option, an authorized foreign agent of
a United States withholding agent will be permitted to act on behalf of the
United States withholding agent (including the receipt of withholding
certificates, the payment of amounts of income subject to withholding and the
deposit of tax withheld); provided that certain conditions are met.
For purposes of the certification requirements, the 1997 Final Regulations
generally treat as the beneficial owners of payments on a Note those persons
that, under United States federal income tax principles, are the taxpayers with
respect to such payments, rather than persons such as nominees or agents legally
entitled to such payments. In the case of payments to an entity classified as a
foreign partnership under United States tax principles, the partners, rather
than the partnership, generally must provide the required certifications to
qualify for the withholding tax exemption described above (unless the
partnership has entered into a special agreement with the Service). A payment to
a United States partnership, however, is treated for these purposes as payment
to a United States payee, even if the partnership has one or more foreign
partners. The 1997 Final Regulations provide certain presumptions with respect
to withholding for Holders not furnishing the required certifications to qualify
for the withholding tax exemption described above. In addition, the 1997 Final
Regulations will replace a number of current tax certification forms (including
I.R.S. Form W-8) with a single, revised I.R.S. Form W-8 (which, in certain
circumstances, requires information in addition to that previously required).
Under the 1997 Final Regulations, this revised Form W-8 will remain valid until
the last day of the third calendar year following the year in which the
certificate is signed.
The 1997 Final Regulations provide transition rules concerning existing
certificates, such as I.R.S. Form W-8. Valid withholding certificates that are
held on December 31, 1999 will generally remain valid
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until the earlier of December 31, 2000 or the date of their expiration. Existing
certificates that expire in 1999 will not be effective after their expiration.
Certificates dated prior to January 1, 1998 will generally remain valid until
the end of 1998, irrespective of the fact that their validity expires during
1998.
In the event that the interest (including OID) paid on the Notes is
effectively connected with the conduct of a trade or business within the United
States of the Non-United States Holder, the Non-United States Holder will
generally be taxed on a net income basis (that is, after allowance for
applicable deductions) at the graduated rates that are applicable to United
States Holders in essentially the same manner as if the Notes were held by a
United States Holder, as discussed above. In the case of a Non-United States
Holder that is a corporation, such income may also be subject to the United
States federal branch profits tax (which is generally imposed on a foreign
corporation upon the deemed repatriation from the United States of effectively
connected earnings and profits) at a 30% rate, unless the rate is reduced or
eliminated by an applicable income tax treaty and the Non-United States Holder
is a qualified resident of the treaty country.
If the interest on the Notes is not "effectively connected" and does not
qualify for the Portfolio Interest Exception, then the interest will be subject
to United States federal withholding tax at a flat rate of 30% (or a lower
applicable income tax treaty rate upon delivery of I.R.S. Form 1001, or any
successor form, certifying eligibility for treaty benefits).
GAIN ON SALE OR OTHER DISPOSITION. Subject to special rules applicable to
individuals as described below, a Non-United States Holder will generally not be
subject to regular United States federal income or withholding tax on gain
recognized on a sale or other disposition of the Notes, unless the gain is
effectively connected with the conduct of a trade or business within the United
States of the Non-United States Holder or of a partnership, trust or estate in
which such Non-United States Holder is a partner or beneficiary.
Gains realized by a Non-United States Holder that are effectively connected
with the conduct of a trade or business within the United States of the
Non-United States Holder will generally be taxed on a net income basis (that is,
after allowance for applicable deductions) at the graduated rates that are
applicable to United States Holders, as described above, unless exempt by an
applicable income tax treaty. In the case of a Non-United States Holder that is
a corporation, such income may also be subject to the United States federal
branch profits tax (which is generally imposed on a foreign corporation upon the
deemed repatriation from the United States of effectively connected earnings and
profits) at a 30% rate, unless the rate is reduced or eliminated by an
applicable income tax treaty and the Non-United States Holder is a qualified
resident of the treaty country.
In addition to being subject to the rules described above, an individual
Non-United States Holder who holds the Notes as a capital asset will generally
be subject to tax at a 30% rate on any gain recognized on the sale or other
disposition of such Notes if (i) such gain is not effectively connected with the
conduct of a trade or business within the United States of the Non-United States
Holder, and (ii) such individual is present in the United States for 183 days or
more in the taxable year of the sale or other disposition and either (A) has a
"tax home" in the United States (as specially defined for purposes of the United
States federal income tax), or (B) maintains an office or other fixed place of
business in the United States and the gain from the sale or other disposition of
the Notes is attributable to such office or other fixed place of business.
Individual Non-United States Holders may also be subject to tax pursuant to
provisions of United States federal income tax law applicable to certain United
States expatriates (including certain former long-term residents of the United
States).
Under the 1997 Final Regulations, withholding of United States federal
income tax may apply to payments on a taxable sale or other disposition of the
Notes by a Non-United States Holder who does not provide appropriate
certification to the withholding agent with respect to such transaction.
FEDERAL ESTATE AND GIFT TAXES. A Note beneficially owned by an individual
who is neither a United States citizen nor a domiciliary of the United States at
the time of death will not be subject to United States federal estate tax as a
result of such individual's death; provided that any interest thereon would
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have been eligible for the Portfolio Interest Exception described above in
"-- Foreign Holders -- Interest," if such interest had been received by the
individual at the time of death.
An individual who is not a United States citizen will not be subject to
United States federal gift tax on a transfer of Notes, unless such person is a
domiciliary of the United States or such person is subject to provisions of
United States federal gift tax law applicable to certain United States
expatriates (including certain former long-term residents of the United States).
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to interest (including OID) paid to, and to the proceeds of
sales or other dispositions before maturity by, certain non-corporate persons.
In addition, a 31% backup withholding tax applies if a non-corporate person (i)
fails to furnish such person's Taxpayer Identification Number ("TIN") (which,
for an individual, is his or her Social Security Number) to the payor in the
manner required, (ii) furnishes an incorrect TIN and the payor is so notified by
the Service, (iii) is notified by the Service that such person has failed
properly to report payments of interest and dividends, or (iv) in certain
circumstances, fails to certify, under penalties of perjury, that such person
has not been notified by the Service that such person is subject to backup
withholding for failure properly to report interest and dividend payments.
Backup withholding does not apply to payments made to certain exempt recipients,
such as corporations and tax-exempt organizations.
In the case of a Non-United States Holder, under current United States
federal income tax law, backup withholding and information reporting do not
apply to payments of interest (including OID) with respect to the Note, or to
payments on the sale or other disposition of a Note, if such Holder has provided
to SpectraSite or its paying agent the certification described in clause (ii)(D)
of "-- Foreign Holders -- Interest" or has otherwise established an exemption.
Under current United States federal income tax law, (i) interest payments
(including OID) with respect to a Note collected outside the United States by a
foreign office of a custodian, nominee or broker acting on behalf of a
beneficial owner of a Note, and (ii) payments on the sale or other disposition
of a Note to or through a foreign office of a broker are not generally subject
to backup withholding or information reporting. However, if such custodian,
nominee or broker is a "United States person" (as defined in Section 7701(a)(30)
of the Code), a controlled foreign corporation for United States tax purposes or
a foreign person 50% of more of whose gross income is effectively connected with
the conduct of a United States trade or business for a specified three-year
period (a "U.S. Related Person"), such custodian, nominee or broker may be
subject to certain information reporting (but not backup withholding)
requirements with respect to such payments, unless such custodian, nominee or
broker has in its records documentary evidence that the beneficial owner is not
a United States person and certain conditions are met or the beneficial owner
otherwise establishes an exemption. Backup withholding may apply to any payment
that such custodian, nominee or broker is required to report if such person has
actual knowledge that the payee is a United States person. Payments to or
through the United States office of a broker will be subject to backup
withholding and information reporting unless the Holder certifies, under
penalties of perjury, that it is not a United States person or otherwise
establishes an exemption.
The 1997 Final Regulations modify certain of the certification requirements
for backup withholding and expand the group of U.S. Related Persons. It is
possible that SpectraSite or its paying agent may request new withholding
exemption forms from Holders in order to qualify for continued exemption from
backup withholding when the 1997 Final Regulations become effective.
Backup withholding tax is not an additional tax. Rather, any amounts
withheld from a payment to a Holder under the backup withholding rules are
allowed as a refund or a credit against such Holder's United States federal
income tax; provided that the required information is furnished to the Service.
109
<PAGE> 112
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by any Participating Broker-Dealer subject to the prospectus delivery
requirements of the Securities Act (other than an Excluded Participating
Broker-Dealer). Until , 1999 (90 days after the commencement of the
Exchange Offer), all dealers effecting transactions in the Exchange Notes may be
required to deliver to prospectus.
SpectraSite will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer that resells the Exchange
Notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a Participating Broker-Dealer 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, or until all
broker-dealers who exchange Old Notes which were acquired as a result of market
making activities for Exchange Notes have sold all Exchange Notes held by them,
the Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. SpectraSite has agreed to pay all
expenses incident to the Exchange Offer. The Company will indemnify the holders
of the Exchange Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
The Exchange Notes will not be listed on any stock exchange. The Exchange
Notes are designated for trading in the PORTAL market.
LEGAL MATTERS
Dow, Lohnes & Albertson, PLLC, Washington, D.C., will pass upon the
validity of the Exchange Notes.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements for the period from inception (April 25, 1997) to December
31, 1997 and the nine months ended September 30, 1998 and the consolidated
financial statements of our predecessor, Telesite Services, LLC, for the year
ended December 31, 1996 and for the period from January 1, 1997 to May 12, 1997
included in our Registration Statement Form on Form S-4, as set forth in their
reports appearing elsewhere herein, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
110
<PAGE> 113
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets as of December 31, 1997, and
September 30, 1998........................................ F-3
Consolidated Statement of Operations for the period from
inception (April 25, 1997) to December 31, 1997 and for
the nine months ended September 30, 1998.................. F-4
Consolidated Statements of Redeemable Convertible Preferred
Stock and Shareholder's Deficiency........................ F-5
Consolidated Statement of Cash Flows for the period from
inception (April 25, 1997) to December 31, 1997 and for
the nine months ended September 30, 1998.................. F-6
Notes to Consolidated Financial Statements.................. F-7
TELESITE SERVICES, LLC
Report of Independent Auditors.............................. F-19
Consolidated Balance Sheet as of December 31, 1996.......... F-20
Consolidated Statement of Operations for the year ended
December 31, 1996 and the period ended May 12, 1997....... F-21
Consolidated Statement of Members' Equity................... F-22
Consolidated Statement of Cash Flows for the year ended
December 31, 1996 and the period ended May 12, 1997....... F-23
Notes to Consolidated Financial Statements.................. F-24
</TABLE>
F-1
<PAGE> 114
REPORT OF INDEPENDENT AUDITORS
Board of Directors
SpectraSite Holdings, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of SpectraSite
Holdings, Inc. (the "Company") and subsidiary as of September 30, 1998 and
December 31, 1997, and the related consolidated statements of operations,
redeemable convertible preferred stock and shareholders' deficiency and cash
flows for the nine months ended September 30, 1998 and for the period from April
25, 1997 (inception) to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 consolidated financial position of SpectraSite
Holdings, Inc. and subsidiary at September 30, 1998 and December 31, 1997, and
the consolidated results of its operations and its cash flows for the nine
months ended September 30, 1998 and for the period from April 25, 1997
(inception) to December 31, 1997 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
October 23, 1998
Raleigh, North Carolina
F-2
<PAGE> 115
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 2,234,148 $ 76,204,475
Investments............................................... -- 45,561,147
Accounts receivable....................................... 1,610,039 1,466,338
Prepaid expenses and other................................ 34,019 257,115
----------- ------------
Total current assets........................................ 3,878,206 123,489,075
Property and equipment, net................................. 1,176,032 14,818,309
Goodwill, less accumulated amortization of $278,381 and
$652,012, respectively.................................... 6,791,663 8,086,801
Deposits.................................................... 1,300,000 11,750,000
Investment in affiliate..................................... 336,095 --
Note receivable............................................. -- 257,130
Debt issuance costs, less accumulated amortization of
$115,362.................................................. -- 4,595,516
Other assets................................................ 159,957 174,166
----------- ------------
Total assets................................................ $13,641,953 $163,170,997
=========== ============
LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Line of credit............................................ $ 628,561 $ --
Accounts payable.......................................... 1,049,157 2,261,599
Accrued and other expenses................................ 1,005,317 645,336
Current portion of long-term debt......................... 25,404 128,044
----------- ------------
Total current liabilities................................... 2,708,439 3,034,979
Long-term debt, less current portion........................ 19,376 4,929
Note payable to shareholder................................. 2,312,000 --
Senior discount notes due 2008, net of unamortized discount
of $96,321,863............................................ -- 128,916,137
----------- ------------
Total liabilities........................................... 5,039,815 131,956,045
Series A redeemable convertible preferred stock, $0.001 par,
3,462,830 shares authorized, 3,462,830 outstanding........ 10,500,000 11,100,000
Series B redeemable convertible preferred stock, $0.001 par,
7,000,000 shares authorized, 7,000,000 outstanding........ -- 28,796,158
Shareholders' deficiency:
Common stock, $0.001 par, 12,000,000 and 20,000,000
authorized, respectively, 931,753 and 1,032,213 issued
and outstanding, respectively.......................... 932 1,032
Additional paid-in-capital................................ 260,802 --
Accumulated deficit....................................... (2,159,596) (8,682,238)
----------- ------------
Total shareholders' deficiency.............................. (1,897,862) (8,681,206)
----------- ------------
Total liabilities, redeemable preferred stock and
shareholders' deficiency.................................. $13,641,953 $163,170,997
=========== ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 116
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION NINE MONTHS
(APRIL 25, 1997) TO ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------------- -------------
<S> <C> <C>
Revenues:
Site acquisition revenue.................................. $ 5,001,668 $ 5,154,265
Site leasing revenue...................................... -- 210,910
----------- -----------
5,001,668 5,365,175
Cost of revenues:
Cost of site acquisition revenue.......................... 1,119,608 1,721,349
Cost of site leasing revenue.............................. -- 142,495
----------- -----------
1,119,608 1,863,844
----------- -----------
Gross profit................................................ 3,882,060 3,501,331
Selling, general and administrative expenses................ 5,957,042 6,515,595
Depreciation expense........................................ 191,077 261,086
----------- -----------
Operating loss.............................................. (2,266,059) (3,275,350)
Other income (expense):
Equity in earnings of affiliate........................... 204,537 --
Interest income........................................... 121,432 2,110,243
Interest expense.......................................... (163,555) (4,335,285)
Gain on sale of assets.................................... -- 472,594
Other expense............................................. (55,951) --
----------- -----------
106,463 (1,752,448)
----------- -----------
Net loss.................................................... $(2,159,596) $(5,027,798)
=========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 117
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
SHAREHOLDER'S DEFICIENCY
<TABLE>
<CAPTION>
REDEEMABLE CONVERTIBLE PREFERRED STOCK SHAREHOLDERS' DEFICIENCY
--------------------------------------- -----------------------------------------------
ADDITIONAL
COMMON PAID-IN ACCUMULATED
SERIES A SERIES B TOTAL STOCK CAPITAL DEFICIT TOTAL
----------- ----------- ----------- ------ ---------- ----------- -----------
<C> <C> <C> <C> <C> <C> <C> <S>
Balance at April 25, 1997
(inception)............... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock................... -- -- -- 932 809,693 -- 810,625
Issuance of warrants...... -- -- -- -- 130,500 130,500
Issuance of preferred
stock................... 10,000,000 -- 10,000,000 -- -- -- --
Stock issuance cost....... -- -- -- -- (179,391) -- (179,391)
Accretion of redemption
value................... 500,000 -- 500,000 -- (500,000) -- (500,000)
Net loss.................. -- -- -- -- -- (2,159,596) (2,159,596)
----------- ----------- ----------- ------ ---------- ----------- -----------
Balance at December 31,
1997...................... 10,500,000 -- 10,500,000 932 260,802 (2,159,596) (1,897,862)
Exercise of warrants...... -- -- -- 100 -- -- 100
Issuance of preferred
stock................... -- 28,000,000 28,000,000 -- -- -- --
Stock issuance cost....... -- -- -- -- (260,802) (98,686) (359,488)
Accretion of redemption
value................... 600,000 796,158 1,396,158 -- -- (1,396,158) (1,396,158)
Net loss.................. -- -- -- -- -- (5,027,798) (5,027,798)
----------- ----------- ----------- ------ ---------- ----------- -----------
Balance at September 30,
1998...................... $11,100,000 $28,796,158 $39,896,158 $1,032 $ -- $(8,682,238) $(8,681,206)
=========== =========== =========== ====== ========== =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 118
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(APRIL 25, 1997) TO NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
--------------------- ------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................. $(2,159,596) $(5,027,798)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation............................................ 191,077 261,086
Amortization............................................ 297,785 519,220
Loss (gain) on sale of assets........................... 60,048 (472,594)
Equity in earnings of affiliate......................... (204,537) --
Amortization of discount -- senior discount notes....... -- 3,915,803
Non cash charge (Note 1)................................ 869,150 --
Changes in operating assets and liabilities:
Accounts receivable.................................. (288,773) 436,101
Prepaid expenses and other........................... 136,062 (105,348)
Other assets......................................... -- (44,406)
Accounts payable..................................... 316,674 1,217,154
Accrued and other expenses........................... 1,005,317 (359,027)
----------- -----------
Net cash provided by operating activities................. 223,207 340,191
INVESTING ACTIVITIES
Purchases of property and equipment....................... (849,939) (12,496,128)
Distribution from affiliate............................... -- 150,000
Purchases of investments.................................. -- (45,561,147)
Proceeds from sale of assets.............................. -- 298,575
Acquisitions, net of cash acquired........................ (5,028,541) (1,988,864)
Deposits on acquisitions.................................. (1,300,000) (11,750,000)
----------- -----------
Net cash used by investing activities..................... (7,178,480) (71,347,564)
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock................. 10,000,000 28,000,000
Exercise of warrants...................................... -- 100
Stock issuance costs...................................... (179,391) (359,488)
Proceeds from issuance of senior discount notes........... -- 125,000,333
Debt issuance costs....................................... -- (4,710,878)
Net repayments on line of credit.......................... (567,501) (628,561)
Repayment of long-term debt............................... (63,687) (2,323,806)
----------- -----------
Net cash provided by financing activities................. 9,189,421 144,977,700
----------- -----------
Net increase in cash and cash equivalents................. 2,234,148 73,970,327
Cash and cash equivalents at beginning of period.......... -- 2,234,148
----------- -----------
Cash and cash equivalents at end of period................ $ 2,234,148 $76,204,475
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest.................. $ 63,989 $ 211,232
=========== ===========
</TABLE>
See accompanying notes.
F-6
<PAGE> 119
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
FORMATION OF COMPANY
SpectraSite Holdings, Inc. (the "Issuer") formerly known as Integrated Site
Development, Inc. ("ISD"), was incorporated in the State of Delaware on April
25, 1997. On May 12, 1997, the Issuer issued 850,000 shares of its common stock
and common stock warrants for 150,000 shares in exchange for all of the issued
and outstanding common stock of US Towers, Inc. ("UST"), an entity which was
founded on November 13, 1996, and which had deminimus assets and operations at
the time of this transaction. In connection with this transaction, the primary
shareholder of UST became chief executive officer of the Issuer. This
transaction resulted in a non-cash charge of $869,150, based on the estimated
fair value of the stock and warrants at the date of issuance.
On May 12, 1997, the Issuer acquired all of the outstanding membership
interests of TeleSite Services, LLC ("TeleSite") and its subsidiary, MetroSite
Management, LLC ("MetroSite"), for consideration including $4,850,000 in cash,
81,753 shares of common stock valued at $71,125 and a $2,312,000 note payable.
Since the Company had minimal operations prior to this acquisition, TeleSite is
considered the Issuer's predecessor for financial reporting purposes. In October
1997, TeleSite was merged into UST, and UST changed its name to SpectraSite
Communications, Inc. The acquisition was accounted for as a purchase in
accordance with the provisions of APB 16 and, accordingly, the results of
operations of TeleSite are included in the consolidated operations of the Issuer
from the date of acquisition.
In connection with the acquisition of TeleSite, the Issuer may be required
to provide additional consideration in the form of common stock that is
contingent upon the acquired businesses achieving certain operating goals
through fiscal 1998. The maximum amount of remaining contingent shares of common
stock that could be issued as additional consideration at September 30, 1998 is
204,382 shares. Any additional consideration will be accounted for as an
additional cost of the acquisition.
The Issuer, its wholly owned subsidiary SpectraSite Communications, Inc.
("SCI") and the wholly owned subsidiaries of SCI, H&K Investments, LLC ("H&K")
and GlobalComm, Inc. ("GlobalComm") (collectively referred to as the "Company"
throughout), are principally engaged in providing services to companies
operating in the telecommunications industry including site development
services, transmission tower construction and leasing antenna tower sites.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Issuer, SCI, H&K and GlobalComm. All significant intercompany transactions
and balances have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
F-7
<PAGE> 120
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
INVESTMENTS
The Company accounts for investments in accordance with the provisions of
Statement of Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". At September 30, 1998, the Company's
available for sale securities consisted of commercial paper and certificates of
deposit with maturities of less than one year. The carrying amount of these
investments approximates market value.
PROPERTY AND EQUIPMENT
Property and equipment, including towers, are stated at cost. Direct costs
related to the development and construction of towers are capitalized.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets ranging from three to fifteen years.
GOODWILL
The Company has classified as goodwill the cost in excess of fair value of
net assets acquired in purchase transactions. Goodwill is being amortized on a
straight-line basis over fifteen years.
DEBT ISSUANCE COSTS
The Company capitalized costs relating to the issuance of the 12% Senior
Discount Notes Due 2008 (the "Senior Discount Notes") (Note 3). The costs are
amortized using the straight-line method over the term of the these notes.
INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes, ("SFAS
109"). Under SFAS 109, the liability method is used in accounting for income
taxes and deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax basis of assets and
liabilities.
FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents and investments
approximates fair value for these instruments. The estimated fair value of the
Senior Discount Notes (see Note 3) is based on the quoted market price in the
private market. The estimated fair values of the Company's financial
instruments, along with the carrying amounts of the related assets
(liabilities), are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SEPTEMBER 30, 1998
------------------ --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- --------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Cash and cash equivalents.................... $ 2,234 $ 2,234 $ 76,204 $ 76,204
Investments.................................. -- -- 45,561 45,561
Senior Discount Notes........................ -- -- (128,916) (108,114)
</TABLE>
REVENUE RECOGNITION
Revenue from site acquisition services is recognized when services are
rendered. Revenue from site leasing contracts are recognized ratably over the
term of the contracts. To date, substantially all of the Company's revenues have
been generated by providing site acquisition services.
F-8
<PAGE> 121
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
COST OF REVENUES
Cost of revenues for site acquisition services and cost of revenues for
site leasing services consist of the direct costs incurred to provide the
related services.
SIGNIFICANT CONCENTRATIONS
The Company's customer base consists of businesses operating in the
wireless telecommunications industry. The Company's exposure to credit risk
consists primarily of unsecured accounts receivable from these customers. Five
customers accounted for 96.6% of the Company's 1997 revenue. One customer
accounted for 59.2% of the Company's 1998 revenue. Following is a list of
significant customers:
<TABLE>
<CAPTION>
PERCENT OF REVENUE
FOR THE PERIOD FROM PERCENT OF REVENUES PERCENT OF
APRIL 25, 1997 PERCENT OF ACCOUNTS FOR THE NINE ACCOUNTS
(INCEPTION) TO RECEIVABLE AT MONTHS ENDED RECEIVABLE AT
DECEMBER 31, 1997 DECEMBER 31, 1997 SEPTEMBER 30, 1998 SEPTEMBER 30, 1998
------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Customer 1........... 38.9% 75.0% 59.2% 16.5%
Customer 2........... 18.8% -- -- 14.2%
Customer 3........... 14.7% -- -- --
Customer 4........... 13.0% -- -- --
Customer 5........... 11.2% -- -- --
Customer 6........... -- -- -- 10.4%
Customer 7........... -- -- -- 21.5%
Customer 8........... -- -- -- 25.6%
</TABLE>
ADVERTISING EXPENSE
The cost of advertising is expensed as incurred, and totaled approximately
$131,000 and $70,000 for the period from April 25, 1997 (inception) to December
31, 1997 and for the nine months ended September 30, 1998, respectively.
STOCK OPTIONS
The Company has elected under the provisions of Statement of Financial
Standard's No. 123, Accounting for Stock Based Compensation ("SFAS 123") to
account for its employee stock options in accordance with Accounting Principle
Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25").
Companies that account for stock based compensation arrangements under APB No.
25 are required by SFAS 123 to disclose the pro forma effect on net income
(loss) as if the fair value based method prescribed by SFAS 123 had been
applied. The Company plans to continue to account for stock based compensation
using the provisions of APB 25 and has adopted the disclosure requirements of
SFAS 123. Under APB 25, no compensation expense has been recognized for stock
options granted since the exercise price of the options has equaled or exceeded
the estimated fair value of the underlying stock on the date of grant.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In December 1997, the Financial Accounting Standards Boards issued
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("Statement No. 130"), that establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. Statement No. 130 only impacts financial
statement presentation as
F-9
<PAGE> 122
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
opposed to actual amounts recorded. Other comprehensive income includes all
nonowner changes in equity that are excluded from net income. This Statement
does not apply to an enterprise that has no items of other comprehensive income
in any period presented. During the nine months ended September 30, 1998, the
Company had no items of other comprehensive income.
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS 131 changes the way public companies report segment
information in annual financial statements and also requires those companies to
report selected segment information in interim financial statements to
shareholders, SFAS 131 also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The application of
the new rules does not have a significant impact on the Company's financial
position at September 30, 1998 or its results of operations for the nine months
ended September 30, 1998 as the Company only operates in one business segment.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER, 30
1997 1998
------------ -------------
<S> <C> <C>
Towers...................................................... $ 166,568 $ 8,538,653
Construction in progress.................................... 305,808 5,551,601
Equipment................................................... 465,758 640,828
Furniture and fixtures...................................... 250,408 267,078
Vehicles.................................................... 148,314 173,315
Other....................................................... -- 42,020
---------- -----------
Total....................................................... 1,336,856 15,213,495
Less accumulated depreciation............................... (160,824) (395,186)
---------- -----------
Property and equipment, net................................. $1,176,032 $14,818,309
========== ===========
</TABLE>
3. DEBT
12% SENIOR DISCOUNT NOTES DUE 2008
In June 1998, the Company issued $225,238,000 principal amount of Senior
Discount Notes with gross proceeds of $125,000,333. The Senior Discount Notes
accrete daily at a rate of 12% per annum, compounded semiannually, to an
aggregate principal amount of $225,238,000 by July 15, 2003. Cash interest will
not accrue on the Senior Discount Notes prior to July 15, 2003. Commencing July
15, 2003, cash interest will accrue and be payable semiannually in arrears on
each January 15 and July 15, commencing January 15, 2004, at rate of 12% per
annum. After July 15, 2003 the Company may redeem all or a portion of the Senior
Discount Notes at specified redemption prices, plus accrued and unpaid interest,
to the applicable redemption date. On one or more occasions prior to July 15,
2001, the Company may redeem up to 25% of the aggregate principal amount at
maturity of the Senior Discount Notes issued with the net cash proceeds from one
or more equity offerings. The redemption price would be 112% of the accreted
value on the redemption date. The Company is required to comply with certain
covenants under the terms of the Senior Discount Notes that restrict the
Company's ability to incur indebtedness, make certain payments, issue preferred
stock among other things. In the nine-month period ended September 30,
F-10
<PAGE> 123
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. DEBT -- (CONTINUED)
1998, the Company incurred amortization discount recorded as interest expense of
approximately $3,916,000 related to the Senior Discount Notes.
<TABLE>
<S> <C>
Senior Discount Notes....................................... $225,238,000
Unamortized discount........................................ (96,321,863)
------------
$128,916,137
============
</TABLE>
LINE OF CREDIT
During 1997, the Company maintained a $1.5 million line of credit with a
bank, which bore interest at prime plus 0.5%. The balance at December 31, was
$628,561. The line of credit was repaid in full in March, 1998.
OTHER LONG-TERM DEBT
Long-term debt, other than the Senior Discount Notes, consists of the
following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Note payable, interest at 9%, maturing May 29, 1999,
interest payable quarterly................................ $ -- $ 100,000
Installment notes payable to a bank, bearing interest at
rates ranging from 8.75% to 10.2%, maturing from October
1998 to December 1999, monthly payments of principal and
interest, collateralized by vehicles...................... 44,780 32,973
-------- ---------
44,780 132,973
Less current portion........................................ (25,404) (128,044)
-------- ---------
Long-term debt, less current portion........................ $ 19,376 $ 4,929
======== =========
</TABLE>
Maturities of long-term debt at September 30, 1998 are as follows:
<TABLE>
<S> <C>
1999........................................................ $128,044
2000........................................................ 4,929
--------
Total....................................................... $132,973
========
</TABLE>
BANK CREDIT AGREEMENT
In January, 1998 the Company signed a letter of intent with a bank for a
$50 million revolving credit facility for the purpose of financing the
construction and/or the acquisition of telecommunication towers for PCS or other
wireless communication services and other permitted acquisitions as defined by
the agreement, contingent upon certain events. In the nine months ended
September 30, 1998 the Company incurred approximately $190,000 in commitment
fees related to the agreement. The agreement expires December 31, 1998.
F-11
<PAGE> 124
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. SHAREHOLDERS' EQUITY
REDEEMABLE CONVERTIBLE VOTING PREFERRED STOCK
The Company's mandatorily redeemable convertible preferred stock consists
of Series A and Series B cumulative redeemable convertible preferred stock,
$.001 par value, 10,462,830 shares authorized in the aggregate and 3,462,830 and
7,000,000 shares issued and outstanding at September 30, 1998, respectively.
Dividends accumulate at a rate of 8% per annum per share and are payable when
declared in cash and are subject to certain restrictions. Voting rights for
preferred stock are equal to the voting rights of the largest number of common
shares into which the preferred stock are convertible. Accumulated dividends for
Series A and B cumulative redeemable preferred stock at September 30, 1998 are
$1,896,158.
Contemporaneously with the closing of an underwritten public offering of
common stock resulting in gross proceeds of at least $30 million at a per share
price of $4.47 or greater the outstanding shares of Series A and Series B
Preferred Stock shall automatically convert to common stock.
The Series A and Series B preferred stock is convertible into common stock
based on a share for share basis and can be adjusted upon the occurrence of
certain transactions defined in the Issuer's articles of incorporation. In
December, 2008 each share of Series A and Series B preferred stock shall
automatically be redeemed at a redemption price per share, in cash, equal to
100% of the original issue price plus unpaid dividends. The Company has reserved
a sufficient number of its authorized shares of common stock for the purpose of
effecting the future conversion of the preferred stock.
WARRANTS
During September and October, 1998, 150,000 shares of common stock were
issued in connection with the exercise of common stock warrants at a price of
$0.001 per share.
STOCK OPTIONS
During 1997, the Company adopted a stock option plan which provides for the
purchase of the common stock by certain employees. The maximum number of shares
for which options may be granted under the plans shall not exceed 1,817,700
shares. Stock options are granted under various stock option agreements. Each
stock option agreement contains specific terms.
The options without performance acceleration under the incentive stock
option agreement and options issued the non qualified stock option agreement
vest and become exercisable ratably over a four year period, commencing one year
after date of grant.
The options with performance acceleration under the incentive stock option
agreement and the non qualified stock option agreement vest and become
exercisable upon the seventh anniversary of the grant date. Vesting, however,
can be accelerated upon the achievement of certain milestones defined in each
agreement.
In accordance with SFAS 123, the fair value of each option grant was
determined by using the Black-Scholes option pricing model with the following
weighted average assumptions for the year ended December 31, 1997 and the nine
months ended September 30, 1998: dividend yield of 0.0%; volatility of .70; risk
free interest rate of 6.0%; and expected option lives of 7 years. Had
compensation cost for the Company's stock options been determined based on the
fair value at the date of grant consistent with the provisions of SFAS 123, the
Company's net loss would have been $2,167,196 for the year ended December 31,
1997 and $5,219,798 for the nine months ended September 30, 1998.
F-12
<PAGE> 125
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. SHAREHOLDERS' EQUITY -- (CONTINUED)
Option activity under the Company's plans is summarized below:
<TABLE>
<CAPTION>
INCENTIVE STOCK NON QUALIFIED STOCK
OPTION PLAN OPTION PLAN
------------------- --------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Outstanding at beginning of April 25, 1997..... -- -- -- --
Options granted................................ 724,700 $2.89 160,000 $2.89
Options exercised.............................. -- -- -- --
Options canceled............................... -- -- -- --
-------- ----- ------- -----
Outstanding at December 31, 1997............... 724,700 $2.89 160,000 2.89
======== ===== ======= =====
Options granted................................ 367,000 3.56 450,000 3.11
Options exercised.............................. -- -- -- --
Options canceled............................... (125,800) 2.89 -- --
-------- ----- ------- -----
Outstanding at September 30, 1998.............. 965,900 $3.15 610,000 $3.05
======== ===== ======= =====
</TABLE>
At December 31, 1997, there were no options exercisable under the incentive
stock option plan. At September 30, 1998 there were 162,500 options exercisable
under the incentive stock option plan. There were no options exercisable under
the non qualified option plan at December 31, 1997 or September 30, 1998.
At December 31, 1997 and September 30, 1998, the weighted average remaining
contractual life of the incentive stock options outstanding were 8.77 years and
9.14 years, respectively.
At December 31, 1997 and September 30, 1998, the weighted average remaining
contractual life of the non qualified stock options outstanding were 8.73 years
and 9.24 years, respectively.
COMMON STOCK RESERVED FOR FUTURE ISSUANCE
At September 30, 1998 the Company had reserved a total of 12,534,452 of its
authorized 20,000,000 shares of common stock for future issuance as follows:
<TABLE>
<S> <C>
Convertible preferred stock................................. 10,462,830
Outstanding stock options................................... 1,575,900
Outstanding warrants........................................ 49,540
Contingent purchase price consideration..................... 204,382
Possible future issuance under stock option plan............ 241,800
----------
12,534,452
==========
</TABLE>
F-13
<PAGE> 126
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LEASES
OPERATING LEASES FROM OTHERS
The Company leases office space and certain office equipment under
noncancelable operating leases. The future minimum lease payments for these
leases at September 30, 1998 are as follows:
<TABLE>
<S> <C>
1999........................................................ $1,059,376
2000........................................................ 909,539
2001........................................................ 863,029
2002........................................................ 589,784
2003........................................................ 283,093
----------
Total....................................................... $3,704,821
==========
</TABLE>
Rent expense was approximately $234,000 and $456,000 for the period from
April 25, 1997 (inception) to December 31, 1997 and for the nine months ended
September 30, 1998, respectively.
ANTENNAE SPACE LEASED TO OTHERS
The Company currently leases antennae space on multi-tenant towers to a
variety of wireless service providers under non cancelable operating leases.
Cost and accumulated depreciation of the leased towers at September 30, 1998,
was $8,539,000 and 128,000, respectively, and at December 31, 1997, was $167,000
and $3,000, respectively.
At September 30, 1998, the approximate future minimum rental income under
operating leases that have initial or remaining non cancelable terms in excess
of one year are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) RENTAL INCOME
-------------- -------------
<S> <C>
1999........................................................ $ 820,992
2000........................................................ 820,992
2001........................................................ 764,525
2002........................................................ 637,121
2003........................................................ 81,482
----------
Total....................................................... $3,125,112
==========
</TABLE>
6. INCOME TAXES
The Company did not recognize any income tax expense for the period from
April 25, 1997 (inception) to December 31, 1997 and for the nine months ended
September 30, 1998 as the Company incurred a net loss for the periods and the
resulting deferred tax assets were fully reserved.
The components of net deferred taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Deferred tax assets
Tax loss carryforwards...................................... $183,000 $2,370,000
======== ==========
Total gross deferred tax assets............................. 183,000 2,370,000
Valuation allowance......................................... (183,000) (2,370,000)
-------- ----------
$ -- $ --
======== ==========
</TABLE>
F-14
<PAGE> 127
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES -- (CONTINUED)
Deferred tax assets result primarily from differences between book and tax
treatment of net operating losses. The Company has a federal net operating loss
carryforward of approximately $6.0 million that expires in the year 2012. Also,
the Company has state tax losses of $6.0 million that expire in 2002. Deferred
tax assets were fully reserved as of December 31, 1997 and September 30, 1998.
Based on the Company's history of losses to date, management has provided a
valuation allowance to offset the deferred assets related to federal and state
net operating losses.
7. RELATED PARTY TRANSACTION
In conjunction with the acquisition of TeleSite, the Company issued a
$2,312,000 note payable to a shareholder. In the period from April 25, 1997
(inception) to December 31, 1997 and the nine months ended September 30, 1998,
the Company incurred approximately $100,000 and $81,000 of interest expense
related to the note payable to shareholder, respectively. The balance at
December 31, 1997 was $2,312,000. In June, 1998, the note was paid in full.
During the period from April 25, 1997 (inception) to December 31, 1997 and
the nine months ended September 30, 1998, the Company paid approximately $60,000
and $90,000 to a related party for management fees.
During the period from April 25, 1997 (inception) to December 31, 1997, the
Company paid approximately $57,000 to a related party for rent expense for an
office facility. In September 1997, the lease with the related party was
terminated.
8. EMPLOYEE BENEFIT PLAN
The Company provides a 401(k) plan for the benefit of all its employees
meeting specified eligibility requirements. The Company's contributions to the
plan are discretionary and totaled approximately $11,000 and $20,000 for the
period from April 25, 1997 (inception) to December 31, 1997 and for the nine
months ended September 30, 1998, respectively.
9. SALE OF AFFILIATES
In February, 1998 the Company entered into a purchase and sale agreement
under which it sold its wholly-owned subsidiary, MetroSite, for $298,575. The
Company recognized a gain on the sale of $257,251.
In May, 1998, the Company sold its ownership interest in Communication
Management Specialists, LLC ("CMS") for $375,000, in exchange for a note
receivable bearing interest at 8.5% per annum, payable to the Company over 60
months. The Company recognized a gain on the sale of approximately $189,000.
Prior to the sale, the Company's ownership interest in CMS was accounted for
using the equity method.
10. ACQUISITION ACTIVITY
In June 1998, the Company entered into an agreement under which it acquired
all of the membership interests of H&K Investments, LLC for $1,400,000 in a
transaction accounted for as a purchase. The results of operations of H&K are
included in the Company's operations from the date of acquisition. The Company
paid $1,300,000 in cash and recorded notes payable for $100,000 in conjunction
with the acquisition.
In August 1998, the Company entered into an asset purchase agreement with
Airadigm Communications, Inc. ("Airadigm") for the purchase of 47 towers for
approximately $11,750,000. The
F-15
<PAGE> 128
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. ACQUISITION ACTIVITY -- (CONTINUED)
Company paid the entire amount to an escrow account pending completion of due
diligence review terms included in the agreement. Accordingly, the Company
recorded the estimated purchase price as a non-current deposit. Under the terms
of the agreement, the Company will leaseback antenna space on the towers to
Airadigm.
In August 1998, the Company entered into an asset purchase agreement with
Amica Wireless Phone Service, Inc. for the purchase of the construction in
progress of 14 towers for approximately $474,000.
In September 1998, the Company acquired all of the outstanding common stock
of GlobalComm, Inc. for $1,988,864 cash in a transaction accounted for as a
purchase. The Company recorded approximately $1,669,000 of goodwill related to
the transaction.
11. SUBSEQUENT EVENTS
On October 9, 1998, the Company paid a former employee $500,000 under an
agreement to release the Company from any potential claims and to buy 125,000
shares of SpectraSite common stock from the former employee for an agreed upon
price. In addition, the agreement provided that shareholders of SpectraSite
would have an option to purchase the former employee's remaining 37,605 shares
of SpectraSite common stock for the same price per share, provided that the
Company advise the former employee in writing of the exercise of all or any
portion of such option by November 15, 1998.
12. YEAR 2000 ISSUE (UNAUDITED)
Many existing computer systems and applications, and other control devices,
use only two digits to identify a year in the date field, without considering
the impact of the upcoming changes in the century. As a result, such systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000. The Company relies on its
systems, applications and devices in operating and monitoring all major aspects
of its business, including the financial systems (such as general ledger,
accounts payable and payroll modules), customer services, infrastructure,
embedded computer chips, networks and telecommunications equipment and products.
The Company also relies, directly and indirectly, on external systems of
business enterprises such as customers, suppliers, creditors, financial
organizations and of governmental entities, both domestic and international, for
accurate exchange of data. The Company's current estimate is that the costs
associated with the year 2000 issue, and the consequences of incomplete or
untimely resolution of the year 2000 issue, will not have a material adverse
effect on the results of operations or financial position of the Company in any
given year. However, despite the Company's efforts to address the year 2000
impact on its internal systems, the Company has not fully identified such impact
or whether such impact can be resolved without disruption of its business and
without incurring significant expense. In addition, even if the internal systems
of the Company are not materially affected by the year 2000 issue, the Company
could be affected through disruption in the operation of the enterprises with
which the Company interacts.
F-16
<PAGE> 129
REPORT OF INDEPENDENT AUDITORS
The Members
TeleSite Services, LLC
We have audited the accompanying consolidated balance sheet of TeleSite
Services, LLC (the "Company") as of December 31, 1996 and the related
consolidated statements of operations and members' equity and cash flows for the
year ended December 31, 1996 and for the period from January 1, 1997 through May
12, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated 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 consolidated financial position of TeleSite
Services, LLC at December 31, 1996 and the consolidated results of its
operations and its cash flows for the year ended December 31, 1996 and for the
period from January 1, 1997 through May 12, 1997, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Raleigh, North Carolina
March 27, 1998
F-17
<PAGE> 130
TELESITE SERVICES, LLC
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 4,854
Accounts receivable:
Trade.................................................. 1,777,611
Other.................................................. 37,107
Prepaid expenses and other................................ 39,964
----------
Total current assets........................................ 1,859,536
Property and equipment, net................................. 931,291
Investment in affiliate..................................... 131,459
----------
Total assets................................................ $2,922,286
==========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Line of credit............................................ $ 946,724
Accounts payable.......................................... 688,180
Accrued expenses.......................................... 33,092
Current portion of long-term debt......................... 295,711
----------
Total current liabilities................................... 1,963,707
Long-term debt, less current portion........................ 81,106
----------
Total liabilities........................................... 2,044,813
Members' equity............................................. 877,473
----------
Total liabilities and members' equity....................... $2,922,286
==========
</TABLE>
See accompanying notes.
F-18
<PAGE> 131
TELESITE SERVICES, LLC
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE JANUARY 1, 1997
YEAR ENDED TO
DECEMBER 31, 1996 MAY 12, 1997
----------------- ---------------
<S> <C> <C>
Revenues.................................................... $8,840,869 $1,925,985
Cost of revenues............................................ 2,254,777 594,683
---------- ----------
Gross profit................................................ 6,586,092 1,331,302
Selling, general and administrative expenses................ 4,255,840 1,741,856
Depreciation expense........................................ 91,133 55,870
---------- ----------
Operating income (loss)..................................... 2,239,119 (466,424)
Interest expense............................................ (66,505) (35,695)
Equity in earnings (loss) of affiliate...................... 116,459 (1,087)
---------- ----------
Net income (loss)........................................... $2,289,073 $ (503,206)
========== ==========
</TABLE>
See accompanying notes.
F-19
<PAGE> 132
TELESITE SERVICES, LLC
CONSOLIDATED STATEMENT OF MEMBERS' EQUITY
<TABLE>
<S> <C>
Members' deficiency at January 1, 1996...................... $ (445,584)
Distributions to members.................................. (966,016)
Net income................................................ 2,289,073
----------
Members' equity at December 31, 1996........................ $ 877,473
==========
</TABLE>
See accompanying notes.
F-20
<PAGE> 133
TELESITE SERVICES, LLC
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE JANUARY 1, 1997
YEAR ENDED TO
DECEMBER 31, 1996 MAY 12, 1997
----------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $ 2,289,073 $(503,206)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation.............................................. 91,133 55,870
Equity in (earnings) loss of affiliate.................... (116,459) 1,087
Changes in operating assets and liabilities:
Trade accounts receivable.............................. (1,314,087) 456,345
Other accounts receivable.............................. (34,072) (76,610)
Prepaid expenses and other............................. (35,827) (17,487)
Accounts payable....................................... 197,702 (42,534)
Accrued expenses....................................... 31,568 55,593
----------- ---------
Net cash provided by (used in) operating activities......... 1,109,031 (70,942)
INVESTING ACTIVITIES
Purchases of property and equipment......................... (837,808) (321,788)
Investment in affiliate..................................... (15,000) --
----------- ---------
Net cash used in investing activities....................... (852,808) (321,788)
FINANCING ACTIVITIES
Net proceeds from line of credit............................ 368,724 249,338
Net proceeds from long-term debt............................ 556,391 293,785
Repayment of long-term debt................................. (224,923) --
Proceeds from capital contribution.......................... -- 100
Distribution to members..................................... (966,016) (153,499)
----------- ---------
Net cash (used in) provided by financing activities......... (265,824) 389,724
----------- ---------
Net decrease in cash........................................ (9,601) (3,006)
Cash at beginning of period................................. 14,455 4,854
----------- ---------
Cash at end of period....................................... $ 4,854 $ 1,848
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest.................... $ 64,000 $ 30,695
=========== =========
</TABLE>
See accompanying notes.
F-21
<PAGE> 134
TELESITE SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
TeleSite Services, LLC (the "Company") was formed on August 1, 1995, for
the purpose of providing site development services, as agent, to companies
operating in the telecommunications industry. TeleSite's clients are located
primarily in the southeastern and south central regions of the United States.
Metrosite Management, LLC ("Metrosite") was formed on February 28, 1997 by
the contribution of $99 by the Company and $1 by a member of the Company for the
99% and 1% ownership of Metrosite, respectively. Metrosite was formed for the
purpose of negotiating agreements with municipalities to lease certain locations
to PCS providers (e.g., water towers, etc.) in return for a percentage of the
monthly rental amounts charged by the municipalities to the PCS providers.
PRINCIPLES OF CONSOLIDATION
The accompanying 1997 consolidated financial statements include the
accounts of TeleSite, LLC and MetroSite Management, LLC from the date of
MetroSite's formation. All significant intercompany transactions and balances
have been eliminated in consolidation. Minority interest related to the
membership interest not owned by the Company is insignificant.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets ranging from three to seven years.
REVENUE RECOGNITION
Revenue from projects is recognized when site selection services are
rendered.
COST OF REVENUES
Cost of revenues consist of the direct costs incurred to provide the
related services.
SIGNIFICANT CONCENTRATIONS
The Company's customer base consists of companies operating in the
telecommunications industry. The Company's exposure to credit risk consists
primarily of unsecured accounts receivable from these
F-22
<PAGE> 135
TELESITE SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
customers. Following is information concerning revenue and accounts receivable
concentrations of the Company's major customers:
<TABLE>
<CAPTION>
% OF REVENUES
--------------------------------------
PERIOD FROM
JANUARY 1, 1997
YEAR ENDED TO
DECEMBER 31, 1996 MAY 12, 1997
----------------- ------------------
<S> <C> <C>
Customer 1................................... 21% 34%
Customer 2................................... 63% 30%
Customer 3................................... -- 12%
</TABLE>
<TABLE>
<CAPTION>
% OF ACCOUNTS RECEIVABLE AT
--------------------------------------
DECEMBER 31, 1996 MAY 12, 1997
----------------- ------------
<S> <C> <C>
Customer 1................................... 11% 37%
Customer 2................................... 67% 24%
</TABLE>
INVESTMENT IN AFFILIATE
The Company's 33% ownership interest in Communication Management
Specialists, LLC, ("CMS") a company that provides construction management
services to telecommunications companies, is accounted for using the equity
method.
Summary financial information of CMS is as follows:
<TABLE>
<CAPTION>
AS OF AND FOR
THE
PERIOD FROM
AS OF AND FOR THE JANUARY 1, 1997
YEAR ENDED TO
DECEMBER 31, 1996 MAY 12, 1997
----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Current Assets................................ $1,110,500 $810,200
Non-current Assets............................ 16,300 17,800
Current Liabilities........................... 747,400 452,000
Non-current Liabilities....................... -- --
Members' equity............................... 379,400 376,000
Net Sales..................................... 2,404,866 650,000
Gross Profit.................................. 553,164 179,500
Net income.................................... 352,900 (3,300)
</TABLE>
INCOME TAXES
The Company is organized as a limited liability company and is therefore
not subject to income taxes. All taxable income or loss is reported by the
members on their respective income tax returns. Therefore the accompanying
Consolidated Statement of Operations and Members' Equity does not include any
provision for income tax expense.
F-23
<PAGE> 136
TELESITE SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1996:
<TABLE>
<S> <C>
Land........................................................ $ 297,600
Equipment................................................... 304,148
Furniture and fixtures...................................... 143,199
Vehicles.................................................... 200,240
Leasehold improvements...................................... 53,448
Construction in progress.................................... 42,259
----------
Total....................................................... 1,040,894
Less accumulated depreciation............................... (109,603)
----------
Property and equipment, net................................. $ 931,291
==========
</TABLE>
3. LINE OF CREDIT AND LONG-TERM DEBT
The Company has a maximum $1,500,000 line of credit with a bank, with an
outstanding balance of $946,724 at December 31, 1996. The line of credit bears
interest at a variable rate, not to exceed 10%, with interest payable monthly
and principal due May 31, 1997. The rate of interest at December 31, 1996 was
8.5%. The line of credit is collateralized by substantially all assets of the
Company.
Long-term debt consisted of the following at December 31, 1996:
<TABLE>
<S> <C>
Note payable to a bank, bearing interest at 8.5%, maturing
April 4, 1997, monthly payments of interest of $1,780,
collateralized by land.................................... $ 250,000
Installment notes payable to a bank, bearing interest at
rates ranging from 8.75% to 10.2%, maturing from October
20, 1998 to December 9, 1999, monthly payments of
principal and interest of $4,614, collateralized by
vehicles.................................................. 126,817
---------
Total....................................................... 376,817
Less current maturities..................................... (295,711)
---------
Long-term debt.............................................. $ 81,106
=========
</TABLE>
Maturities of long-term debt at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
1997........................................................ $295,711
1998........................................................ 46,815
1999........................................................ 34,291
--------
Total....................................................... $376,817
========
</TABLE>
The Company estimates that the fair value of notes payable approximates the
carrying value based upon its effective current borrowing rate for debt with
similar terms and remaining maturities. Disclosure about fair value of financial
instruments is based upon information available to management as of December 31,
1996.
F-24
<PAGE> 137
TELESITE SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. RELATED PARTY TRANSACTIONS
The company is affiliated with other organizations by common ownership
and/or control. During the year ended December 31, 1996 and the period from
January 1, 1997 to May 12, 1997, the Company paid approximately $66,000 and
$22,000, respectively, to an affiliated organization for rent expense.
On May 9, 1997, a member of the Company assumed the Company's construction
line of credit with a bank of $562,135, in exchange for land and construction in
progress with carrying values of $297,600 and $322,292, respectively. The
Company recorded a non-cash shareholder's distribution of $57,757 associated
with this transaction.
5. LEASES
The Company leases office space and certain office equipment under
noncancelable operating leases. The future minimum lease payments under such
leases at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997........................................................ $164,597
1998........................................................ 136,409
1999........................................................ 93,696
2000........................................................ 66,429
2001........................................................ 27,500
--------
Total....................................................... $488,631
========
</TABLE>
Rent expense under operating leases was approximately $110,000 and $57,000
for the year ended December 31, 1996 and for the period from January 1, 1997 to
May 12, 1997, respectively.
6. EMPLOYEE BENEFIT PLAN
The Company provides a 401(k) plan for the benefit of its employees meeting
specified eligibility requirements. The Company's contributions to the plan are
discretionary and totaled $15,205 in 1996 and $12,342 for the period from
January 1, 1997 to May 12, 1997.
7. SUBSEQUENT EVENT
On May 12, 1997, 100% of the members' interests of the Company and its
subsidiary, Metrosite, were acquired by SpectraSite Holdings, Inc., a Delaware
corporation.
F-25
<PAGE> 138
- ------------------------------------------------------
- ------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or represent anything not contained in this Prospectus. You must not
rely on any unauthorized information or representations. This Prospectus is an
offer to sell or to buy only the shares offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this Prospectus is current only as of its date.
------------------------------------
TABLE OF CONTENTS
------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Certain Introductory Matters.......... 1
Prospectus Summary.................... 2
Risk Factors.......................... 12
Use of Proceeds....................... 20
Capitalization........................ 21
Unaudited Pro Forma Financial Data.... 22
Selected Financial Data............... 28
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 30
Industry Review....................... 34
Business.............................. 39
Management............................ 50
Certain Transactions.................. 55
Ownership of Capital Stock............ 58
Description of Capital Stock.......... 60
Description of New Credit Facility.... 62
The Exchange Offer.................... 64
Description of the Notes.............. 73
Certain U.S. Federal Tax
Considerations...................... 103
Plan of Distribution.................. 110
Legal Matters......................... 110
Experts............................... 110
Index to Financial Statements......... F-1
</TABLE>
UNTIL , 1998 (90TH DAY AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
SPECTRASITE HOLDINGS, INC.
EXCHANGE OFFER FOR
12% SENIOR DISCOUNT NOTES DUE 2008
-------------------------------------
PROSPECTUS
-------------------------------------
SPECTRASITE LOGO
, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 139
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a corporation (in its original certificate of
incorporation or amendment thereto) may eliminate or limit the personal
liability of a director (or certain persons who, pursuant to the provisions of
the certificate of incorporation, exercise of perform duties conferred or
imposed upon directors by the DGCL) to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from which
the director derived an improper personal benefit. The Registrant's Certificate
of Incorporation, as amended, limits the liability of directors thereof to the
extent permitted by Section 102(b)(7) of the DGCL.
Under Section 145 of the DGCL, in general, a corporation may indemnify its
directors, officers, employees or agents against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties to which they may be made parties by reason of their being or
having been directors, officers, employees or agents and shall so indemnify such
persons 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 proceeding, had no reasonable cause to believe their
conduct was unlawful.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
3.1 Certificate of Incorporation of Integrated Site Development
("ISD"), dated and filed as of April 25, 1997
3.2 Certificate of Amendment of the Certificate of Incorporation
of ISD, dated as of May 11, 1997 (authorizing Series A
Preferred Stock) and filed May 12, 1997
3.3 Certificate of Amendment of the Certificate of Incorporation
of ISD, dated as of August 14, 1997 (changing name to
SpectraSite Communications, Inc. ("SCI")) and filed August
15, 1997
3.4 Certificate of Amendment of the Certificate of Incorporation
of SCI, dated and filed as of October 29, 1997 (changing
name to SpectraSite Holdings, Inc. (the "Registrant"))
3.5 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated and filed as of March 23, 1998
(authorizing Series B Preferred Stock)
3.6 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of May 29, 1998 and filed June
2, 1998
3.7 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of August 18, 1998 and filed
August 19, 1998
3.8 Bylaws of ISD, dated as of April 25, 1997
4.1 Indenture, dated as of June 26, 1998, between the Registrant
and United States Trust Company of New York, as trustee
</TABLE>
II-1
<PAGE> 140
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
*5.1 Opinion of Dow Lohnes & Albertson, PLLC
10.1 Stock Purchase Agreement (Series A Preferred Stock), dated
as of May 12, 1997, by and among U.S. Towers, Inc. ("UST"),
TeleSite Services, LLC ("TeleSite"), Metrosite Management,
LLC ("Metrosite"), Whitney Equity Partners, L.P. ("Whitney
Equity"), Kitty Hawk Capital Limited Partnership, L.P., III
("Kitty Hawk III"), and ISD
10.2 Stock Purchase Agreement (Series B Preferred Stock), dated
as of March 23, 1998, by and among the Registrant, Whitney
Equity, J. H. Whitney, III, L.P. ("Whitney III"), Whitney
Strategic Partners III, L.P. ("Whitney Strategic"),
Waller-Sutton Media Partners, L.P. ("Waller-Sutton"), Kitty
Hawk III, Kitty Hawk Capital Limited Partnership, IV ("Kitty
Hawk IV"), Eagle Creek Capital, L.L.C. ("Eagle Creek"), The
North Carolina Enterprise Fund, L.P. ("NCEF"), Finley Family
Limited Partnership ("Finley LP"), William R. Gupton
("Gupton"), Jack W. Jackman ("Jackman") and Alton D. Eckert
("Eckert")
10.3 First Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of May 29, 1998
10.4 Second Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of August 27, 1998
10.5 Amended and Restated Registration Rights Agreement, dated as
of March 23, 1998, by and among the Registrant, Whitney
Equity, Whitney III, Whitney Strategic, Waller-Sutton, Kitty
Hawk III, Kitty Hawk IV, Eagle Creek, NCEF, Finley LP,
Gupton, Eckert, Stephen H. Clark ("Clark") and Robert M.
Long ("Long")
10.6 Second Amended and Restated Stockholders' Agreement, dated
as of March 23, 1998, by and among the Registrant, Whitney
Equity, Whitney III, Whitney Strategic, Waller-Sutton, Kitty
Hawk III, Kitty Hawk IV, Eagle Creek, Clark, Long, Finely
LP, NCEF, Edward Lutkewich ("Lutkewich"), Jackman, Eckert,
and Gupton
10.7 First Amendment to Second Amended and Restated Stockholders'
Agreement, dated as of May 29, 1998
10.8 Executive Employment Agreement, dated as of May 12, 1997, by
ISD and Joe Finley, III ("Finley")
10.9 Assignment and Amendment of Employment Agreement, dated as
of October 31, 1997, by and between the Registrant, SCI and
Finley
10.10 Employment Agreement, dated as of May 12, 1997, by ISD and
Tracy Gill
10.11 Confidentiality and Non-Competition Agreement, dated as of
May 12, 1997, by and between ISD and Clark
10.12 Membership Interests Purchase Agreement, dated as of
December 31, 1997, by and among SCI, Jeffrey Hawkins, Edwin
Keuck and H&K Investments LLC
10.13 First Amendment to the Membership Interests Purchase
Agreement, dated May 29, 1998
10.14 Purchase and Sale Agreement, dated as of February 20, 1998,
by and among the Registrant, Metrosite and Apex Site
Management, L.P.
10.15 Letter Agreement, dated as of February 6, 1998, by and
between SCI and Whalen
</TABLE>
II-2
<PAGE> 141
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.16 Stock Option Plan of the Registrant, effective as of June
24, 1997
10.17 Management Rights Letter Agreement, dated as of March 23,
1998, by and between the Registrant and Kitty Hawk IV
10.18 Escrow Agreement, dated as of May 12, 1997, by and among
ISD, Finley LP, and Morrison Cohen Singer & Weinstein, LLP
("Morrison Cohen")
10.19 Option Escrow Agreement, dated as of May 12, 1997, by and
among Whitney LP, Kitty Hawk III and Morrison Cohen
10.20 Release and Settlement Agreement, dated as of May 12, 1997,
by and among PCX Corporation ("PCX"), NCEF, Kitty Hawk III,
Eckert, Gupton, Jackman, Lutkewich, UST, Long and Clark
10.21 Stock Restriction Agreement, dated as of May 12, 1997, by
and between ISD and Finley LP
10.22 Agreement, dated September 15, 1998, by and between Robert
M. Long and the Registrant
10.23 Asset Purchase Agreement, dated as of August 14, 1998 by and
among Airadigm Communications, Inc. ("Airadigm") and SCI
10.24 Form of Master Tower Attachment Lease Agreement by and
between Airadigm and SCI
10.25 Asset Purchase, dated as of August 20, 1998, by and among
Amica Wireless PhoneService, Inc. ("Amica") and SCI
10.26 Form of Master Design Build Lease Agreement by and between
Amica and SCI
10.27 Stock Contribution Agreement, dated as of May 12, 1997, by
and among ISD, Clark, Long and UST
10.28 Membership Interests Contribution Agreement, dated as of May
12, 1997, by and among ISD, Finley, Caroline Finley, Finley
LP, the Central Arkansas Opportunity Foundation, TeleSite
and MetroSite
10.29 Agreement and Plan of Merger, dated as of October 31, 1997,
by and between UST and SCI
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Registrant
*23.1 Consent of Dow, Lohnes & Albertson, PLLC (contained in
Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* To be filed by amendment
(b) Financial Statement Schedules.
None.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
II-3
<PAGE> 142
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, 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.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the provisions, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrants 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
Registrants 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 Act and will be governed by the final
adjudication of such issue.
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 issues undertake that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
the reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
Every prospectus: (i) that is filed pursuant to the immediately preceding
paragraph or (ii) that purports to meet the requirements of Section 10(a)(3) of
the 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 Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to 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.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE> 143
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
SPECTRASITE HOLDINGS, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF CARY, STATE OF NORTH CAROLINA, ON NOVEMBER 10, 1998.
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H. CLARK
------------------------------------
Stephen H. Clark
Chief Executive Officer
SPECTRASITE HOLDINGS, INC., A DELAWARE CORPORATION, AND EACH PERSON WHOSE
SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS STEPHEN H. CLARK AND DAVID P.
TOMICK, AND EITHER OF THEM, WITH FULL POWER TO ACT WITHOUT THE OTHERS, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS-IN-FACT, WITH FULL POWER OF SUBSTITUTION AND
RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN ANY AND ALL
CAPACITIES, TO SIGN THIS REGISTRATION STATEMENT, AND ANY AND ALL AMENDMENTS
THERETO (INCLUDING, WITHOUT LIMITATION, POST-EFFECTIVE AMENDMENTS AND ANY
SUBSEQUENT REGISTRATION STATEMENT FILED PURSUANT TO RULE 462(b) OR RULE 462(d)
UNDER THE SECURITIES ACT OF 1933, AS AMENDED), AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID
ATTORNEYS-IN-FACT, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM
EACH AND EVERY ACT AND THING NECESSARY OR DESIRABLE TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY AND TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT, OR
EITHER OF THEM, OR THEIR SUBSTITUTE OR SUBSTITUTES MAY LAWFULLY DO OR CAUSE TO
BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEPHEN H. CLARK Chief Executive Officer and Chairman November 10, 1998
- ------------------------------------------ of the Board of Directors (Principal
Stephen H. Clark Executive Officer)
/s/ DAVID P. TOMICK Chief Financial Officer and Secretary November 10, 1998
- ------------------------------------------ (Principal Financial Officer)
David P. Tomick
/s/ CATHY M. ANTEE Controller and Assistant Secretary November 10, 1998
- ------------------------------------------ (Principal Accounting Officer)
Cathy M. Antee
/s/ JOE L. FINLEY, III Vice Chairman of the Board of November 10, 1998
- ------------------------------------------ Directors
Joe L. Finley, III
/s/ MICHAEL R. STONE Director November 10, 1998
- ------------------------------------------
Michael R. Stone
/s/ JAMES R. MATTHEWS Director November 10, 1998
- ------------------------------------------
James R. Matthews
/s/ W. CHRIS HEGELE Director November 10, 1998
- ------------------------------------------
W. Chris Hegele
/s/ ANDREW J. ARMSTRONG Director November 10, 1998
- ------------------------------------------
Andrew J. Armstrong
</TABLE>
II-5
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
INTEGRATED SITE DEVELOPMENT, INC.
Pursuant to Section 102 of the General Corporation Law of Delaware, the
undersigned does hereby submit this Certificate of Incorporation for the
purposes of forming a business corporation.
1. The name of the corporation shall be Integrated Site Development,
Inc.
2. The address of the registered office of the corporation in the State
of Delaware is 1013 Centre Road, Wilmington, New Castle County, Delaware 19805
and the name of the registered agent is Corporation Service Company.
3. The purpose for which the corporation is organized is to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
4. The corporation shall have authority to issue Ten Million
(10,000,000) shares of Common Stock having a par value of $0.001 per share.
5. The name and mailing address of the incorporator is J. Robert Tyler,
III, 4011 Westchase Blvd., Suite 400, Raleigh, North Carolina 27607.
6. The number of Directors of the corporation may be fixed by the
By-laws. The number of the Directors constituting the initial Board of Directors
shall be one (1), and the name and mailing address of the person who is to serve
as Director until the first annual meeting of the stockholders or until his
successor be elected and qualify is :
Name Address
---- -------
Stephen H. Clark 1135 Kildaire Farm Rd., Suite 200
Cary, North Carolina 27511
7. The Board of Directors of the corporation shall have the power to
adopt, amend or repeal the By-laws of the corporation.
8. Elections of directors may be, but shall not be required to be, by
written ballot.
9. No director of the corporation shall have personal liability arising
out of an action whether by or in the right of the corporation or otherwise for
monetary damages for breach of fiduciary duty as a director; provided, however,
that the foregoing shall not limit or eliminate the liability of a director (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of Delaware or any successor provision, (iv) for any
transaction from which such director derived an improper personal benefit, or
(v) acts or omissions occurring prior to the date of the effectiveness of this
provision.
Furthermore, notwithstanding the foregoing provision, in the event that
the General
<PAGE> 2
Corporation Law of Delaware is amended or enacted to permit further limitation
or elimination of the personal liability of the director, the personal liability
of the corporation's directors shall be limited or eliminated to the fullest
extent permitted by the applicable law.
This provision shall not affect any provision permitted under the
General Corporation Law of Delaware in the certificate of incorporation, By-laws
or contract or resolution of the corporation indemnifying or agreeing to
indemnify a director against personal liability. Any repeal or modification of
this provision shall not adversely affect any limitation hereunder on the
personal liability of the director with respect to acts or omissions occurring
prior to such repeal or modification.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this the 25th day of April, 1997.
/s/ J. ROBERT TYLER, III [SEAL]
-----------------------------------
J. Robert Tyler, III, Incorporator
<PAGE> 1
EXHIBIT 3.2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 5/12/1997
971155442 - 2744741
CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
INTERGRATED SITE DEVELOPMENT, INC.
The undersigned corporation, in order to amend its Certificate
of Incorporation (the "Certificate of Incorporation"), hereby certifies the
following:
FIRST: The name of the corporation is Intergrated Site
Development, Inc. (the "Corporation").
SECOND: Section 4 of the Certificate of Incorporation of the
Corporation is hereby amended and restated in its entirety as follows.
4.1 Authorized Shares. The total number of shares of capital stock
which the Corporation shall have authority to issue is Seventeen Million Six
Hundred Eighty Thousand (17,680.000) shares, divided into Twelve Million
(12,000,000) shares of common stock, $0.001 par value per share ("Common
Stock"), and Five Million Six Hundred Eighty Thousand (5,680,000) shares of
preferred stock. $0.001 par value per share, all of which shall be designated as
the 8% Series A Cumulative Convertible Redeemable Preferred Stock ("Series A
Preferred Stock").
4.2 Dividends and Distributions. The Series A Preferred Stock shall,
with respect to dividend rights and rights of liquidation, dissolutions, or
winding up rank senior of the Common Stock and any other series or class of the
Corporation's Common Stock, preferred stock or other capital stock, now or
hereafter authorized.
4A.1 Dividend and Distributions; Series A Preferred Stock.
A. Declaration of Dividend; Accrual of Dividends. Subject
to Paragraph 4A.5, the holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the board of Directors (the
"Board"), out of funds legally available therefor ("Legally Available Funds"),
dividends at an annual rate equal to 8% of the Original Issue Price (as
hereinafter defined) per share for each of the then outstanding shares of Series
A Preferred Stock, calculated on the basis of a 360-day year consisting of
twelve 30-day months, and accruing quarterly. Dividends shall begin to accrue
and shall accumulate (the extent not otherwise declared and paid as set forth
above), from May 12, 1997,
<PAGE> 2
whether or not declared. Dividends shall be paid in the manner provided in
Paragraph 4A.1(C). Original Issue Price shall mean $2.89 per share for each of
the then outstanding shares of Series A Preferred Stock as may be adjusted for
subdivisions or combinations of the Series A Preferred Stock.
B. Record Date. The Board may fix a record date (each a
"Dividend Payment Record Date") for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of the dividends payable
pursuant to Paragraph 4A.1(A), which record date shall not be more than 60 days
nor less than 10 days prior to the date on which any such dividend is paid (each
such date, a "Dividend Payment Date").
C. Payment. All dividends on Series A Preferred Stock shall
be payable at the option of the Corporation, either in cash, subject to
Paragraph 4A.1(G) or provided that a sufficient numbers of shares of Series A
Preferred Stock have been reserved or are otherwise available for such purpose
by issuing additional fully paid and nonassessable shares of Series A Preferred
Stock at the rate of one share for each $2.89 of such dividend payable as may be
adjusted for subdivisions or combinations of the Series A preferred Stock. The
issuance of shares of Series A Preferred Stock shall constitute full payment of
such dividend and all such shares which may be issued in payment of such
dividend shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable. Upon the occurrence of either (a) a consolidation or merger
of the Corporation resulting in the holders of the issued and outstanding voting
securities of the Corporation immediately prior to such transaction owing or
controlling less than a majority of the voting securities of the continuing or
surviving entity immediately following such transaction or (b) a sale, lease,
exchange, transfer or other disposition of all of substantially all of the
Corporation's assets to a person or group of persons (each such occurrence
hereinafter referred to as a "Liquidity Event"), all accrued and unpaid
dividends on Series A Preferred Stock shall be immediately due and payable (such
dividends may be payable in either form described in this Paragraph 4A.1(C).
D. Reservation of Shares. The Corporation shall reserve and
keep available out of its authorized and unissued shares of Series A Preferred
Stock solely for the purposes of paying dividends on shares of Series A
Preferred Stock such number of shares of Series A Preferred Stock as shall from
time to time be sufficient for purposes, including (immediately following the
initial issuance of shares of Series A Preferred Stock) at least the number of
additional shares of Series A Preferred Stock to pay all dividends that will
accrue on the Series A Preferred Stock through the eighth anniversary of the
initial issuance. The Board shall from time to time, if necessary, propose to
the stockholders of the Corporation amendments to the Certificate of
Incorporation to increase the Corporation's authorized capital stock and take
such actions as may be necessary to permit the issuance of shares of Series A
Preferred Stock upon the declaration of any dividend payable in shares in Series
A Preferred Stock.
E. Fractional Shares. Fractional shares of Series A
Preferred Stock shall be issued to the extent necessary to make dividend
payments in shares of Series A Preferred Stock. Each factional share of Series A
Preferred Stock outstanding shall be entitled to a ratably proportionate amount
of all dividends accruing with respect to each outstanding share of Series A
Preferred Stock and all of such dividends with respect to such outstanding share
o Series A Preferred Stock shall be fully cumulative and shall accrue (whether
or not declared) and shall be payable in the same manner and at such times as
provided for herein with respect to dividends on each outstanding share of
Series A Preferred Stock.
2
<PAGE> 3
F. Dividends Pro Rata. All dividends paid with respect to
shares of Series A Preferred Stock shall be paid pro rata to the holders
entitled thereto. If the Legally Available Funds are insufficient for the
payment of the entire amount of cash dividends payable at any time, such funds
shall be allocated pro rata for the payment of dividends with respect to the
shares of Series A Preferred Stock based upon the Liquidation Preference as
defined below, of the outstanding shares. "Liquidation Preference" shall mean,
as to each share of Series A Preferred Stock plus an amount equal to all unpaid
accrued or accumulated dividends (whether or not declared) on Series A Preferred
Stock, to the final date of distribution or the Mandatory Redemption Date.
G. Certain Restrictions.
(i) Cash dividends on the Series A Preferred Stock
may not be declared, paid or set apart from payment if (a) the Corporation is
not solvent or would be rendered insolvent thereby or (b) the terms and
provisions of any law or agreement of the Corporation, including any agreement
relating to its indebtedness, specifically prohibit such declaration, payment or
setting apart from payment or provide that such declaration, payment or setting
apart for payment would constitute a violation or breach thereof or a default
thereunder.
(ii) Until all dividends payable on the shares of
Series A Preferred Stock have been paid in full, the Corporation shall not
declare or pay cash dividends on, or redeem, purchase or otherwise acquire for
consideration any shares of Common Stock or other shares of capital stock,
except with the prior written consent of holders of seventy-five percent (75%)
of the outstanding shares of Series A Preferred Stock.
(iii) The Corporation shall not permit any Subsidiary
(as defined hereinafter) of the Corporations, or cause any other person, to make
any distribution with respect to or purchase or otherwise acquire for
consideration any shares of capital stock of the Corporation unless the
Corporation could make such distribution or purchase or otherwise acquire such
shares at such time and such manner. The term "Subsidiary" shall mean with
respect to which such person directly or indirectly has the power to elect a
majority of the board of directors or similar governing body, or otherwise
direct the management or operations thereof.
4A.2 Conversion.
A. Upon the closing of a firm commitment underwritten
initial public offering of the Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, which
offering yields net proceeds to the Corporation of not less than $30,000,000 at
a per share price of not less than $4.47 (subject to appropriate adjustments for
any dividends, subdivisions, combinations or reclassifications of Common Stock)
(a "Qualified IPO"), each then outstanding share of the Series A Preferred Stock
shall be automatically converted into one or more shares of Common Stock
calculated by multiplying the number of shares of the Series A Preferred Stock
to be so converted by the conversion rate (the "Conversion Rate") as then in
effect. For purposes hereof, (i) the Conversion rate shall be determined by
dividing the Liquidation Preference per share by the Conversion Price par
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share and (ii) the "Conversion Price" per share shall be an amount equal to
$2.89, subject to adjustment from time to time as provided herein. At any time
prior to the closing of a Qualified IPO and subject to and upon compliance with
the provisions of this paragraph the holder of any shares of the Series A
Preferred Stock shall have the right, at its option to convert at the Conversion
Rate all or any portion of its shares of the Series A Preferred Stock into one
or more shares of Common Stock by surrendering the shares to be converted, in
the manner provided below.
B. (i) In order to exercise its conversion right, the
holder of the Series A Preferred Stock to be converted shall surrender the
certificate representing such share to the conversion agent (which may be the
Corporation itself), with a notice of election to convert daily completed and
signed at the principal office of this conversion agent. Unless the shares
issuable upon conversion are to be issued in the same name as the name in which
the share of the Series A Preferred Stock is registered each share surrendered
for conversion shall be accompanied by instruments of transfer duly executed by
the holder of his duly authorized attorney. If the Corporation fails to
designate a conversion agent the conversion agent shall be the Corporation.
(ii) As promptly as practicable after the surrender
by a holder of the certificates for shares of the Series A Preferred Stock and
in any event within five business days after such surrender, the Corporation
shall issue and deliver to the person for whose account such Series A Preferred
Stock was surrendered or to its nominee or nominees (subject to compliance with
applicable stockholders agreements and other applicable agreements restricting
transfer) a certificate or certificates for the number of full shares of Common
Stock or other securities issuable upon the conversion of those shares and any
fractional interest in respect of a share of Common Stock or other security
arising upon the conversion shall be settled as provided below. In the event
that a holder of Series A Preferred Stock converts less than all of the shares
of Series A Preferred Stock evidenced by the certificate(s) surrendered by such
holder, the Corporation shall simultaneously with the issuance of certificates
for the shares of Common Stock issue and deliver to such holder (or in
accordance with the instructions of such holder) a new certificate for the
balance of the shares of Series A Preferred Stock not so converted.
(iii) Each conversion shall be deemed to have been
effective immediately prior to the close of business on the date on which all of
the precedent conditions shall have been satisfied and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares of Common Stock or other securities
represented by those certificates at such time on such date and such conversion
shall be at the Conversion Price in effect at such time, unless the stock
transfer books of the Corporation shall be closed on the date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open and such conversion shall be at the Conversion Price in
effect on the date such transfer books are open. All shares of Common Stock
delivered upon conversion of the Series A Preferred Stock will upon delivery in
accordance with the provisions hereof b duly and validly issued and fully paid
and nonassessable free of all liens and charges and not subject to any
preemptive rights. Upon the surrender of certificates representing shares of the
Series A Preferred Stock to be converted, the shares shall no longer be deemed
to be outstanding and all rights of a holder with respect to the shares
surrendered for conversion shall immediately terminate except the right to
receive the Common Stock or other securities cash or other assets as herein
provided.
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C. No fractional shares or securities representing
fractional shares of Common Stock shall be issued upon conversion of the Series
A Preferred Stock. Any fractional interest in a share of Common Stock resulting
from conversion of a share of the Series A Preferred Stock shall be paid in cash
(computed to the nearest cent) equal to such fraction multiplied by the Current
Market Price (as defined in Subparagraph 4A.2D(vii) below. If more than one
certificate representing Series A Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of the Series A Preferred Stock so surrendered.
D. The Conversion Price shall be subject to adjustment as
follows if any of the events listed below occur prior to the conversion of each
share of the Series A Preferred Stock.
(i) In case the Corporation shall (a) pay a dividend
or make a distribution on its Common Stock in shares of its Common Stock (b)
subdivide or reclassify its outstanding Common Stock into a greater number of
shares, or (c) combine or reclassify its outstanding Commons Stock into a
smaller number of shares the Conversion Price in effect immediately prior to
such event shall be adjusted so that the holder of any share of the Series A
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock of the Corporation which it would
have owned or have been entitled to receive after the happening of such event
had the share of the Series A Preferred Stock been converted immediately prior
to the happening of such event. An adjustment made pursuant to this paragraph
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective on the effective date in the
case of subdivision combination or reclassification. If any dividend or
distribution is not paid or made, the Conversion Price then in effect shall be
appropriately readjusted.
(ii) In case the Corporation shall (a) sell or issue
shares of its Common Stock, (b) issue rights, options or warrants to subscribe
for or purchase shares of Common Stock or (c) issue or sell other rights for
shares of Common Stock or securities convertible or exchangeable into shares of
Common Stock in the case of one or more of the events described in the
immediately preceding clauses (a) (b) and (c) (collectively the "Securities"),
at a price per share less than either the Current Market Price of the Conversion
Price on the date the Corporation fixes the offering price of such Securities,
then in each such case the Conversion Price in effect immediately prior to the
issuance of such Securities shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the date of issuance of the Securities by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of the Securities plus the number of shares of Common Stock which
the aggregate consideration received for the issuance of the Securities would
purchase at the Applicable Price (as defined below), and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the issuance of the Securities (after giving effect to the full exercise,
conversion or exchange as applicable of such Securities). The term "Applicable
Price" shall mean the greater of the Current Market Price or the Conversion
Price unless the nominees of J.H. Whitney & Co. WEP and/or Whitney Equity
Partners, L.P. to the Corporation's Board of Directors constitute a majority of
the Board of Directors of the Corporation in which case the term "Applicable
Price" shall mean the Conversion Price. The adjustment provided for in this
Subparagraph a.2(D)(ii) shall be made successively whenever any such Securities
are issued (provided, however, that no further adjustments in the Conversion
Price shall be made upon the subsequent exercise, conversion or exchange, as
applicable of such Securities pursuant to the original
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<PAGE> 6
terms of such Securities) and shall become effective immediately, except as
provided in Subparagraph 4A2(D)(v) below, after such issuance. In determining
whether any Securities entitle the holders of the Common Stock to subscribe for
or purchase shares of Common Stock at less than the Current Market Price or the
Conversion Price, and in determining the aggregate offering price of the shares
of Common Stock so offered, there shall be taken into account any consideration
received by the Corporation for such Securities, any consideration required to
be paid upon the exercise, conversion, or exchange, as applicable, of such
Securities and the value of all such consideration (if other than cash) shall be
determined by the Board (whose determination, if made in good faith, shall be
conclusive). If any or all of such Securities are not so sued or expire or
terminate without having been exercised, converted or exchanged, the Conversion
Price then in effect shall be appropriately readjusted to the Conversion Price
which would then be in effect had the adjustments made upon the issuance of such
Securities been made upon the basis of only the number of shares of Common Stock
delivered pursuant to Securities actually exercised, converted or exchanged. For
purposes of this Subparagraph 4A2(D)(ii), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of the
Corporation or by any Subsidiary of the Corporation. Notwithstanding any
provision herein to the contrary, the Conversion Price shall not be subject to
adjustment pursuant to this Subsection 4A2(D)(ii) in the event of sales or
issuance of Securities at a price per share less than the Current Market Price
but equal to or greater than the Conversion Price for so long as the nominees of
J.H. Whitney & Co. and/or Whitney Equity Partners, L.P. to the Corporation's
Board of Directors constitute a majority of the Board of Directors of the
Corporation.
(iii) In case the Corporation shall distribute to all
holders of its Common Stock any shares of capital stock of the Corporation
(other than Common Stock) or evidences of indebtedness or cash or other assets
(excluding regular cash dividends or distributions paid from retained earnings
of the Corporation and dividends or distributions paid from retained earnings of
the Corporation and dividends or distributions referred to in Subparagraph
4A2(D)(i) above) or rights, options or warranties to subscribe for or purchase
any of its securities (excluding those referred to in Subparagraph 4A2(D)(ii)
above) then, in each such case, the Conversion Price shall be adjusted so that
it shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date of the distribution by a fraction the
numerator of which shall be the Conversion Price in effect immediately prior to
the date of the distribution less the then fair market value (as determined by
the Board, whose determination, if made in good faith, shall be conclusive) of
the portion of the capital stock, cash or assets or evidences of indebtedness so
distributed, or of the subscription rights, options or warrants so distributed
or of such convertible or exchangeable securities, with respect to one share of
Common Stock, and the denominator of which shall be the Conversion Price in
effect immediately prior to the date of the distribution. Such adjustment shall
be made whenever any such distribution is made, and shall become effective
retroactive to the record date for the determination of stockholders entitled to
receive such distribution. If any such distribution is not made or if any or all
of such rights, options or warrants expire or terminate without having been
exercised, the Conversation Price then in effect shall be appropriately
readjusted.
(iv) Notwithstanding the foregoing, the provisions of
this paragraph shall not apply to the issuance of (a) 150,000 shares of Common
Stock (subject to appropriate adjustments for any dividends, subdivisions,
combinations or reclassifications of Common Stock) issued upon exercise of the
PCX Warrant (as defined in the Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of May 12, 1997, by and among the Corporation, U.S.
Towers, Inc., a Delaware corporation, Telesite Services, LLC, an Arkansas
limited liability company, Metrosite Management, LLC, an Arkansas limited
liability company, Whitney Equity Partners, L.P., a Delaware limited partnership
and Kitty Hawk Capital
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Limited Partnership, III, a Delaware limited partnership; (b) shares of Common
Stock issued upon the exercise of 967,700 options granted or to be granted
pursuant to stock option plans contemplated by the Purchase Agreement or
otherwise approve din accordance with Subsection 4A4(B) hereof, (c) shares of
Common Stock issuable upon conversion of the Series A Preferred Stock; (d)
shares issued to a holder of Preferred Stock which are attributable solely to
any adjustment made pursuant to this Section 4A(D); (e) capital stock issued as
a dividend on the Preferred Stock or in connection with a subdivision or
combination f the Preferred Stock; (f) shares issues to a holder of Preferred
Stock which are attributable solely to any adjustments made pursuant to this
Section 4A(D); (g) capital stock issued as a dividend on the Preferred Stock or
in connection with a subdivision or combination of the Preferred Stock; and (h)
any warrant issued to J.H. Whitney & Co. (or any of its Affiliates) in
connection with any subordinated debt financing provided to the Corporation by
J.H. Whitney & Co. (or any of its Affiliates). The term "Affiliate" shall have
the meaning assigned to that term in Regulation 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended.
(v) No adjustment in the Conversion Price shall be
required unless such adjustment would require a change of at least 1% in the
Conversion Price; provided, however, that any adjustments which by reason of
this paragraph are not required to be made shall be carried forward and taken
into account in any subsequent adjustment; and provided, further, that
adjustment shall be required and made in accordance with the provisions of this
paragraph 4A2(D) (other than this Subparagraph 4A2(D)(vi) not later than such
time as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. All calculations shall be
made to the nearest cent or to the nearest one hundredth of a share.
(vi) Whenever the Conversion Price or Conversion Rate
is adjusted as herein provided, the Corporation shall promptly file with the
conversion agent an officers certificate setting forth the Conversion Price and
Conversion Rate after the adjustment and setting forth a brief statement of the
facts requiring the adjustment, which certificate shall be conclusive evidence
of the correctness of the adjustment. Promptly after delivery of the
certificate, the Corporation shall prepare a notice of the adjustment of the
Conversion Price and Conversion Rate setting forth the Conversion Price and
Conversion Rate and the date on which the adjustment becomes effective and shall
mail the notice of such adjustment of the Conversion Price and Conversion Rate
(together with a copy of the officers certificate setting forth the facts
requiring such adjustment) to the holder of each share of the Series A Preferred
Stock at such holder's last address as shown on the stock books of the
Corporation.
(vii) For the purpose of any computation under any
provision relating to the Series A Preferred Stock, the "Current Market Price"
per share of Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of Common Stock, for the 10 consecutive trading
days commencing 15 trading days before such date. If on any such date or the
shares of Common Stock are not listed or admitted for trading on any national
securities exchange or quoted by NASDAQ or a similar service, the Current Market
Price for such share shall be the fair market value of such shares on such date
as determined in good faith by a committee of disinterested members of the Board
of Directors of the Corporation based on a written option of an independent
investment banking firm of nationally recognized stature.
(viii) The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolutions, issue or sale of
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<PAGE> 8
securities or any other action, avoid or seek to avoid the observance or
performance of any term of this Certificate of Incorporation, but will at all
times in good faith assist in carrying out of all such terms and in taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holders of Series A Preferred Stock against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock receivable on the
conversion of the Series A Preferred Stock; (b) will at all times reserve and
keep available the maximum number of its authorized shares of Common Stock, free
from all preemptive rights therein, which will be sufficient to permit the full
conversion of the Series A Preferred Stock, and (c) will take such action as may
be necessary or appropriate in order that all shares of Common Stock as may be
issued pursuant to the conversion of the Series A Preferred Stock will, upon
issuance, be duly and validly issued, fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof.
E. In case at any time prior to the conversion of all of
the Series A Preferred Stock:
(i) the Corporation shall authorize the granting to
all the holders of Common Stock of rights to subscribe for or purchase any
shares of stock of any class or of any other rights; or
(ii) there shall be any reclassification of the
Common Stock of the Corporation (other than a subdivision or combination of its
outstanding Common Stock); or
(iii) there shall be any capital reorganization by the
Corporation; or
(iv) there shall be consolidation or merger involving
the Corporation or sale of all or substantially all of the Corporation's
property and assets (except a merger or other reorganization in which the
Corporation shall be the surviving corporation or a consolidation, merger or
sale with a wholly-owned Subsidiary); or
(v) there shall be voluntary or involuntary
dissolution, liquidation and winding up by the Corporation or dividend or
distribution to holders of Common Stock (other than the Corporation's customary
cash and stock dividends); or
(vi) any other event described in Subparagraph
4A2(D);
then in any one or more of said cases, the Corporation shall cause to be
delivered to the holder, at the earliest practicable time (and, in any event,
not less than 15 days before any record date or the date set for definitive
action), notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or such reorganization, sale, consolidation, merger, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Conversion Price and the
kind and amount of the shares of stock and other securities and property
deliverable upon conversions of the Series A Preferred Stock. Such notice shall
also specify the date, if known, as of which the holders of record of the Common
Stock shall participate in said dividend, distribution or subscription rights or
shall be entitled to exchange their shares of the Common Stock for securities or
other property (including cash) deliverable upon such reorganization, sale,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be.
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F. (i) The Corporation shall at all times reserve and
keep available, out of the aggregate of its authorized but unissued shares of
Common Stock, for the purpose of effecting conversion of the Series A Preferred
Stock, the full number of share of Common Stock deliverable upon the conversion
of all outstanding shares of the Series A Preferred Stock not theretofore
converted including (immediately following the initial issuance of shares of the
Series A Preferred Stock) at least the number of additional shares of Common
Stock that would be required to enable the Corporation to issue shares of Common
Stock upon the conversion of the aggregate number of shares of Series A
Preferred Stock that may be issued at the Corporation's option to pay all
dividends that will accrue on the Series A Preferred Stock through the eighth
anniversary of the initial issuance. For purposes of this paragraph, the number
of shares of Common Stock which shall be deliverable upon conversion o fall of
the outstanding shares of the Series A Preferred Stock shall be computed as if,
at the time of computation, all of the outstanding shares were held by a single
holder. The Corporation shall from time to time, in accordance with the laws of
the jurisdiction of its incorporation, increase the authorized amount of its
Common Stock if any time the number of shares of Common Stock remaining unissued
shall not be sufficient to permit the conversion of all the then outstanding
shares of the Series A Preferred Stock.
(ii) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value (if any) of
the shares of Common Stock deliverable upon conversion of the Series A Preferred
Stock, the Corporation will take any corporate action which may be necessary in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at the adjusted Conversion Price.
G. Except where registration is requested in a name other
than the name of the registered holder, the Corporation will pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of share of Common Stock on conversion of the Series A
Preferred Stock pursuant hereto.
H. In case of any reclassification or change of outstanding
shares of Common Stock (other than a change in par value, or as a result of a
subdivision or combination), or in case of any consolidation of the Corporation
with, or merger of the Corporation with or into, any other entity that results
in a reclassification, change, conversion, exchange or cancellation of
outstanding share of Common Stock or any sale or transfer of all or
substantially all of the assets of the Corporation, each holder of shares of the
Series A Preferred Stock than outstanding, if it has either elected or consented
to not requiring a distribution, shall have the right thereafter to convert the
shares of the Series A Preferred Stock held by the holder into the kind and
amount of securities, cash and other property which the holder would have been
entitled to receive upon such reclassification, change, consolidation, merger,
sale or transfer if the holder had held the Common Stock immediately prior to
the reclassification, change, consolidation, merger, sale or transfer.
4A.3 Status on Conversion or Redemption
Upon any conversion or redemption of shares of the Series A Preferred
stock, the shares o converted or redeemed shall have the status of authorized
and unissued shares of Series A Preferred Stock, and the number of shares of
Series A Preferred Stock which the Corporation shall have authority to issue
shall not be decreased by the conversion, exchange or redemption of shares of
the Series A Preferred Stock.
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4A.4 Voting Rights of the Series A Preferred Stock: Special Required
Approval
A. The shares of the Series A Preferred Stock shall be
voted with the shares of the Common Stock at any annual or special meeting of
stockholders of the Corporation, or the holders of such shares of the Series A
Preferred Stock may act by written consent in the same manner as holders of the
Common Stock, upon the following basis: Each holder of shares of the Series A
Preferred Stock shall be entitled to such number of votes for the Series A
Preferred Stock held by such holder on the record date fixed for such meeting,
or on the effective date of such written consent, as shall be equal to the
largest number of whole shares of the Common Stock into which all of such
holder's shares of the Series A Preferred Stock are convertible immediately
after the close of business on the record date fixed for such meeting or the
effective date of such written consent.
B. Notwithstanding any other paragraph or provision hereof,
none of the following actions may be taken by the Corporation or any of its
Subsidiaries without the approval by vote or written consent of the holders of
seventy-five percent (75%) of all issued shares of Series A Preferred Stock:
(i) During the period beginning May 12, 1997 and
ending on May 11, 2007, the consummation of an Organic Transaction (as defined
below) for an aggregate consideration equal to less than the sum of (a) all
Indebtedness (as define din the Stock Purchase Agreement) of the Company and its
Subsidiaries taken as a whole, outstanding as of the date of the relevant
Organic Transaction; and (b) the aggregate Liquidation Preference of all shares
of Series A Preferred Stock outstanding (the amounts set forth in the
immediately preceding clauses (a) and (b) are collectively referred to herein as
the "Target Amount");
(ii) Any amendment, restatement or modification of
the Certificate of Incorporation, By-laws (the "By-laws") or other governance
documents which adversely affects the rights of the holders of the Series A
Preferred Stock;
(iii) Declaration of payment of any dividend or making
of any distribution on or with respect to the Common Stock or any other capital
stock (other than the Series A Preferred Stock);
(iv) Except as permitted herein, purchase, redemption
or retirement, directly or indirectly, of any shares of capital stock or other
equity securities (or any securities convertible or exchangeable into such
securities);
(v) Authorization, creation or issuance of any
shares of capital stock or other securities which adversely affect, or are
tanked prior to or pari passu with, the Series A Preferred Stock, other than
shares of Series A Preferred Stock issued in accordance with paragraph (iii)
above;
(vi) Engaging in any business other than the business
in which the Corporation or its Subsidiaries are currently engaged;
(vii) A voluntary dissolution, liquidation or winding
up;
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(viii) Enter into any transaction or agreement with, or
make any payment to, any Affiliate of the Corporation, amend or terminate any
existing agreement with any Affiliate of the Corporation, purchase from or
provide to an Affiliate of the Corporation any selling, general management or
administrative services, directly or indirectly make any sales to or purchases
from an Affiliate of the Corporation; or
(ix) The sale of any assets or business of the
Corporation having a fair market value an excess of $250,000.
For the purposed hereof "Organic Transaction" means (x) the sale, lease,
exchange, transfer or other disposition of all substantially all of the
Corporations' assets to a person or a group of person (y) any merger,
consolidation, refinancing or recapitalization that results in the holders of
the issued and outstanding voting securities of the Corporation immediately
prior to such transaction owning or controlling less than a majority of the
voting securities of the continuing or surviving entity immediately following
such transaction and/or (z) any person or persons acting together or which would
constitute a "group" for the purposed of Section 13 (d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), together or with any
Affiliates thereof, other than the holders of the Common Stock as of May 12,
1997 and the holders of the Series A Preferred Stock as of May 12, 1997, and
their respective Affiliates, beneficially owning (as defined in Rule 13d-3 of
the Exchange Act) or controlling, directly or indirectly, at least 50% of the
total voting power of all classes of capital stock entitled to vote generally in
the election of Directors of the Corporation.
4A5 Redemption by the Corporation. The Corporation shall, as provided
below, redeem the shares of Series A Preferred Stock.
A. Automatic Redemption. On May 11, 2007 (the "Mandatory
Redemption Date"), each share of Series A Preferred stock shall automatically,
with no further action required to be taken by the Corporation or the holder
thereof, be redeemed (unless otherwise prevented by law), at a redemption price
per share, in cash equal to 100% of the Liquidation Preference for such Series A
Preferred Stock. The total sum payable per share of Series A Preferred Stock to
be redeemed (the "Redeemed Shares") on the Mandatory Redemption Date is
hereinafter referred to as the "Redemption Price", and the payment to be made on
the Mandatory Redemption Date for the Redeemed Shares is hereinafter referred to
as the "Redemption Payment". Upon notice from the Corporation, at any place
where the Corporation shall maintain a transfer agent for its Series A Preferred
Stock, certificates representing the shares so redeemed, duly endorsed in blank
or accompanied by proper instruments of transfer.
B. Termination of Rights. Except as set forth in
subparagraph 4A5(C), on and after the Mandatory Redemption Date all rights of
any holder of Series A Preferred Stock shall cease and terminate; and such
Redeemed Shares shall no longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the Corporation;
provided, however, that, if the Corporation defaults in the payment of the
Redemption Payment, the rights of the holders of Series A Preferred Stock shall
continue until the Corporation cures such default.
C. Insufficient Funds for Redemption.
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(i) If the funds of the Corporation available for
redemption of the Series A Preferred Stock by law or otherwise on the Mandatory
Redemption Date (the "Legally Available Redemption Funds") are insufficient to
redeem the Redeemed Shares on such date, the holders of Redeemed Shares shall
share ratably in the Legally Available Redemption Funds according to the
respective amounts which would be payable with respect to the number of shares
owned by them if the shares to be so redeemed on such Mandatory Redemption Date
were redeemed in full.
(ii) The Corporation shall in good faith use all
reasonable efforts as expeditiously as possible to eliminate, or obtain an
exception, waiver or exemption from, any and all restrictions under applicable
law that prevented the Corporation from paying the Redemption Price and
redeeming all of the shares of Series A Preferred Stock to e redeemed hereunder.
At any time thereafter when additional such funds will be used, at the end of
the next succeeding fiscal quarter, to redeem the balance of such shares, of
rush portion thereof for which funds are available, on the basis set forth
above.
(iii) In the event that funds are not available by law
for the payment in full of the Redemption Price for the shares of Series A
Preferred Stock to be so redeemed on the Mandatory Redemption Date, then the
Corporation shall be obligated to make such partial redemption so that the
number of shares of Series A Preferred Stock held by each holder shall be
reduced on a pro rata basis. In the event that the Corporation fails to redeem
shares of Series A Preferred Stock for which redemption is required, then during
the period from the Mandatory Redemption Date through the date on which such
shares that the Corporation failed to redeem on the Mandatory Redemption Date
are actually redeemed, dividends on such shares shall continue to accrue and the
cumulative as specified in such paragraph 4A1.
4A.6 Liquidation, Dissolution or winding Up Affect Upon Series A
Preferred Stock.
A. In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, before any distribution
or payment to holders of Common Stock or other capital stock (other than the
Series A Preferred Stock), the holders of shares of Series A Preferred Stock
shall be entitled to e paid an amount equal to the Liquidation Preference per
share, with respect to each share of Series A Preferred Stock.
B. If upon any liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation available for distribution to the
holders of Series A Preferred Stock shall be insufficient to permit payment in
full to such holders of the sums which such holders are entitled to receive in
such case, then all of the assets available for distribution to holders of the
Series A Preferred Stock shall be distributed among and paid to such holders
ratably in proportion to the amounts that would be payable to such holders if
such assets were sufficient to permit payment in full. After payment in full of
the Liquidation Preference for the Series A Preferred Stock any assets available
for distribution shall be distributed to the holders of the Common Stock, and
the Series A Preferred Stock shall not be entitled to any further participation
in the remaining assets of the Corporation.
C. A consolidation or merger of the Corporation resulting
in the holders of the issued and outstanding voting securities of the
Corporation immediately prior to such transaction owning or controlling a
majority of the voting securities of the continuing or surviving entity
immediately
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<PAGE> 13
following such transaction, shall not be deemed to be a liquidation, dissolution
or winding up of the Corporation for purposed of this paragraph 4A.6.
4A.7 Notices. Except as otherwise expressly provided, whenever in this
Section 4A notices or other communications are required to be made, delivered or
otherwise given to holders of shares of the Series A Preferred Stock, the notice
or other communication shall be made in writing and shall be by registered or
certified first class mail, return receipt requested, telecopier, courier
service or personal delivery, addressed to the persons shown on the books of the
Corporation as such holders at the addresses as they appear in the books of the
Corporation, as of a record date or dates determined in accordance with the
Corporation's Certificate of Incorporation and By-laws and applicable law, as in
effect from time to time. All such notices and communications shall be deemed to
have been duly given; when delivered by hand, if personally delivered by
courier, if delivered by commercial overnight courier service; five business
days after being deposited in the U.S. mail, postage prepaid; if mailed; and
when receipt is acknowledged, if telecopied.
4A.8 Miscellaneous.
A. Except as may otherwise be required by law, the
shares of Series A Preferred Stock shall not have any designations, preferences,
limitations or relative rights other than those specifically set forth in this
Section 4A (as such may be amended from time to time) and in any other provision
of the Certificate of Incorporation.
B. If any right, preferences or limitation of the
Series A Preferred Stock set froth herein (as amended from time to time) is
invalid, unlawful or incapable of being enforced by reason of any rule or law or
public policy, all other rights, preferences and limitations set forth in this
Section 4A (as so amended) which can be given effect without the invalid,
unlawful or enforceable right preference or limitation herein set forth shall be
deemed dependant upon any other right, preference or limitation unless so
expressed herein.
THIRD: Section 9 of the Certificate of Incorporation is
hereby amended and restated as follows
9 No director of the Corporation shall e liable to the
corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as director, except with respect to (i) a breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) liability under Section 174 of the Delaware General
Corporation law or (iv) a transaction from which the director derived an
improper personal benefit, it being the intention of the foregoing provision to
eliminate the liability of the corporations' directors to the corporation or its
stockholders to the fullest extent permitted by Section 102(b)(7) of the
Delaware General Corporation Law, as amended from time to time. The corporation
shall indemnify to the fullest extent permitted by Section 102(b)(7) and 145 of
the Delaware General Corporation Law, as amended from time to time, each person
that such Sections grant the corporation the power to indemnify.
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<PAGE> 14
FOURTH: The corporation has not received any payment for
any of its stock; and this Certificate of Amendment has been duly adopted in
accordance with the provisions of Section 241 of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the
statements made herein are true under the penalties of perjury, this 11th day of
May 1997.
INTEGRATED SITE DEVELOPMENT, INC.
By: /s/ STEPHEN H. CLARK
----------------------------------
Its sole Director
Stephen H. Clark
14
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTEGRATED SITE DEVELOPMENT, INC.
INTEGRATED SITE DEVELOPMENT, INC. (hereinafter called the
"Corporation"), organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
By written consent in lieu of a meeting of the Board of Directors of the
Corporation, pursuant to Section 141(f) of the General Corporation Law of the
State of Delaware, a resolution was duly adopted, pursuant to Section 242 of the
General Corporation Law of the State of Delaware, setting forth an amendment to
the Certificate of Incorporation of the Corporation and declaring said amendment
to be advisable. All of the holders of the issued and outstanding shares of
capital stock of the Corporation duly approved said proposed amendment by
written consent in lieu of a meeting in accordance with Sections 228 and 242 of
the General Corporation Law of the State of Delaware. The resolution setting
forth the amendment is as follows:
RESOLVED: That Article 1 of the Certificate of Incorporation of
the Corporation be and hereby is deleted and the following
Article 1 is inserted in lieu thereof:
1. The name of the corporation shall be SpectraSite
Communications, Inc.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed by its President
and attested by its Secretary this 14th day of August, 1997.
INTEGRATED SITE DEVELOPMENT, INC.
By: /s/ STEPHEN H. CLARK
---------------------------
Stephen H. Clark
President
ATTEST:
/s/ DAVID P. TOMICK
- ----------------------------
David P. Tomick
Secretary
<PAGE> 1
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SPECTRASITE COMMUNICATIONS, INC.
SPECTRASITE COMMUNICATIONS, INC. (the "Corporation"), organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
By written consent in lieu of a meeting of the Board of Directors of the
Corporation, pursuant to Section 141(f) of the General Corporation Law of the
State of Delaware, a resolution was duly adopted, pursuant to Section 242 of the
General Corporation Law of the State of Delaware, setting forth an amendment to
the Certificate of Incorporation of the Corporation and declaring said amendment
to be advisable. All of the holders of the issued and outstanding shares of
capital stock of the Corporation duly approved said proposed amendment by
written consent in lieu of a meeting in accordance with Sections 228 and 242 of
the General Corporation Law of the State of Delaware. The resolution setting
forth the amendment is as follows:
RESOLVED: That Article 1 of the Certificate of Incorporation of
the Corporation be and hereby is deleted and the following
Article 1 is inserted in lieu thereof:
1. The name of the corporation shall be SpectraSite
Holdings, Inc.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and attested by its Secretary this 29th
day of October, 1997.
SPECTRASITE COMMUNICATIONS, INC.
By: /s/ STEPHEN H. CLARK
---------------------------
Stephen H. Clark
President
ATTEST:
/s/ DAVID P. TOMICK
- ----------------------------
David P. Tomick
Secretary
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
SPECTRASITE HOLDINGS, INC.
The undersigned corporation, in order to amend its Certificate
of Incorporation (the "CERTIFICATE OF INCORPORATION"), hereby certifies the
following:
FIRST: The name of the corporation is SpectraSite Holdings,
Inc. (the "CORPORATION").
SECOND: Section 4 of the Certificate of Incorporation of the
Corporation is hereby amended and restated in its entirety as follows:
4.1 AUTHORIZED SHARES. The total number of shares of capital stock
which the Corporation shall have authority to issue is Twenty-Two Million Four
Hundred Sixty-Two Thousand Eight Hundred Thirty (22,462,830) shares, divided
into Twelve Million (12,000,000) shares of common stock, $0.001 par value per
share ("COMMON STOCK"), and Ten Million Four Hundred Sixty-Two Thousand Eight
Hundred Thirty (10,462,830) shares of preferred stock, $0.001 par value per
share (the "Preferred Stock"). The Preferred Stock shall have two series: 8%
Series A Cumulative Convertible Redeemable Preferred Stock ("SERIES A PREFERRED
STOCK"), consisting of Three Million Four Hundred Sixty-Two Thousand Eight
Hundred Thirty (3,462,830) shares; and 8% Series B Cumulative Convertible
Redeemable Preferred Stock ("SERIES B PREFERRED STOCK"), consisting of Seven
Million (7,000,000) shares. As used herein the term "PREFERRED STOCK" means the
Series A Preferred Stock and the Series B Preferred Stock, share-for-share alike
and without distinction as to class or series, except as otherwise set forth
herein or as the context otherwise requires.
4.2 DIVIDENDS AND DISTRIBUTIONS. The Preferred Stock shall, with
respect to dividend rights and rights on liquidation, dissolution, or winding
up, rank senior to the Common Stock and any other series or class of the
Corporation's Common Stock, preferred stock or other capital stock, now or
hereafter authorized.
4A.1 DIVIDEND AND DISTRIBUTIONS; PREFERRED STOCK.
A. Declaration of Dividend; Accrual of Dividends. Subject
to Paragraph 4A.5, the holders of shares of Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors (the "Board"), out
of funds legally available therefor ("LEGALLY AVAILABLE FUNDS"), dividends at an
annual rate equal to 8% of the applicable Original Issue Price (as hereinafter
defined) per share for each of the then outstanding shares of Preferred
<PAGE> 2
Stock, calculated on the basis of a 360-day year consisting of twelve 30-day
months, and accruing quarterly. Dividends shall begin to accrue and shall
accumulate (to the extent not otherwise declared and paid as set forth above),
from May 12, 1997, in the case of the Series A Preferred Stock, and from March
23, 1998 in the case of the Series B Preferred Stock, whether or not declared.
Dividends shall be paid in the manner provided in Paragraph 4A.1(C). The term
"ORIGINAL ISSUE PRICE" shall mean $2.89 per share for each of the then
outstanding shares of Series A Preferred Stock and $4.00 per share for each of
the then outstanding shares of Series B Preferred Stock, as may be adjusted for
subdivisions or combinations of the Series A Preferred Stock and the Series B
Preferred Stock, respectively.
B. Record Date. The Board may fix a record date (each a
"DIVIDEND PAYMENT RECORD DATE") for the determination of holders of shares of
Preferred Stock entitled to receive payment of the dividends payable pursuant to
Paragraph 4A.1(A), which record date shall not be more than 60 days nor less
than 10 days prior to the date on which any such dividend is paid (each such
date, a "DIVIDEND PAYMENT DATE").
C. Payment. All dividends on Preferred Stock shall be
payable in cash, subject to Paragraph 4A.1(E), upon the occurrence of a
liquidation, dissolution or winding up of the Corporation, either voluntary or
involuntary (each such occurrence hereinafter referred to as a "LIQUIDITY
EVENT"). Upon the occurrence of a Liquidity Event, all accrued and unpaid
dividends on the Preferred Stock shall be immediately due and payable.
D. Dividends Pro Rata. All dividends paid with respect to
shares of Preferred Stock shall be paid pro rata to the holders entitled
thereto. If the Legally Available Funds are insufficient for the payment of the
entire amount of cash dividends payable at any time, such funds shall be
allocated pro rata for the payment of dividends with respect to the shares of
Preferred Stock based upon the Liquidation Preference, as defined below, of the
outstanding shares. The Series A Legally Available Funds, as defined below,
shall be allocated pro rata for the payment of dividends with respect to the
shares of Series A Preferred Stock based upon the Liquidation Preference of the
outstanding shares of Series A Preferred Stock, and the Series B Legally
Available Funds, as defined below, shall be allocated pro rata for the payment
of dividends with respect to the shares of Series B Preferred Stock based upon
the Liquidation Preference of the outstanding shares of Series B Preferred
Stock. "LIQUIDATION PREFERENCE" shall mean, as to each share of Preferred Stock,
an amount equal to the applicable Original Issue Price per share of Preferred
Stock plus, only upon the occurrence of (i) a Liquidity Event or (ii) a
redemption of the Preferred Stock pursuant to Section 4A.5 hereof, an amount
equal to all unpaid accrued or accumulated dividends (whether or not declared)
on such Preferred Stock, to the final date of distribution or the Mandatory
Redemption Date. The term "SERIES A LEGALLY AVAILABLE FUNDS" shall mean an
amount equal to the Legally Available Funds multiplied by a fraction the
numerator of which is the aggregate Liquidation Preference of the outstanding
shares of the Series A Preferred Stock and the denominator of which is the
aggregate Liquidation Preference of the outstanding shares of the Preferred
Stock. The term "SERIES B LEGALLY AVAILABLE FUNDS" shall mean an amount equal to
the Legally Available Funds multiplied by a fraction the numerator of which is
the aggregate Liquidation Preference of the outstanding shares of the Series B
Preferred Stock and the denominator of which is the aggregate Liquidation
Preference of the outstanding shares of the Preferred Stock.
2
<PAGE> 3
E. Certain Restrictions.
(i) Cash dividends on the Preferred Stock may not be
declared, paid or set apart for payment if (a) the Corporation is not solvent or
would be rendered insolvent thereby or (b) the terms and provisions of any law
or agreement of the Corporation, including any agreement relating to its
indebtedness, specifically prohibit such declaration, payment or setting apart
for payment or provide that such declaration, payment or setting apart for
payment would constitute a violation or breach thereof or a default thereunder.
(ii) Until all dividends payable on shares of
Preferred Stock have been paid in full, the Corporation shall not declare or pay
cash dividends on, or redeem, purchase or otherwise acquire for consideration,
any shares of Common Stock or other shares of capital stock, except with the
prior written consent of holders of seventy-five percent (75%) of the
outstanding shares of the Preferred Stock voting as a single class.
(iii) The Corporation shall not permit any Subsidiary
(as defined hereinafter) of the Corporation, or cause any other person, to make
any distribution with respect to or purchase or otherwise acquire for
consideration, any shares of capital stock of the Corporation unless the
Corporation could make such distribution or purchase or otherwise acquire such
shares at such time and such manner. The term "SUBSIDIARY" shall mean, with
respect to any person, a corporation or other entity (i) of which 50% or more of
the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such person or (ii) with respect to which such
person, directly or indirectly, has the power to elect a majority of the board
of directors or similar governing body, or otherwise direct the management or
operations thereof.
4A.2 CONVERSION.
A. Upon the closing of a firm commitment underwritten
initial public offering of the Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, which
offering yields net proceeds to the Corporation of not less than $30,000,000 at
a per share price of not less than the $4.47 (subject to appropriate adjustments
for any dividends, subdivisions, combinations or reclassifications of Common
Stock) (a "QUALIFIED IPO"), each then outstanding share of Preferred Stock shall
be automatically converted into one or more shares of Common Stock calculated by
multiplying the number of shares of the Preferred Stock to be so converted by
the applicable conversion rate (the "CONVERSION RATE") as then in effect. For
purposes hereof, (i) the Conversion Rate shall be determined by dividing the
applicable Liquidation Preference per share by the applicable Conversion Price
per share and (ii) the applicable "CONVERSION PRICE" per share shall be an
amount equal to $2.89, in the case of the Series A Preferred Stock, and $4.00,
in the case of the Series B Preferred Stock, in each case subject to adjustment
from time to time as provided herein. At any time prior to the closing of a
Qualified IPO, and subject to and upon compliance with the provisions of this
paragraph, the holder of any shares of the Preferred Stock shall have the right,
at its option, to convert, at the applicable Conversion Rate, all or any portion
of its
3
<PAGE> 4
shares of the Preferred Stock into one or more shares of Common Stock by
surrendering the shares to be converted, in the manner provided below.
B. (i) In order to exercise its conversion right, the
holder of the Series A Preferred Stock or Series B Preferred Stock to be
converted shall surrender the certificate representing such share to the
conversion agent (which may be the Corporation itself), with a notice of
election to convert, duly completed and signed, at the principal office of this
conversion agent. Unless the shares issuable upon conversion are to be issued in
the same name as the name in which the share of such Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer duly executed by the holder or his duly authorized
attorney. If the Corporation fails to designate a conversion agent, the
conversion agent shall be the Corporation.
(ii) As promptly as practicable after the surrender
by a holder of the certificates for shares of the Series A Preferred Stock or
Series B Preferred Stock and in any event within five business days after such
surrender, the Corporation shall issue and deliver to the person for whose
account such Preferred Stock was surrendered, or to its nominee or nominees
(subject to compliance with applicable stockholders' agreements and other
applicable agreements restricting transfer), a certificate or certificates for
the number of full shares of Common Stock or other securities issuable upon the
conversion of those shares and any fractional interest in respect of a share of
Common Stock or other security arising upon the conversion shall be settled as
provided below. In the event that a holder of Series A Preferred Stock or Series
B Preferred Stock converts less than all of the shares of such Preferred Stock
evidenced by the certificate(s) surrendered by such holder, the Corporation
shall, simultaneously with the issuance of certificates for the shares of Common
Stock, issue and deliver to such holder (or in accordance with the instructions
of such holder) a new certificate for the balance of the shares of such
Preferred Stock not so converted.
(iii) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which all of
the precedent conditions shall have been satisfied, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares of Common Stock or other securities
represented by those certificates at such time on such date and such conversion
shall be at the applicable Conversion Price in effect at such time, unless the
stock transfer books of the Corporation shall be closed on the date, in which
event such person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such stock transfer books are open, and such conversion shall be at the
applicable Conversion Price in effect on the date such transfer books are open.
All shares of Common Stock delivered upon conversion of Preferred Stock will
upon delivery in accordance with the provisions hereof be duly and validly
issued and fully paid and nonassessable, free of all liens and charges and not
subject to any preemptive rights. Upon the surrender of certificates
representing shares of the Series A Preferred Stock or Series B Preferred Stock
to be converted, the shares shall no longer be deemed to be outstanding and all
rights of a holder with respect to the shares surrendered for conversion shall
immediately terminate except the right to receive the Common Stock or other
securities, cash or other assets as herein provided.
4
<PAGE> 5
C. No fractional shares or securities representing
fractional shares of Common Stock shall be issued upon conversion of the
Preferred Stock. Any fractional interest in a share of Common Stock resulting
from conversion of a share of the Series A Preferred Stock or Series B Preferred
Stock shall be paid in cash (computed to the nearest cent) equal to such
fraction multiplied by the Current Market Price (as defined in Subparagraph
4A.2D(vii) below). If more than one certificate representing the Series A
Preferred Stock or Series B Preferred Stock shall be surrendered for conversion
at one time by the same holder, the number of full shares issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of such Preferred Stock so surrendered.
D. The applicable Conversion Price in respect of the Series
A Preferred Stock and the Series B Preferred Stock shall be subject to
adjustment as follows if any of the events listed below occur on or after May
12, 1997, but prior to the conversion of each share of the Preferred Stock.
(i) In case the Corporation shall (a) pay a dividend
or make a distribution on its Common Stock in shares of its Common Stock, (b)
subdivide or reclassify its outstanding Common Stock into a greater number of
shares, or (c) combine or reclassify its outstanding Common Stock into a smaller
number of shares, the applicable Conversion Price in effect immediately prior to
such event shall be adjusted so that the holder of any share of the Series A
Preferred Stock or Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock of
the Corporation which it would have owned or have been entitled to receive after
the happening of such event had the share of such Preferred Stock been converted
immediately prior to the happening of such event. An adjustment made pursuant to
this paragraph shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective on the effective
date in the case of subdivision, combination or reclassification. If any
dividend or distribution is not paid or made, the applicable Conversion Price
then in effect shall be appropriately readjusted.
(ii) In case the Corporation shall (a) sell or issue
shares of its Common Stock, (b) issue rights, options or warrants to subscribe
for or purchase shares of Common Stock or (c) issue or sell other rights for the
purchase of shares of Common Stock or securities convertible into or
exchangeable into shares of Common Stock, in the case of one or more of the
events described in the immediately preceding clauses (a), (b) and (c)
(collectively, the "SECURITIES"), at a price per share less than either the
Current Market Price or the applicable Conversion Price on the date the
Corporation fixes the offering price of such Securities, then in each such case
the applicable Conversion Price in effect immediately prior to the issuance of
such Securities shall be adjusted so that it shall equal the price determined by
multiplying the applicable Conversion Price in effect immediately prior to the
date of issuance of the Securities by a fraction the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to the
issuance of the Securities plus the number of shares of Common Stock which the
aggregate consideration received for the issuance of the Securities would
purchase at the Applicable Price (as defined below), and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the issuance of the Securities (after giving effect to the full exercise,
conversion or exchange, as applicable, of such
5
<PAGE> 6
Securities). The term "APPLICABLE PRICE" shall mean the greater of the Current
Market Price or the Conversion Price unless the elected nominees of J.H. Whitney
& Co. ("Whitney"), Whitney Equity Partners, L.P. ("JHW II"), Whitney Equity
Partners III, L.P. ("JHW III") and/or Whitney Strategic Partners III, L.P. ("JHW
Strategic III") to the Corporation's Board of Directors constitute a majority of
the Board of Directors of the Corporation in which case the term "Applicable
Price" shall mean the Conversion Price. The adjustment provided for in this
Subparagraph 4A.2(D)(ii) shall be made successively whenever any Securities are
issued (provided, however, that no further adjustments in the applicable
Conversion Price shall be made upon the subsequent exercise, conversion or
exchange, as applicable of such Securities pursuant to the original terms of
such Securities) and shall become effective immediately, except as provided in
Subparagraph 4A.2(D)(v) below after such issuance. In determining whether any
Securities entitle the holders of the Common Stock to subscribe for or purchase
shares of Common Stock at less than the Current Market Price or the applicable
Conversion Price, and in determining the aggregate offering price of the shares
of Common Stock so offered, there shall be taken into account any consideration
received by the Corporation for such Securities, any consideration required to
be paid upon the exercise, conversion or exchange, as applicable, of such
Securities and the value of all such consideration (if other than cash) shall be
determined by the Board (whose determination, if made in good faith, shall be
conclusive). If any or all of such Securities are not so issued or expire or
terminate without having been exercised, converted or exchanged, the applicable
Conversion Price then in effect shall be appropriately readjusted to the
Conversion Price which would then be in effect had the adjustments made upon the
issuance of such Securities been made upon the basis of only the number of
shares of Common Stock delivered pursuant to Securities actually exercised,
converted or exchanged. For purposes of this Subparagraph 4A.2(D)(ii), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation or by any Subsidiary of the
Corporation. Notwithstanding any provision herein to the contrary, the
applicable Conversion Price shall not be subject to adjustment pursuant to this
Subsection 4A.2(D)(ii) in the event of sales or issuances of Securities at a
price per share less than the Current Market Price but equal to or greater than
the Conversion Price for so long as the nominees of Whitney, JHW II, JHW III
and/or JHW Strategic III to the Corporation's Board of Directors constitute a
majority of the Board of Directors of the Corporation.
(iii) In case the Corporation shall distribute to all
holders of its Common Stock any shares of capital stock of the Corporation
(other than Common Stock) or evidences of indebtedness or cash or other assets
(excluding regular cash dividends or distributions paid from retained earnings
of the Corporation and dividends or distributions referred to in Subparagraph
4A.2(D)(i) above) or rights, options or warrants to subscribe for or purchase
any of its securities (excluding those referred to in Subparagraph 4A.2(D)(ii)
above) then, in each such case, the applicable Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying the
applicable Conversion Price in effect immediately prior to the date of the
distribution by a fraction the numerator of which shall be the applicable
Conversion Price less the then fair market value (as determined by the Board,
whose determination, if made in good faith, shall be conclusive) of the portion
of the capital stock, cash or assets or evidences of indebtedness so
distributed, or of the subscription rights, options or warrants so distributed
or of such convertible or exchangeable securities, with respect to one share of
Common Stock, and the denominator of which shall be the applicable Conversion
Price
6
<PAGE> 7
in effect immediately prior to the date of the distribution. Such adjustment
shall be made whenever any such distribution is made, and shall become effective
retroactive to the record date for the determination of stockholders entitled to
receive such distribution. If any such distribution is not made or if any or all
of such rights, options or warrants expire or terminate without having been
exercised, the applicable Conversion Price then in effect shall be appropriately
readjusted.
(iv) Notwithstanding the foregoing, the provisions of
this paragraph shall not apply to the issuance of: (a) an aggregate of 150,000
shares of Common Stock (subject to appropriate adjustments for any dividends,
subdivisions, combinations or reclassifications of Common Stock) issued upon
exercise of the PCX Stockholder Warrants (as defined in the Stock Purchase
Agreement, dated as of March 23, 1998, by and among the Corporation, JHW II, JHW
III, JHW Strategic III, Kitty Hawk Capital Limited Partnership, III, Kitty Hawk
Capital Limited Partnership, IV, Waller-Sutton Media Partners, L.P, Eagle Creek
Capital, L.L.C., The North Carolina Enterprise Fund, L.P., Finley Family Limited
Partnership, William R. Gupton, Jack W. Jackman and Alton D. Eckert (the "SERIES
B STOCK PURCHASE AGREEMENT"), (b) shares of Common Stock issued upon the
exercise of 1,244,700 options granted and 573,000 options to be granted pursuant
to the Corporation's Stock Option Plan contemplated by the Series B Stock
Purchase Agreement, or otherwise approved in accordance with Subsection 4A.4(B);
(c) shares of Common Stock issuable upon conversion of the Preferred Stock; (d)
shares issued to a holder of Preferred Stock which are attributable solely to
any adjustments made pursuant to this Section 4A.(D); (e) capital stock issued
as a dividend on the Preferred Stock or in connection with a subdivision or
combination of the Preferred Stock; and (f) any warrant (or shares of capital
stock of the Corporation issued upon the exercise of such warrant) issued in
connection with any subordinated debt financing provided to the corporation. The
term "AFFILIATE" shall have the meaning assigned to that term in Regulation
12b-2 promulgated under the Securities Exchange Act of 1934, as amended.
(v) No adjustment in the applicable Conversion Price
shall be required unless such adjustment would require a change of at least 1%
in such Conversion Price; provided, however, that any adjustments which by
reason of this paragraph are not required to be made shall be carried forward
and taken into account in any subsequent adjustment; and provided, further, that
adjustment shall be required and made in accordance with the provisions of this
paragraph 4A.2(D) (other than this Subparagraph 4A.2(D)(vi)) not later than such
time as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. All calculations shall be
made to the nearest cent or to the nearest one hundredth of a share.
(vi) Whenever the applicable Conversion Price or
Conversion Rate is adjusted as herein provided, the Corporation shall promptly
file with the conversion agent an officers certificate setting forth such
Conversion Price and Conversion Rate after the adjustment and setting forth a
brief statement of the facts requiring the adjustment, which certificate shall
be conclusive evidence of the correctness of the adjustment. Promptly after
delivery of the certificate, the Corporation shall prepare a notice of the
adjustment of such Conversion Price and Conversion Rate setting forth such
Conversion Price and Conversion Rate and the date on which the adjustment
becomes effective and shall mail the notice of such adjustment of the applicable
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<PAGE> 8
Conversion Price and Conversion Rate (together with a copy of the officers
certificate setting forth the facts requiring such adjustment) to the holder of
each share of the Preferred Stock at such holder's last address as shown on the
stock books of the Corporation.
(vii) For the purpose of any computation under any
provision relating to the Preferred Stock, the "CURRENT MARKET PRICE" per share
of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of Common Stock for the 10 consecutive trading days
commencing 15 trading days before such date. If on any such date or the shares
of Common Stock are not listed or admitted for trading on any national
securities exchange or quoted by NASDAQ or a similar service, the Current Market
Price for such shares shall be the fair market value of such shares on such date
as determined in good faith by a committee of disinterested members of the Board
of Directors of the Corporation based on a written opinion of an independent
investment banking firm of nationally recognized stature.
(viii) The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any term of this
Certificate of Incorporation, but will at all times in good faith assist in
carrying out of all such terms and in taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of Series
A Preferred Stock and Series B Preferred Stock against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock receivable on the
conversion of the Preferred Stock, (b) will at all times reserve and keep
available the maximum number of its authorized shares of Common Stock, free from
all preemptive rights therein, which will be sufficient to permit the full
conversion of the Preferred Stock, and (c) will take such action as may be
necessary or appropriate in order that all shares of Common Stock as may be
issued pursuant to the conversion of the Preferred Stock will, upon issuance, be
duly and validly issued, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof.
E. In case at any time prior to the conversion of all of
the Preferred Stock:
(i) the Corporation shall authorize the granting to
all the holders of Common Stock of rights to subscribe for or purchase any
shares of stock of any class or of any other rights; or
(ii) there shall be any reclassification of the
Common Stock of the Corporation (other than a subdivision or combination of its
outstanding Common Stock); or
(iii) there shall be any capital reorganization by the
Corporation; or
(iv) there shall be a consolidation or merger
involving the Corporation or sale of all or substantially all of the
Corporation's property and assets (except a merger or other reorganization in
which the Corporation shall be the surviving corporation or a consolidation,
merger or sale with a wholly-owned Subsidiary); or
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<PAGE> 9
(v) there shall be voluntary or involuntary
dissolution, liquidation and winding up by the Corporation or dividend or
distribution to holders of Common Stock (other than the Corporation's customary
cash and stock dividends); or
(vi) any other event described in Subparagraph
4A.2(D);
then in any one or more of said cases, the Corporation shall cause to be
delivered to the holder, at the earliest practicable time (and, in any event,
not less than 15 days before any record date or the date set for definitive
action), notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or such reorganization, sale, consolidation, merger, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the applicable Conversion
Price and the kind and amount of the shares of stock and other securities and
property deliverable upon conversion of the Preferred Stock. Such notice shall
also specify the date, if known, as of which the holders of record of the Common
Stock shall participate in said dividend, distribution or subscription rights or
shall be entitled to exchange their shares of the Common Stock for securities or
other property (including cash) deliverable upon such reorganization, sale,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be.
F. (i) The Corporation shall at all times reserve and
keep available, out of the aggregate of its authorized but unissued shares of
Common Stock, for the purpose of effecting conversions of the Preferred Stock,
the full number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of the Preferred Stock not theretofore converted. For
purposes of this paragraph, the number of shares of Common Stock which shall be
deliverable upon conversion of all of the outstanding shares of the Preferred
Stock shall be computed as if, at the time of computation, all of the
outstanding shares were held by a single holder. The Corporation shall from time
to time, in accordance with the laws of the jurisdiction of its incorporation,
increase the authorized amount of its Common Stock if any time the number of
shares of Common Stock remaining unissued shall not be sufficient to permit the
conversion of all the then outstanding shares of the Preferred Stock.
(ii) Before taking any action which would cause an
adjustment reducing the applicable Conversion Price below the then par value (if
any) of the shares of Common Stock deliverable upon conversion of the Series A
Preferred Stock or Series B Preferred Stock, the Corporation will take any
corporate action which may be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock at
the adjusted applicable Conversion Price.
G. Except where registration is requested in a name other
than the name of the registered holder, the Corporation will pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on conversion of the Preferred Stock
pursuant hereto.
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<PAGE> 10
H. In case of any reclassification or change of outstanding
shares of Common Stock (other than a change in par value, or as a result of a
subdivision or combination), or in case of any consolidation of the Corporation
with, or merger of the Corporation with or into, any other entity that results
in a reclassification, change, conversion, exchange or cancellation of
outstanding shares of Common Stock or any sale or transfer of all or
substantially all of the assets of the Corporation, each holder of shares of
Series A Preferred Stock or Series B Preferred Stock then outstanding, if it has
either elected or consented to not requiring a distribution, shall have the
right thereafter to convert the shares of such Preferred Stock held by the
holder into the kind and amount of securities, cash and other property which the
holder would have been entitled to receive upon such reclassification, change,
consolidation, merger, sale or transfer if the holder had held the Common Stock
immediately prior to the reclassification, change, consolidation, merger, sale
or transfer.
4A.3 STATUS ON CONVERSION OR REDEMPTION.
Upon any conversion or redemption of shares of the Preferred Stock, the
shares so converted or redeemed shall have the status of authorized and unissued
shares of Preferred Stock, and the number of shares of Preferred Stock which the
Corporation shall have authority to issue shall not be decreased by the
conversion, exchange or redemption of shares of the Preferred Stock.
4A.4 VOTING RIGHTS OF THE PREFERRED STOCK; SPECIAL REQUIRED APPROVAL.
A. The shares of the Preferred Stock shall be voted with
the shares of the Common Stock at any annual or special meeting of stockholders
of the Corporation, or the holders of such shares of the Preferred Stock may act
by written consent in the same manner as holders of the Common Stock, upon the
following basis: Each holder of shares of the Preferred Stock shall be entitled
to such number of votes for the Preferred Stock held by such holder on the
record date fixed for such meeting, or on the effective date of such written
consent, as shall be equal to the largest number of whole shares of the Common
Stock into which all of such holder's shares of the Preferred Stock are
convertible immediately after the close of business on the record date fixed for
such meeting or the effective date of such written consent.
B. Notwithstanding any other paragraph or provision hereof,
none of the following actions may be taken by the Corporation or any of its
Subsidiaries without the approval by vote or written consent of the holders of
seventy-five percent (75%) of all issued shares of Preferred Stock, voting as a
single class:
(i) During the period beginning May 12, 1997 and
ending on May 11, 2007, the consummation of an Organic Transaction (as defined
below) for an aggregate consideration equal to less than the sum of (a) all
Indebtedness (as defined in the Series B Stock Purchase Agreement) of the
Company and its Subsidiaries taken as a whole, outstanding as of the date of the
relevant Organic Transaction; and (b) the aggregate Liquidation Preference of
all shares of Preferred Stock outstanding (the amounts set forth in the
immediately preceding clauses (a) and (b) are collectively referred to herein as
the "TARGET AMOUNT");
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<PAGE> 11
(ii) Any amendment, restatement or modification of
the Certificate of Incorporation, By-laws (the "BY-LAWS") or other governance
documents which adversely affects the rights of the holders of the Preferred
Stock;
(iii) Declaration of payment of any dividend or making
of any distribution on or with respect to the Common Stock or any other capital
stock (other than the Preferred Stock);
(iv) Except as permitted herein, purchase, redemption
or retirement, directly or indirectly, of any shares of capital stock or other
equity securities (or any securities convertible or exchangeable into such
securities);
(v) Authorization, creation or issuance of any
shares of capital stock or other securities which adversely affect, or are
ranked prior to or pari passu with, the Preferred Stock, other than shares of
Preferred Stock issued in accordance with paragraph (iii) above;
(vi) Engaging in any business other than the business
in which the Corporation or its Subsidiaries are currently engaged;
(vii) A voluntary dissolution, liquidation or winding
up;
(viii) Enter into any transaction or agreement with, or
make any payment to, any Affiliate of the Corporation, amend or terminate any
existing agreement with any Affiliate of the Corporation, purchase from or
provide to an Affiliate of the Corporation any selling, general management or
administrative services, directly or indirectly make any sales to or purchases
from an Affiliate of the Corporation; or
(ix) The sale of any assets or business of the
Corporation having a fair market value in excess of $250,000.
For the purposes hereof, "ORGANIC TRANSACTION" means (x) the sale, lease,
exchange, transfer or other disposition of all or substantially all of the
Corporation's assets to a person or group of persons (y) any merger,
consolidation, refinancing or recapitalization that results in the holders of
the issued and outstanding voting securities of the Corporation immediately
prior to such transaction owning or controlling less than a majority of the
voting securities of the continuing or surviving entity immediately following
such transaction and/or (z) any person or persons acting together or which would
constitute a "group" for the purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), together or with any
Affiliates thereof, other than the holders of the Common Stock as of May 12,
1997, the holders of the Series A Preferred Stock as of May 12, 1997, and the
holders of the Series B Preferred Stock as of March 23, 1998, and their
respective Affiliates, beneficially owning (as defined in Rule 13d-3 of the
Exchange Act) or controlling, directly or indirectly, at least 50% of the total
voting power of all classes of capital stock entitled to vote generally in the
election of Directors of the Corporation.
11
<PAGE> 12
4A.5 REDEMPTION BY THE CORPORATION. The Corporation shall, as provided
below, redeem the shares of Preferred Stock.
A. Automatic Redemption. On May 11, 2007 (the "MANDATORY
REDEMPTION DATE"), each share of Preferred Stock shall automatically, with no
further action required to be taken by the Corporation or the holder thereof, be
redeemed (unless otherwise prevented by law), at a redemption price per share,
in cash, equal to 100% of the applicable Liquidation Preference for such
Preferred Stock. The total sum payable per share of Series A Preferred Stock to
be redeemed (the "SERIES A REDEEMED SHARES") and per share of Series B Preferred
Stock to be redeemed (the "SERIES B REDEEMED SHARES," together with the Series A
Redeemed Shares, the "REDEEMED SHARES") on the Mandatory Redemption Date is
hereinafter referred to as the "REDEMPTION PRICE," and the payment to be made on
the Mandatory Redemption Date for the Redeemed Shares is hereinafter referred to
as the "REDEMPTION PAYMENT." Upon notice from the Corporation, each holder of
Series A Preferred Stock or Series B Preferred Stock so redeemed shall promptly
surrender to the Corporation, at any place where the Corporation shall maintain
a transfer agent for its Preferred Stock, certificates representing the shares
so redeemed, duly endorsed in blank or accompanied by proper instruments of
transfer.
B. Termination of Rights. Except as set forth in
subparagraph 4A.5(C), on and after the Mandatory Redemption Date, all rights of
any holder of any shares of Preferred Stock shall cease and terminate; and such
Redeemed Shares shall no longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the Corporation;
provided, however, that, if the Corporation defaults in the payment of the
applicable Redemption Payment, the rights of the holders of Preferred Stock
shall continue until the Corporation cures such default.
C. Insufficient Funds for Redemption.
(i) If the funds of the Corporation available for
redemption of the Preferred Stock by law or otherwise on the Mandatory
Redemption Date (the "LEGALLY AVAILABLE REDEMPTION FUNDS") are insufficient to
redeem the Redeemed Shares on such date, the holders of Series A Redeemed Shares
shall share ratably in the Series A Legally Available Redemption Funds, as
defined below according to the respective amounts which would be payable with
respect to the number of shares owned by them if the shares to be so redeemed on
such Mandatory Redemption Date were redeemed in full, and the holders of Series
B Redeemed Shares shall share ratably in the Series B Legally Available
Redemption Funds, as defined below, according to the respective amounts which
would be payable with respect to the number of shares owned by them if the
shares to be so redeemed on such Mandatory Redemption Date were redeemed in
full. The term "SERIES A LEGALLY AVAILABLE REDEMPTION FUNDS" shall mean an
amount equal to the Legally Available Redemption Funds multiplied by a fraction
the numerator of which is the aggregate Redemption Payment relating to the
Series A Redeemed Shares and the denominator of which is the aggregate
Redemption Payment relating to the Redeemed Shares. The term "SERIES B LEGALLY
AVAILABLE REDEMPTION FUNDS" shall mean an amount equal to the Legally Available
Redemption Funds multiplied by a fraction the numerator
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<PAGE> 13
of which is the aggregate Redemption Payment relating to the Series B Redeemed
Shares and the denominator of which is the aggregate Redemption Payment relating
to the Redeemed Shares.
(ii) The Corporation shall in good faith use all
reasonable efforts as expeditiously as possible to eliminate, or obtain an
exception, waiver or exemption from, any and all restrictions under applicable
law that prevented the Corporation from paying the applicable Redemption Price
and redeeming all of the shares of Preferred Stock to be redeemed hereunder. At
any time thereafter when additional funds of the Corporation are available by
law for the redemption of shares of Preferred Stock, such funds will be used, at
the end of the next succeeding fiscal quarter, to redeem the balance of such
shares, or such portion thereof for which funds are available, on the basis set
forth above.
(iii) In the event that funds are not available by law
for the payment in full of the applicable Redemption Price for the shares of
Preferred Stock to be so redeemed on the Mandatory Redemption Date, then the
Corporation shall be obligated to make such partial redemption so that the
number of shares of Series A Preferred Stock held by each holder and the number
of shares of Series B Preferred Stock held by each holder shall be reduced on a
pro rata basis out of the Series A Legally Available Redemption Funds and the
Series B Legally Available Funds, respectively. In the event that the
Corporation fails to redeem shares of Preferred Stock for which redemption is
required, then during the period from the Mandatory Redemption Date through the
date on which such shares that the Corporation failed to redeem on the Mandatory
Redemption Date are actually redeemed, dividends on such shares shall continue
to accrue and be cumulative as specified in such paragraph 4A.1.
4A.6 LIQUIDATION, DISSOLUTION OR WINDING UP; AFFECT UPON PREFERRED
STOCK.
A In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, before any distribution
or payment to holders of Common Stock or other capital stock (other than the
Preferred Stock), the holders of shares of Preferred Stock shall be entitled to
be paid an amount equal to the applicable Liquidation Preference per share, with
respect to each share of Preferred Stock.
B If, upon any liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation available for distribution to the
holders of Preferred Stock shall be insufficient to permit payment in full to
such holders of the sums which such holders are entitled to receive in such
case, then all of the assets available for distribution to holders of the
Preferred Stock shall be distributed among and paid to such holders ratably in
proportion to the amounts that would be payable to such holders if such assets
were sufficient to permit payment in full. After payment in full of the
Liquidation Preference for the Preferred Stock, any assets available for
distribution shall be distributed to the holders of the Common Stock and the
Preferred Stock shall not be entitled to any further participation in the
remaining assets of the Corporation.
C. A consolidation or merger of the Corporation resulting
in the holders of the issued and outstanding voting securities of the
Corporation immediately prior to such transaction owning or controlling a
majority of the voting securities of the continuing or
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<PAGE> 14
surviving entity immediately following such transaction shall not be deemed to
be a liquidation, dissolution or winding up of the Corporation for purposes of
this paragraph 4A.6.
4A.7 NOTICES. Except as otherwise expressly provided, whenever in this
Section 4A notices or other communications are required to be made, delivered or
otherwise given to holders of shares of the Preferred Stock, the notice or other
communication shall be made in writing and shall be by registered or certified
first class mail, return receipt requested, telecopier, courier service or
personal delivery, addressed to the persons shown on the books of the
Corporation as such holders at the addresses as they appear in the books of the
Corporation, as of a record date or dates determined in accordance with the
Corporation's Certificate of Incorporation and By-laws and applicable law, as in
effect from time to time. All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial overnight courier service; five
business days after being deposited in the U.S. mail, postage prepaid, if
mailed; and when receipt is acknowledged, if telecopied.
4A.8 MISCELLANEOUS.
A Except as may otherwise be required by law, the shares
of the Preferred Stock shall not have any designations, preferences, limitations
or relative rights other than those specifically set forth in this Section 4A
(as such may be amended from time to time) and in any other provision of the
Certificate of Incorporation.
B If any right, preference or limitation of the Preferred
Stock set forth herein (as amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule or law or public policy, all
other rights, preferences and limitations set forth in this Section 4A (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation herein set forth shall be deemed
dependant upon any other such right, preference or limitation unless so
expressed herein.
THIRD: The amendment effected herein was authorized by the
consent in writing, setting forth the action so taken, signed by the holders of
a least a majority of the outstanding shares entitled to vote thereon, and due
notice so taken has been given to those shareholders who have not consented in
writing pursuant to Sections 222 and 242 of the Delaware General Corporation
Law.
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<PAGE> 15
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the
statements made herein are true under the penalties of perjury, this 23rd day of
March 1998.
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H. CLARK
---------------------------
Stephen H. Clark
President
15
<PAGE> 1
EXHIBIT 3.6
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SPECTRASITE HOLDINGS, INC.
SPECTRASITE HOLDINGS, INC. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
By written consent in lieu of a meeting of the Board of Directors of the
Corporation, pursuant to Section 141(f) of the General Corporation Law of the
State of Delaware, a resolution was duly adopted, pursuant to Section 242 of the
General Corporation Law of the State of Delaware, setting forth an amendment to
the Certificate of Incorporation of the Corporation and declaring said amendment
to be advisable. The stockholders of the Corporation duly approved said proposed
amendment by written consent in lieu of a meeting in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendment is as follows:
RESOLVED: That paragraph A of Section 4A.5 of the Certificate of
Amendment of the Corporation be and hereby is deleted in its entirety and the
following paragraph A of Section 4A.5 is inserted in lieu thereof:
A. "Automatic Redemption. On December 15, 2008 (the
"MANDATORY REDEMPTION DATE"), each share of Preferred Stock shall
automatically, with no further action required to be taken by the
Corporation or the holder thereof, be redeemed (unless otherwise
prevented by law), at a redemption price per share, in cash, equal to
100% of the applicable Liquidation Preference for such Preferred Stock.
The total sum payable per share of Series A Preferred Stock to be
redeemed (the "SERIES A REDEEMED SHARES") and per share of Series B
Preferred Stock to be redeemed (the "SERIES B REDEEMED SHARES," together
with the Series A Redeemed Shares, the "REDEEMED SHARES") on the
Mandatory Redemption Date is hereinafter referred to as the "REDEMPTION
PRICE," and the payment to be made on the Mandatory Redemption Date for
the Redeemed Shares is hereinafter referred to as the "REDEMPTION
PAYMENT." Upon notice from the Corporation, each holder of Series A
Preferred Stock or Series B Preferred Stock so redeemed shall promptly
surrender to the Corporation, at any place where the Corporation shall
maintain a transfer agent for its Preferred Stock, certificates
representing the shares so redeemed, duly endorsed in blank or
accompanied by proper instruments of transfer."
<PAGE> 2
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the
statements made herein are true under the penalties of perjury, this 29th day of
May 1998.
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H CLARK
--------------------------
Stephen H. Clark
President
2
<PAGE> 1
EXHIBIT 3.7
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
SPECTRASITE HOLDINGS, INC.
PURSUANT TO SECTION 242
OF THE GENERAL CORPORATION LAW OF
THE STATE OF DELAWARE
SPECTRASITE HOLDINGS, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter called the "CORPORATION"), does hereby certify as follows:
By unanimous written consent in lieu of a meeting of the Board of
Directors of the Corporation, pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware, a resolution was duly adopted pursuant
to Section 242 of the General Corporation Law of the State of Delaware setting
forth an amendment to the Certificate of Incorporation of the Corporation, as
amended (the "CERTIFICATE OF INCORPORATION"), and declaring said amendment to be
advisable. The stockholders of a majority of the issued and outstanding capital
stock of the Corporation duly approved said amendment by written consent in
accordance with Sections 228 and 242 of the General Corporation Law of the State
of Delaware. The resolution setting forth the amendment is as follows, and the
Certificate of Incorporation is hereby amended accordingly:
RESOLVED: That the first sentence of Section 4.1 of the Certificate of
Incorporation be deleted in its entirety and the following sentence inserted in
lieu thereof:
"4.1 AUTHORIZED SHARES. The total number of shares of capital
stock which the Corporation shall have authority to issue is Thirty
Million Four Hundred Sixty-Two Thousand Eight Hundred Thirty
(30,462,830) shares, divided into Twenty Million (20,000,000) shares of
common stock, $0.001 par value per share ("COMMON STOCK"), and Ten
Million Four Hundred Sixty-Two Thousand Eight Hundred Thirty
(10,462,830) shares of preferred stock, $0.001 par value per share (the
"PREFERRED STOCK")."
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed hereto and this Certificate of Amendment to be signed by its
President and attested by its Secretary this 18th day of August, 1998.
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H. CLARK
---------------------------
Stephen H. Clark, President
ATTEST:
By: /s/ DAVID P. TOMICK
----------------------------
David P. Tomick, Secretary
<PAGE> 1
EXHIBIT 3.8
BYLAWS
OF
INTEGRATED SITE DEVELOPMENT, INC.
<PAGE> 2
BYLAWS
OF
INTEGRATED SITE DEVELOPMENT, INC.
ARTICLE I
OFFICES
1. Principal Office. The principal office of the Corporation shall be
located in Wake County, North Carolina or such other place as is designated by
the Board of Directors.
2. Registered Office. The registered office of the Corporation required
by law to be maintained in the State of Delaware may be, but need not be,
identical with the principal office.
3. Other Offices. The Corporation may have offices at such other places,
either within or without the State of Delaware, as the Board of Directors may
from time to time determine or as the affairs of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
1. Place of Meetings. All meetings of stockholders shall be held at the
principal office of the Corporation or at such other place, either within or
without the State of Delaware, as shall be designated in the notice of the
meeting or in the waiver of notice thereof.
2. Annual Meeting. The annual meeting of the stockholders shall be held
at the principal office of the Corporation during the month of December of each
year on any day in that month (except a Saturday, Sunday or a legal holiday) and
at such time as is determined by the Board of Directors, and designated in the
notice of meeting, for the purpose of electing Directors of the Corporation and
for the transaction of such other business as may be properly brought before the
meeting.
3. Substitute Annual Meeting. If the annual meeting shall not be held on
the day designated by Section 2 of this Article II of these Bylaws, a substitute
annual meeting may be called in accordance with the provisions of Section 4 of
this Article II as soon thereafter as convenient. A meeting so called shall be
designated and treated for all purposes as the annual meeting. The shares
represented at such substitute annual meeting, either in person or by proxy, and
entitled to vote thereat, shall constitute a quorum for the purpose of such
meeting.
4. Special Meetings. Special meetings of the stockholders may be called
at any time by the President, the Secretary or the Board of Directors of the
Corporation, or by any stockholder pursuant to the written request of the
holders of not less than one-tenth (1/10) of all the shares
<PAGE> 3
entitled to vote at the meeting. At any special meeting of stockholders, only
such business may be transacted which is related to the purposes of such meeting
set forth in the notice thereof given pursuant to Section 5 of this Article II
or in any waiver of notice given pursuant to Section 6 of this Article II.
5. Notice of Meetings.
(a) Written or printed notice stating the time and place of the
meeting shall be delivered not less than ten (10) nor more than sixty (60) days
before the date thereof, either personally or by mail, by or at the direction of
the Board of Directors, President, Secretary or other person calling the
meeting, to each stockholder of record entitled to vote at such meeting on the
record date explained in Section 6 of Article VII. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail addressed to
the stockholder at his address as it appears on the record of stockholders of
the Corporation, with the correct postage thereon prepaid.
(b) In the case of an annual or substitute annual meeting, the
notice of meeting need not specifically state the business to be transacted
thereat unless it is a matter, other than election of Directors, on which the
vote of the stockholders is expressly required by the provisions of the Delaware
Corporation Law. In the case of a special meeting, the notice of meeting shall
specifically state the purpose or purposes for which the meeting is called.
(c) When a meeting is adjourned for thirty (30) days or more, or
when a new record date is fixed after the adjournment for the adjourned meeting,
notice of the adjourned meeting shall be given as in the case of an original
meeting. When a meeting is adjourned for less than thirty (30) days in any one
adjournment, it is not necessary to give any notice of the time and place of the
adjourned meeting or of the business to be transacted thereat to the persons
present at such meeting other than by announcement at the meeting at which the
adjournment is taken; provided, however, notice shall be given pursuant to
Section 5 of this Article II to all persons not in attendance or those persons
departing such adjourned meeting before such announcement was made.
6. Waivers of Notice. Whenever notice is required to be given to any
stockholder under any provision of General Corporation Law, the Certificate of
Incorporation or the Bylaws, a written waiver thereof, signed by the stockholder
entitled to notice, shall be deemed equivalent to notice. Attendance of a
stockholder at a meeting shall constitute a waiver of notice of such meeting,
except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, or the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
7. Voting Lists. At least ten (10) days before each meeting of
stockholders the Secretary of the Corporation shall prepare an alphabetical list
of the stockholders entitled to vote at such
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<PAGE> 4
meeting or any adjournment thereof, with the address of and number of shares
held by each, which list shall be kept on file at a location in the city where
such meeting is to be held or at the place where such meeting is to be held for
a period of ten (10) days prior to such meeting, and shall be subject to
inspection by any stockholder at any time during the usual business hours. This
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to inspection by any stockholder during the whole time of
the meeting.
8. Quorum.
(a) Unless otherwise provided by law, the holders of a majority
of the shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. When a quorum is present at
the original meeting, any business which might have been transacted at the
original meeting may be transacted at an adjourned meeting, even when a quorum
is not present. In the absence of a quorum at the opening of any meeting of
stockholders, such meeting may be adjourned from time to time by the Board of
Directors or the vote of a majority of the shares voting on the motion to
adjourn, but no other business may be transacted until and unless a quorum is
present. If later a quorum is present at an adjourned meeting, then any business
may be transacted which might have been transacted at the original meeting.
(b) The stockholders at a meeting at which a quorum is present
may continue to do business until adjournment, notwithstanding the withdrawal of
sufficient stockholders to leave less than a quorum.
9. Voting of Shares.
(a) Every stockholder of record shall be entitled at every
meeting of stockholders to one vote for each share of capital stock standing in
his or her name on the record of stockholders determined in accordance with
Section 6 of Article VII.
(b) Except in the election of Directors, the vote of a majority
of the shares voted on any matter at a meeting of stockholders, duly held and at
which a quorum is present, shall be the act of the stockholders on that matter,
unless the vote by a greater number is required by law or by the Certificate of
Incorporation or Bylaws of the Corporation.
(c) Voting on all matters except the election of Directors shall
be by voice vote or by a show of hands unless the holders of one-tenth (1/10) of
the shares represented at the meeting shall, prior to the voting on any matter,
demand a ballot vote on that particular matter. Elections of Directors shall be
by ballot only.
(d) Shares of its own stock owned by the Corporation, directly
or indirectly, through a subsidiary or otherwise, shall not be voted and shall
not be counted in determining the total number of shares entitled to vote;
except that shares held in a fiduciary capacity may be voted and shall be
counted to the extent provided by law.
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10. Proxies. Shares may be voted either in person or by one or more
agents authorized by a written proxy executed by the stockholder or by his duly
authorized attorney-in-fact. A proxy is not valid after the expiration of
thirty-six (36) months from the date of its execution, unless the person
executing it specifies therein the length of time for which it is to continue in
force, or limits its use to a particular meeting.
11. Inspectors of Election.
(a) Appointment of Inspectors of Election. In advance of any
meeting of stockholders, the Board of Directors may appoint any persons, other
than nominees for office, as inspectors of election to act at such meeting or
any adjournment thereof. If inspectors of election are not so appointed, the
chairman of any such meeting may appoint inspectors of election at the meeting.
The number of inspectors shall be either one or three. In case any person
appointed as inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment by the Board of Directors in advance of the meeting
or at the meeting by the person acting as chairman.
(b) Duties of Inspectors. The inspectors of election shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes, ballots or consents, hear and
determine all challenges and questions in any way arising in connection with the
right to vote, count and tabulate all votes or consents, determine the result
and do such acts as may be proper to conduct the election or vote with fairness
to all stockholders. The inspectors of election shall perform their duties
impartially, in good faith, to the best of their ability and as expeditiously as
is practical.
(c) Vote of Inspectors. If there are three inspectors of
election, the decision, act or certificate of a majority shall be effective in
all respects as the decision, act or certificate of all.
(d) Report of Inspectors. On request of the chairman of the
meeting, the inspectors shall make a report in writing of any challenge or
question or matter determined by them and shall execute a certificate of any
fact found by them. Any report or certificate made by them shall be a prima
facie evidence of the facts stated therein.
12. Informal Action by Stockholders. Any action which is required or
permitted to be taken at a meeting of the stockholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed and dated by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business or an officer of agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt
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requested. When corporate action is taken without a meeting by less than
unanimous written consent, prompt notice shall be given to those stockholders
who have not consented in writing. Such signed and dated action must be filed
with the Secretary of the Corporation to be kept in the Corporate minute book,
whether done before or after the action so taken, but in no event later than
sixty (60) days after the first signature date.
ARTICLE III
DIRECTORS
1. General Powers. The business and affairs of the Corporation shall be
managed by the Board of Directors or by such committees as the Board may
establish pursuant to these Bylaws.
2. Number, Term and Qualification. The number persons serving as
Directors of the Corporation shall be not less than five (5) nor more than nine
(9) as may be fixed or changed from time to time, within the minimum and
maximum, by the stockholders or by the Board of Directors. Each Director shall
hold office until his death, resignation, retirement, removal, disqualification,
or his successor is elected and qualifies. Directors need not be residents of
the State of Delaware or stockholders of the Corporation.
3. Election of Directors. Except as provided in Section 5 of this
Article III, the Directors shall be elected at the annual meeting of
stockholders; and those persons who receive the highest number of votes shall be
deemed to have been elected. Election of Directors shall be by written ballot.
4. Removal. Directors may be removed from office with or without cause
by a vote of stockholders holding a majority of the outstanding shares entitled
to vote at an election of Directors. If a director is elected by a voting group
of stockholders, only the stockholders of that voting group may participate in
the vote to remove him. If any Directors are so removed, new Directors may be
elected at the same meeting.
5. Vacancies. A vacancy occurring in the Board of Directors, including,
without limitation, a vacancy created by an increase in the authorized number of
Directors or resulting from the stockholders' failure to elect the full
authorized number of Directors, may be filled by the Board of Directors or if
the Directors remaining in office constitute less than a quorum of the
Directors, they may fill the vacancy by the affirmative vote of a majority of
all remaining Directors or by the sole remaining Director. If the vacant office
was held by a Director elected by a voting group, only the remaining Director or
Directors elected by that voting group or the holders of shares of that voting
group are entitled to fill the vacancy. A Director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office. The
stockholders may elect a Director at any time to fill any vacancy not filled by
the Directors.
6. Chairman. There may be a Chairman of the Board of Directors elected
by the Directors from their number at any meeting of the Board of Directors. The
Chairman shall preside at all meetings of the Board of Directors and of
stockholders and perform such other
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duties as may be directed by the Board of Directors. Until a Chairman of the
Board of Directors is elected, the President of the Corporation shall preside at
the meetings of the Board of Directors and stockholders.
7. Compensation. The Board of Directors may provide for the compensation
of Directors for their services as such and may provide for the payment of any
and all expenses incurred by the Directors in connection with such services.
8. Executive and Other Committees.
(a) The Board of Directors, by resolution adopted by a majority
of the number of Directors then in office, may designate from among its members
an Executive Committee and one or more other committees, each consisting of one
or more Directors, and each of which, to the extent authorized by law or
provided in the resolution, shall have and may exercise all of the authority of
the Board of Directors and may authorize the corporate seal to be affixed to all
papers which may require it, except no such committee shall have authority as to
the following matters: (i) the dissolution, merger or consolidation of the
Corporation, or the sale, lease or exchange of all or substantially all of the
property of the Corporation; (ii) the amendment of the Certificate of
Incorporation; (iii) the amendment or repeal of the Bylaws or adoption of new
Bylaws; (iv) the declaration of a dividend; (v) the issuance of stock; (vi) the
adoption of a certificate of ownership and merger pursuant to Section 253 of the
Delaware Corporation Law.
(b) Any resolutions adopted or other action taken by any such
committee within the scope of the authority delegated to it by the Board of
Directors shall be deemed for all purposes to be adopted or taken by the Board
of Directors. The designation of any committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility or liability imposed upon it or him by law.
(c) If a committee member is absent or disqualified, the
qualified members present at a meeting, even if not a quorum, may unanimously
appoint another Board of Directors member to act in the absent or disqualified
member's place.
(d) Regular meetings of any such committee may be held without
notice at such time and place as such committee may fix from time to time by
resolution. Special meetings of any such committee may be called by any member
thereof upon not less than one day's notice stating the place, date and hour of
such meeting, which notice may be written or oral, and if mailed, shall be
deemed to be delivered when deposited in the United States mail addressed to any
member of the Executive Committee at his business address. Any member of the
Executive Committee may waive notice of any meeting and no notice of any meeting
need be given to any member thereof who attends in person. The notice of a
meeting of the Executive Committee need not state the business proposed to be
transacted at the meeting.
(e) A majority of the members of any such committee shall
constitute a quorum for the transaction of business at any meeting thereof, and
actions of such committee must be authorized by the affirmative vote of a
majority of the members of such committee.
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(f) Any member of any such committee may be removed at any time with or
without cause by resolution adopted by a majority of the Board of Directors.
(g) Any such committee shall elect a presiding officer from among its
members and may fix its own rules of procedure which shall not be inconsistent
with these Bylaws. It shall keep regular minutes of its proceedings and report
the same to the Board of Directors for its information at the meeting thereof
held next after the proceedings shall have been taken.
ARTICLE IV
MEETINGS OF DIRECTORS
1. Regular Meetings. A regular meeting of the Board of Directors shall
be held immediately after, and at the same place as, the annual meeting of
stockholders. In addition, the Board of Directors may provide, by resolution,
the time and place for the holding of additional regular meetings.
2. Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the Chairman of the Board (if one has been duly
elected), the President or any two Directors.
3. Notice of Meetings.
(a) Regular meetings of the Board of Directors may be held
without notice.
(b) The person or persons calling a special meeting of the Board
of Directors shall, at least two days before the meeting, give notice thereof by
any usual means of communication. Such notice or waiver of notice shall specify
the business to be transacted at, or the purpose of, the meeting that is called.
Notice of an adjourned meeting need not be given if the time and place are fixed
at the meeting adjourning and if the period of adjournment does not exceed ten
(10) days in any one adjournment.
(c) A Director may waive notice of any meeting. Attendance by a
Director at a meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
4. Quorum. A majority of the Directors in office immediately before the
meeting shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
5. Manner of Acting.
(a) Except as otherwise provided in this Section, the act of a
majority of the Directors then in office shall be the act of the Board of
Directors, unless a greater number is
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required by law, the Certificate of Incorporation of the Corporation, or a Bylaw
adopted by the stockholders.
(b) A Director of the Corporation, who is present at a meeting
of the Board of Directors at which action on any corporate matter is taken,
shall be presumed to have assented to the action taken unless his contrary vote
is recorded or his dissent is otherwise entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right of dissent shall not apply to a
Director who voted in favor of such action.
(c) The vote of a majority of the number of Directors then in
office shall be required to adopt a resolution constituting an Executive
Committee or other committee of the Board. The vote of a majority of the
Directors then holding office shall be required to adopt, amend or repeal a
Bylaw, or to adopt a resolution dissolving the Corporation without action by the
stockholders, in circumstances authorized by law. Vacancies in the Board of
Directors may be filled as provided in Section 5 of Article III of these Bylaws.
6. Informal Action by Directors. Action taken by the Directors or
members of a committee of the Board of Directors without a meeting is
nevertheless Board or committee action if written consent to the action in
question is signed by all of the Directors or members of the committee, as the
case may be, and filed with the minutes of the proceedings of the Board or
committee, whether done before or after the action so taken.
7. Attendance by Telephone. Any one or more Directors or members of a
committee may participate in a meeting of the Board or committee by means of a
conference telephone or similar communications device which allows all persons
participating in the meeting to hear each other, and such participation in the
meeting shall be deemed presence in person at such meeting.
ARTICLE V
OFFICERS
1. Number. The officers of the Corporation shall consist of a President,
a Secretary, a Treasurer, and such Vice Presidents, Assistant Secretaries,
Assistant Treasurers and other officers as the Board of Directors may from time
to time elect. Any two or more offices, other than that of President and
Secretary, may be held by the same person. In no event, however, may an officer
act in more than one capacity where action of two or more officers is required.
2. Election and Term. The officers of the Corporation shall be elected
by the Board of Directors. Such election may be held at any regular or special
meeting of the Board. Each officer shall hold office until his death,
resignation, retirement, removal, disqualification, or his successor is elected
and qualifies.
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3. Removal. Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board with or without cause; but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
4. Resignations. Any officer may resign at any time in writing by
notifying the Board or the President or the Secretary. Such resignation shall
take effect at the date of receipt of such notice or at such later time as is
therein specified, and , unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective. The resignation of an
officer shall be without prejudice to the contract rights of the Corporation, if
any.
5. Compensation. The compensation of all officers of the Corporation
shall be fixed by the Board of Directors.
6. President. The President shall be the chief executive officer of the
Corporation and, subject to the control of the Board of Directors, shall
supervise and control the management of the Corporation in accordance with these
Bylaws. He shall, in the absence of a Chairman of the Board of Directors,
preside at all meetings of the Board of Directors and stockholders. He shall
sign, with any other proper officer, certificates for shares of the Corporation
and any deeds, mortgages, bonds, contracts, or other instruments which may be
lawfully executed on behalf of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be delegated by the Board of Directors to
some other officer or agent; and, in general, he shall perform all duties
incident to the office of President and such other duties as may be prescribed
by the Board of Directors from time to time.
7. Vice Presidents. The Vice Presidents, in the order of their
appointment, unless otherwise determined by the Board of Directors, shall, in
the absence or disability of the President, perform the duties and exercise the
powers of that office. In addition, they shall perform such other duties and
have such other powers as the President or the Board of Directors shall
prescribe. The Board of Directors may designate one or more Vice Presidents to
be responsible for certain functions, including, without limitation, Marketing,
Finance, Manufacturing and Personnel.
8. Secretary. The Secretary shall keep accurate records of the acts and
proceedings of all meetings of stockholders, Directors and committees. He shall
give all notices required by law and by these Bylaws. He shall have general
charge of the corporate books and records and of the corporate seal, and he
shall affix the corporate seal to any lawfully executed instrument requiring it.
He shall have general charge of the stock transfer books of the Corporation and
shall keep, at the registered or principal office of the Corporation, a record
of stockholders showing the name and address of each stockholder and the number
and class of the shares held by each. He shall sign such instruments as may
require his signature, and, in general, attest the signature or certify the
incumbency or signature of any other officer of the Corporation and shall
perform all duties incident to the office of Secretary and such other duties as
may be assigned him from time to time by the President or by the Board of
Directors.
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9. Treasurer. The Treasurer shall have custody of all funds and
securities belonging to the Corporation and shall receive, deposit or disburse
the same under the direction of the Board of Directors. He shall keep full and
accurate accounts of the finances of the Corporation in books especially
provided for that purpose, which may be consolidated or combined statements of
the Corporation and one or more of its subsidiaries as appropriate, that include
a balance sheet as of the end of the fiscal year, an income statement for that
year, and a statement of cash flows for the year unless that information appears
elsewhere in the financial statements. If financial statements are prepared for
the Corporation on the basis of generally accepted accounting principles, the
annual financial statements must also be prepared on that basis. The Corporation
shall mail the annual financial statements, or a written notice of their
availability, to each stockholder within one hundred twenty 120 days of the
close of each fiscal year. The Treasurer shall, in general, perform all duties
incident to his office and such other duties as may be assigned to him from time
to time by the President or by the Board of Directors.
10. Assistant Secretaries and Treasurers. The Assistant Secretaries and
Assistant Treasurers shall, in the absence or disability of the Secretary or the
Treasurer, perform the respective duties and exercise the respective powers of
those offices, and they shall, in general, perform such other duties as shall be
assigned to them by the Secretary or the Treasurer, respectively, or by the
President or by the Board of Directors.
11. Controller and Assistant Controllers. The Controller, if one has
been appointed, shall have charge of the accounting affairs of the Corporation
and shall have such other powers and perform such other duties as the Board of
Directors shall designate. Each Assistant Controller shall have such powers and
perform such duties as may be assigned by the Board of Directors, and the
Assistant Controllers shall exercise the powers of the Controller during that
officer's absence or inability to act.
12. Bonds. The Board of Directors, by resolution, may require any or all
officers, agents and employees of the Corporation to give bond to the
Corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of their respective offices or positions, and to comply with such
other conditions as may from time to time be required by the Board of Directors.
ARTICLE VI
CONTRACTS, LOANS AND DEPOSITS
1. Contracts. The Board of Directors may authorize any officer or
officers, or agent or agents, to enter into any contract or execute and deliver
any instrument on behalf of the Corporation, and such authority may be general
or confined to specific instances, or otherwise limited.
2. Loans. No loans shall be contracted on behalf of the Corporation and
no evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors specifying which officer(s) may effect such
indebtedness on behalf of the Corporation.
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Such authority may be general or confined to specific instances.
3. Checks and Drafts. All checks, drafts or other orders for the payment
of money issued in the name of the Corporation shall be signed by such officer
or officers, or agent or agents, of the Corporation and in such manner as shall
from time to time be determined by resolution of the Board of Directors.
4. Deposits. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the credit of the Corporation in such
depository or depositories as the Board of Directors shall direct.
ARTICLE VII
CERTIFICATES FOR SHARES AND OTHER TRANSFER
1. Certificates for Shares. Certificates representing shares of the
Corporation shall be issued, in such form as the Board of Directors shall
determine, to every stockholder for the fully paid shares owned by him. These
certificates shall be signed by the President or any Vice President or a person
who has been designated as the chief executive officer of the Corporation and by
the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer and sealed
with the seal of the Corporation or a facsimile thereof. The signatures of any
such officers upon a certificate may be facsimiles or may be engraved or printed
or omitted if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the Corporation itself or an employee of
the Corporation. In case any officer who has signed or whose facsimile or other
signature has been placed upon such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of its issue. The
certificates shall be consecutively numbered or otherwise identified; and the
name and address of the persons to whom they are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation.
2. Transfer of Shares. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by such holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation, as the case may be. A person in whose name shares of capital
stock shall stand on the books of the Corporation shall be deemed the owner
thereof to receive dividends, to vote as such owner and for all other purposes
as respects the Corporation. No transfer of shares of capital stock shall be
valid as against the Corporation, its stockholders and creditors for any
purpose, except to render the transferee liable for the debts of the Corporation
to the extent provided by law, until such transfer shall have been entered on
the books of the Corporation by an entry showing from and to whom transferred.
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3. Transfer Agent and Registrar. The Board of Directors may appoint one
or more transfer agents and one or more registrars of transfer and may require
all stock certificates to be signed or countersigned by the transfer agent and
registered by the registrar of transfers.
4. Closing Transfer Books and Fixing Record Date.
(a) For the purpose of determining the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors shall fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting. If no record date
is fixed by the Board of Directors, such record date shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. Such determination of stockholders of record shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) For the purpose of determining the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, such record date, when no
prior action by the Board of Directors is required by this chapter, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is filed with the Secretary of the Corporation. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by the Delaware Corporation Law, such record date
shall be at the close of business on the day on which the Board of Directors
adopts the resolution taking such prior action.
(c) For the purpose of determining the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
5. Lost Certificates. The Board of Directors may authorize the issuance
of a new share certificate in place of a certificate claimed to have been lost
or destroyed, upon receipt of an affidavit of such fact from the person claiming
the loss or destruction. When authorizing such issuance of a new certificate,
the Board may require the claimant to give the Corporation a bond in such sum as
it may direct to indemnify the Corporation against loss from any claim with
respect to the certificate claimed to have been lost or destroyed; or the Board
may, by resolution
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reciting that the circumstances justify such action, authorize the issuance of
the new certificate without requiring such a bond.
6. Holder of Record. The Corporation may treat as absolute owner of the
shares the person in whose name the shares stand of record on its books just as
if that person had full competency, capacity, and authority to exercise all
rights of ownership irrespective of any knowledge or notice to the contrary or
any description indicating a representative, pledge or other fiduciary relation
or any reference to any other instrument or to the rights of any other person
appearing upon its record or upon the share certificate; except that any person
furnishing to the Corporation proof of his appointment as a fiduciary shall be
treated as if he were a holder of record of the Corporation's shares.
7. Treasury Shares. Treasury shares of the Corporation shall consist of
such shares as have been issued and thereafter acquired but not canceled by the
Corporation. Treasury shares shall not carry voting or dividend rights, except
rights in share dividends.
ARTICLE VIII
INDEMNIFICATION AND REIMBURSEMENT
OF DIRECTORS AND OFFICERS
1. Indemnification for Expenses and Liabilities: Any person who at any
time serves or has served (i) as a director, officer, employee or agent of the
Corporation, (ii) at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, or (iii) at the request
of the Corporation as a trustee or administrator under an employee benefit plan,
or is called as a witness at a time when he or she has not been made a named
defendant or respondent to any Proceeding, shall have a right to be indemnified
by the Corporation to the fullest extent from time to time permitted by law
against Liability and Expenses in any Proceeding (including without limitation a
Proceeding brought by or on behalf of the Corporation itself) arising out of his
or her status as such or activities in any of the foregoing capacities.
The Board of Directors of the Corporation shall take all such action as
may be necessary and appropriate to authorize the Corporation to pay the
indemnification required by this provision, including without limitation, to the
extent needed, making a good faith evaluation of the manner in which the
claimant for indemnity acted and of the reasonable amount of indemnity due him
or her.
Any person who at any time serves or has served in any of the aforesaid
capacities for or on behalf of the Corporation shall be deemed to be doing or to
have done so in reliance upon, and as consideration for, the rights provided for
herein. Any repeal or modification of these indemnification provisions shall not
affect any rights or obligations existing at the time of such repeal or
modification. The rights provided for herein shall inure to the benefit of the
legal representatives of any such person and shall not be exclusive of any other
rights to which such person may be entitled apart from this provision.
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The rights granted herein shall not be limited by the provisions
contained in Section 145 of the Delaware Corporation Law or any successor to
such statute.
2. Advance Payment of Expenses: The Corporation shall (upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent
involved to repay the Expenses described herein unless it shall ultimately be
determined that he or she is entitled to be indemnified by the Corporation
against such Expenses) pay Expenses incurred by such director, officer, employee
or agent in defending a Proceeding or appearing as a witness at a time when he
or she has not been named as a defendant or a respondent with respect thereto in
advance of the final disposition of such Proceeding.
3. Insurance: The Corporation shall have the power to 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 domestic or
foreign corporation, partnership, joint venture, trust or other enterprise or as
a trustee or administrator under an employee benefit plan) against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify him or her against such liability.
4. Definitions: The following terms as used in this Article shall have
the following meanings. "Proceeding" means any threatened, pending or completed
action, suit, or proceeding and any appeal therein (and any inquiry or
investigation that could lead to such action, suit, or proceeding), whether
civil, criminal, administrative, investigative or arbitrative and whether formal
or informal. "Expenses" means expenses of every kind, including counsel fees.
"Liability" means the obligation to pay a judgment, settlement, penalty, fine
(including an excise tax assessed with respect to an employee benefit plan),
reasonable expenses incurred with respect to a Proceeding, and all reasonable
expenses incurred in enforcing the indemnification rights provided herein.
"Director," "officer," "employee" and "agent" include the estate or personal
representative of a director, officer, employee or agent. "Corporation" shall
include any domestic or foreign predecessor of this Corporation in a merger or
other transaction in which the predecessor's existence ceased upon consummation
of the transaction.
ARTICLE IX
GENERAL PROVISIONS
1. Dividends. The Board of Directors may from time to time declare, and
the Corporation may pay, dividends on its outstanding shares in the manner and
upon the terms and conditions provided by law and by its charter.
2. Seal. The corporate seal shall have the name of the corporation
inscribed thereon and shall be in such form of as may be approved from time to
time by the Board of Directors. Such seal may be an impression or stamp and may
be used by the officers of the Corporation by
14
<PAGE> 16
causing it, or a facsimile thereof, to be impressed or affixed or in any other
manner reproduced. In addition to any form of seal adopted by the Board of
Directors, the officers of the Corporation may use as the corporate seal a seal
in the form of a circle containing the name of the Corporation and the state of
its incorporation (or an abbreviation thereof) on the circumference and the word
"Seal" in the center.
3. Waiver of Notice. Whenever any notice is required to be given to any
stockholder or Director under the provisions of the Delaware Corporation Law or
under the provisions of the charter or Bylaws of the Corporation, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice.
4. Fiscal Year. The fiscal year of the Corporation shall be determined
by the Board of Directors.
5. Form of Records. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device;
provided that the records so kept can be converted into clearly legible form
within a reasonable time. The Corporation shall so convert any records so kept
upon the request of any person entitled to inspect the same.
6. Amendments. Except as otherwise provided herein, these Bylaws may be
amended or repealed and new Bylaws may be adopted by the affirmative vote of
stockholders entitled to exercise a majority of voting power of the Corporation,
or, if the Certificate of Incorporation of the Corporation so permits, by the
affirmative vote of a majority of the Directors then holding office at any
regular or special meeting of the Board of Directors or by unanimous written
consent.
The Board of Directors shall have no power to adopt a Bylaw: (i)
changing the statutory requirement for a quorum of Directors or action by
Directors or changing the statutory requirement for a quorum of stockholders or
action by stockholders; (ii) providing for the management of the Corporation
otherwise than by the Board of Directors or the committees thereof; (iii)
increasing or decreasing the number of Directors; or (iv) classifying and
staggering the election of Directors.
THIS IS TO CERTIFY that the above Bylaws were duly adopted by the Board
of Directors of the Corporation by action taken, without a meeting, effective
the 12th day of May, 1997.
/s/ HELGA L. LEFTWICH
-----------------------------------
Helga L. Leftwich, Assistant Secretary
15
<PAGE> 1
EXHIBIT 4.1
============================================================
SPECTRASITE HOLDINGS, INC.,
Issuer
12% Senior Discount Notes Due 2008
=====================
INDENTURE
Dated as of June 26, 1998
====================
United States Trust Company of New York,
Trustee
=============================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.3. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.5. One Class of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
The Notes
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.4. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.5. Noteholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.6. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.7. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.8. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.9. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.2. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.6. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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ARTICLE IV
Covenants
SECTION 4.1. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.2. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.3. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.4. Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.5. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.6. Limitation on Restrictions on Distributions from
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.7. Limitation on Sale of Assets and Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.8. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.9. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.10. Limitation on Sale or Issuance of Capital Stock of
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.11. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.12. Limitation on Sale/Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.13. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.14. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.15. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.16. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.17. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.18. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.19. Maintenance of Properties and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
Successor Issuer
SECTION 5.1. When the Issuer May Merge or Transfer Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.12. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.11. Preferential Collection of Claims Against Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Notes; Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.2. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.3. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.4. Repayment to Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.5. Indemnity for Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.6. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.4. Revocation and Effect of Consents and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.5. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.6. Trustee to Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.7. Payment for Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
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ARTICLE X
Miscellaneous
SECTION 10.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.3. Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.6. When Notes Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.8. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.9. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.13. Variable Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.14. Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.15. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.16. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
Rule 144A/Regulation S Appendix
Exhibit 1 to Appendix - Form of Initial Note
Exhibit A - Form of Exchange Note and Private Exchange Note
-iv-
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INDENTURE, dated as of June 26, 1998, between SPECTRASITE
HOLDINGS, INC., a Delaware corporation (as further defined below, the
"Issuer"), and UNITED STATES TRUST COMPANY OF NEW YORK, a national banking
association, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Issuer's
$225,238,000 aggregate principal amount at maturity 12% Senior Discount Notes
Due 2008 (the "Initial Notes") and, if and when issued in exchange for Initial
Notes as provided in the Registration Rights Agreement (as defined in the
Appendix hereto), the Issuer's Series B 12% Senior Discount Notes Due 2008 (the
"Exchange Notes") and, if and when issued pursuant to a private exchange for
Initial Notes, the Issuer's Series C 12% Senior Discount Notes Due 2008 (the
"Private Exchange Notes," together with the Initial Notes and the Exchange
Notes, the "Notes"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Accreted Value" means, as of any date (the "Specified Date"),
with respect to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each
a "Semi-Annual Accrual Date"), the Accreted Value will equal the
amount set forth opposite such date below:
<TABLE>
<CAPTION>
ACCRETED
--------
SEMI-ANNUAL ACCRUAL DATE VALUE
------------------------ -----
<S> <C>
June 26, 1998 . . . . . . . . . . . . . . . . . . . $ 554.97
January 15, 1999 . . . . . . . . . . . . . . . . . 591.90
July 15, 1999 . . . . . . . . . . . . . . . . . . . 627.41
January 15, 2000 . . . . . . . . . . . . . . . . . 665.06
July 15, 2000 . . . . . . . . . . . . . . . . . . . 704.96
January 15, 2001 . . . . . . . . . . . . . . . . . 747.26
July 15, 2001 . . . . . . . . . . . . . . . . . . . 792.09
January 15, 2002 . . . . . . . . . . . . . . . . . 839.62
July 15, 2002 . . . . . . . . . . . . . . . . . . . 890.00
January 15, 2003 . . . . . . . . . . . . . . . . . . 943.40
July 15, 2003 . . . . . . . . . . . . . . . . . . . 1,000.00
</TABLE>
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal the sum of (A) the
Accreted Value for the Semi-Annual Accrual Date immediately preceding
such Specified Date and (B) an amount equal to the product of (1) the
Accreted Value for the immediately following Semi-Annual Accrual Date
less the Accreted Value for the immediately preceding Semi-Annual
<PAGE> 7
2
Accrual Date multiplied by (2) a fraction, the numerator of which is
the number of days elapsed from the immediately preceding Semi-Annual
Accrual Date to the Specified Date, using a 360-day year of twelve
30-day months, and the denominator of which is 180; or
(iii) if the Specified Date occurs after the last
Semi-Annual Accrual Date, the Accreted Value will equal $1,000.00.
"Adjusted EBITDA" as of any date of determination means the
sum of (i) the EBITDA of the Issuer for the four most recent full fiscal
quarters ending prior to such date, less the Issuer's Tower EBITDA for such
four-quarter period, plus (ii) the product of four times the Issuer's Tower
EBITDA for the most recent quarterly period, which Tower EBITDA for the most
recent quarterly period shall be determined on a pro forma basis after giving
effect to (A) all acquisitions or dispositions of assets made by the Issuer and
its Subsidiaries from the beginning of such quarter through and including such
date of determination (including any related financing transactions) as if such
acquisitions and dispositions had occurred at the beginning of such 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 from the beginning of such quarter through and including such date of
determination as if such new lease or Site Management Contract had been signed
at the beginning 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 from the
beginning of such quarter through and including such date of determination 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 from the beginning of such quarter through and including such date
of determination related to leases or Site Management Contracts on Tower Assets
as if such increased rental rate had been in effect at the beginning of such
quarter and such increased amount of rent had been received by the Issuer or a
Restricted Subsidiary during such quarter. For purposes of making the
computation referred to above, (1) acquisitions that have been made by the
Issuer or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
reference period or subsequent to such reference period and on or prior to the
date of determination shall be deemed to have occurred on the first day of the
reference period and EBITDA for such reference period shall be calculated
without giving effect to clause (ii) of the proviso set forth in the definition
of Consolidated Net Income, and (2) the EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the date of determination shall be excluded.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For 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
<PAGE> 8
3
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. For purposes of the covenants in this Indenture,
"Affiliate" shall also mean any beneficial owner of Capital Stock representing
10% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Issuer or of rights or warrants to purchase such Capital Stock
(whether or not currently exercisable) and any Person who would be an Affiliate
of any such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Issuer or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Issuer
or a Restricted Subsidiary), (ii) all or substantially all the assets of any
division or line of business of the Issuer or any Restricted Subsidiary or
(iii) any other assets of the Issuer or any Restricted Subsidiary outside of
the ordinary course of business of the Issuer or such Restricted Subsidiary
(other than, in the case of (i), (ii) and (iii) above, (v) a disposition by a
Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary
to a Wholly Owned Subsidiary, (w) for purposes of Section 4.7 only, a
disposition that constitutes a Restricted Payment permitted by Section 4.5, (x)
a disposition of assets with a fair market value of less than $500,000, (y)
grants of leases or licenses in the ordinary course of business, and (z)
disposals of cash equivalents).
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Notes, compounded annually) of
the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the product of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
"Board of Directors" means the Board of Directors of the
Issuer or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or
other day on which banking institutions in New York State are authorized or
required by law to close.
"Capitalized Lease Obligation" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall
<PAGE> 9
4
be the capitalized amount of such obligation determined in accordance with
GAAP; and the Stated Maturity thereof 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.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) prior to the first public offering of common
stock of the Issuer, the Permitted Holders cease to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of a majority in the aggregate of the total
voting power of the Voting Stock of the Issuer, whether as a result of
issuance of securities of the Issuer, any merger, consolidation,
liquidation or dissolution of the Issuer, any direct or indirect
transfer of securities by the Issuer or otherwise (for purposes of
this clause (i) and clause (ii) below, the Permitted Holders shall be
deemed to beneficially own any Voting Stock of an entity (the
"specified entity") held by any other entity (the "parent entity") so
long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent entity);
(ii) subsequent to the first public offering of
common stock of the Issuer, any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the beneficial owner (as defined in
clause (i) above, except that for purposes of this clause (ii) such
person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly
or indirectly, of more than 35% of the total voting power of the
Voting Stock of the Issuer; provided, however, that the Permitted
Holders "beneficially own" (as defined in clause (i) above), directly
or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Issuer than such other person
and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board
of Directors of the Issuer (for the purposes of this clause (ii), such
other person shall be deemed to beneficially own any Voting Stock of a
specified entity held by a parent entity, if such other person is the
beneficial owner (as defined in this clause (ii)), directly or
indirectly, of more than 35% of the voting power of the Voting Stock
of such parent entity and the Permitted Holders "beneficially own" (as
defined in clause (i) above), directly or indirectly, in the aggregate
a lesser percentage of the voting power of the Voting Stock of such
parent entity and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the board of directors of such parent entity);
<PAGE> 10
5
(iii) during any period of two consecutive years
(or, in the case this event occurs within the first two years after
the Issue Date, such shorter period as shall have begun on the Issue
Date), individuals who at the beginning of such period constituted the
Board of Directors of the Issuer (together with any new directors
whose election by such Board of Directors or whose nomination for
election by the shareholders of the Issuer was approved by a vote of a
majority of the directors of the Issuer then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Issuer then in office;
(iv) the merger or consolidation of the Issuer with
or into another Person or the merger of another Person with or into
the Issuer, or the sale of all or substantially all the assets of the
Issuer to another Person (other than a Permitted Holder or a Person
that is controlled by the Permitted Holders), and, in the case of any
such merger or consolidation, the securities of the Issuer that are
outstanding immediately prior to such transaction and which represent
100% of the aggregate voting power of the Voting Stock of the Issuer
are changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of
the surviving corporation that represent immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Completed Tower" means a wireless transmission tower with, as
of any date of determination, (i) at least one anchor tenant that has executed
a definitive lease with the Issuer or any of its Restricted Subsidiaries and
(ii) capacity for at least three tenants.
"Consolidated Indebtedness" as of any date of determination
means (without duplication) (i) the total amount of Indebtedness of the Issuer
and its Restricted Subsidiaries, (ii) the total amount of Indebtedness of any
other Person, to the extent that such Indebtedness has been Guaranteed by the
Issuer or one or more of its Restricted Subsidiaries, (iii) the aggregate
liquidation value of all Disqualified Stock of the Issuer and all preferred
stock of Restricted Subsidiaries of the Issuer, in each case, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Issuer and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent incurred by the Issuer or its Restricted Subsidiaries,
without duplication, (i) interest expense attributable to capital leases and to
leases constituting part of a Sale/Leaseback Transaction, (ii) amortization of
debt discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs associated with Hedging Obligations (including amortization of fees),
(vii) Preferred Stock dividends paid in respect of all Preferred Stock of the
Issuer and its Subsidiaries held by Persons other than the Issuer or a Wholly
Owned
<PAGE> 11
6
Subsidiary, (viii) interest incurred in connection with Investments in
discontinued operations, (ix) interest accruing on any Indebtedness of any
other Person to the extent such Indebtedness is Guaranteed by (or secured by
the assets of) the Issuer or any Restricted Subsidiary and (x) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or
fees to any Person (other than the Issuer) in connection with Indebtedness
Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Issuer and its consolidated Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person (other
than the Issuer) if such Person is not a Restricted Subsidiary, except
that (A) subject to the exclusion contained in (iv) below, the
Issuer's equity in the net income of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Issuer or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to a Restricted
Subsidiary, to the limitations contained in clause (iii) below) and
(B) solely for purposes of calculating the Indebtedness to Adjusted
EBITDA Ratio, the Issuer's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period shall be
included in determining such Consolidated Net Income,
(ii) any net income (loss) of any Person acquired
by the Issuer or a Subsidiary in a pooling of interests transaction
for any period prior to the date of such acquisition,
(iii) any net income of any Restricted Subsidiary
if such Restricted Subsidiary is subject to restrictions (other than
any restrictions contained in the New Credit Facility), directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Issuer,
except that (A) subject to the exclusion contained in (iv) below the
Issuer's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to the Issuer or another
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to another
Restricted Subsidiary, to the limitation contained in this clause) and
(B) solely for purposes of calculating the Indebtedness to Adjusted
EBITDA Ratio, the Issuer's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income,
(iv) any gain or loss realized upon the sale or
other disposition of any assets of the Issuer, its consolidated
Subsidiaries or any other Person (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed of
in the ordinary course of business and any gain or loss realized upon
the sale or other disposition of any Capital Stock of any Person,
<PAGE> 12
7
(v) any net income or loss of any Unrestricted
Subsidiary, whether or not distributed to the Issuer or one of its
Subsidiaries,
(vi) any extraordinary gain or loss, and
(vii) the cumulative effect of a change in
accounting principles.
Notwithstanding the foregoing, for the purposes of Section 4.5 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Issuer or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under such covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Tangible Assets" means, with respect to the
Issuer, the total consolidated tangible assets of the Issuer and its Restricted
Subsidiaries, as shown on the most recent internal consolidated balance sheet
of the Issuer and such Restricted Subsidiaries calculated on a consolidated
basis in accordance with GAAP.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness
or Disqualified Stock or (iii) is redeemable at the option of the holder
thereof, in whole or in part, in each case on or prior to the 91st day after
the Stated Maturity of the Notes; provided, however, that any Capital Stock
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the 91st day after the Stated Maturity of the Notes shall
not constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the provisions described under Section 4.9
and Section 4.7.
"EBITDA" for any period means the sum of Consolidated Net
Income, plus the following to the extent deducted in calculating such
Consolidated Net Income: (a) Consolidated Interest Expense, (b) all income tax
expense of the Issuer and its consolidated Restricted Subsidiaries, (c)
depreciation expense of the Issuer and its consolidated Restricted
Subsidiaries, (d) amortization expense of the Issuer and its consolidated
Restricted Subsidiaries (excluding amortization expense attributable to a
prepaid cash item that was paid in a prior period), (e) all other non-cash
charges of the Issuer and its consolidated Restricted
<PAGE> 13
8
Subsidiaries (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future
period), and (f) any premium or penalty paid in connection with repurchasing,
redeeming, retiring, defeasing or acquiring any Indebtedness prior to maturity
to the extent deducted in calculating Consolidated Net Income, in each case for
such period. Notwithstanding the foregoing, the provision for taxes based on
the income or profits of, and the depreciation and amortization and non-cash
charges of, a Restricted Subsidiary shall be added to Consolidated Net Income
to compute EBITDA only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Issuer by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders, without in any event giving effect to any
restrictions or limitations contained in the New Credit Facility.
"Equity Offering" means a public or private issuance by the
Issuer of common stock of the Issuer for cash.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the actual
obligations of such Person pursuant to any Interest Rate Agreement or Currency
Agreement.
<PAGE> 14
9
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(i) the principal in respect of (A) indebtedness
of such Person for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment
of which such Person is responsible or liable, including, in each
case, any premium on such indebtedness to the extent such premium has
become due and payable;
(ii) all Capitalized Lease Obligations of such
Person and all Attributable Debt in respect of Sale/Leaseback
Transactions entered into by such Person;
(iii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional
sale obligations of such Person and all obligations of such Person
under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business);
(iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than obligations with
respect to letters of credit and other contingent liabilities (but
only to the extent such contingent liabilities are not reflected as
liabilities on the consolidated balance sheet of such Person) securing
obligations (other than obligations described in clauses (i) through
(iii) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than
the tenth Business Day following payment on the letter of credit);
(v) the amount of all obligations of such Person
with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary of such Person,
the liquidation preference with respect to, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(vi) all obligations of the type referred to in
clauses (i) through (v) of other Persons and all dividends of other
Persons for the payment of which, in either case, such Person is
responsible or liable, directly or indirectly, as obligor, guarantor
or otherwise, including by means of any Guarantee;
<PAGE> 15
10
(vii) all obligations of the type referred to in
clauses (i) through (vi) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation being deemed to
be the lesser of the value of such property or assets or the amount of
the obligation so secured; and
(viii) to the extent not otherwise included in this
definition, Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above or the
accreted value thereof, in the case of Indebtedness issued with original issue
discount, and the maximum liability, upon the occurrence of the contingency
giving rise to the obligation, of any contingent obligations at such date.
"Indebtedness to Adjusted EBITDA Ratio" as of any date of
determination means the ratio of (i) Consolidated Indebtedness as of such date
to (ii) Adjusted EBITDA.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect such Person against
fluctuations in interest rates as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes
of the definitions of "Unrestricted Subsidiary" and "Restricted Payment" and
Section 4.5, (i) "Investment" shall include the portion (proportionate to the
Issuer's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Issuer at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Issuer shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Issuer's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Issuer's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time that
such Subsidiary is so re-designated a Restricted Subsidiary; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as
<PAGE> 16
11
determined in good faith by the Board of Directors and evidenced by a
resolution of such Board of Directors.
"Issue Date" means the date on which the Notes are originally
issued.
"Legal Holiday" has the meaning ascribed in Section 10.8.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other non cash form) therefrom, in each case net of (i) all
legal, title, accounting, investment banking and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon or other
security arrangement of any kind with respect to such assets, or which must by
its terms, 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 required to be made to
minority interest holders in Restricted Subsidiaries or joint ventures as a
result of such Asset Disposition, (iv) the deduction of appropriate amounts to
be provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition
and retained by the Issuer or any Restricted Subsidiary after such Asset
Disposition, and (v) any reserves established in respect of the sales price of
such asset for post-closing adjustments, indemnification purposes or employee
termination expenses.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, printing costs, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
and expenses actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"New Credit Facility" means that certain credit facility to be
entered into by a wholly owned subsidiary of the Issuer, SpectraSite
Communications, Inc. ("SCI"), pursuant to a commitment letter from Credit
Suisse First Boston, New York branch, to SCI dated December 22, 1997, which has
been renewed through December 31, 1998, including any collateral documents,
instruments and agreements executed in connection therewith, and the term New
Credit Facility shall also include any amendments, supplements, modifications,
extensions, renewals, restatements or refundings thereof and any credit
facilities that replace,
<PAGE> 17
12
refund or refinance any part of the loans, other credit facilities or
commitments thereunder, including any such replacement, refunding or
refinancing facility that increases the amount borrowable thereunder or alters
the maturity thereof.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Issuer nor any Restricted Subsidiary (a) provides any Guarantee or credit
support of any kind (including any undertaking, Guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Issuer or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Offering Circular" means the Offering Circular dated June 23,
1998 relating to the Initial Notes; provided that after the issuance of
Exchange Notes, all references herein to "Offering Circular" shall be deemed
references to the prospectus contained in the registration statement relating
to the Exchange Notes.
"Officer" means the Chairman of the Board, the President, the
Chief Executive Officer, any Vice President, the Chief Financial Officer, the
Treasurer or the Secretary of the Issuer, as applicable.
"Officer's Certificate" means a certificate signed by any
Officer.
"Opinion of Counsel" means a written opinion from Dow, Lohnes
& Albertson, PLLC, or any other legal counsel who is reasonably acceptable to
the Trustee. The counsel may be an employee of or counsel to the Issuer or the
Trustee.
"Permitted Business" means any business conducted by the
Issuer and its Restricted Subsidiaries on the Issue Date and any other business
related, ancillary or complementary to any such business.
"Permitted Holders" means any or all of Stephen H. Clark, Joe
L. Finley, Whitney Equity Partners, L.P., J.H. Whitney III, L.P., Whitney
Strategic Partners III, L.P., Waller-Sutton Media Partners, L.P., Kitty Hawk
Capital Limited Partnership, III, Kitty Hawk Capital Limited Partnership, IV,
Eagle Creek Capital, L.L.C., The North Carolina Enterprise Fund, L.P., Finley
Family Limited Partnership, and their respective Affiliates.
"Permitted Investment" means an Investment by the Issuer or
any Restricted Subsidiary in (i) the Issuer, a Wholly Owned Subsidiary or a
Person which will, upon the making of such Investment, become a Wholly Owned
Subsidiary; provided, however, that a loan or other extension of credit by the
Issuer or a Restricted Subsidiary to a Restricted Subsidiary that is not a
Wholly Owned Subsidiary also will constitute a "Permitted Investment"; and
provided further, however, that a Permitted Business is the primary business of
the Person in which any such Investment is made; and (ii) another Person if as
a result of
<PAGE> 18
13
such Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Issuer or a
Restricted Subsidiary; provided, however, that such Person's primary business
is a Permitted Business; (iii) Temporary Cash Investments; (iv) receivables
owing to the Issuer or any Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include
such concessionary trade terms as the Issuer or any such Restricted Subsidiary
deems reasonable under the circumstances; (v) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees made in
the ordinary course of business consistent with past practice of the Issuer or
such Restricted Subsidiary, but in any event not to exceed $2.0 million in the
aggregate outstanding at any one time; (vii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to the Issuer or any Restricted Subsidiary or in satisfaction of
judgments; (viii) any Person to the extent such investment represents the
non-cash portion of the consideration received for an Asset Disposition as
permitted pursuant to Section 4.7; (ix) Capital Stock of the Issuer or any
Restricted Subsidiary purchased, redeemed or otherwise acquired or retired for
value from members of the Issuer's management or employees, but in any event
not to exceed $500,000 in the aggregate in any twelve-month period; (x) other
Investments in Permitted Businesses not to exceed, at any one time outstanding
(each such Investment being measured as of the date made and without giving
effect to subsequent changes in value), the greater of (A) $5.0 million and (B)
5% of the Issuer's Consolidated Tangible Assets, (xi) any Interest Rate
Agreement or Currency Agreement, (xii) any acquisition of assets solely in
exchange for the issuance of Capital Stock (other than Disqualified Stock) of
the Issuer, (xiii) prepaid expenses, negotiable instruments held for collection
and lease, utility and workers' compensation, performance and other similar
deposits and (xiv) deposits of proceeds from Asset Dispositions with a
"qualified intermediary," "qualified trustee" or similar person for purposes of
facilitating a "like-kind" exchange made in accordance with the applicable
provisions of the Internal Revenue Code of 1986, as amended; provided, however,
that the making of any Permitted Investment pursuant to this clause (xiv) will
not in any manner violate Section 4.7.
"Permitted Liens" means, with respect to any Person, (a)
pledges or deposits by such Person under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits or cash or United
States government bonds to secure surety or appeal bonds to which such Person
is a party, or deposits as security for contested taxes or import duties or for
the payment of rent, in each case incurred in the ordinary course of business;
(b) Liens imposed by law, such as carriers', warehousemen's, landlords' and
mechanics' Liens, in each case for sums not yet due or being contested in good
faith by appropriate proceeding, or judgment Liens not giving rise to an Event
of Default so long as any appropriate legal proceedings which may have been
duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceedings may be initiated shall
not have expired; (c) Liens for property
<PAGE> 19
14
taxes not yet subject to penalties for non-payment or which are being contested
in good faith by appropriate proceedings; (d) Liens in favor of issuers of
surety bonds or letters of credit issued pursuant to the request of and for the
account of such Person in the ordinary course of its business; (e) minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of
others for, licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties or liens incidental to the conduct of the
business of such Person or to the ownership of its properties which were not
incurred in connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person; (f) Liens securing
Hedging Obligations so long as the related Indebtedness is, and is permitted to
be under this Indenture, secured by a Lien on the same property securing such
Hedging Obligations; (g) leases and subleases of real property which do not
interfere with the ordinary conduct of the business of the Issuer or any of its
Restricted Subsidiaries, and which are made on customary and usual terms
applicable to similar properties; (h) Liens existing as of the date on which
the Notes are originally issued and Liens created by this Indenture; (i) Liens
created solely for the purpose of securing the payment of all or a part of the
purchase price of assets or property acquired or constructed in the ordinary
course of business after the date on which the Notes are originally issued;
provided, however, that (A) the aggregate principal amount of Indebtedness
secured by such Liens shall not exceed the aggregate purchase price of the
assets or property so acquired or constructed, (B) the Indebtedness secured by
such Liens shall have otherwise been permitted to be issued under this
Indenture and (C) such Liens shall not encumber any other assets or property of
the Issuer or any of its Restricted Subsidiaries and shall attach to such
assets or property within 90 days of the construction or acquisition of such
assets or property; (j) Liens on the assets or property of a Restricted
Subsidiary of the Issuer existing at the time such Restricted Subsidiary became
a Subsidiary of the Issuer and not incurred as a result of (or in connection
with or in anticipation of) such Restricted Subsidiary becoming a Subsidiary of
the Issuer; provided, however, that (A) any such Lien does not by its terms
cover any property or assets after the time such Restricted Subsidiary becomes
a Subsidiary which were not covered immediately prior to such transaction, (B)
the incurrence of the Indebtedness secured by such Lien shall have otherwise
been permitted to be issued under this Indenture, and (C) such Liens do not
extend to or cover any other property or assets of the Issuer or any of its
Restricted Subsidiaries; (k) Liens securing Indebtedness outstanding under the
New Credit Facility; (l) Liens extending, renewing or replacing in whole or in
part a Lien permitted by this Indenture; provided, however, that (A) such Liens
do not extend beyond the property subject to the existing Lien and improvements
and construction on such property and (B) the Indebtedness secured by the Lien
may not exceed the Indebtedness secured at the time by the existing Lien; (m)
Liens Incurred in the ordinary course of business by the Issuer or any
Restricted Subsidiary of the Issuer with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (i) are not Incurred
in connection with the borrowing of money or the obtaining of advances of
credit (other than trade credit in the ordinary course of business) and (ii) do
not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Issuer or
such Restricted Subsidiary; (n) Liens in favor of the Issuer or a Wholly Owned
Subsidiary; (o) any interest in or title of a lessor to any property subject to
a Capitalized Lease Obligation permitted to be Incurred under this Indenture
and (p) Liens on the Capital Stock of Unrestricted Subsidiaries.
<PAGE> 20
15
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"Principal" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become
due at the relevant time.
"Qualified Proceeds" means assets that are used or useful in,
or Capital Stock of any Person engaged in, a Permitted Business.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, purchase, defease or
retire, or to issue other Indebtedness in exchange or replacement for, such
indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Issuer or any Restricted Subsidiary existing on the
date of this Indenture or Incurred in compliance with this Indenture (including
Indebtedness of the Issuer that Refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that Refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (i) the
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness is Incurred in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the Indebtedness being
Refinanced; provided further, however, that Refinancing Indebtedness shall not
include (x) Indebtedness of a Subsidiary that Refinances Indebtedness of the
Issuer or (y) Indebtedness of the Issuer or a Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock or similar payment to the direct or indirect
holders of its Capital Stock (other than dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) and dividends or
distributions payable solely to the Issuer or a Restricted Subsidiary, and
other than pro rata dividends or other distributions made by a Subsidiary that
is not a Wholly
<PAGE> 21
16
Owned Subsidiary to minority stockholders (or owners of an equivalent interest
in the case of a Subsidiary that is an entity other than a corporation)), (ii)
the purchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Issuer held by any Person or of any Capital Stock of a
Restricted Subsidiary held by any Person (other than the Issuer or a Restricted
Subsidiary), including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of the Issuer that is not Disqualified Stock),
other than as permitted by clause (ix) of the definition of "Permitted
Investments"; (iii) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of
the date of acquisition); or (iv) the making of any Investment in any Person
(other than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of the Issuer
other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Issuer or a Restricted
Subsidiary transfers such property to a Person and the Issuer or a Restricted
Subsidiary leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Issuer
secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Semi-Annual Accrual Date" has the meaning set forth in the
definition of the term "Accreted Value."
"Senior Indebtedness" means (i) Indebtedness of the Issuer,
whether outstanding on the Issue Date or thereafter Incurred, and (ii) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Issuer to the
extent post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness of the Issuer for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
the Issuer is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the Notes; provided, however, that Senior Indebtedness shall not
include (1) any obligation of the Issuer to any Subsidiary, (2) any liability
for Federal, state, local or other taxes owed or owing by the Issuer, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness of the Issuer (and any accrued and unpaid
interest respect thereof) which
<PAGE> 22
17
is subordinate or junior in any respect to any other Indebtedness or other
obligation of the Issuer, (5) that portion of any Indebtedness which at the
time of Incurrence is Incurred in violation of this Indenture.
"Series B Investors" means Whitney Equity Partners, L.P.,
Whitney Strategic Partners III, L.P., J.H. Whitney III, L.P., Waller-Sutton
Media Partners, L.P., Kitty Hawk Capital Limited Partnership, III, Kitty Hawk
Capital Limited Partnership, IV, Eagle Creek Capital, L.L.C., The North
Carolina Enterprise Fund, L.P., Finley Family Limited Partnership, William R.
Gupton, Jack W. Jackman and Alton D. Eckert.
"Series B Preferred Stock" means the Series B Preferred Stock
of the Issuer.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Issuer within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"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.
"Specified Date" has the meaning set forth in the definition of
the term "Accreted Value."
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Issuer
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) 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 (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within one year
<PAGE> 23
18
of the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $500.0 million (or the
foreign currency equivalent thereof) and whose long-term debt is rated "A" (or
such similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) or any money market fund sponsored by a registered broker dealer or mutual
fund distributor, (iii) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (i) above
entered into with a bank meeting the qualifications described in clause (ii)
above, (iv) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Issuer) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard & Poor's Ratings Group, and (v) investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States
of America, or by any political subdivision or taxing authority thereof, and
rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
"Tower Asset Exchange" means any transaction in which the
Issuer or a Restricted Subsidiary exchanges assets for Tower Assets or Tower
Assets and cash or cash equivalents where the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officer's 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 wireless communication transmission
towers and related assets that are located on the site of a transmission tower.
"Tower EBITDA" means, for any period, the EBITDA of the Issuer
and its Restricted Subsidiaries for such period that is directly attributable
to site rental revenue, license or management fees paid to manage, lease or
sublease space on communication sites owned, leased or managed by the Issuer
(collectively, "site leasing revenues"), all determined on a consolidated basis
and in accordance with GAAP. Tower EBITDA will not include revenue derived
from the sale of assets. In allocating, corporate, general, administrative and
other operating expenses that are not allocated to any particular line of
business in the financial statements of the Issuer, such expenses shall be
allocated to the Issuer's site leasing business in proportion to the percentage
of the Issuer's total revenues for the applicable period that were site leasing
revenues.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means such successor.
<PAGE> 24
19
"Trust Officer" means any trust officer, assistant vice
president, or vice president of the Trustee assigned by the Trustee to
administer this Indenture.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Issuer that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Issuer (including any newly acquired or newly formed
Subsidiary of the Issuer) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness
of, or owns or holds any Lien on any property of, the Issuer or any other
Restricted Subsidiary of the Issuer that is not a Subsidiary of the Subsidiary
to be so designated; provided, however, that either (A) the Subsidiary to be so
designated has total consolidated assets of $1,000 or less or (B) if such
Subsidiary has consolidated assets greater than $1,000, then such designation
would be permitted under Section 4.5. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Issuer would have
been permitted to incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) of Section 4.3 and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officer's Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or trustee
thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Issuer all the Capital Stock of which (other than directors' qualifying shares)
is owned by the Issuer or another Wholly Owned Subsidiary.
<PAGE> 25
20
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8
"Appendix" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"covenant defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"legal defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(b)
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(b)
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(b)
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Purchase Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(b)
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Successor Issuer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. The mandatory provisions of the TIA are incorporated by reference in and
made a part of this Indenture. The following TIA terms have the following
meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
<PAGE> 26
21
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) except as otherwise expressly provided, the principal
amount of any noninterest bearing or other discount security at any
date shall be the principal amount thereof that would be shown on a
balance sheet of the issuer dated such date prepared in accordance
with GAAP;
(8) the principal amount of any Preferred Stock shall be
(i) the maximum liquidation preference of such Preferred Stock or (ii)
the maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater; and
(9) except as otherwise expressly provided, all
references to the date the Notes were originally issued shall refer to
the date the Initial Notes were originally issued.
SECTION 1.5. One Class of Notes. The Initial Notes, the
Private Exchange Notes and the Exchange Notes shall vote and consent together
on all matters as one class and none of the Initial Notes, the Private Exchange
Notes or the Exchange Notes shall have the right to vote or consent as a
separate class on any matter.
ARTICLE II
The Notes
SECTION 2.1. Form and Dating. Certain provisions relating to
the Initial Notes, the Private Exchange Notes and the Exchange Notes are set
forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix"),
which is hereby incorporated in and expressly made a part of this Indenture.
The Initial Notes and the Trustee's certificate of authentication thereof shall
be substantially in the form of Exhibit 1 to the Appendix, which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Notes, the Private Exchange Notes and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit A, which
is hereby incorporated by reference and expressly made a part of this
Indenture. The Notes may have notations, legends or
<PAGE> 27
22
endorsements required by law, rule of any securities exchange or
over-the-counter market on which such Notes are then listed or quoted, or
usage, in addition to those set forth on the Appendix and Exhibit A. The
Issuer and the Trustee shall approve the forms of the Notes and any notation,
endorsement or legend on them. Each Note shall be dated the date of its
authentication. The terms of the Notes set forth in the Appendix and Exhibit A
are part of the terms of this Indenture and, to the extent applicable, the
Issuer and the Trustee, by their execution and delivery of this Indenture,
expressly agree to be bound by such terms.
SECTION 2.2. Execution and Authentication. Two Officers
shall sign the Notes for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note, the Note shall be
valid nevertheless.
A Note shall not be valid until an authorized signatory of the
Trustee manually authenticates the Note. The signature of the Trustee on a
Note shall be conclusive evidence that such Note has been duly and validly
authenticated and issued under this Indenture.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Issuer to authenticate the Notes. Unless limited
by the terms of such appointment, any such Authenticating Agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent.
SECTION 2.3. Registrar and Paying Agent. The Issuer shall
(i) appoint an agent (the "Registrar") who shall maintain an office or agency
where Notes may be presented for registration of transfer or for exchange and
(ii) an agent (the "Paying Agent") who shall maintain an office or agency where
Notes may be presented for payment. The Registrar shall keep a register of the
Notes and of their transfer and exchange. The Issuer may have one or more
co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any such additional paying agent.
In the event the Issuer shall retain any Person not a party to
this Indenture as an agent hereunder, the Issuer shall enter into an
appropriate agency agreement with any Registrar, Paying Agent or co-registrar
not a party to this Indenture, which shall incorporate the terms of the TIA.
The agreement shall implement the provisions of this Indenture that relate to
such agent. The Issuer shall notify the Trustee of the name and address of
each such agent. If the Issuer fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.7. The Issuer or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent.
The Issuer initially appoints the Trustee as Registrar and
Paying Agent for the Notes.
<PAGE> 28
23
SECTION 2.4. Paying Agent to Hold Money in Trust. By at
least 11:00 a.m. (New York City time) on the date on which any principal or
interest on any Note is due and payable, the Issuer shall deposit with the
Paying Agent a sum sufficient to pay such principal or interest when due. The
Issuer shall require each Paying Agent (other than the Trustee) to agree in
writing that such Paying Agent shall hold in trust for the benefit of
Noteholders or the Trustee all money held by such Paying Agent for the payment
of principal or interest on the Notes and shall notify the Trustee of any
default by the Issuer in making any such payment. If the Issuer or a
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Issuer at any time may
require a Paying Agent (other than the Trustee) to pay all money held by it to
the Trustee and to account for any funds disbursed by such Paying Agent. Upon
complying with this Section, the Paying Agent (if other than the Issuer or a
Subsidiary) shall have no further liability for the money delivered to the
Trustee. Upon any bankruptcy, reorganization or similar proceeding with
respect to the Issuer, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.5. Noteholder Lists. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Noteholders. If the Trustee or any Paying
Agent is not the Registrar, the Issuer shall cause the Registrar to furnish to
the Trustee or any such Paying Agent, in writing at least five Business Days
before each interest payment date and at such other times as the Trustee or any
such Paying Agent may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Noteholders.
SECTION 2.6. [Intentionally Omitted]
SECTION 2.7. Replacement Notes. If a mutilated Note is
surrendered to the Registrar or if the Holder of a Note shall provide the
Issuer and the Trustee with evidence to their satisfaction that the Note has
been lost, destroyed or wrongfully taken, the Issuer shall issue and the
Trustee shall authenticate a replacement Note if the requirements of Section
8-405 of the Uniform Commercial Code are met and the Holder satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Issuer, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Issuer and the Trustee to protect the Issuer, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Note is replaced. The Issuer and the Trustee may charge the Holder
for their expenses in replacing a Note, including reasonable fees and expenses
of counsel. Every replacement Note is an additional obligation of the Issuer.
SECTION 2.8. Outstanding Notes. Notes outstanding at any
time are all Notes authenticated by the Trustee except for those canceled,
those delivered for cancellation and those described in this Section 2.8 as not
outstanding. A Note does not cease to be outstanding because the Issuer or an
Affiliate of the Issuer holds the Note.
If a Note is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee and the Issuer receive proof satisfactory to
them that the replaced Note is held by a bona fide purchaser.
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If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Notes (or portions thereof) to be redeemed or maturing, as the case may
be, and the Paying Agent is not prohibited from paying such money to the
Noteholders on that date pursuant to the terms of this Indenture, then on and
after that date such Notes (or portions thereof) cease to be outstanding and
interest on them ceases to accrue.
SECTION 2.9. Temporary Notes. Until definitive Notes are
ready for delivery, the Issuer may prepare and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Issuer considers appropriate
for temporary Notes. Without unreasonable delay, the Issuer shall prepare and
the Trustee shall authenticate definitive Notes. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive
Notes upon surrender of the temporary Notes at any office or agency maintained
by the Issuer for that purpose and such exchange shall be without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes,
the Issuer shall execute, and the Trustee shall authenticate and deliver in
exchange therefor, one or more definitive Notes representing an equal principal
amount of Notes. Until so exchanged, the Holder of temporary Notes shall in
all respects be entitled to the same benefits under this Indenture as a Holder
of definitive Notes.
SECTION 2.10. Cancellation. The Issuer at any time may
deliver Notes to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee for cancellation any Notes surrendered to
them for registration of transfer or exchange or payment. The Trustee shall
cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Notes surrendered for registration of transfer or exchange,
payment or cancellation and deliver a certificate of such destruction to the
Issuer unless the Issuer directs the Trustee to deliver canceled Notes to the
Issuer. The Issuer may not issue new Notes to replace Notes it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Issuer defaults in
a payment of interest on the Notes, the Issuer shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) at the rate
specified therefor in the Notes in any lawful manner. The Issuer may pay the
defaulted interest to the Persons who are Noteholders on a subsequent special
record date. The Issuer shall fix or cause to be fixed (or upon the Issuer's
failure to do so the Trustee shall fix) any such special record date and
payment date to the reasonable satisfaction of the Trustee which specified
record date shall not be less than 10 days prior to the payment date for such
defaulted interest and shall promptly mail or cause to be mailed to each
Noteholder a notice that states the special record date, the payment date and
the amount of defaulted interest to be paid. The Issuer shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment, 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
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payment, such money when so deposited to be held in trust for the benefit of
the Person entitled to such defaulted interest as provided in this Section
2.11.
SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Notes
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers.
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee. If the Issuer elects to
redeem Notes pursuant to paragraph 5 of the Notes (Exhibit 1 to the Appendix),
it shall notify the Trustee and the Paying Agent in writing of the redemption
date and the principal amount at maturity of Notes to be redeemed and the
redemption price.
The Issuer shall give each notice to the Trustee and the
Paying Agent provided for in this Section at least 60 days before the
redemption date unless the Trustee and the Paying Agent consent to a shorter
period. Such notice shall be accompanied by an Officer's Certificate from the
Issuer to the effect that such redemption will comply with the conditions
herein. The record date relating to such redemption shall be selected by the
Issuer and set forth in the related notice given to the Trustee and the Paying
Agent, which record date shall be not less than 15 days prior to the date
selected for redemption by the Issuer.
SECTION 3.2. Selection of Notes to Be Redeemed. In the case
of any partial redemption, selection of the Notes for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed, or, if the Notes
are not so listed, on a pro rata basis, by lot or by such other method as the
Trustee in its sole discretion shall deem to be fair and appropriate, although
no Note of $1,000 in original principal amount or less will be redeemed in
part. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption. Upon request of the
Issuer, the Trustee shall notify the Issuer of the Notes or portions of Notes
to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Notes, the Trustee at the
expense of the Issuer shall mail a notice of redemption by first-class mail to
each Holder of Notes to be redeemed.
The notice shall identify the Notes to be redeemed and shall
state:
(1) the redemption date;
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(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price plus accrued and
unpaid interest, if any;
(5) if fewer than all the outstanding Notes are to be
redeemed, the identification and principal amounts of the particular
Notes to be redeemed;
(6) that, unless the Issuer defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Notes (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(7) the CUSIP number, if any, printed on the Notes being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Notes.
The Trustee shall give the notice of redemption in the
Issuer's name and at the Issuer's expense. In such event, the Issuer shall
provide the Trustee with the information required by this Section 3.3.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption shall become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Notes shall be paid at the redemption price
stated in the notice, plus accrued and unpaid interest, if any, to the
redemption date; provided that the Issuer shall have deposited the redemption
price with the Paying Agent or the Trustee on or before 11:00 a.m. (New York
City time) on the date of redemption; provided, further, that if the redemption
date is after a regular record date and on or prior to the interest payment
date, the accrued and unpaid interest shall be payable to the Noteholder of the
redeemed Notes registered on the relevant record date. Failure to give notice
or any defect in the notice to any Holder shall not affect the validity of the
notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. By at least 11:00
a.m. (New York City time) on the date on which any principal of or interest on
any Note is due and payable, the Issuer shall deposit with the Paying Agent
(or, if the Issuer or a Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued and
unpaid interest, if any, on all Notes to be redeemed on that date other than
Notes or portions of Notes called for redemption which are owned by the Issuer
or a Subsidiary and have been delivered by the Issuer or such Subsidiary to the
Trustee for cancellation.
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If the Issuer complies with the preceding paragraph, then,
unless the Issuer defaults in the payment of such redemption price, the Notes
shall cease to accrete and interest on the Notes to be redeemed will cease to
accrue on and after the applicable redemption date, whether or not such Notes
are presented for payment.
SECTION 3.6. Notes Redeemed in Part. Upon surrender of a
Note that is redeemed in part, the Issuer shall execute and the Trustee shall
authenticate for the Holder (at the Issuer's expense) a new Note equal in a
principal amount at maturity to the unredeemed portion of the Note surrendered.
ARTICLE IV
Covenants
SECTION 4.1. Payment of Notes. The Issuer shall promptly pay
the principal of and interest on the Notes on the dates and in the manner
provided in the Notes and in this Indenture. Principal and interest shall be
considered paid on the date due if on or before 11:00 a.m. (New York City time)
on such date the Trustee or the Paying Agent holds (or, if the Issuer or a
Subsidiary is the Paying Agent, the segregated account or separate trust fund
maintained by the Issuer or such Subsidiary pursuant to Section 2.4) in
accordance with this Indenture money sufficient to pay all principal and
interest then due and the Trustee or the Paying Agent (or, if the Issuer or a
Subsidiary is the Paying Agent, the Issuer or such Subsidiary), as the case may
be, is not prohibited from paying such money to the Noteholders on that date
pursuant to the terms of this Indenture.
The Issuer shall pay interest on overdue principal at the rate
specified therefor in the Notes, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful as provided in
Section 2.11.
Notwithstanding anything to the contrary contained in this
Indenture, the Issuer or the Paying Agent may, to the extent it is required to
do so by law, deduct or withhold income or other similar taxes imposed by the
United States of America or other domestic or foreign taxing authorities from
principal or interest payments hereunder.
SECTION 4.2. SEC Reports. Notwithstanding that the Issuer
may not be required to remain subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, the Issuer will file with the SEC (unless the
SEC does not permit such filing) and provide the Trustee and Noteholders with
the annual reports and such information, documents and other reports which are
specified in Sections 13 and 15(d) of the Exchange Act. The Issuer also will
comply with the other provisions of TIA Section 314(a).
SECTION 4.3. Limitation on Indebtedness. (a) The Issuer will
not Incur, directly or indirectly, any Indebtedness unless, on the date of such
Incurrence and after giving effect to such Incurrence and the application of
the net proceeds therefrom, the Indebtedness to Adjusted EBITDA Ratio of the
Issuer would be less than 7.00:1. Accrual of interest,
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accretion or amortization of original issue discount and the payment of
interest in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this covenant.
(b) Notwithstanding the foregoing paragraph (a) and
regardless of the amount of outstanding Indebtedness of the Issuer, the Issuer
may Incur any or all of the following Indebtedness: (i) Indebtedness of the
Issuer owing to and held by any Restricted Subsidiary; provided, however, that
any subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of any such Indebtedness (except to
another Restricted Subsidiary) will be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the Issuer; (ii) Indebtedness represented by
the Notes and the Exchange Notes; (iii) Indebtedness of the Issuer (other than
the Indebtedness described in clauses (i) or (ii) above) outstanding on the
Issue Date; (iv) Indebtedness (including Capitalized Lease Obligations) of the
Issuer Incurred to finance the acquisition, construction or improvement of
fixed or capital assets in an aggregate principal amount at any one time
outstanding not to exceed $5.0 million (together with the amount of any
Indebtedness then outstanding and Incurred pursuant to clause (b)(vi) of
Section 4.4); provided, that such Indebtedness is Incurred within 180 days
after the date of such acquisition, construction or improvement and does not
exceed the fair market value of such acquired, constructed or improved assets,
as determined in good faith by the Board of Directors of the Issuer; (v)
Refinancing Indebtedness Incurred in respect of any Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (ii), (iii) or this clause (v);
(vi) Indebtedness (A) in respect of performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds provided by the Issuer in the
ordinary course of its business and which do not secure other Indebtedness and
(B) under Currency Agreements and Interest Rate Agreements Incurred which, at
the time of Incurrence, is in the ordinary course of business; provided,
however, that, in the case of Currency Agreements and Interest Rate Agreements,
such Currency Agreements and Interest Rate Agreements are directly related to
Indebtedness permitted to be Incurred by the Issuer pursuant to this Indenture;
(vii) Indebtedness represented by Guarantees by the Issuer of Indebtedness
otherwise permitted to be Incurred pursuant to this Indenture; (viii)
Indebtedness of any other Person existing at the time such other Person is
merged with or into the Issuer outstanding on or prior to the date on which
such Person was merged with or into the Issuer (other than Indebtedness
Incurred in connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions pursuant to which such Person was merged with or into the Issuer);
provided, however, that on the date of such merger and after giving effect
thereto, the Issuer would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of this Section 4.3; (ix)
Indebtedness Incurred by the Issuer's Subsidiaries not otherwise prohibited by
the terms of this Indenture; (x) the Incurrence by the Issuer of Indebtedness
not to exceed, at any one time outstanding (together with the amount of any
Indebtedness then outstanding and Incurred pursuant to clause (b)(ix) of
Section 4.4), 1.5 times the aggregate Net Cash Proceeds received by the Issuer
from the issue or sale of Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of
the Issuer and other than an issuance or sale to an employee stock ownership
plan or to a trust established by the Issuer or any of its Restricted
Subsidiaries), less the amount of such Net Cash Proceeds used to make
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Restricted Payments pursuant clause 3(B) of paragraph (a) of Section 4.5 or
applied pursuant to clause (i)(B) of paragraph (b) of Section 4.5; provided,
however, that, immediately prior to the consummation of each such issuance or
sale of Capital Stock, the Issuer would have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to paragraph (a) of this Section 4.3;
and (xi) other Indebtedness in an aggregate principal amount outstanding at any
time not to exceed $5.0 million (together with the amount of any Indebtedness
and Preferred Stock then outstanding and Incurred pursuant to clause (b)(x) of
Section 4.4).
(c) Notwithstanding the foregoing, the Issuer shall not Incur
any Indebtedness pursuant to the foregoing paragraph (b) of this Section 4.3 if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations unless such new Indebtedness shall (i) be subordinated
to the Notes to at least the same extent as such Subordinated Obligations being
Refinanced and (ii) have a Stated Maturity that is no earlier than the Stated
Maturity of the Subordinated Obligations being Refinanced.
(d) For purposes of determining compliance with this Section
4.3, (i) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above, the Issuer, in its sole
discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses of
this Section 4.3 and (ii) an item of Indebtedness may be divided and classified
in more than one of the types of Indebtedness described in this Section 4.3.
SECTION 4.4. Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries. (a) The Issuer shall not permit any Restricted
Subsidiary to Incur, directly or indirectly, any Indebtedness or Preferred
Stock unless, on the date of such Incurrence and after giving effect to such
Incurrence and the application of the net proceeds therefrom, the Indebtedness
to Adjusted EBITDA Ratio of the Issuer would be less than 7.00:1. Accrual of
interest, accretion or amortization of original issue discount and the payment
of interest in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this covenant.
(b) Notwithstanding the foregoing paragraph (a) and regardless
of the amount of outstanding Indebtedness of the Restricted Subsidiaries, any
Restricted Subsidiary may Incur any or all of the following Indebtedness: (i)
Indebtedness Incurred under the New Credit Facility in an aggregate principal
amount outstanding at any time not to exceed the greater of (A) $50.0 million
and (B) the product of (x) $200,000 and (y) the number of Completed Towers on
the date of such Incurrence, less the aggregate amount of all proceeds from all
Asset Dispositions of Tower Assets of the Issuer that have been applied since
the Issue Date to permanently reduce the outstanding amount of such
Indebtedness pursuant to Section 4.7; (ii) Indebtedness or Preferred Stock of a
Restricted Subsidiary issued to and held by the Issuer or a Restricted
Subsidiary; provided, however, that any subsequent issuance or transfer of any
Capital Stock which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness or
Preferred Stock (other than to the Company or a Restricted Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness or
Preferred Stock by the issuer thereof; (iii) Indebtedness or Preferred Stock of
a Restricted Subsidiary Incurred and outstanding on or
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prior to the date on which such Restricted Subsidiary was acquired by the
Issuer (other than Indebtedness or Preferred Stock Incurred in connection with,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was acquired by
the Issuer); provided, however, that on the date of such acquisition and after
giving effect thereto, the Issuer would have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to paragraph (a) of Section 4.3; (iv)
Indebtedness or Preferred Stock outstanding on the Issue Date (other than
Indebtedness described in clauses (i), (ii) or (iii) of this paragraph); (v)
Refinancing Indebtedness Incurred in respect of Indebtedness or Preferred Stock
referred to in clauses (iii) or (iv) of this paragraph or this clause (v);
provided, however, that to the extent such Refinancing Indebtedness directly or
indirectly Refinances Indebtedness or Preferred Stock of a Subsidiary described
in clause (iii), such Refinancing Indebtedness shall be Incurred only by such
Subsidiary; (vi) Indebtedness (including Capitalized Lease Obligations)
Incurred to finance the acquisition, construction or improvement of fixed or
capital assets in an aggregate principal amount at any one time outstanding not
to exceed $5.0 million (together with the amount of any Indebtedness then
outstanding and Incurred pursuant to clause (b)(iv) of Section 4.3); provided,
that such Indebtedness is Incurred within 180 days after the date of such
acquisition, construction or improvement and does not exceed the fair market
value of such acquired, constructed or improved assets, as determined in good
faith by the Board of Directors of the Issuer; (vii) Indebtedness (A) in
respect of performance bonds, bankers' acceptances, letters of credit and
surety or appeal bonds provided in the ordinary course of its business and
which do not secure other Indebtedness and (B) under Currency Agreements and
Interest Rate Agreements Incurred which, at the time of Incurrence, is in the
ordinary course of business; provided, however, that, in the case of Currency
Agreements and Interest Rate Agreements, such Currency Agreements and Interest
Rate Agreements are directly related to Indebtedness permitted to be Incurred
pursuant to this Indenture; (viii) Indebtedness represented by Guarantees of
Indebtedness otherwise permitted to be Incurred pursuant to this Indenture;
(ix) the Incurrence of Indebtedness not to exceed, at any one time outstanding
(together with the amount of any Indebtedness then outstanding and Incurred
pursuant to clause (b)(x) of Section 4.3), 1.5 times the aggregate Net Cash
Proceeds received by the Issuer from the issue or sale of Capital Stock (other
than Disqualified Stock) subsequent to the Issue Date (other than an issuance
or sale to a Subsidiary of the Issuer and other than an issuance or sale to an
employee stock ownership plan or to a trust established by the Issuer or any of
its Restricted Subsidiaries), less the amount of such Net Cash Proceeds used to
make Restricted Payments pursuant clause 3(B) of paragraph (a) of Section 4.5
or applied pursuant to clause (i)(B) of paragraph (b) of Section 4.5; provided,
however, that, immediately prior to the consummation of each such issuance or
sale of Capital Stock, the Issuer would have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to paragraph (a) of Section 4.3; and
(x) other Indebtedness and Preferred Stock in an aggregate principal and/or
liquidation amount outstanding at any time not to exceed $5.0 million (less the
amount of any Indebtedness then outstanding and Incurred pursuant to clause
(b)(xi) of Section 4.3).
(c) For purposes of determining compliance with this Section
4.4, (i) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above, the Issuer, in its sole
discretion, will classify such item of
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Indebtedness and only be required to include the amount and type of such
Indebtedness in one of the above clauses of this Section 4.4 and (ii) an item
of Indebtedness may be divided and classified in more than one of the types of
Indebtedness described in this Section 4.4.
The Issuer will not permit any Unrestricted Subsidiary to
Incur any Indebtedness other than Non-Recourse Debt.
SECTION 4.5. Limitation on Restricted Payments. (a) The
Issuer will not, and will not permit any Restricted Subsidiary, directly or
indirectly, to make any Restricted Payment if at the time the Issuer or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default or Event of
Default will have occurred and be continuing (or would result therefrom); (2)
the Issuer could not Incur at least $1.00 of additional Indebtedness under
paragraph (a) of Section 4.3; or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments (the amount so expended, if other
than in cash, to be determined in good faith by the Board of Directors of the
Issuer, whose determination will be evidenced by a resolution of such Board of
Directors) declared or made subsequent to the Issue Date would exceed the sum
of: (A) (x) the aggregate EBITDA (or, in the event such EBITDA shall be a
deficit, minus such deficit) accrued subsequent to the Issue Date to the most
recent date for which financial information is available to the Issuer, taken
as one accounting period, (y) less 1.4 times Consolidated Interest Expense for
the same period; (B) (x) 100% of the aggregate Net Cash Proceeds (less the
aggregate amount of such Net Cash Proceeds used to Incur Indebtedness pursuant
to clause (b)(x) of Section 4.3 and clause (b)(ix) of Section 4.4) and (y) 70%
of the GAAP purchase accounting valuation of Qualified Proceeds (with each such
valuation calculated as of the sale date of the Capital Stock received as
consideration therefor), in each case received by the Issuer from the issue or
sale of Capital Stock (other than Disqualified Stock) subsequent to the Issue
Date (other than an issuance or sale to a Subsidiary of the Issuer and other
than an issuance or sale to an employee stock ownership plan or to a trust
established by the Issuer or any of its Restricted Subsidiaries); (C) the
amount by which Indebtedness of the Issuer is reduced on the Issuer's balance
sheet upon the conversion or exchange (other than by a Restricted Subsidiary)
subsequent to the Issue Date of any Indebtedness of the Issuer convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the Issuer
(less the amount of any cash, or the fair value of any other property,
distributed by the Issuer upon such conversion or exchange); (D) an amount
equal to the sum of (i) the net reduction in Investments in Unrestricted
Subsidiaries resulting from dividends, repayments of loans or advances or other
transfers of assets to the Issuer or any Restricted Subsidiary from
Unrestricted Subsidiaries and (ii) the portion (proportionate to the Issuer's
equity interest in such Subsidiary) of the fair market value of the net assets
of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; provided, that the foregoing sum shall not
exceed, in the case of any Unrestricted Subsidiary, the amount of Investments
previously made by the Issuer or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of the amount of
Restricted Payments; (E) dividends and distributions received by the Issuer
subsequent to the Issue Date from Unrestricted Subsidiaries, to the extent such
dividends and distributions are not otherwise included in calculating EBITDA;
and (F) Net Cash Proceeds received by the Issuer subsequent to the
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Issue Date from Investments that are not Permitted Investments, to the extent
not otherwise included in calculating EBITDA.
(b) The provisions of the foregoing paragraph (a) of this
Section 4.5 will not prohibit: (i) any purchase, redemption, defeasance or
other acquisition of Capital Stock of the Issuer or Subordinated Obligations
made by exchange for, or out of the net proceeds of the substantially
concurrent sale of, Capital Stock of the Issuer (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Issuer or an
employee stock ownership plan or to a trust established by the Issuer or any of
its Subsidiaries); provided, however, that (A) such purchase, redemption,
defeasance or other acquisition will be excluded in the calculation of the
amount of Restricted Payments and (B) to the extent applied toward any such
purchase, redemption, defeasance or other acquisition, the Net Cash Proceeds
from such sale will be excluded from clause (3)(B) of paragraph (a) of this
Section 4.5, clause (b)(x) of Section 4.3 and clause (b)(ix) of Section 4.4;
(ii) any purchase, redemption, defeasance or other acquisition of Subordinated
Obligations made by exchange for, or out of the net proceeds of the
substantially concurrent sale of, Subordinated Obligations of the Issuer;
provided, however, that (A) the principal amount of such new Indebtedness does
not exceed the principal amount of the Subordinated Obligations being so
redeemed, repurchased, acquired or retired for value (plus the amount of any
premium required to be paid under the terms of the instrument governing the
Subordinated Obligations being so redeemed, repurchased, acquired or retired),
(B) such new Indebtedness is subordinated to the Notes at least to the same
extent as such Subordinated Obligations so purchased, exchanged, redeemed,
repurchased, acquired or retired for value, (C) such new Indebtedness has a
final scheduled maturity date later than the earlier of the final scheduled
maturity date of the Subordinated Obligations being so redeemed, repurchased,
acquired or retired and the final scheduled maturity date of the Notes and (D)
such new Indebtedness has an Average Life equal to or greater than the Average
Life of the Notes; provided further, however, that such purchase, redemption,
defeasance or other acquisition will be excluded in the calculation of the
amount of Restricted Payments; (iii) dividends paid within 60 days after the
date of declaration thereof if at such date of declaration such dividend would
have complied with this covenant; provided, however, that the amount of such
dividend will be included in the calculation of the amount of Restricted
Payments; and (iv) purchases of outstanding shares of the Issuer's capital
stock from deceased shareholders in an amount not to exceed $1.0 million in the
aggregate; provided, however, that such purchases will be included in the
calculation of the amount of Restricted Payments; provided, however, that, at
the time of, and after giving effect to, any Restricted Payment permitted by
clauses (i), (ii) and (iv), no Default or Event of Default shall have occurred
and be continuing.
SECTION 4.6. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Issuer will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of
any Restricted Subsidiary to (i) pay dividends or make any other distributions
on its Capital Stock to the Issuer or a Restricted Subsidiary or pay any
Indebtedness or other obligation owed to the Issuer, (ii) make any loans or
advances to the Issuer or (iii) transfer any of its property or assets to the
Issuer or any Restricted Subsidiary, except: (1) any encumbrance or restriction
pursuant to the New Credit Facility or any
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agreement in effect at or entered into on the Issue Date; (2) any encumbrance
or restriction with respect to a Restricted Subsidiary pursuant to an agreement
relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior
to the date on which such Restricted Subsidiary was acquired by the Issuer or a
Restricted Subsidiary (other than Indebtedness Incurred as consideration in, or
to provide all or any portion of the funds or credit support utilized to
consummate the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Subsidiary or was acquired by the Issuer or
a Restricted Subsidiary) and outstanding on such date; (3) any encumbrance or
restriction pursuant to an agreement effecting a Refinancing of Indebtedness
Incurred pursuant to an agreement referred to in clause (1) or (2) of this
Section 4.6 or contained in any amendment to an agreement referred to in clause
(1) or (2) of this Section 4.6; provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in any such
refinancing agreement or amendment taken as a whole are no less favorable to
the Noteholders than the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in such predecessor agreements as determined in
good faith by the Board of Directors of the Issuer; (4) in the case of clause
(iii), any encumbrance or restriction that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is subject to
a lease, license or other contract; (5) in the case of clause (iii), contained
in security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such encumbrance or restrictions restrict the transfer
of the property subject to such security agreements or mortgages; (6) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary pending the closing
of such sale or disposition; and (7) customary provisions with respect to the
disposition or distribution of assets or property in joint venture and other
similar agreements.
SECTION 4.7. Limitation on Sale of Assets and Subsidiary
Stock. (a) The Issuer will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless (i) the
Issuer or such Restricted Subsidiary receives consideration at the time of such
Asset Disposition at least equal to the fair market value (including as to the
value of all non cash consideration), as determined in good faith by the Board
of Directors of the Issuer of the shares and assets subject to such Asset
Disposition and (ii) except in the case of a Tower Asset Exchange, at least 75%
of the consideration thereof received by the Issuer or such Restricted
Subsidiary is in the form of cash or cash equivalents.
Within 365 days after the receipt of any Net Available Cash
from an Asset Disposition, the Issuer or the applicable Restricted Subsidiary
may apply such Net Available Cash to: (A) prepay, repay, redeem or purchase
Indebtedness (other than Disqualified Stock) of a Wholly Owned Subsidiary
(provided, that the applicable Restricted Subsidiary, whether or not a Wholly
Owned Subsidiary, also may prepay, repay, redeem or purchase its own
outstanding Indebtedness) or Senior Indebtedness (in each case other than
Indebtedness owed to the Issuer or an Affiliate of the Issuer); (B) acquire all
or substantially all of the assets of an entity engaged in a Permitted
Business; (C) acquire Voting Stock of an entity engaged in a Permitted Business
from a Person that is not a Subsidiary of the Issuer; provided, that, (x) after
giving effect thereto, the Issuer or its Restricted Subsidiary owns a majority
of such
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Voting Stock and (y) such acquisition is otherwise made in accordance with this
Indenture, including, without limitation, Section 4.5; or (D) make a capital
expenditure or acquire other long-term assets that are used or useful in a
Permitted Business. To the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B), (C) or (D), the Issuer
shall make an Offer (as defined in Section 4.7(b)) to Holders of the Notes to
purchase Notes pursuant to and subject to the conditions set forth in paragraph
(b) of this Section 4.7.
Notwithstanding the foregoing provisions, the Issuer and its
Restricted Subsidiaries shall not be required to apply any Net Available Cash
in accordance herewith except to the extent that the aggregate Net Available
Cash from all Asset Dispositions which are not applied in accordance with this
covenant exceeds $2.5 million. Pending application of Net Available Cash
pursuant to this covenant, such Net Available Cash shall be invested in
Permitted Investments.
For the purposes of this Section 4.7(a), the following are
deemed to be cash: (x) the assumption by the transferee of Indebtedness of the
Issuer (other than Disqualified Stock of the Issuer and other than Indebtedness
that is subordinated to the Notes) or Indebtedness of any Restricted Subsidiary
and the release of the Issuer or such Restricted Subsidiary from all liability
on such Indebtedness in connection with such Asset Disposition; (y) securities
received by the Issuer or any Restricted Subsidiary from the transferee that
are converted by the Issuer or such Restricted Subsidiary into cash within 20
days of the applicable Asset Disposition (to the extent of the cash received);
and (z) any liabilities (as shown on the Issuer's or such Restricted
Subsidiary's most recent balance sheet) of the Issuer or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any guarantee thereof) that are assumed by
the transferee of any such assets pursuant to a customary novation agreement
that releases the Issuer or any such Restricted Subsidiary from further
liability.
(b) In the event of an Asset Disposition that requires
the purchase of Notes pursuant to paragraph (a) of this Section 4.7, the Issuer
will be required to purchase Notes tendered pursuant to an offer by the Issuer
for the Notes (the "Offer") at a purchase price of 100% of their Accreted Value
as of the date of purchase (without premium) plus accrued and unpaid interest
to the date of purchase in accordance with the procedures (including prorating
in the event of oversubscription) set forth in this Indenture. If the
aggregate purchase price of Notes tendered pursuant to the Offer is less than
the Net Available Cash allotted to the purchase of the Notes, the Issuer may
use any remaining Net Available Cash for general corporate purposes not
otherwise prohibited by this Indenture. If the aggregate purchase price of
Notes tendered pursuant to the Offer is greater than the Net Available Cash
allotted to the purchase of the Notes, the Trustee will select the Notes to be
purchased on the basis set forth in paragraph (c) of this Section 4.7. Upon
completion of any required Offer to the holders of the Notes, the amount of Net
Available Cash will be reset at zero. The Issuer shall not be required to make
an Offer for Notes pursuant to this Section 4.7 if the Net Available Cash
available therefor (after application of the proceeds as provided in the second
paragraph of Section 4.7(a)) are less than $5.0 million for all Asset
Dispositions (which lesser amounts
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shall be carried forward for purposes of determining whether an Offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition).
(c)(1) Promptly, and in any event within 30 days after the
Issuer becomes obligated to make an Offer, the Issuer shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, at the
address appearing in the security register, a written notice stating that the
Holder may elect to have his Notes purchased by the Issuer either in whole or
in part (subject to prorationing as hereinafter described in the event the
Offer is oversubscribed) in integral multiples of $1,000 of principal amount at
maturity, at the applicable purchase price. The notice shall specify a
purchase date not less than 30 days nor more than 60 days after the date of
such notice (the "Purchase Date") and shall contain all instructions and
materials necessary to tender Notes pursuant to the Offer.
(2) Not later than the date upon which written notice of
an Offer is delivered to the Trustee as provided below, the Issuer
shall deliver to the Trustee an Officer's Certificate as to (i) the
amount of the Offer (the "Offer Amount"), (ii) the allocation of the
Net Available Cash from the Asset Dispositions pursuant to which such
Offer is being made and (iii) the compliance of such allocation with
the provisions of Section 4.7(a). Upon the expiration of the period
for which the Offer remains open (the "Offer Period"), the Issuer
shall deliver to the Trustee for cancellation the Notes or portions
thereof which have been properly tendered to and are to be accepted by
the Issuer. Not later than 11:00 a.m. (New York City time) on the
Purchase Date, the Issuer shall irrevocably deposit with the Trustee
or with a paying agent (or, if the Issuer is acting as Paying Agent,
segregate and hold in trust) an amount in cash sufficient to pay the
Offer Amount for all Notes properly tendered to, not withdrawn from
and accepted by the Issuer. The Trustee shall, on the Purchase Date,
mail or deliver payment to each tendering Holder in the amount of the
purchase price.
(3) Holders electing to have a Note purchased will be
required to surrender the Note, together with all necessary
endorsements and other appropriate materials duly completed, to the
Issuer at the address specified in the notice at least three Business
Days prior to the Purchase Date. Holders will be entitled to withdraw
their election in whole or in part if the Trustee or the Issuer
receives not later than one Business Day prior to the Purchase Date, a
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note (which shall be $1,000 in principal
amount at maturity or an integral multiple thereof) which was
delivered for purchase by the Holder, the aggregate principal amount
at maturity of such Note (if any) that remains subject to the original
notice of the Offer and that has been or will be delivered for
purchase by the Issuer and a statement that such Holder is withdrawing
his election to have such Note purchased. If at the expiration of the
Offer Period the aggregate principal amount at maturity of Notes
surrendered by Holders exceeds the Offer Amount, the Trustee shall
select the Notes to be purchased in accordance with the provisions of
Section 3.2 (with such adjustments as may be deemed appropriate by the
Trustee so that only securities in denominations of $1,000 principal
amount at maturity, or integral multiples thereof, shall be
purchased).
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Holders whose Notes are purchased only in part will be issued new
Notes equal in principal amount at maturity to the unpurchased portion
of the Notes surrendered.
(4) A Note shall be deemed to have been accepted for
purchase at the time the Trustee, directly or through an agent, mails
or delivers payment therefor to the surrendering Holder.
(d) The Issuer will comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Notes
pursuant to this covenant. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this covenant, the Issuer will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this covenant by virtue thereof.
(e) The provisions of this Section 4.7 shall not apply to any
transaction that is permitted under the provisions of Section 5.1.
SECTION 4.8. Limitation on Transactions with Affiliates. (a)
The Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction or series of transactions
(including the purchase, sale, lease or exchange of any property, employee
compensation arrangements or the rendering of any service) with any Affiliate
of the Issuer (an "Affiliate Transaction") unless (i) the terms of such
transaction, taken as a whole, are no less favorable to the Issuer or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate; (ii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $1.0 million, the terms of such transaction are
set forth in writing and shall have been approved by a majority of the members
of the Board of Directors having no personal stake in such Affiliate
Transaction (and such majority determines that such Affiliate Transaction
satisfies the criteria in clause (i) above) and (iii) in the event such
Affiliate Transaction involves an aggregate amount in excess of $5.0 million,
the Issuer has received a written opinion from a nationally recognized
independent investment banking firm that such Affiliate Transaction is fair to
the Issuer and its Restricted Subsidiaries from a financial point of view.
(b) The provisions of paragraph (a) of this Section 4.8 shall
not prohibit (i) any Restricted Payment permitted to be made pursuant to
Section 4.5, (ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by
the Board of Directors, or any arrangements relating thereto, (iii) the grant
of a stock options or similar rights to employees and directors of the Issuer
pursuant to plans approved by the Board of Directors, (iv) loans or advances to
employees in the ordinary course of business in accordance with the past
practices of the Issuer or its Restricted Subsidiaries, but in any event not to
exceed $1.0 million in the aggregate outstanding at any one time, (v) the
payment of reasonable fees to directors of the Issuer and its Restricted
Subsidiaries who are not employees of the Issuer or its Restricted
Subsidiaries, (vi) any transaction between the Issuer and a Restricted
Subsidiary or between Restricted Subsidiaries, (vii) the issuance or
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sale of any Capital Stock (other than Disqualified Stock) of the Issuer and
(viii) any transaction consummated pursuant to the terms of any agreement
described in the Offering Circular to which the Issuer is a party, in each case
as such agreement is in effect on the Issue Date and without giving any effect
to any subsequent amendments, modifications or alterations thereof.
SECTION 4.9. Change of Control. (a) Upon the occurrence of
a Change of Control, each Holder shall have the right to require that the
Issuer repurchase all or any part of such Holder's Notes at a purchase price in
cash equal to 101% of the Accreted Value thereof as of the date of repurchase,
plus accrued and unpaid interest, if any, to the date of repurchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date), in accordance with the terms
contemplated in Section 4.9(b).
(b) (i) Within 30 days following any Change of Control, the
Issuer shall mail a notice to each Holder at its registered address with a copy
to the Trustee stating:
(1) that a Change of Control has occurred and that such
Holder has the right to require the Issuer to purchase such Holder's
Notes in denominations of $1,000 principal amount at maturity or any
integral multiple thereof at a purchase price in cash equal to 101% of
the Accreted Value thereof as of the date of repurchase, plus accrued
and unpaid interest, if any, to the date of repurchase (subject to the
right of Holders of record on the relevant record date to receive
interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma
historical income, cash flow and capitalization after giving effect to
such Change of Control);
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Issuer, consistent
with this Section 4.9, that a Holder must follow in order to have its
Notes purchased by the Issuer.
(c) Holders electing to have a Note purchased will be
required to surrender the Note, together with all necessary endorsements and
other appropriate materials duly completed, to the Issuer at the address
specified in the notice at least three Business Days prior to the purchase
date. Holders will be entitled to withdraw their election if the Trustee or
the Issuer receives not later than one Business Day prior to the purchase date,
a facsimile transmission or letter setting forth the name of the Holder, the
principal amount at maturity of the Note which was delivered for purchase by
the Holder as to which such notice of withdrawal is being submitted and a
statement that such Holder is withdrawing his election to have such Note
purchased.
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(d) On the purchase date, all Notes purchased by the Issuer
under this Section 4.9 shall be delivered to the Trustee for cancellation, and
the Issuer shall pay the purchase price, including premium, if any, plus
accrued and unpaid interest, if any, to the Holders entitled thereto.
(e) The Issuer will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Section 4.9. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.9, the Issuer will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 4.9 by virtue
thereof.
(f) The Issuer will not be required to make an offer pursuant
to this Section 4.9 upon a Change of Control if a third party, in the manner,
at the times and otherwise in compliance with the requirements set forth in
this Indenture applicable to a Change of Control made by the Issuer, makes an
offer to purchase and purchases all Notes validly tendered and not withdrawn
under such offer.
(g) Notwithstanding the occurrence of a Change of Control,
the Issuer shall not be obligated to repurchase the Notes or otherwise comply
with this Section 4.9 if the Issuer has irrevocably elected to redeem all the
Notes in accordance with Article III; provided that the Issuer does not default
in its redemption obligations pursuant to such election.
SECTION 4.10. Limitation on Sale or Issuance of Capital Stock
of Restricted Subsidiaries. The Issuer (i) will not, and will not permit any
Restricted Subsidiary of the Issuer to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Restricted Subsidiary to any
Person (other than to the Issuer or a Wholly Owned Subsidiary), unless (a) such
transfer, conveyance, sale, lease or other disposition is of (x) all of the
Capital Stock of such Restricted Subsidiary or (y) a majority of the issued and
outstanding Capital Stock of such Restricted Subsidiary; provided, however,
that the Issuer's minority equity interest in such Person after giving effect
to any such disposition shall be deemed to constitute an Investment by the
Issuer in such Person; and (b) the net cash proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.7 and (ii) will not permit any Restricted Subsidiary to issue any of
its Capital Stock (other than, to the extent necessary or mandated by
applicable law, shares of its Capital Stock constituting directors' qualifying
shares or the ownership by foreign nationals of Capital Stock of any Restricted
Subsidiary) to any Person other than to the Issuer or a Wholly Owned
Subsidiary.
SECTION 4.11. Limitation on Liens. The Issuer will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien on any of its property or assets (including Capital
Stock), whether owned on the Issue Date or thereafter acquired, securing any
obligation, other than Permitted Liens, unless contemporaneously therewith
effective provision is made to secure the Notes equally and ratably with (or on
a senior basis to, in the case of Subordinated Obligations) such obligation for
so long as such obligation is so secured.
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SECTION 4.12. Limitation on Sale/Leaseback Transactions. The
Issuer will not, and will not permit any Restricted Subsidiary to, enter into
any Sale/Leaseback Transaction with respect to any property unless (i) the
Issuer or such Restricted Subsidiary would be entitled to (A) Incur
Indebtedness in an amount equal to the Attributable Indebtedness with respect
to such Sale/Leaseback Transaction pursuant to Section 4.3 and (B) create a
Lien on such property securing such Attributable Indebtedness without equally
and ratably securing the Notes pursuant to Section 4.11, (ii) the net cash
proceeds received by the Issuer or any Restricted Subsidiary in connection with
such Sale/Leaseback Transaction are at least equal to the fair value (as
determined in good faith by the Board of Directors of the Issuer) of such
property and (iii) the transfer of such property is permitted by, and the
Issuer or such Restricted Subsidiary applies the proceeds of such transaction
in compliance with, Section 4.7.
SECTION 4.13. Compliance with Laws. The Issuer shall comply,
and shall cause each of its Restricted Subsidiaries to comply, with all
applicable statutes, rules, regulations, orders and restrictions of the United
States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
for such noncompliances as are not in the aggregate reasonably likely to have a
material adverse effect on the financial condition or results of operations of
the Issuer and its Subsidiaries, taken as a whole.
SECTION 4.14. Compliance Certificate. The Issuer shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Issuer an Officer's Certificate signed by the chief executive officer, the
chief financial officer or the chief accounting officer stating that in the
course of the performance by the signer of his duties as an Officer of the
Issuer he would normally have knowledge of any Default or Event of Default and
whether or not the signers know of any Default or Event of Default that
occurred during such period. If he does, the certificate shall describe the
Default or Event of Default, its status and what action the Issuer is taking or
proposes to take with respect thereto. The Issuer also shall comply with TIA
Section 314(a)(4).
SECTION 4.15. Further Instruments and Acts. Upon reasonable
request of the Trustee, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.
SECTION 4.16. Maintenance of Office or Agency. The Issuer
shall maintain the office or agency required under Section 2.3. The Issuer
shall give prior 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 address of the Trustee set forth in
Section 10.2.
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SECTION 4.17. Corporate Existence. Except as otherwise
permitted by Article V and Section 4.9, the Issuer shall do or cause to be
done, at its own cost and expense, all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate, partnership or
limited liability company existence of each of its Significant Subsidiaries in
accordance with the respective organizational documents of each such Subsidiary
and the material rights (charter and statutory) and franchises of the Issuer
and each such Subsidiary; provided, however, that the Issuer shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Significant Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Issuer shall
determine in good faith (such determination to be evidenced by a board
resolution), that the preservation thereof is no longer desirable in the
conduct of the business of the Issuer and the Subsidiaries, taken as a whole.
SECTION 4.18. Payment of Taxes and Other Claims. The Issuer
shall pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all material taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon it or any of its Restricted Subsidiaries or
properties of it or any of its Restricted Subsidiaries and (ii) all lawful
claims for labor, materials and supplies that, if unpaid, might by law become a
Lien upon the property of it 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
proceedings properly instituted and diligently conducted for which adequate
reserves, to the extent required under GAAP, have been taken.
SECTION 4.19. Maintenance of Properties and Insurance. (a)
The Issuer shall, and shall cause each of its Significant Subsidiaries to,
maintain its material properties in good working order and condition (subject
to ordinary wear and tear) and make or cause to be made all necessary repairs,
renewals, replacements, additions, betterments and improvements thereto and
actively conduct and carry on its business, all as in the reasonable judgment
of the Issuer is necessary so that the business carried on by Issuer and its
Significant Subsidiaries may be actively conducted; provided, however, that
nothing in this Section 4.19 shall prevent the Issuer or any of its
Subsidiaries from discontinuing the operation and maintenance of any of its
properties, if such discontinuance is, in the good faith judgment of the Issuer
or the Subsidiary, as the case may be, desirable in the conduct of their
respective businesses and is not disadvantageous in any material respect to the
Holders.
(b) The Issuer shall provide or cause to be provided, for
itself and each of its Significant Subsidiaries, insurance (including
appropriate self-insurance) against loss or damage of the kinds that, in the
good faith judgment of the Issuer, are adequate and appropriate for the conduct
of the business of the Issuer and such Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States of America, any
state thereof or any agency or instrumentality of such governments, in such
amounts, with such deductibles, and by such methods as shall be customary, in
the good faith judgment of the Issuer, for companies similarly situated in the
industry.
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ARTICLE V
Successor Issuer
SECTION 5.1. When the Issuer May Merge or Transfer Assets.
The Issuer will not consolidate with or merge with or into, or convey, transfer
or lease, in one transaction or a series of transactions, all or substantially
all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person
(the "Successor Issuer") will be a Person organized and existing under
the laws of the United States of America, any State thereof or the
District of Columbia and the Successor Issuer (if not the Issuer) will
expressly assume, by supplemental indenture, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations
of the Issuer under the Notes and this Indenture;
(ii) immediately after giving effect to such
transaction on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the Successor Issuer or any Restricted
Subsidiary as a result of such transaction as having been Incurred by
the Successor Issuer or such Restricted Subsidiary at the time of such
transaction), no Default or Event of Default will have occurred and be
continuing;
(iii) except in the case of a merger of the Issuer
into a Wholly Owned Subsidiary or a merger entered into solely for the
purpose of reincorporating the Issuer in another jurisdiction,
immediately after giving effect to such transaction on a pro forma
basis as if such transaction had occurred at the beginning of the
applicable four quarter period, the Issuer or the Person formed by or
surviving any such consolidation or merger (if other than the Issuer),
or to which such conveyance, transfer, lease or other disposition
shall have been made, would have been permitted to incur at least
$1.00 of additional Indebtedness under Section 4.3(a); and
(iv) the Issuer will have delivered to the Trustee
an Officer's Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture, as set forth in this Indenture.
The Successor Issuer will succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture, but
the predecessor Issuer in the case of a conveyance, transfer or lease of all
its assets or substantially all its assets will be released from the
obligations under this Indenture and the Notes, including without limitation
the obligation to pay the principal of and interest on the Notes.
ARTICLE VI
Defaults and Remedies
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SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Issuer defaults in any payment of interest on any
Note when the same becomes due and payable, and such default continues
for a period of 30 days;
(2) the Issuer defaults in the payment of the principal of
any Note when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon required repurchase, upon declaration
or otherwise;
(3) the Issuer fails to comply with its obligations under
Article V;
(4) the Issuer fails to comply with Section 4.2, 4.3, 4.4,
4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11 or 4.12 (other than a failure to
purchase Notes when required pursuant to Section 4.7 or 4.9, which
failure shall constitute an Event of Default under Section 6.1(2)) and
such failure continues for 30 days after the notice specified below;
(5) the Issuer fails to comply with any of its agreements in
the Notes or this Indenture (other than those referred to in (1), (2),
(3) or (4) above) and such failure continues for 60 days after the
notice specified below;
(6) the Issuer or any Significant Subsidiary of the Issuer
fails to pay any Indebtedness within any applicable grace period
provided in such Indebtedness after final maturity or the acceleration
of any such Indebtedness by the holders thereof because of a default
if the total amount of such Indebtedness unpaid or accelerated exceeds
$5.0 million or its foreign currency equivalent at the time;
(7) the Issuer or a Significant Subsidiary of the Issuer
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case in which it is the debtor;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Issuer or any
Significant Subsidiary of the Issuer in an involuntary case;
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(B) appoints a Custodian of the Issuer or any
Significant Subsidiary or for any substantial part of its
property of the Issuer or any Significant Subsidiary; or
(C) orders the winding up or liquidation of the
Issuer or any Significant Subsidiary of the Issuer;
(or any similar relief is granted under any foreign laws) and the
order, decree or relief remains unstayed and in effect for 90 days;
(9) any final judgment or decree for the payment of money in
excess of $5.0 million (net of any amounts with respect to which a
creditworthy insurance company has acknowledged full liability
(subject to any deductible amounts of less than $5.0 million required
to be paid by the Issuer or the Significant Subsidiary of the Issuer
in accordance with the applicable insurance policy)) is rendered
against the Issuer or any Significant Subsidiary of the Issuer and
either (A) an enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) such judgment or decree
remains unpaid and outstanding for a period of 60 days following such
judgment and is not discharged, waived or stayed within 10 days after
notice; or
(10) the failure of the Series B Investors to have purchased
2,750,000 shares of the Series B Preferred Stock for an aggregate
purchase price of $11.0 million by April 1, 1999.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is 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.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5) and (9) of this Section 6.1 is
not an Event of Default until the Trustee by notice to the Issuer or the
Holders of at least 25% in aggregate principal amount of the outstanding Notes
by notice to the Issuer give notice of the Default and the Issuer does not cure
such Default within the time specified in said clause (4), (5) or (9) after
receipt of such notice. Such notice must specify the Default, demand that it
be remedied and state that such notice is a "Notice of Default".
The Issuer shall deliver to the Trustee, within 30 days after
its knowledge of the occurrence thereof, written notice in the form of an
Officer's Certificate of any Event of Default under clause (6) or (10) of this
Section 6.1 and any event which with the giving of notice or the lapse of time
would become an Event of Default under clause (4), (5) or (9) of this Section
6.1 and what action the Issuer is taking or proposes to take with respect
thereto.
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SECTION 6.2. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.1(7) or (8) with respect to the
Issuer) occurs and is continuing, the Trustee by notice to the Issuer, or the
Holders of at least 25% in aggregate principal amount at maturity of the
outstanding Notes by notice to the Issuer, may declare the Accreted Value of
and accrued but unpaid interest on all the Notes to be due and payable. Upon
such a declaration, such Accreted Value and interest shall be due and payable
immediately. If an Event of Default specified in Section 6.1(7) or (8) with
respect to the Issuer occurs and is continuing, the Accreted Value of and
accrued interest on all the Notes shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holders. The Holders of a majority in aggregate principal amount at
maturity of the outstanding Notes by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration and the Trustee has been paid all amounts due to it
pursuant to Section 7.7. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of Accreted Value of or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are, to the extent
permitted by law, cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in aggregate principal amount at maturity of the Notes then
outstanding by notice to the Trustee may waive any past or existing Default and
its consequences except (i) a Default in the payment of the principal of or
interest on a Note or (ii) a Default in respect of a provision that under
Section 9.2 cannot be amended without the consent of each Noteholder affected.
When a Default is waived, it is deemed cured, and any Event of Default arising
therefrom shall be deemed to have been cured, but no such waiver shall extend
to any subsequent or other Default or impair any consequent right.
SECTION 6.5. Control by Majority. Upon provision of
reasonable indemnity to the Trustee satisfactory to the Trustee, the Holders of
a majority in aggregate principal amount of the Notes then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. However, the Trustee, which may rely on opinions of counsel, may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to
the rights of other Noteholders or
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would involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction.
SECTION 6.6. Limitation on Suits. A Holder may not pursue
any remedy with respect to this Indenture or the Notes unless:
(i) the Holder gives to the Trustee previous written
notice stating that an Event of Default is continuing;
(ii) the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding make a written
request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(v) the Holders of a majority in aggregate principal amount
of the Notes then outstanding do not give the Trustee a direction
inconsistent with such request within such 60-day period.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over another
Noteholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of the Accreted Value of and interest on the Notes held by
such Holder, on or after the respective due dates expressed in the Notes, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Issuer for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Noteholders
allowed in any judicial proceedings relative to the Issuer, its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other securities or property payable or deliverable on
any such claims and to distribute the same, and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that
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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 its counsel, and any other amounts due the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article VI, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Noteholders for amounts due and unpaid on the
Notes for Accreted Value and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for Accreted Value and interest, respectively; and
THIRD: to the Issuer or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 6.10. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Trustee a
notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. This Section
6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in aggregate principal amount
of the outstanding Notes.
SECTION 6.12. Waiver of Stay or Extension Laws. The Issuer
(to the extent it may lawfully do so) shall 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 it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and the TIA and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b) and (c) of this Section 7.1.
(e) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(f) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties
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hereunder or in the exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.1 and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely
upon, and shall be fully protected from acting or refraining from acting, on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
request an Officer's Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection,
and the advice or opinion of counsel with respect to legal matters relating to
this Indenture and the Notes shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
(g) The Trustee shall not be charged with knowledge of any
Default or Event of Default with respect to the Notes unless either (1) a Trust
Officer shall have actual knowledge of such Default or Event of Default or (2)
written notice of such Default or Event of Default shall have been given to the
Trustee by the Issuer or by any Holder of the Notes.
SECTION 7.3. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its respective Affiliates with the
same rights it would have if it were not Trustee.
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Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Issuer's use
of the proceeds from the Notes, and it shall not be responsible for any
statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default or an Event of
Default occurs and is continuing and if it is known to the Trustee, the Trustee
must mail to each Noteholder notice of the Default within the earlier of 90
days after it occurs or 30 days after it is known to a Trust Officer or written
notice of it is received by the Trustee. Except in the case of a Default in
payment of principal of, premium (if any) or interest on any Note, the Trustee
may withhold notice if and so long as a committee of its Trust Officers in good
faith determines that withholding notice is not opposed to the interests of
Noteholders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each January 15 beginning with the January 15 following the
date of this Indenture, and in any event prior to March 15 in each year, the
Trustee shall mail to each Noteholder a brief report dated as of such January
15 that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Section 313(b). The Trustee shall promptly deliver to the Issuer a copy of
any report it delivers to Holders pursuant to this Section 7.6.
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Trustee with the SEC and each stock exchange
(if any) on which the Notes are listed. The Issuer agrees to notify promptly
the Trustee whenever the Notes become listed on any stock exchange and of any
delisting thereof.
SECTION 7.7. Compensation and Indemnity. The Issuer shall
pay to the Trustee from time to time such compensation for its services as the
Issuer and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall reimburse the Trustee upon request for all
reasonable fees and expenses, including out-of-pocket expenses, incurred or
made by it in connection with the performance of its duties hereunder,
including costs of collection, in addition to such compensation for its
services, except any such expense, disbursement or advance as may arise from
its negligence, wilful misconduct or bad faith, unless the Trustee shall have
complied with the applicable standard of care required by the TIA. Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Trustee's agents, counsel, accountants and experts. The
Trustee shall provide the Issuer reasonable notice of any expenditure not in
the ordinary course of business; provided that prior approval by the Issuer of
any such expenditure shall not be a requirement for the making of such
expenditure nor for reimbursement by the Issuer thereof. The Issuer shall
indemnify each of the Trustee and any predecessor Trustees against any and all
loss, damage, claim, liability or expense (including reasonable attorneys' fees
and expenses) (other
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than taxes applicable to the Trustee's compensation hereunder) incurred by it
in connection with the acceptance or administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Issuer
promptly of any claim for which it may seek indemnity. Failure by the Trustee
to so notify the Issuer shall not relieve the Issuer of its obligations
hereunder. The Issuer shall defend the claim and the Trustee may have separate
counsel, and the Issuer will pay the reasonable fees and expenses of such
counsel. The Issuer need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith, unless the Trustee shall have
complied with the applicable standard of care required by the TIA.
To secure the Issuer's payment obligations in this Section
7.7, the Trustee shall have a lien prior to the Notes on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Notes.
The Issuer's payment obligations pursuant to this Section 7.7
shall survive the resignation or removal of the Trustee and discharge of this
Indenture. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.1(7) or (8) with respect to the Issuer, the expenses are
intended to constitute expenses of administration under the Bankruptcy Law,
provided, however, that this shall not affect the Trustee's rights as set forth
in the preceding paragraph or Section 6.10.
SECTION 7.8. Replacement of Trustee. The Trustee may resign
at any time with 30 days notice to the Issuer. The Holders of a majority in
principal amount of the Notes then outstanding, may remove the Trustee with 30
days notice to the Trustee and the Issuer and may appoint a successor Trustee.
The Issuer shall remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Issuer or by the
Holders of a majority in principal amount of the Notes and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
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succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee, provided that such corporation
shall be eligible under this Article VII and TIA Section 3.10(a).
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Trustee
shall have a combined capital and surplus of at least $250,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities or certificates of interest or participation in other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Issuer. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
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ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Notes; Defeasance.
(a) When (i) the Issuer delivers to the Trustee all outstanding Notes (other
than Notes replaced pursuant to Section 2.7) for cancellation or (ii) all
outstanding Notes have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof
or the Notes will become due and payable at their Stated Maturity within 91
days, or the Notes are to be called for redemption within 91 days under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Issuer, and, in each
case of this clause (ii), the Issuer irrevocably deposits or causes to be
deposited with the Trustee funds sufficient to pay at maturity or upon
redemption all outstanding Notes, including interest thereon to maturity or
such redemption date (other than Notes replaced pursuant to Section 2.7), and
if in either case the Issuer pays all other sums payable hereunder by the
Issuer, then this Indenture shall, subject to Section 8.1(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of
this Indenture on demand of the Issuer accompanied by an Officer's Certificate
and an Opinion of Counsel from the Issuer that all conditions precedent
provided herein for relating to satisfaction and discharge of this Indenture
have been complied with and at the cost and expense of the Issuer.
(b) Subject to Sections 8.1(c) and 8.2, the Issuer at any
time may terminate (i) all of its obligations under the Notes and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.14, 4.18 and 4.19
and the operation of Sections 6.1(6), 6.1(7) (but only with respect to a
Significant Subsidiary), 6.1(8) (but only with respect to a Significant
Subsidiary), 6.1(9) and 5.1(iii) ("covenant defeasance option"). The Issuer
may exercise its legal defeasance option notwithstanding its prior exercise of
its covenant defeasance option.
If the Issuer exercises its legal defeasance option, payment
of the Notes may not be accelerated because of an Event of Default. If the
Issuer exercises its covenant defeasance option, payment of the Notes may not
be accelerated because of an Event of Default specified in Section 6.1(4),
6.1(5), 6.1(6), 6.1(7) (but only with respect to a Significant Subsidiary),
6.1(8) (but only with respect to a Significant Subsidiary), 6.1(9), 6.1(10) or
because of the failure of the Issuer to comply with Section 5.1(iii).
Upon satisfaction of the conditions set forth herein and upon
request of the Issuer, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuer terminates.
(c) Notwithstanding clauses (a) and (b) above, the Issuer's
obligations in Sections 2.3, 2.4, 2.5, 2.7, 4.1, 4.13, 4.15, 4.16, 4.17, 7.7,
7.8, 8.4, 8.5 and 8.6 shall survive until the Notes have been paid in full.
Thereafter, the Issuer's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
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SECTION 8.2. Conditions to Defeasance. The Issuer may
exercise its legal defeasance option or its covenant defeasance option only if:
(i) the Issuer irrevocably deposits or causes to
be deposited in trust with the Trustee money or U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide cash at such times and in such amounts as will be sufficient
to pay principal and interest when due on all outstanding Notes
(except Notes replaced pursuant to Section 2.7) to maturity or
redemption, as the case may be;
(ii) the Issuer delivers to the Trustee a
certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal
and interest when due and without reinvestment on the deposited U.S.
Government Obligations plus any deposited money without investment
will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all outstanding
Notes (except Notes replaced pursuant to Section 2.7) to maturity or
redemption, as the case may be;
(iii) 91 days pass after the deposit is made and
during the 91-day period no Default specified in Section 6.1(7) or (8)
with respect to the Issuer occurs which is continuing at the end of
the period;
(iv) the deposit does not constitute a default
under any other material agreement binding on the Issuer;
(v) the Issuer delivers to the Trustee an Opinion
of Counsel to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment
company under the Investment Company Act of 1940;
(vi) in the case of the legal defeasance option,
the Issuer shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Issuer has received from, or there has been
published by, the Internal Revenue Service a ruling, or (ii) since the
date of this Indenture there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Noteholders
will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred;
(vii) in the case of the covenant defeasance
option, the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Noteholders will not recognize income,
gain or loss for federal income tax purposes as a result of such
covenant defeasance and will be subject to federal income tax on the
same amounts and in the same manner and at the same times as would
have been the case if such deposit and covenant defeasance had not
occurred; and
<PAGE> 59
54
(viii) the Issuer delivers to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Notes as
contemplated by this Article VIII have been complied with.
Before or after a deposit, the Issuer may make arrangements
satisfactory to the Trustee for the redemption of Notes at a future date in
accordance with Article III.
SECTION 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from
U.S. Government Obligations either directly or through the Paying Agent as the
Trustee may determine and in accordance with this Indenture to the payment of
principal of and interest on the Notes.
SECTION 8.4. Repayment to Issuer. The Trustee and the Paying
Agent shall promptly turn over to the Issuer upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Issuer upon written request any money
held by them for the payment of principal or interest that remains unclaimed
for one year after such principal and interest have become due and payable,
and, thereafter, Noteholders entitled to the money must look to the Issuer for
payment as general creditors.
SECTION 8.5. Indemnity for Government Obligations. The
Issuer shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations other
than any such tax, fee or other charge which by law is for the account of the
Holders of the defeased Notes; provided that the Trustee shall be entitled to
charge any such tax, fee or other charge to such Holder's account.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to this Article VIII until such time as the Trustee or
Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, (a)
if the Issuer has made any payment of interest on or principal of any Notes
following the reinstatement of their obligations, the Issuer shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent and (b) unless otherwise required by any legal proceeding or any order or
judgment of any court or governmental authority, the Trustee or Paying Agent
shall return all such money and U.S. Government Obligations to the Issuer
promptly after receiving a written request therefor at any time, if such
reinstatement of the Issuer's obligations has occurred and continues to be in
effect.
<PAGE> 60
55
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Issuer and the
Trustee may amend this Indenture or the Notes without notice to or consent of
any Noteholder:
(i) to cure any ambiguity, omission, defect or
inconsistency;
(ii) to comply with Article V;
(iii) to provide for uncertificated Notes in
addition to or in place of certificated Notes (provided, however, that
the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Notes are as described in Section 163(f)(2)(B) of the Code);
(iv) to add Guarantees with respect to the Notes;
(v) to secure the Notes;
(vi) to add to the covenants of the Issuer for the
benefit of the Noteholders or to surrender any right or power herein
conferred upon the Issuer;
(vii) to make any change that does not materially
and adversely affect the rights of any Noteholder; and
(viii) to comply with any requirements of the SEC in
connection with qualifying this Indenture under the TIA.
After an amendment under this Section 9.1 becomes effective,
the Issuer shall mail to Noteholders a notice briefly describing such
amendment. The failure to give such notice to all Noteholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.1.
SECTION 9.2. With Consent of Holders. The Issuer and the
Trustee may amend this Indenture or the Notes without notice to any Noteholder
but with the written consent of the Holders of at least a majority in principal
amount at maturity of the Notes then outstanding (including consents obtained
in connection with a tender offer or exchange for Notes). However, without the
consent of each Noteholder of an outstanding Note affected, an amendment may
not:
(i) reduce the amount of Notes whose Holders must
consent to an amendment;
<PAGE> 61
56
(ii) reduce the rate of or extend the time for
payment of interest on any Note;
(iii) reduce the principal of or extend the Stated
Maturity of any Note;
(iv) reduce the premium payable upon the
redemption of any Note or change the time at which any Note may be
redeemed in accordance with Article III;
(v) make any Note payable in money other than
that stated in the Note;
(vi) impair the right of any Holder to receive
payment of principal of and interest on such Holder's Notes on or
after the due dates therefor or to institute suit for the enforcement
of any payment on or with respect to such Holder's Notes; or
(vii) make any change in this second sentence of
Section 9.2.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.2 becomes effective,
the Issuer shall mail to Noteholders a notice briefly describing such
amendment. The failure to give such notice to all Noteholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.2.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Note shall bind the
Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same debt as the consenting Holder's Note, even if notation of
the consent or waiver is not made on the Note. After an amendment or waiver
becomes effective, it shall bind every Noteholder.
The Issuer may, but shall not be obligated to, fix a record
date for the purpose of determining the Noteholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Noteholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid
or effective for more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Notes. If an
amendment changes the terms of a Note, the Trustee may require the Holder of
the Note to deliver it to the
<PAGE> 62
57
Trustee. The Trustee may place an appropriate notation on the Note regarding
the changed terms and return it to the Holder. Alternatively, if the Issuer or
the Trustee so determine, the Issuer in exchange for the Note shall issue and
the Trustee shall authenticate a new Note that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Note shall not
affect the validity of such amendment.
SECTION 9.6. Trustee to Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not materially and adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may but need not sign it.
In signing such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to Section 7.1)
shall be fully protected in relying upon, in addition to the documents required
by Section 10.4, an Officer's Certificate and an Opinion of Counsel stating
that such amendment complies with the provisions of this Article IX; provided,
however, that Holders who do not consent, waive or agree to amend this
Indenture in the time frame set forth in such solicitation documents shall not
be entitled to any consideration offered for timely consent, waiver or
amendment, even if the consent, waiver or amendment is agreed to by sufficient
Holders to approve such consent, waiver or amendment to this Indenture.
SECTION 9.7. Payment for Consent. Neither the Issuer nor any
affiliate of the Issuer shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for, or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of this Indenture or the Notes unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Miscellaneous
SECTION 10.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the provision required
by the TIA shall control.
SECTION 10.2. Notices. Any notice or communication shall be
in writing and delivered in person, transmitted by facsimile machine, or mailed
by first-class mail or overnight air courier guaranteeing next day delivery
addressed as follows:
<PAGE> 63
58
if to the Issuer:
SpectraSite Holdings, Inc.
8000 Regency Parkway, Suite 570
Cary, North Carolina 27511
Attention: Chief Financial Officer
if to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036-1532
Attention: Corporate Trust Administration
The Issuer or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Noteholder shall be
mailed to the Noteholder at the Noteholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or
any defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.3. Communication by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes.
The Issuer, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 10.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Issuer to the Trustee to
take or refrain from taking any action under this Indenture, the Issuer shall
furnish to the Trustee:
(i) an Officer's Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of
the signer, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
<PAGE> 64
59
SECTION 10.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(i) a statement that the individual making such
certificate or opinion has read such covenant or condition;
(ii) 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;
(iii) a statement that, in the opinion of 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; and
(iv) a statement as to whether or not, in the opinion of
such individual, such covenant or condition has been complied with.
SECTION 10.6. When Notes Disregarded. In determining whether
the Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Issuer or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Notes outstanding at the
time shall be considered in any such determination.
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Noteholders. The Registrar and the Paying Agent may make reasonable rules for
their functions.
SECTION 10.8. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue on such payment for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 10.9. GOVERNING LAW. THIS INDENTURE AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
<PAGE> 65
60
SECTION 10.10. No Recourse Against Others. No director,
officer, employee, incorporator or stockholder of the Issuer, as such, shall
have any liability for any obligations of the Issuer under the Notes, this
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes.
SECTION 10.11. Successors. All agreements of the Issuer in
this Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
SECTION 10.13. Variable Provisions. The Issuer initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect
to any Global Notes.
SECTION 10.14. Qualification of Indenture. The Issuer shall
qualify this Indenture under the TIA in accordance with the terms and
conditions of the Registration Rights Agreement (as defined in the Appendix
hereto) and shall pay all reasonable costs and expenses (including attorneys'
fees for the Issuer, the Trustee and the Holders) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification
of this Indenture and the Notes. The Trustee shall be entitled to receive from
the Issuer any such Officer's Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 10.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
SECTION 10.16. Severability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby.
<PAGE> 66
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
SPECTRASITE HOLDINGS, INC.
By: /s/ David P. Tomick
--------------------------------
Name: David P. Tomick
Title: Chief Financial Officer
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:/s/ Gerard F. Ganey
--------------------------------
Name: Gerard F. Ganey
Title: Senior Vice President
<PAGE> 67
RULE 144A/REGULATION S APPENDIX
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO
RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN
RELIANCE ON REGULATION S.
PROVISIONS RELATING TO INITIAL NOTES,
PRIVATE EXCHANGE NOTES
AND EXCHANGE NOTES
1. Definitions.
1.1 Definitions.
For the purposes of this Appendix the following terms
shall have the meanings indicated below:
"Depositary" means The Depository Trust Company, its nominees
and their respective successors and assigns.
"Exchange Notes" means the 12% Senior Discount Notes Due 2008
to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer pursuant to the Registration Rights Agreement.
"Initial Purchasers" means Credit Suisse First Boston
Corporation, Lehman Brothers Inc. and CIBC Oppenheimer Corp.
"Initial Notes" means the 12% Senior Discount Notes Due 2008,
issued under this Indenture on or about the date hereof.
"Notes" means the Initial Notes, the Exchange Notes and the
Private Exchange Notes, treated as a single class.
"Notes Custodian" means the custodian with respect to a Global
Note (as appointed by the Depositary), or any successor person thereto and
shall initially be the Trustee.
"Private Exchange" means the offer by the Issuer, pursuant to
the Registration Rights Agreement, to the Initial Purchasers to issue and
deliver to each Initial Purchaser, in exchange for the Initial Notes held by
the Initial Purchaser as part of its initial distribution, a like aggregate
principal amount at maturity of Private Exchange Notes.
"Private Exchange Notes" means the 12% Senior Discount Notes
Due 2008, if any, to be issued pursuant to this Indenture to the Initial
Purchasers in a Private Exchange.
"Purchase Agreement" means the Purchase Agreement dated June
23, 1998, among the Issuer and the Initial Purchasers.
<PAGE> 68
2
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Issuer,
pursuant to the Registration Rights Agreement, to certain Holders of Initial
Notes, to issue and deliver to such Holders, in exchange for the Initial Notes,
a like aggregate principal amount of Exchange Notes registered under the
Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 26, 1998 among the Issuer and the Initial
Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the registration
statement issued by the Issuer, in connection with the offer and sale of
Initial Notes or Private Exchange Notes, pursuant to Section 2 of the
Registration Rights Agreement.
"Transfer Restricted Notes" means Notes that bear or are
required to bear the legend set forth in Section 2.3(b) hereof.
1.2 Other Definitions
<TABLE>
<CAPTION>
Defined in
----------
Term Section:
- ---- -------
<S> <C>
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
"Global Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
</TABLE>
2. The Notes.
2.1 Form and Dating.
The Initial Notes are being offered and sold by the
Issuer pursuant to the Purchase Agreement.
(a) Global Notes. Initial Notes offered and sold
to a QIB in reliance on Rule 144A or in reliance on Regulation S, in each case
as provided in the Purchase Agreement, shall be issued initially in the form of
one or more permanent global Notes in definitive, fully registered form without
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit 1 hereto (each, a "Global Note"), which shall be
deposited on behalf of the purchasers of the Initial Notes represented thereby
with the Trustee as custodian for the Depositary (or with such other custodian
as the Depositary may
<PAGE> 69
3
direct), and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Issuer and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Notes may
from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b)
shall apply only to a Global Note deposited with or on behalf of the
Depositary.
The Issuer shall execute and the Trustee shall, in
accordance with this Section 2.1(b), authenticate and deliver initially one or
more Global Notes that (i) shall be registered in the name of the Depositary
for such Global Note or Global Notes or in the name of the nominee of such
Depositary and (ii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions or held by the Trustee as custodian
for the Depositary.
Members of, or participants in, the Depositary
("Agent Members") shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Note, and the Depositary may
be treated by the Issuer, the Trustee and any agent of the Issuer or the
Trustee as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the
Trustee or any agent of the Issuer or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of
a holder of a beneficial interest in any Global Note.
(c) Certificated Notes. Except as provided in
this Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in
Global Notes will not be entitled to receive physical delivery of certificated
Notes.
2.2 Authentication. The Trustee shall authenticate and
deliver: (1) Initial Notes for original issue in an aggregate principal amount
at maturity of U.S. $225,238,000 and (2) Exchange Notes or Private Exchange
Notes for issue only in a Registered Exchange Offer or a Private Exchange,
respectively, pursuant to the Registration Rights Agreement, for a like
principal amount at maturity of Initial Notes, in each case upon a written
order of the Issuer signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Issuer. Such order shall
specify the amount of the Notes to be authenticated and the date on which the
original issue of Notes is to be authenticated and whether the Notes are to be
Initial Notes, Exchange Notes or Private Exchange Notes. The aggregate
principal amount at maturity of Notes outstanding at any time may not exceed
U.S. $225,238,000 except as provided in Section 2.7 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of
Global Notes. (i) The transfer and exchange of Global Notes or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including applicable restrictions on
<PAGE> 70
4
transfer set forth herein, if any) and the procedures of the Depositary
therefor. A transferor of a beneficial interest in a Global Note shall deliver
to the Registrar a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in the Global Note. The
Registrar shall, in accordance with such instructions instruct the Depositary
to credit to the account of the Person specified in such instructions a
beneficial interest in the Global Note and to debit the account of the Person
making the transfer of the beneficial interest in the Global Note being
transferred.
(ii) Notwithstanding any other provisions of this
Appendix (other than the provisions set forth in Section 2.4), a
Global Note may not be transferred as a whole except by the Depositary
to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary of another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary.
(iii) In the event that a Global Note is exchanged
for Notes in definitive registered form pursuant to Section 2.4 of
this Appendix or Section 2.9 of this Indenture prior to the
consummation of a Registered Exchange Offer or the effectiveness of a
Shelf Registration Statement with respect to such Notes, such Notes
may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of
the Initial Notes intended to ensure that such transfers comply with
Rule 144A or Regulation S, as the case may be) and such other
procedures as may from time to time be adopted by the Issuer.
(b) Legend.
(i) Except as permitted by the following paragraphs
(ii), (iii) and (iv), each Note certificate evidencing the Global
Notes (and all Notes issued in exchange therefor or in substitution
thereof) shall bear a legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED
THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER,
THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED
<PAGE> 71
5
OR OTHERWISE TRANSFERRED, ONLY (I) INSIDE THE UNITED STATES TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer
Restricted Note (including any Transfer Restricted Note represented by
a Global Note) pursuant to Rule 144 under the Securities Act, in the
case of any Transfer Restricted Note that is represented by a Global
Note, the Registrar shall permit the Holder thereof to exchange such
Transfer Restricted Note for a certificated Note that does not bear
the legend set forth above and rescind any restriction on the transfer
of such Transfer Restricted Note, if the Holder certifies in writing
to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth
on the reverse of the Note).
(iii) After a transfer of any Initial Securities or
Private Exchange Securities during the period of the effectiveness of
and pursuant to a Shelf Registration Statement with respect to such
Initial Securities or Private Exchange Securities, as the case may be,
all requirements pertaining to legends on such Initial Securities or
such Private Exchange Notes will cease to apply, but the requirements
requiring such Initial Notes or such Private Exchange Notes issued to
certain Holders be issued in global form will continue to apply, and
Initial Notes or Private Exchange Notes in global form without legends
will be available to the transferee of the Holder of such Initial
Notes or Private Exchange Notes upon exchange of such transferring
Holder's Initial Notes or Private Exchange Notes or directions to
transfer such Holder's interest in the Global Note, as applicable.
(iv) Upon the consummation of a Registered Exchange
Offer with respect to the Initial Notes pursuant to which Holders of
such Initial Notes are offered Exchange Notes in exchange for their
Initial Notes, all requirements pertaining to such Initial Notes that
Initial Notes issued to certain Holders be issued in global form will
continue to apply and Initial Notes in global form with the restricted
securities legend set forth in Exhibit 1 hereto will be available to
Holders of such Initial Notes that do not exchange their Initial
Notes, and Exchange Notes in global form without the
<PAGE> 72
6
restriction securities legend will be available to Holders that
exchange such Initial Notes in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with
respect to the Initial Notes pursuant to which Holders of such Initial
Notes are offered Private Exchange Notes in exchange for their Initial
Notes, all requirements pertaining to such Initial Notes that Initial
Notes issued to certain Holders be issued in global form will still
apply, and Private Exchange Notes in global form with the restricted
securities legend set forth in Exhibit 1 hereto will be available to
Holders that exchange such Initial Notes in such Private Exchange.
(c) Cancellation or Adjustment of Global Note. At such
time as all beneficial interests in a Global Note have either been exchanged
for certificated Notes, redeemed, repurchased or canceled, such Global Note
shall be returned to the Depositary for cancellation or retained and canceled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for certificated Notes, redeemed,
repurchased or canceled, the principal amount of Notes represented by such
Global Note shall be reduced and an adjustment shall be made on the books and
records of the Trustee (if it is then the Notes Custodian for such Global Note)
with respect to such Global Note, by the Trustee or the Notes Custodian, to
reflect such reduction.
(d) Obligations with Respect to Transfers and Exchanges
of Notes.
(i) To permit registrations of transfers and
exchanges, the Issuer shall execute and the Trustee shall authenticate
certificated Notes and Global Notes at the Registrar's or any
co-registrar's request, subject to terms and conditions of this
Indenture.
(ii) No service charge shall be made for any
registration of transfer or exchange, but the Issuer may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other
than any such transfer taxes, assessments or similar governmental
charge payable upon exchange or transfer pursuant to Sections 3.6,
4.7, 4.9 and Section 9.5 of this Indenture.
(iii) The Registrar or any co-registrar shall not be
required to register the transfer of or exchange of (a) any
certificated Note selected for redemption in whole or in part pursuant
to Article III of this Indenture, except the unredeemed portion of any
certificated Note being redeemed in part, or (b) any Note for a period
beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redeem Notes or 15 Business Days before an interest
payment date.
(iv) Prior to the due presentation for registration
of transfer of any Note, the Issuer, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Note is registered as the absolute owner of such Note for
the purpose of receiving payment of principal of and interest on such
Note
<PAGE> 73
7
and for all other purposes whatsoever, whether or not such Note is
overdue, and none of the Issuer, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the
contrary.
(v) All Notes issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Notes surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee or the Issuer.
(i) The Trustee and the Issuer shall have no
responsibility or obligation to any beneficial owner of a Global Note,
a member of, or a participant in the Depositary or other Person with
respect to the accuracy of the records of the Depositary or its
nominee or of any participant or member thereof, with respect to any
ownership interest in the Notes or with respect to the delivery to any
participant, member, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Notes. All
notices and communications to be given to the Holders and all payments
to be made to Holders under the Notes shall be given or made only to
or upon the order of the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Note). The rights
of beneficial owners in any Global Note shall be exercised only
through the Depositary subject to the applicable rules and procedures
of the Depositary. The Trustee and the Issuer may rely and shall be
fully protected in relying upon information furnished by the
Depositary with respect to its members, participants and any
beneficial owners.
(ii) The Trustee and the Issuer 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 Note (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Note) other
than to require delivery of such certificates and other documentation
or evidence as are expressly 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.
2.4 Certificated Notes.
(a) A Global Note deposited with the Depositary or with
the Trustee as custodian for the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated Notes
in an aggregate principal amount at maturity equal to the principal amount at
maturity of such Global Note, in exchange for such Global Note, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies the Issuer
that it is unwilling or unable to continue as Depositary for such Global Note
or if at any time such Depositary ceases to be a "clearing agency" registered
under the Exchange Act and a successor depositary is not appointed by the
Issuer within 90 days of such notice, or (ii) an
<PAGE> 74
8
Event of Default has occurred and is continuing or (iii) the Issuer, in its
sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of certificated Notes under this Indenture.
(b) Any Global Note that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Note, an equal aggregate principal
amount at maturity of certificated Initial Notes of authorized denominations.
Any portion of a Global Note transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depositary shall
direct. Any certificated Initial Note delivered in exchange for an interest in
the Global Note shall, except as otherwise provided by Section 2.3(d), bear the
restricted securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Note may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.
(d) In the event of the occurrence of any of the events
specified in Section 2.4(a), the Issuer will promptly make available to the
Trustee a reasonable supply of certificated Notes in definitive, fully
registered form without interest coupons.
<PAGE> 75
EXHIBIT 1
TO RULE 144A/REGULATION S
APPENDIX
[FORM OF FACE OF INITIAL NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS 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.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEES, AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER, THAT (A)
THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I)
INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT
<PAGE> 76
2
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF
THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
[Original Issue Discount Legend]
THIS NOTE WAS 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 NOTE IS 55.497% OF ITS PRINCIPAL
AMOUNT AT MATURITY, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $445.03 PER $1,000
OF PRINCIPAL AMOUNT AT MATURITY, THE ISSUE DATE IS JUNE 26, 1998 AND THE YIELD
TO MATURITY IS 12%.
<PAGE> 77
3
SPECTRASITE HOLDINGS, INC.
No. Principal Amount $
-- -------------
CUSIP NO.
------- --
12% Senior Discount Note Due 2008
SpectraSite Holdings, Inc., a Delaware corporation, promises
to pay to __________, or registered assigns, the principal sum of
________________________ Dollars on July 15, 2008.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
Additional provisions of this Note are set forth on the other
side of this Note.
Dated: SPECTRASITE HOLDINGS, INC.
By:
----------------------------------
By:
----------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Notes
referred to in the Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By:
--------------------------
Authorized Signatory
<PAGE> 78
[FORM OF REVERSE SIDE OF INITIAL NOTE]
(Reverse of Note)
12% Senior Discount Note Due 2008
1. Interest
SpectraSite Holdings, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Issuer"), promises to pay interest on the
principal amount of this Note at the rate per annum shown above; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional cash interest will accrue on this Note at a rate
of 0.50% per annum from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration
Defaults have been cured, calculated on the Accreted Value of this Note as of
the date on which such interest is payable; provided, however, that in no event
shall the aggregate amount of such additional interest exceed 0.50% per annum.
Such interest is payable in addition to any other interest payable from time to
time with respect to this Note. The Trustee will not be deemed to have notice
of a Registration Default until it shall have received actual notice of such
Registration Default.
Until July 15, 2003, the Notes will accrue at a rate of 12%
per annum and be compounded semi-annually on each Semi-Annual Accrual Date with
respect to the Notes, but, except as described herein, will not be payable in
cash. Interest on the Accreted Value of each Note as of July 15, 2003 will
accrue at the same rate but will be paid semi-annually commencing January 15,
2004, to Holders of record at the close of business on the January 1 or July 1
immediately preceding the interest payment date of January 15 and July 15 of
each year. The Issuer shall pay interest on overdue principal at 1% per annum
in excess of the rate borne by the Notes to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
By at least 11:00 a.m. (New York City time) on the date on
which any principal of or interest on any Note is due and payable, the Issuer
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal and/or interest. The Issuer will pay interest (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the January 1 or July 1 next preceding the interest
payment date even if Notes are cancelled, repurchased or redeemed after the
record date and on or before the interest payment date. Holders must surrender
Notes to a Paying Agent to collect principal payments. The Issuer will pay
principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. However, the
Issuer may pay principal and interest by check payable in such money. It may
mail an interest check to a Holder's registered address.
<PAGE> 79
2
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a national
banking association (the "Trustee"), will act as Paying Agent and Registrar.
The Issuer may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Noteholder. The Issuer or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent.
4. Indenture
The Issuer issued the Notes under an Indenture dated as of
June 26, 1998 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), between the Issuer and the
Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of
the Indenture (the "TIA"). Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture. The Notes are
subject to all such terms, and Noteholders are referred to the Indenture and
the TIA for a statement of those terms.
The Notes are unsecured senior obligations of the Issuer
limited to $225,238,000 aggregate principal amount at maturity (subject to
Section 2.7 of the Indenture), all of which are being offered on the Issue Date
This Note is one of the Initial Notes referred to in the
Indenture. The Notes include the Initial Notes and any Private Exchange Notes
and Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes, the
Private Exchange Notes and the Exchange Notes are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on
the Incurrence of Indebtedness by the Issuer and its Restricted Subsidiaries,
the payment of dividends and other distributions on the Capital Stock of the
Issuer and its Restricted Subsidiaries, the purchase or redemption of Capital
Stock of the Issuer and Capital Stock of such Restricted Subsidiaries, certain
purchases or redemptions of Subordinated Obligations, the sale or transfer of
assets and Capital Stock of Restricted Subsidiaries, the issuance or sale of
Capital Stock of Restricted Subsidiaries, the investments of the Issuer and its
Subsidiaries and transactions with Affiliates. In addition, the Indenture
limits the ability of the Issuer and its Restricted Subsidiaries to restrict
distributions and dividends from Restricted Subsidiaries.
5. Optional Redemption
Except as set forth in the following paragraph, the Notes will
not be redeemable at the option of the Issuer prior to July 15, 2003.
Thereafter, the Notes will be redeemable, at the Issuer's option, in whole or
in part, at any time or from time to time, upon
<PAGE> 80
3
not less than 30 nor more than 60 days' prior notice mailed by first-class mail
to each Holder's registered address, at the following redemption prices
(expressed as a percentage of the Accreted Value), plus accrued and unpaid
interest, if any, on such Accreted Value to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing on July 15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
----------
<S> <C>
2003 . . . . . . . . . . . . . . . . . . . . . . . . . 106.000%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . 104.000%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . 102.000%
2006 and thereafter . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
In addition, at any time and from time to time prior to July
15, 2001, the Issuer may redeem in the aggregate up to 25% of the aggregate
principal amount at maturity of the Notes with the proceeds of one or more
Equity Offerings, at a redemption price (expressed as a percentage of the
Accreted Value thereof) of 112% plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least 75% of the aggregate principal amount at
maturity of the Notes must remain outstanding after each such redemption
(excluding Notes held by the Issuer or any of its Subsidiaries); provided
further, that such redemption shall occur within 60 days of the date of closing
of such Equity Offering.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date by first-class mail to each Holder
of Notes to be redeemed at his registered address. Notes in denominations of
principal amount larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest on all Notes (or portions thereof) to be redeemed
on the redemption date is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after such
date interest ceases to accrue on such Notes (or such portions thereof) called
for redemption.
<PAGE> 81
4
7. Put Provisions
Upon a Change of Control, any Holder of Notes will have the
right to cause the Issuer to repurchase all or any part of the Notes of such
Holder at a repurchase price equal to 101% of the Accreted Value thereof as of
the date of repurchase, plus accrued and unpaid interest, if any, to the date
of repurchase as provided in, and subject to the terms of, the Indenture.
8. Registration Rights
The Issuer is party to a Registration Rights Agreement, dated
as of June 26, 1998, among the Issuer, Credit Suisse First Boston Corporation,
Lehman Brothers Inc. and CIBC Oppenheimer Corp. pursuant to which it is
obligated to pay Additional Interest (as defined therein) upon the occurrence
of certain Registration Defaults (as defined therein).
9. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may register, transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange (i) any Notes selected for redemption (except, in
the case of a Note to be redeemed in part, the portion of the Note not to be
redeemed) for a period beginning 15 business days before a selection of Notes
to be redeemed and ending on the date of such selection or (ii) any Notes for a
period beginning 15 business days before an interest payment date and ending on
such interest payment date.
10. Persons Deemed Owners
The registered holder of this Note may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for one year after the date of payment of principal and interest, the
Trustee or Paying Agent shall pay the money back to the Issuer at its request
unless an abandoned property law designates another Person. After any such
payment, Holders entitled to the money must look only to the Issuer and not to
the Trustee for payment.
<PAGE> 82
5
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Issuer at any time may terminate some or all of its obligations under the Notes
and the Indenture if the Issuer deposits with the Trustee money or U.S.
Government Obligations for the payment of principal of and interest on the
Notes to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Notes may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity of the
outstanding Notes and (ii) any default or noncompliance with any provision may
be waived with the written consent of the Holders of a majority in principal
amount at maturity of the outstanding Notes. Subject to certain exceptions set
forth in the Indenture, without the consent of any Noteholder, the Issuer and
the Trustee may amend the Indenture or the Notes to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the
Indenture, or to provide for uncertificated Notes in addition to or in place of
certificated Notes, or to add guarantees with respect to the Notes or to secure
the Notes, or to add additional covenants of or surrender rights and powers
conferred on the Issuer, or to make any change that does not materially and
adversely affect the rights of any Noteholder, or to comply with any request of
the SEC in connection with qualifying the Indenture under the Act.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) a default
in any payment of interest on any Note when due, continued for 30 days, (ii) a
default in the payment of principal of any Note when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (iii) the failure by the Issuer to comply with its obligations
under Article V of the Indenture, (iv) the failure by the Issuer to comply for
30 days after notice with any of its obligations under the covenants described
under Section 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11 or 4.12 of the
Indenture (in each case, other than a failure to purchase Notes), (v) the
failure by the Issuer to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) the failure by the Issuer or any
Significant Subsidiary of the Issuer to pay any Indebtedness within any
applicable grace period after final maturity or the acceleration of any such
Indebtedness by the holders thereof because of a default if the total amount of
such Indebtedness unpaid or accelerated exceeds $5.0 million or its foreign
currency equivalent, (vii) certain events of bankruptcy, insolvency or
reorganization of the Issuer or any Significant Subsidiary of the Issuer,
(viii) any final judgment or decree for the payment of money in excess of $5.0
million (net of any amounts with respect to which a creditworthy insurance
company has acknowledged full liability (subject to any deductible amounts of
less than $5.0 million required to be paid by the Issuer or the Significant
Subsidiary of the Issuer in accordance with the applicable insurance policy))
is rendered against the Issuer or any Significant Subsidiary of the Issuer
<PAGE> 83
6
and either (A) an enforcement proceeding has been commenced by any creditor
upon such judgment or decree or (B) such judgment or decree remains unpaid and
outstanding for a period of 60 days following such judgment and is not
discharged, waived or stayed within 10 days after notice, or (ix) the failure
of the Series B Investors to have purchased 2,750,000 shares of the Series B
Preferred Stock for an aggregate purchase price of $11.0 million by April 1,
1999. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes may declare
all the Notes to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Notes being due
and payable immediately upon the occurrence of such Events of Default.
Noteholders may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Noteholders notice of any continuing Default or Event of Default
(except a Default or Event of Default in payment of principal or interest) if
it determines that withholding notice is not opposed to their interest.
15. Trustee Dealings with the Issuer
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with and collect
obligations owed to it by the Issuer or its Affiliates and may otherwise deal
with the Issuer or its Affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
No director, officer, employee, incorporator or stockholder of
the Issuer, as such, shall have any liability for any obligations of the Issuer
under the Notes, the Indenture or for any claim based on, in respect of, or by
reason of such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. This waiver and
release are part of the consideration for issuance of the Notes.
17. Authentication
This Note shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Note.
18. Abbreviations
<PAGE> 84
7
Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Issuer has caused CUSIP numbers
to be printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Noteholders. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. GOVERNING LAW
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Issuer will furnish to any Noteholder upon written request
and without charge to the Noteholder a copy of the Indenture which has in it
the text of this Note in larger type. Requests may be made to: SpectraSite
Holdings, Inc., 8000 Regency Parkway, Suite 570, Cary, North Carolina 27511,
Attention: Chief Financial Officer.
<PAGE> 85
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
--------------------------------------
--------------------------------------
--------------------------------------
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on
the books of the Issuer. The agent may substitute another to act for
him.
- --------------------------------------------------------------------------------
Date: Your Signature:
-------------------- -------------------
Sign exactly as your name appears on
the other side of this Note.
Signature Guarantee:
------------------------------
(Signature must be guaranteed by a participant in a recognized Signature
Guarantee Medallion Program or other signature guarantor program reasonably
acceptable to the Trustee)
In connection with any transfer or exchange of any of the Notes evidenced by
this certificate occurring prior to the date that is two years after the later
of the date of original issuance of such Notes and the last date, if any, on
which such Notes were owned by the Issuer or any Affiliate of the Issuer, the
undersigned confirms that such Notes are being transferred:
CHECK ONE BOX BELOW:
(1)[ ] to the Issuer; or
(2)[ ] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3)[ ] inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933)
that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that
<PAGE> 86
2
such transfer is being made in reliance on Rule 144A, in each
case pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(4)[ ] outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933; or
(5)[ ] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than
the registered holder thereof; provided, however, that if box (4) or (5) is
checked, the Trustee may require, prior to registering any such transfer of the
Notes, such legal opinions, certifications and other information as the Issuer
has reasonably requested to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended, such as the exemption
provided by Rule 144 under such Act.
Date: Your Signature:
-------------------- -------------------
Sign exactly as your name appears on
the other side of this Note.
Signature Guarantee:
------------------------------
(Signature must be guaranteed by a participant in a recognized Signature
Guarantee Medallion Program or other signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 87
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Issuer as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
---------------- ------------------------------
NOTICE: To be executed by
an executive officer
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuer pursuant to
Section 4.7 or 4.9 of the Indenture, check the appropriate box:
Section 4.7 [ ]
Section 4.9 [ ]
If you want to elect to have only part of this Note purchased by the Issuer
pursuant to Section 4.7 or 4.9 of the Indenture, state the amount you elect to
have purchased (must be integral multiple of $1,000): $
<PAGE> 88
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease in Amount of increase in Principal Amount at Signature of
Exchange Principal Amount at Principal Amount at Maturity of this authorized officer of
Maturity of this Maturity of this Global Note following Trustee or Notes
Global Note Global Note such decrease or Custodian
increase
</TABLE>
<PAGE> 89
EXHIBIT A
[FORM OF FACE OF EXCHANGE NOTE [OR PRIVATE
EXCHANGE NOTE]]
*/
**/
***/
SPECTRASITE HOLDINGS, INC.
No. Principal Amount $
-- -------------
CUSIP NO.
---------
12% Senior Discount Note Due 2008
SpectraSite Holdings, Inc., a Delaware corporation, promises
to pay to __________, or registered assigns, the principal sum of
________________________ Dollars on July 15, 2008.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
Additional provisions of this Note are set forth on the other
side of this Note.
Dated: SPECTRASITE HOLDINGS, INC.
By:
----------------------------------
By:
----------------------------------
- ----------------------------
*/ [If the Security is to be issued in global form add the Global
Securities Legend from Exhibit 1 to Appendix A and the attachment from
such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] -
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".]
**/ [If the Security is a Private Exchange Security issued in a Private
Exchange to an Initial Purchaser holding an unsold portion of its
initial allotment, add the Restricted Securities Legend from Exhibit 1
to Appendix A and replace the Assignment Form included in such Exhibit
1.]
***/ [Add the Original Issue Discount Legend from Exhibit 1 to Appendix A.]
<PAGE> 90
2
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Notes
referred to in the Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By:
--------------------------
Authorized Signatory
<PAGE> 91
3
[FORM OF REVERSE SIDE OF EXCHANGE NOTE [OR
PRIVATE EXCHANGE NOTE]]
12% Senior Discount Note Due 2008
1. Interest
SpectraSite Holdings, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Issuer"), promises to pay interest on the
principal amount of this Note at the rate per annum shown above[; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional cash interest will accrue on this Note at a rate
of 0.50% per annum from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration
Defaults have been cured, calculated on the Accreted Value of this Note as of
the date on which such interest is payable; provided, however, that in no event
shall the aggregate amount of such additional interest exceed 0.50% per annum.
Such interest is payable in addition to any other interest payable from time to
time with respect to this Note. The Trustee will not be deemed to have notice
of a Registration Default until it shall have received actual notice of such
Registration Default].****/
Until July 15, 2003, the Notes will accrue at a rate of 12%
per annum and be compounded semi-annually on each Semi-Annual Accrual Date with
respect to the Notes, but, except as described herein, will not be payable in
cash. Interest on the Accreted Value of each Note as of July 15, 2003 will
accrue at the same rate but will be paid semi-annually commencing January 15,
2004, to Holders of record at the close of business on the January 1 or July 15
immediately preceding the interest payment date of January 15 and July 15 of
each year. The Issuer shall pay interest on overdue principal at 1% per annum
in excess of the rate borne by the Notes to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
By at least 11:00 a.m. (New York City time) on the date on
which any principal of or interest on any Note is due and payable, the Issuer
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal and/or interest. The Issuer will pay interest (except
defaulted interest) to the Persons who are registered
- -----------------------------
****/ Insert if at the time of issuance of the Exchange Security or Private
Exchange Security (as the case may be) neither the Registered Exchange
Offer has been consummated nor a Shelf Registration Statement has been
declared effective in accordance with the Registration Rights
Agreement.
<PAGE> 92
4
Holders of Notes at the close of business on the January 1 or July 1
next preceding the interest payment date even if Notes are cancelled,
repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Notes to a Paying Agent
to collect principal payments. The Issuer will pay principal and
interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the
Issuer may pay principal and interest by check payable in such money.
It may mail an interest check to a Holder's registered address.
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a national
banking association (the "Trustee"), will act as Paying Agent and Registrar.
The Issuer may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Noteholder. The Issuer or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent.
4. Indenture
The Issuer issued the Notes under an Indenture dated as of
June 26, 1998 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), between the Issuer and the
Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of
the Indenture (the "TIA"). Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture. The Notes are
subject to all such terms, and Noteholders are referred to the Indenture and
the TIA for a statement of those terms.
The Notes are unsecured senior obligations of the Issuer
limited to $225,238,000 aggregate principal amount at maturity (subject to
Section 2.7 of the Indenture), all of which are being offered on the Issue
Date.
This Note is one of the Exchange Notes referred to in the
Indenture. The Notes include the Initial Notes and any Private Exchange Notes
and Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes, the
Private Exchange Notes and the Exchange Notes are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on
the Incurrence of Indebtedness by the Issuer and its Restricted Subsidiaries,
the payment of dividends and other distributions on the Capital Stock of the
Issuer and its Restricted Subsidiaries, the purchase or redemption of Capital
Stock of the Issuer and Capital Stock of such Restricted Subsidiaries, certain
purchases or redemptions of Subordinated Obligations, the sale or transfer of
assets and Capital Stock of Restricted Subsidiaries, the issuance or sale of
Capital Stock of Restricted Subsidiaries, the investments of the Issuer and its
Subsidiaries and transactions with Affiliates. In addition, the Indenture
limits the ability of
<PAGE> 93
5
the Issuer and its Restricted Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
5. Optional Redemption
Except as set forth in the following paragraph, the Notes will
not be redeemable at the option of the Issuer prior to July 15, 2003.
Thereafter, the Notes will be redeemable, at the Issuer's option, in whole or
in part, at any time or from time to time, upon not less than 30 nor more than
60 days' prior notice mailed by first-class mail to each Holder's registered
address, at the following redemption prices (expressed as a percentage of the
Accreted Value), plus accrued and unpaid interest, if any, on such Accreted
Value to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on July 15 of the
years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
----------
<S> <C>
2003 . . . . . . . . . . . . . . . . . . . . . . . . . 106.000%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . 104.000%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . 102.000%
2006 and thereafter . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
In addition, at any time and from time to time prior to July
15, 2001, the Issuer may redeem in the aggregate up to 25% of the aggregate
principal amount at maturity of the Notes with the proceeds of one or more
Equity Offerings, at a redemption price (expressed as a percentage of the
Accreted Value thereof) of 112% plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least 75% of the aggregate principal amount at
maturity of the Notes must remain outstanding after each such redemption
(excluding Notes held by the Issuer or any of its Subsidiaries); provided
further, that such redemption shall occur within 60 days of the date of closing
of such Equity Offering.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date by first-class mail to each Holder
of Notes to be redeemed at his registered address. Notes in denominations of
principal amount larger than $1,000 may be
<PAGE> 94
6
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued and unpaid interest on all Notes (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Notes (or
such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Notes will have the
right to cause the Issuer to repurchase all or any part of the Notes of such
Holder at a repurchase price equal to 101% of the Accreted Value thereof as of
the date of repurchase, plus accrued and unpaid interest, if any, to the date
of repurchase as provided in, and subject to the terms of, the Indenture.
8. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may register transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange (i) any Notes selected for redemption (except, in
the case of a Note to be redeemed in part, the portion of the Note not to be
redeemed) for a period beginning 15 business days before a selection of Notes
to be redeemed and ending on the date of such selection or (ii) any Notes for a
period beginning 15 business days before an interest payment date and ending on
such interest payment date.
9. Persons Deemed Owners
The registered holder of this Note may be treated as the owner
of it for all purposes.
10. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for one year after the date of payment of principal and interest, the
Trustee or Paying Agent shall pay the money back to the Issuer at its request
unless an abandoned property law designates another Person. After any such
payment, Holders entitled to the money must look only to the Issuer and not to
the Trustee for payment.
<PAGE> 95
7
11. Defeasance
Subject to certain conditions set forth in the Indenture, the
Issuer at any time may terminate some or all of its obligations under the Notes
and the Indenture if the Issuer deposits with the Trustee money or U.S.
Government Obligations for the payment of principal of and interest on the
Notes to redemption or maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Notes may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity of the
outstanding Notes and (ii) any default or noncompliance with any provision may
be waived with the written consent of the Holders of a majority in principal
amount at maturity of the outstanding Notes. Subject to certain exceptions set
forth in the Indenture, without the consent of any Noteholder, the Issuer and
the Trustee may amend the Indenture or the Notes to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the
Indenture, or to provide for uncertificated Notes in addition to or in place of
certificated Notes, or to add guarantees with respect to the Notes or to secure
the Notes, or to add additional covenants of or surrender rights and powers
conferred on the Issuer, or to make any change that does not materially and
adversely affect the rights of any Noteholder, or to comply with any request of
the SEC in connection with qualifying the Indenture under the Act.
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) a default
in any payment of interest on any Note when due, continued for 30 days, (ii) a
default in the payment of principal of any Note when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (iii) the failure by the Issuer to comply with its obligations
under Article V of the Indenture, (iv) the failure by the Issuer to comply for
30 days after notice with any of its obligations under the covenants described
under Section 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11 or 4.12 of the
Indenture (in each case, other than a failure to purchase Notes), (v) the
failure by the Issuer to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) the failure by the Issuer or any
Significant Subsidiary of the Issuer to pay any Indebtedness within any
applicable grace period after final maturity or the acceleration of any such
Indebtedness by the holders thereof because of a default if the total amount of
such Indebtedness unpaid or accelerated exceeds $5.0 million or its foreign
currency equivalent, (vii) certain events of bankruptcy, insolvency or
reorganization of the Issuer or any Significant Subsidiary of the Issuer,
(viii) any final judgment or decree for the payment of money in excess of $5.0
million (net of any amounts with respect to which a creditworthy insurance
company has acknowledged full liability (subject to any deductible amounts of
less than $5.0 million required to be paid by the Issuer or the Significant
Subsidiary of the Issuer in accordance with the applicable insurance policy))
is rendered against the Issuer or any Significant Subsidiary of the Issuer
<PAGE> 96
8
and either (A) an enforcement proceeding has been commenced by any creditor
upon such judgment or decree or (B) such judgment or decree remains unpaid and
outstanding for a period of 60 days following such judgment and is not
discharged, waived or stayed within 10 days after notice, or (ix) the failure
of the Series B Investors to have purchased 2,750,000 shares of the Series B
Preferred Stock for an aggregate purchase price of $11.0 million by April 1,
1999. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes may declare
all the Notes to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Notes being due
and payable immediately upon the occurrence of such Events of Default.
Noteholders may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Noteholders notice of any continuing Default or Event of Default
(except a Default or Event of Default in payment of Principal or interest) if
it determines that withholding notice is not opposed to their interest.
14. Trustee Dealings with the Issuer
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with and collect
obligations owed to it by the Issuer or its Affiliates and may otherwise deal
with the Issuer or its Affiliates with the same rights it would have if it were
not Trustee.
15. No Recourse Against Others
No director, officer, employee, incorporator or stockholder of
the Issuer, as such, shall have any liability for any obligations of the Issuer
under the Notes, the Indenture or for any claim based on, in respect of, or by
reason of such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. This waiver and
release are part of the consideration for issuance of the Notes.
16. Authentication
This Note shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Note.
17. Abbreviations
<PAGE> 97
9
Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
18. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Issuer has caused CUSIP numbers
to be printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Noteholders. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. GOVERNING LAW
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Issuer will furnish to any Noteholder upon written request
and without charge to the Noteholder a copy of the Indenture which has in it
the text of this Note in larger type. Requests may be made to: SpectraSite
Holdings, Inc., 8000 Regency Parkway, Suite 570, Cary, North Carolina 27511,
Attention: Chief Financial Officer.
<PAGE> 98
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on
the books of the Issuer. The agent may substitute another to act for
him.
- --------------------------------------------------------------------------------
Date: Your Signature:
-------------------- -------------------
Sign exactly as your
name appears on the
other side of this Note.
Signature Guarantee:
------------------------------
(Signature must be guaranteed by a participant in a recognized Signature
Guarantee Medallion Program or other signature guarantor program reasonably
acceptable to the Trustee)
- --------------------------------------------------------------------------------
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuer
pursuant to Section 4.7 or 4.9 of the Indenture, check the appropriate box:
Section 4.7 [ ]
Section 4.9 [ ]
If you want to elect to have only part of this Note purchased
by the Issuer pursuant to Section 4.7 or 4.9 of the Indenture, state the amount
you elect to have purchased (must be integral multiple of $1,000): $
<PAGE> 1
EXHIBIT 10.1
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
by and among
INTEGRATED SITE DEVELOPMENT, INC.
U.S. TOWERS, INC.,
TELESITE SERVICES, LLC,
METROSITE MANAGEMENT, LLC,
WHITNEY EQUITY PARTNERS, L.P.,
and
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III
--------------------------------
Dated as of May 12, 1997
--------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 DEFINITIONS........................................................................................2
1.1 Definitions........................................................................................2
1.2 Accounting Terms: Financial Statements............................................................10
1.3 Knowledge of the Companies........................................................................10
ARTICLE 2 PURCHASE AND SALE OF THE PREFERRED STOCK..........................................................10
2.1 Purchase and Sale of the WEP Shares and the Kitty Hawk Shares.....................................10
2.2 Purchase of the Option Shares.....................................................................11
2.3 Closings..........................................................................................12
2.4 Financial Accounting Positions; Tax Reporting.....................................................12
2.5 Fees and Expenses; Monthly Fees...................................................................13
ARTICLE 3 CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE THE WEP SHARES...........................................................................14
3.1 Representations and Warranties....................................................................14
3.2 Compliance with this Agreement....................................................................14
3.3 Compliance with the UST Agreements; No Defaults...................................................14
3.4 Compliance with Telesite Agreement; No Defaults. .................................................14
3.5 Secretary's Certificates..........................................................................15
3.6 Documents.........................................................................................15
3.7 Purchase of Securities and ISD Exchange Permitted by Applicable Laws..............................15
3.8 Opinions of Counsel...............................................................................15
3.9 Approval of Counsel to the Purchaser..............................................................15
3.10 Consents and Approvals............................................................................16
3.11 Release and Settlement Agreement..................................................................16
3.12 Clark Non-Competition and Confidentiality Agreement...............................................16
3.13 Finley Employment Agreement.......................................................................16
3.16 Registration Rights Agreement.....................................................................16
3.17 Stockholders' Agreement...........................................................................16
3.20 Certificate of Incorporation and By-laws..........................................................17
3.21 No Material Judgment or Order.....................................................................17
3.22 ISD Exchange......................................................................................17
3.24 Boatman's Commitment..............................................................................17
3.25 Pro Forma Balance Sheet...........................................................................17
3.26 Good Standing Certificates........................................................................17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 3A CONDITION TO THE OBLIGATIONS OF THE PURCHASERS TO
PURCHASE THE OPTION SHARES UPON EXERCISE OF THE WEP
OPTION............................................................................................18
3A.1 No Material Adverse Effect. ......................................................................18
3A.2 Representations and Warranties....................................................................18
3A.3 Compliance with this Agreement; No Defaults.......................................................18
3A.4 Compliance with UST Agreements, Stock Restriction Agreement and
Employment Agreements; No Defaults................................................................18
3A.5 No Material Judgment or Order.....................................................................18
3A.6 Pro Forma Balance Sheet...........................................................................19
3A.7 Opinions of Counsel...............................................................................19
3A.9 Consents and Approvals............................................................................19
ARTICLE 4 CONDITIONS TO THE OBLIGATIONS OF THE HOLDING COMPANY
TO ISSUE AND SELL THE WEP SHARES..................................................................19
4.1 Representations and Warranties....................................................................20
4.2 Compliance with this Agreement....................................................................20
4.3 ISD Exchange. ....................................................................................20
ARTICLE 4A CONDITIONS TO THE OBLIGATIONS OF THE HOLDING COMPANY
TO ISSUE AND SELL THE OPTION SHARES...............................................................20
4A.1 Representations and Warranties....................................................................20
4A.2 Compliance with this Agreement....................................................................20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANIES...................................................20
5.1 Existence and Power...............................................................................20
5.2 Authorization; No Contravention...................................................................21
5.3 Governmental Authorization; Third Party Consents..................................................21
5.4 Binding Effect....................................................................................21
5.5 No Legal Bar......................................................................................21
5.6 Litigation........................................................................................21
5.7 Compliance with Laws..............................................................................22
5.8 No Default or Breach..............................................................................22
5.9 Title to Properties...............................................................................22
5.10 Use of Real Property..............................................................................22
5.11 Taxes.............................................................................................22
5.12 Financial Condition...............................................................................23
5.13 ERISA.............................................................................................23
5.14 Disclosure........................................................................................24
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
5.15 Absence of Certain Changes or Events..............................................................24
5.16 Environmental Matters.............................................................................24
5.17 Investment Company/Government Regulations.........................................................25
5.18 Subsidiaries......................................................................................25
5.19 Capitalization....................................................................................26
5.20 Private Offering..................................................................................27
5.21 Broker's, Finder's or Similar Fees................................................................27
5.22 Labor Relations...................................................................................27
5.23 Employee Benefit Plans............................................................................27
5.24 Patents, Trademarks, Etc..........................................................................28
5.25 Potential Conflicts of Interest...................................................................29
5.26 Trade Relations...................................................................................29
5.27 Outstanding Borrowings............................................................................29
5.28 Material Contracts................................................................................29
5.29 Insurance.........................................................................................30
5.30 Solvency..........................................................................................30
5.31 Other Documents...................................................................................30
5.32 Exchange Transaction Documents....................................................................30
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................................................30
6.1 Authorization; No Contravention...................................................................30
6.2 Binding Effect....................................................................................31
6.3 No Legal Bar......................................................................................31
6.4 Experience........................................................................................31
6.5 Purchase for Own Account..........................................................................31
6.6 Exemption.........................................................................................31
6.7 Accredited Investor...............................................................................32
6.8 No Public Market..................................................................................32
6.9 ERISA.............................................................................................32
6.10 Broker's, Finder's or Similar Fees................................................................32
6.11 Governmental Authorization; Third Party Consent...................................................32
ARTICLE 7 INDEMNIFICATION...................................................................................32
7.1 Indemnification...................................................................................32
7.2 Notification......................................................................................33
7.3 Limitations on Indemnification....................................................................34
7.4 Registration Rights Agreement.....................................................................34
ARTICLE 8 AFFIRMATIVE COVENANTS.............................................................................35
8.1 Financial Statements and Other Information........................................................35
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
8.2 Preservation of Corporate Existence...............................................................38
8.3 Payment of Obligations............................................................................38
8.4 Compliance with Laws..............................................................................39
8.5 Filing of Second Certificate of Amendment; Reservation of Shares..................................39
8.6 Inspection........................................................................................39
8.7 Maintenance of Properties; Insurance..............................................................39
8.8 Books and Records.................................................................................40
8.9 Use of Proceeds...................................................................................40
8.10 Board Nominees....................................................................................40
8.11 Granting of Options...............................................................................41
8.12 Business Activities...............................................................................41
8.13 Key-Man Life Insurance............................................................................41
ARTICLE 9 MISCELLANEOUS.....................................................................................42
9.1 Survival of Representations and Warranties........................................................42
9.2 Notices...........................................................................................42
9.3 Successors and Assigns............................................................................43
9.4 Amendment and Waiver..............................................................................44
9.5 Signatures and Counterparts.......................................................................44
9.6 Headings..........................................................................................44
9.7 GOVERNING LAW.....................................................................................44
9.8 JURISDICTION......................................................................................44
9.9 Severability......................................................................................45
9.10 Rules of Construction.............................................................................45
9.11 Entire Agreement..................................................................................45
9.12 Certain Expenses..................................................................................45
9.13 Publicity.........................................................................................45
9.14 Further Assurances................................................................................46
9.15 Obligations of the Parties........................................................................46
</TABLE>
EXHIBITS
A-1 Certificate of Amendment
A-2 Second Certificate of Amendment
B Clark Non-Competition and Confidentiality Agreement
C-1 Escrow Agreement
C-2 Option Escrow Agreement
D Finley Employment Agreement
E Gill Employment Agreement
F Long Employment Agreement
G Registration Rights Agreement
H Release and Settlement Agreement
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<PAGE> 6
I Stockholders' Agreement
J Stock Restriction Agreement
K PCX Warrant
L Compliance Certificate
v
<PAGE> 7
STOCK PURCHASE AGREEMENT
AGREEMENT (the "AGREEMENT"), dated as of May 12, 1997, by and among
INTEGRATED SITE DEVELOPMENT, INC. (the "HOLDING COMPANY"), a Delaware
corporation, U.S. TOWERS, INC. ("UST"), a Delaware corporation, TELESITE
SERVICES, LLC ("TELESITE"), an Arkansas limited liability company, METROSITE
MANAGEMENT, LLC ("Metrosite"), an Arkansas limited liability company, WHITNEY
EQUITY PARTNERS, L.P. (the "WEP"), a Delaware limited partnership, and KITTY
HAWK CAPITAL LIMITED PARTNERSHIP, III ("KITTY HAWK"), a Delaware limited
partnership. The Holding Company, UST, Telesite and Metrosite shall sometimes
hereinafter be referred to individually, as a "Company" and collectively, as the
"COMPANIES." WEP and Kitty Hawk shall sometimes hereinafter be collectively
referred to as the "PURCHASERS."
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement (i) the stockholders of UST (the "UST STOCKHOLDERS") have agreed to
contribute all of the shares of common stock of UST to the Holding Company in
exchange for 850,000 shares of common stock, $0.001 par value per share, of the
Holding Company (the "COMMON STOCK") pursuant to the terms of a Stock
Contribution Agreement (the "UST EXCHANGE AGREEMENT"), dated as of the date
hereof, by and among the Holding Company, the UST Stockholders and UST; and the
holder (the "PCX WARRANT HOLDER") of a warrant (the "ORIGINAL PCX WARRANT") to
purchase 1,500 shares of common stock of UST has agreed to contribute such
warrant to the Holding Company in exchange for a warrant (the "PCX WARRANT"), in
the form of Exhibit K attached hereto, to purchase 150,000 shares of Common
Stock pursuant to the terms of the Original PCX Warrant; and (ii) the members
(the "MEMBERS") of Telesite have agreed to contribute all of the membership
interests in Telesite, and have agreed to cause the members of Metrosite to
transfer all of the membership interests in Metrosite, to the Holding Company in
exchange for, among other consideration, an aggregate of 490,517 shares of
Common Stock, pursuant to the terms of a Membership Interests Contribution
Agreement (together with the PCX Warrant, the "LLC EXCHANGE AGREEMENT" and
together with the UST Exchange Agreement, the "EXCHANGE AGREEMENTS"), dated as
of the date hereof, by and among the Holding Company, the Members, Caroline
Finley, Telesite and Metrosite (the transactions set forth in clauses (i) and
(ii) above are collectively referred to herein as the "ISD EXCHANGE");
WHEREAS, the Holding Company wishes to sell to WEP, and WEP wishes to
purchase from the Holding Company, 3,203,118 shares of its 8% Series A
Cumulative Convertible Redeemable Preferred Stock, $0.001 par value per share
(the "SERIES A PREFERRED STOCK"), for an aggregate purchase price of $9,250,000,
upon the terms and subject to the conditions hereinafter set forth;
WHEREAS, the Holding Company wishes to sell to Kitty Hawk, and Kitty
Hawk wishes to purchase from the Holding Company, 259,712 shares of Series A
Preferred Stock, for an aggregate purchase price of $750,000, upon the terms and
subject to the conditions hereinafter set forth;
<PAGE> 8
"AGREEMENT" shall mean this Agreement, including the exhibits and
schedules attached hereto, as the same may be amended, supplemented or modified
in accordance with the terms hereof.
"ARTICLES OF ORGANIZATION" shall mean the articles of organization of
each of Telesite, Metrosite and Communications Management, as in effect on the
First Closing Date, in each case the purpose of which is the formation of a
limited liability company under the applicable governing statute.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"BY-LAWS" shall mean the by-laws of each of the Holding Company and
UST as in effect on the First Closing Date.
"CERTIFICATE OF AMENDMENT" shall mean the certificate of amendment to
the certificate of incorporation of the Holding Company, which, among other
things, sets forth the terms, limitations and relative rights and preferences of
the Series A Preferred Stock, substantially in the form attached hereto as
Exhibit A-1.
"CERTIFICATES OF INCORPORATION" shall mean the certificate of
incorporation of each of the Holding Company (as amended by the Certificate of
Amendment) and UST, as in effect on the First Closing Date.
"CLARK NON-COMPETITION AND CONFIDENTIALITY AGREEMENT" shall mean the
Non- Competition and Confidentiality Agreement substantially in the form
attached hereto as Exhibit B.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"COMMISSION" shall mean the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"COMMON STOCK" shall have the meaning assigned to that term in the
first Whereas clause hereof, or any other capital stock of the Holding Company
into which such stock is reclassified or reconstituted.
"COMMUNICATIONS MANAGEMENT" shall mean Communications Management
Specialists, LLC, an Arkansas limited liability company.
"CONDITION OF THE COMPANIES" shall mean the assets, business,
properties, operations or financial condition of the Companies and their
Subsidiaries, taken as a whole.
3
<PAGE> 9
"CONTINGENT OBLIGATION" as applied to any Person, shall mean any
direct or indirect liability, contingent or otherwise, of that Person: (i) with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings; or (iii)
under any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co- making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATIONS" shall mean as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which such
Person is a party or by which it or any of its property is bound.
"DEFINED BENEFIT PLAN" shall mean a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, qualified or non-qualified (whether or not subject to ERISA or the
Code).
"EMPLOYMENT AGREEMENTS" shall mean the Clark Non-Competition and
Confidentiality Agreement, the Finley Employment Agreement, the Gill Employment
Agreement and the Long Employment Agreement.
"ENVIRONMENTAL LAWS" shall mean any Federal, state, territorial,
provincial or local law, common law doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters,
including those pertaining to land use, air, soil, surface water, ground water
(including the protection, cleanup, removal, remediation or damage thereof),
public or employee health or safety or any other environmental matter, together
with any other laws (Federal, state, territorial, provincial or local) relating
to emissions, discharges, releases or threatened releases of any pollutant or
contaminant including, without limitation, medical, chemical, biological,
biohazardous or radioactive waste and materials, into ambient air, land, surface
water, groundwater, personal property or structures, or otherwise relating to
the manufacture, processing, distribution,
4
<PAGE> 10
use, treatment, storage, disposal, transportation, discharge or handling of any
contaminant, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C.
1251 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), and
the Occupational Safety and Health Act (29 U.S.C. 651 et seq.), as such laws
have been, or are, amended, modified or supplemented heretofore or from time to
time hereafter and any analogous future Federal, or present or future state or
local laws, statutes and regulations promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any Person that is treated as a single
employer with any Company or any of its Subsidiaries under Section 414(b), (c),
(m) or (o) of the Code.
"ESCROW AGREEMENT" shall mean the Escrow Agreement, substantially in
the form attached hereto as Exhibit C-1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"EXCHANGE AGREEMENTS" shall have the meaning assigned to that term in
the first Whereas clause hereof.
"EXCHANGE TRANSACTION DOCUMENTS" shall mean the Exchange Agreements
and the agreements, instruments and other documents contemplated by or delivered
pursuant to the Exchange Agreements and shall include, without limitation, the
Release and Settlement Agreement and the Stock Restriction Agreement.
"EXERCISABLE SHARES" shall have the meaning assigned to that term in
Section 8.5 hereof.
"FINLEY EMPLOYMENT AGREEMENT" shall mean the Employment Agreement
substantially in the form attached hereto as Exhibit D.
"FIRST CLOSING" shall have the meaning assigned to that term in
Section 2.3 hereof.
"FIRST CLOSING DATE" shall have the meaning assigned to that term in
Section 2.3 hereof.
"GAAP" shall mean generally accepted accounting principles in effect
from time to time within the United States.
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<PAGE> 11
"GILL EMPLOYMENT AGREEMENT" shall mean the Employment Agreement
substantially in the form attached hereto as Exhibit E.
"GOVERNMENTAL AUTHORITY" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"HAZARDOUS MATERIALS" shall mean those substances which are regulated
by or form the basis of liability under any Environmental Laws.
"INDEBTEDNESS" shall mean as to any Person (a) all obligations of
such Person for borrowed money (including, without limitation, reimbursement and
all other obligations with respect to surety bonds, unfunded credit commitments,
letters of credit and bankers' acceptances, whether or not matured), (b) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and accrued
commercial or trade liabilities arising in the ordinary course of business, (d)
all interest rate and currency swaps, caps, collars and similar agreements or
hedging devices under which payments are obligated to be made by such Person,
whether periodically or upon the happening of a contingency, (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) any
Contingent Obligation of such Person.
"INITIAL PUBLIC OFFERING" shall mean the sale by any Company or any
of their Subsidiaries of their capital stock pursuant to a registration
statement on Form S-1 or other Form under the Securities Act.
"ISD EXCHANGE" shall have the meaning assigned to such term in the
first Whereas clause hereof.
"KITTY HAWK OPTION SHARES" shall have the meaning set forth in
Section 2.2 hereof.
"KITTY HAWK SHARES" shall have the meaning set forth in Section 2.1
hereof.
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or
6
<PAGE> 12
preferential arrangement of any kind or nature whatsoever (excluding preferred
stock and equity related preferences) including, without limitation, those
created by, arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a Capital Lease Obligation,
or any financing lease having substantially the same economic effect as any of
the foregoing.
"LLC EXCHANGE AGREEMENT"shall have the meaning assigned to such term
in the first Whereas clause hereof.
"LONG EMPLOYMENT AGREEMENT" shall mean the Employment Agreement
substantially in the form attached hereto as Exhibit F
"OPERATING AGREEMENTS" shall mean the operating agreement of each of
Telesite, Metrosite and Communications Management, as in effect on the First
Closing Date.
"OPTION ESCROW AGREEMENT" shall mean the Option Escrow Agreement,
substantially in the form attached hereto as Exhibit C-2.
"OPTION SHARES" shall have the meaning set forth in Section 2.2
hereof.
"OUTSTANDING BORROWINGS" shall mean all Indebtedness of the Companies
and their Subsidiaries for money borrowed that is outstanding at the relevant
time of determination.
"PCX" shall mean PCX Corporation, a Delaware corporation.
"PCX WARRANT" shall have the meaning assigned to that term in the
first Whereas clause hereof.
"PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, Governmental Authority or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"PLANS" shall have the meaning assigned to that term in Section 5.23
of this Agreement.
"PRO FORMA BALANCE SHEET" shall mean the pro forma consolidated
balance sheet of the Companies and their Subsidiaries delivered pursuant to
Articles 3 and Article 3A hereof.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement substantially in the form attached hereto as Exhibit G.
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<PAGE> 13
"RELEASE AND SETTLEMENT AGREEMENT" shall mean the Release and
Settlement Agreement, substantially in the form attached hereto as Exhibit H.
"REQUIREMENTS OF LAW" shall mean as to any Person, the Certificate of
Incorporation, Articles of Organization, By-laws and Operating Agreement or
other organizational or governing documents of such Person, and any law, treaty,
rule, regulation, right, privilege, qualification, license or franchise or
determination of an arbitrator or a court or other Governmental Authority
(including without limitation, the Federal Communications Act of 1934, as
amended, and the rules and regulations promulgated thereunder, and all Federal
and State securities laws, and the rules and regulations promulgated
thereunder), in each case applicable or binding upon such Person or any of its
property or to which such Person or any of its property is subject or pertaining
to any or all of the transactions contemplated or referred to herein.
"SECOND CERTIFICATE OF AMENDMENT" shall mean the certificate of
amendment to the certificate of incorporation of the Holding Company, which,
among other things, sets forth the terms, limitations and relative rights and
preferences of the Series B Preferred Stock, substantially in the form attached
hereto as Exhibit A-2.
"SECOND CLOSING" shall have the meaning assigned to that term in
Section 2.3 hereof.
"SECOND CLOSING DATE" shall have the meaning assigned to that term in
Section 2.2 hereof.
"SECURITIES" shall mean, collectively, the Shares and the WEP Option.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"SERIES A PREFERRED STOCK" shall have the meaning ascribed to such
term in the second Whereas clause.
"SERIES B PREFERRED STOCK" shall have the meaning ascribed to such
term in the fourth Whereas clause.
"SHARES" shall mean the WEP Shares, the Kitty Hawk Shares and the
Option Shares.
"SOLVENT" shall mean, with respect to the Companies and their
Subsidiaries considered as a whole, based on the Pro Forma Balance Sheet, (i)
the assets and the property of the Companies and their Subsidiaries, considered
as a whole, exceed the aggregate liabilities (including contingent and
unliquidated liabilities) of the Companies and their Subsidiaries, considered as
a whole, (ii) after giving effect to the transactions contemplated by this
Agreement, the Companies and their Subsidiaries, considered as a whole, will not
be left with unreasonably small capital, and (iii) after giving effect to the
transactions contemplated by this Agreement, the Companies and their
8
<PAGE> 14
Subsidiaries, considered as a whole, are able to both service and pay their
liabilities as they mature. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed as the
amount that, in light of all the facts and circumstances existing at such time,
represents the amount that is likely to become an actual or matured liability.
"SPRINT AGREEMENT" shall mean the Master Sublease Agreement, dated as
of January 19, 1997, between UST and Sprint Spectrum, L.P.
"STOCKHOLDERS' AGREEMENT" shall mean the Stockholders Agreement,
substantially in the form attached hereto as Exhibit I.
"STOCK OPTIONS" shall have the meaning assigned to that term in
Section 5.19 of this Agreement.
"STOCK RESTRICTION AGREEMENT" shall mean the Stock Restriction
Agreement, substantially in the form attached hereto as Exhibit J.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation or
other entity (i) of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Companies or (ii) with respect to which such Person, directly or indirectly,
has the power to elect a majority of the board of directors or similar governing
body, or otherwise direct the management and/or operations thereof.
"TELESITE AGREEMENT" shall mean the letter agreement, dated March 27,
1997, between Whitney and Telesite.
"TRANSACTION DOCUMENTS" shall mean collectively, this Agreement, the
Registration Rights Agreement, the Stockholders' Agreement, the Certificates of
Incorporation, Articles of Organization, the Certificate of Amendment, the
Second Certificate of Amendment, the By-laws and the Operating Agreements.
"UST AGREEMENTS" shall mean the Sprint Agreement and the Wal-Mart
Agreement.
"WAL-MART AGREEMENT" shall mean the Master Lease Agreement (Multiple
Sites), dated as of January 10, 1997, between UST, Wal-Mart Stores, Inc. and
Wal-Mart Real Estate Business Trust.
"WEP OPTION" shall mean the option granted to WEP to purchase, and to
have Kitty Hawk purchase, the Option Shares as set forth in Section 2.2 hereof.
"WEP OPTION SHARES" shall have the meaning set forth in Section 2.2
hereof.
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<PAGE> 15
"WEP SHARES" shall have the meaning set forth in Section 2.1 hereof.
"WHITNEY" shall mean J.H. Whitney & Co.
1.2 ACCOUNTING TERMS: FINANCIAL STATEMENTS. For purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to such terms in conformity with GAAP. Financial statements
and other information furnished to Purchasers pursuant to this Agreement shall
be prepared in accordance with GAAP as in effect at the time of such
preparation. No Accounting Changes (as defined below) shall affect any financial
covenants, standards or terms in this Agreement; provided that the Companies
shall prepare footnotes to each compliance certificate and the financial
statements required to be delivered hereunder that show the differences between
the financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating any financial covenant compliance (without reflecting
such Accounting Changes). "ACCOUNTING CHANGES" means: (a) changes in accounting
principles required by GAAP and implemented by the Companies; (b) changes in
accounting principles recommended by the Companies' certified public accountants
and implemented by the Companies; and (c) changes in carrying value of the
Companies' or any of their Subsidiaries' assets, liabilities or equity accounts
resulting from (i) the application of purchase accounting principles (A.P.B. 16
and/or 17, EITF 88-16 and FASB 109) to the transactions contemplated by the
Transaction Documents and the Exchange Transaction Documents or (ii) as the
result of any other adjustments that, in each case, were applicable to, but not
included in, the Pro Forma Balance Sheet. All such adjustments resulting from
expenditures made subsequent to the First Closing Date (including, without
limitation, capitalization of costs and expenses or payment of pre-closing date
liabilities) shall be treated as expenses in the period the expenditures are
made.
1.3 KNOWLEDGE OF THE COMPANIES. All references to the knowledge of
the Companies or to facts known by the Companies shall mean actual knowledge of,
or notice to, the Chairman, Chief Executive Officer, President, Chief Financial
Officer, or any other officer of any Company, any Subsidiary or any division of
any Company or any Subsidiary.
ARTICLE 2
PURCHASE AND SALE OF THE PREFERRED STOCK
2.1 PURCHASE AND SALE OF THE WEP SHARES AND THE KITTY HAWK SHARES.
(a) Subject to the terms and conditions herein set forth, the Holding
Company agrees that it will issue and sell to WEP, and WEP agrees that it will
acquire from the Holding Company, on the First Closing Date, 3,203,118 shares of
Series A Preferred Stock (the "WEP SHARES"). The WEP Shares shall have the
powers, rights and preferences set forth in the Certificate of Amendment, a copy
of which is attached hereto as Exhibit A-1. The aggregate purchase price for the
WEP Shares shall be $9,250,000.
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<PAGE> 16
(b) Subject to the terms and conditions herein set forth, the Holding
Company agrees that it will issue and sell to Kitty Hawk, and Kitty Hawk agrees
that it will acquire from the Holding Company, on the First Closing Date,
257,712 shares of Series A Preferred Stock (the "KITTY HAWK SHARES"). The Kitty
Hawk Shares shall have the powers, rights and preferences set forth in the
Certificate of Amendment, a copy of which is attached hereto as Exhibit A-1. The
aggregate purchase price for the Kitty Hawk Shares shall be $750,000.
2.2 PURCHASE OF THE OPTION SHARES.
(a) WEP, at any time on or before October 31, 1997, may at its
option, require the Holding Company to sell to WEP and Kitty Hawk an aggregate
of up to 2,236,959 shares of Series B Preferred Stock (the "OPTION SHARES"), and
the Holding Company shall issue and sell to WEP and Kitty Hawk such Option
Shares. If WEP elects to exercise such option, Kitty Hawk shall purchase, and
the Holding Company shall issue and sell to Kitty Hawk, the lesser of (i) 7.5%
of the Option Shares and (ii) that number of Option Shares having an aggregate
purchase price of $1,500,000 (the "KITTY HAWK OPTION SHARES"), and WEP shall
purchase from the Holding Company, and the Holding Company shall issue and sell
to WEP, the balance of the Option Shares (the "WEP OPTION SHARES"). The Option
Shares shall have the powers, rights and preferences set forth in the Second
Certificate of Amendment, a copy of which is attached hereto as Exhibit A-2. The
purchase price for the Option Shares shall be $4.47 per share.
(b) WEP may exercise the option to purchase the Option Shares set
forth in subsection 2.2(a) by providing written notice (the "EXERCISE NOTICE")
to the Holding Company, with a copy of such notice to Kitty Hawk, on or before
October 31, 1997, and in any case at least thirty (30) days prior to WEP's
proposed closing date for the purchase of the Option Shares setting forth its
intention to purchase the WEP Option Shares and to have Kitty Hawk purchase the
Kitty Hawk Option Shares, the number of WEP Option Shares and Kitty Hawk Option
Shares to be purchased and the date for the proposed closing (the "SECOND
CLOSING DATE") for the purchase thereof (which date shall be no later than
November 30, 1997, or such other date as the parties mutually agree).
(c) In order to secure Kitty Hawk's obligation to WEP to purchase the
Kitty Hawk Option Shares in accordance with the terms of this Agreement, Kitty
Hawk shall, at the First Closing, deliver to the law firm of Morrison Cohen
Singer & Weinstein, LLP, 750 Lexington Avenue, New York, New York, as escrow
agent (the "ESCROW AGENT") under the Escrow Agreement, 129,856 shares (the
"ESCROWED SHARES") of the Kitty Hawk Stock, and the Escrow Agent shall hold such
shares in accordance with the terms and subject to the conditions of the
Escrow Agreement. In the event that WEP exercises the WEP Option and purchases
the WEP Option Shares on the Second Closing Date in accordance with the terms
hereof, and Kitty Hawk fails to purchase the Kitty Hawk Option Shares in
accordance with the terms hereof, all of Kitty Hawk's right, title and interest
in and to Escrowed Shares shall be transferred to WEP in accordance with the
terms and conditions set forth in the Escrow Agreement, free and clear of all
Liens, claims, charges or encumbrances. Kitty Hawk acknowledges that the
transfer of the Escrowed Shares to WEP under such circumstances shall not limit
any other rights or remedies that the Companies or WEP may have
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<PAGE> 17
against Kitty Hawk with respect to its failure to purchase the Kitty Hawk Option
Shares as contemplated hereunder by Kitty Hawk.
2.3 CLOSINGS.
(a) The issuance and purchase of the WEP Shares and the Kitty Hawk
Shares shall take place at the closing (the "FIRST CLOSING") to be held at the
offices of Morrison Cohen Singer & Weinstein, LLP, 750 Lexington Avenue, New
York, New York 10022 at 10:00 a.m., Eastern Standard Time, on or before Tuesday,
May 13, 1997, or at such other time and place as the Holding Company and the
Purchasers may agree in writing (the "FIRST CLOSING DATE"). At the First
Closing, the Holding Company shall deliver to (i) WEP the WEP Shares against
delivery by WEP to the Holding Company of the purchase price therefor and (ii)
Kitty Hawk the Kitty Hawk Shares against delivery by Kitty Hawk to the Holding
Company of the purchase price therefor, in each case payable by wire transfer of
immediately available funds to an account or accounts designated in writing by
the Holding Company.
(b) The purchase and issuance of the Option Shares shall take place
at the closing (the "SECOND CLOSING") to be held at the offices of Morrison
Cohen Singer & Weinstein, LLP, 750 Lexington Avenue, New York, New York 10022 at
10:00 a.m., Eastern Standard Time, on the Second Closing Date. At the Second
Closing, the Holding Company shall deliver to (i) WEP the WEP Option Shares
against delivery by WEP to the Holding Company of the purchase price therefor
and (ii) Kitty Hawk the Kitty Hawk Option Shares against delivery by Kitty Hawk
to the Holding Company of the purchase price therefor, in each case by wire
transfer of immediately available funds to an account or accounts designated in
writing by the Holding Company. In the event that Kitty Hawk shall have breached
its obligation to purchase the Kitty Hawk Option Shares pursuant to the terms of
this Agreement, and, without limiting any rights or remedies that the Companies
or WEP may have against Kitty Hawk with respect to such breach, WEP shall have
the right to purchase the Kitty Hawk Option Shares from the Holding Company. The
Holding Company shall provide WEP with prompt written notice of any such breach,
and WEP shall have the right to purchase the Kitty Hawk Option Shares
exercisable by written notice delivered to the Holding Company specifying the
closing date for such purchase, which date shall not be later than thirty days
following WEP's receipt of the Holding Company's notice.
2.4 FINANCIAL ACCOUNTING POSITIONS; TAX REPORTING. Each of the
parties hereto agrees to take reporting and other positions with respect to the
Securities which are consistent with the purchase price of the Securities set
forth herein for all financial accounting purposes, unless otherwise required by
applicable GAAP or Commission rules (in which case the parties agree only to
take positions inconsistent with the purchase price of the Securities set forth
herein provided that the Purchasers have consented thereto, which consent shall
not be unreasonably withheld). Each of the parties to this Agreement agrees to
take reporting and other positions with respect to the Securities which are
consistent with the purchase price of the Securities set forth herein for all
other purposes, including without limitation, for all Federal, state and local
tax purposes.
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2.5 FEES AND EXPENSES; MONTHLY FEES.
(a) The Companies jointly and severally agree that they shall pay to
Whitney (i) (A) at the First Closing, a placement fee of $100,000 and (B) at the
Second Closing, a placement fee of $150,000, provided that the aggregate
purchase price for the Option Shares is at least $5,000,000 and (ii) at each of
the First Closing and the Second Closing, to the extent not previously paid to
WEP or Whitney, an amount equal to WEP's or Whitney's, as the case may be,
out-of-pocket expenses (including, without limitation, attorneys' fees, charges
and disbursements, consultants' fees and expenses and due diligence expenses)
incurred in connection with (A) the negotiation, execution, delivery and filing
of the Transaction Documents and the Exchange Documents and any amendments or
modifications thereto and (B) the transactions contemplated by the Transaction
Documents and the Exchange Transaction Documents.
(b) From and after the First Closing, the Companies shall pay to
Whitney a monitoring fee payable in cash at the rate of $10,000 per month
(calculated for partial months on a daily basis) payable quarterly on each March
31, June 30, September 30 and December 31, or if any such date shall not be a
Business Day, on the next succeeding Business Day to occur after such date,
beginning on June 30, 1997 and ending upon consummation of an Initial Public
Offering. Upon consummation of an Initial Public Offering, the Company shall pay
any unpaid portion of the monthly monitoring fees (calculated on a daily basis)
within five (5) Business Days after receipt by any of the Companies or their
Subsidiaries of the proceeds of such Initial Public Offering.
(c) If the First Closing shall fail to occur as a result of a failure
of one or more of the conditions set forth in Article 3 hereof, the Companies
shall pay to Whitney within two Business Days following the date on which the
First Closing was scheduled to occur all amounts described in clause (ii) of
subsection 2.5(a) hereof. If the First Closing shall fail to occur as a result
of a failure of one or more of the conditions set forth in Article 3 hereof and
any of the following events shall have occurred on or before October 31, 1997:
(i) an Initial Public Offering; (ii) a merger, consolidation, refinancing, or
recapitalization of any Company resulting in the holders of the issued and
outstanding voting securities of such Company immediately prior to such
transaction owning or controlling less than a majority of the voting securities
of the continuing or surviving entity immediately following such transaction;
(iii) a sale, lease, exchange, transfer or other disposition of all or
substantially all of any Company's assets to any Person or group of Persons; or
(iv) with respect to any Company, any Person or Persons acting together or which
would constitute a "group" for the purposes of Section 13(d) of the Exchange Act
(other than the holders of the capital stock or membership interests, as the
case may be, of such Company as of the date hereof) beneficially owning (as
defined in Rule 13d-3 of the Exchange Act) or controlling, directly or
indirectly, at least 50% of the total voting power of all classes of capital
stock or membership interests, as the case may be, entitled to vote generally in
the election of Directors or other governing body of such Company, then, in
addition to the amounts owed pursuant to the first sentence of this paragraph
(c), the Companies shall, prior to November 15, 1997, pay to Whitney the sum of
$500,000 in cash or, at the election of Whitney, shall issue, or cause the
issuance of, warrants to purchase the capital stock and/or membership interests
(having a fair market value of $500,000 on the date of grant) of one or
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more of the Companies or their successors. Such warrants shall be exercisable
at a nominal purchase price, shall expire on the tenth anniversary of the date
of issuance and shall be represented by a warrant agreement, which shall be
reasonably satisfactory to Whitney.
(d) All payments contemplated by this Section 2.5 to be made to, or
on behalf of, Whitney or WEP shall be made by wire transfer of immediately
available funds to an account or accounts designated by Whitney or WEP, as the
case may be, and all payments contemplated by this Section 2.5 to be made to, or
on behalf of, Kitty Hawk shall be made by wire transfer of immediately available
funds to an account or accounts designated by Kitty Hawk.
ARTICLE 3
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS
TO PURCHASE THE WEP SHARES AND THE KITTY HAWK SHARES
The obligation of the Purchasers to purchase the WEP Shares and the
Kitty Hawk Shares, to pay the purchase prices therefor at the First Closing and
to perform any other obligations hereunder shall be subject to the satisfaction
as determined by, or waived by, the Purchasers of the following conditions on or
before the First Closing Date. No Purchaser shall be obligated to purchase any
of the Securities to be purchased by it at the First Closing hereunder unless
the purchase and sale of each of the other Securities required to be purchased
at the First Closing hereunder occurs simultaneously therewith.
3.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Companies contained in Article 5 hereof shall be true and
correct at and as of the First Closing Date as if made at and as of such date.
3.2 COMPLIANCE WITH THIS AGREEMENT. The Companies shall have
performed and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Companies on or before the First Closing Date.
3.3 COMPLIANCE WITH THE UST AGREEMENTS; NO DEFAULTS. The UST
Agreements shall be in full force and effect; each party thereto shall have
performed and complied with all of the agreements and conditions contemplated
thereunder that are required to be performed or complied with by it; and there
shall be no defaults under any of the UST Agreements.
3.4 COMPLIANCE WITH TELESITE AGREEMENT; NO DEFAULTS. The Telesite
Agreement shall be in full force and effect; Mr. Joe L. Finley, III shall have
performed and complied with all of the agreements and conditions contemplated
thereunder that are required to be performed or complied with by him; and there
shall be no defaults by Mr. Finley under the Telesite Agreement.
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3.5 SECRETARY'S CERTIFICATES. The Purchasers shall have received a
certificate from each Company, dated the First Closing Date and signed by the
Secretary or an Assistant Secretary of each of the respective Companies,
certifying that (a) in the case of the certificates for the Holding Company and
UST, the attached copies of the Certificates of Incorporation and By-laws, as
the case may be, and, in the case of Telesite and Metrosite, the attached copies
of the Articles of Organization and Operating Agreements of Telesite and
Metrosite, as the case may be, are all true, complete and correct and remain
unamended and in full force and effect, (b) in the case of the certificates for
the Holding Company and UST, the attached copies of the resolutions of the Board
of Directors of the Holding Company or UST, as the case may be, and, in the case
of the certificates for Telesite and Metrosite, the attached consents of the
members of Telesite or Metrosite, as the case may be, approving the Transaction
Documents to which it is a party and the transactions contemplated hereby and
thereby, are all true, complete and correct and remain unamended and in full
force and effect, and (c) as to the incumbency and specimen signature of each
officer or member of each Company executing any Transaction Document to which it
is a party or any other document delivered in connection herewith on behalf of
such Company.
3.6 DOCUMENTS. The Purchasers shall have received true, complete and
correct copies of such agreements, schedules, exhibits, certificates, documents,
financial information and filings as it may reasonably request in connection
with or relating to the ISD Exchange and the transactions contemplated hereby
and by the Exchange Transaction Documents, all in form and substance
satisfactory to the Purchasers.
3.7 PURCHASE OF SECURITIES AND ISD EXCHANGE PERMITTED BY APPLICABLE
LAWS. The acquisition of and payment for the Securities to be acquired by the
Purchasers hereunder and the consummation of the transactions contemplated
hereby and by the Transaction Documents and the Exchange Transaction Documents
(a) shall not be prohibited by any Requirement of Law, (b) shall not subject the
Purchasers to any penalty or other onerous condition under or pursuant to any
Requirement of Law, and (c) shall be permitted by all Requirements of Law to
which the Purchasers or the transactions contemplated by or referred to herein
or in the Transaction Documents or the Exchange Transaction Documents are
subject; and the Purchasers shall have received such certificates or other
evidence as they may reasonably request to establish compliance with this
condition.
3.8 OPINIONS OF COUNSEL. The Purchasers shall have received opinions
of outside counsel to the Companies, dated the First Closing Date, relating to
the transactions contemplated by or referred to herein and in the Exchange
Agreements, in form and substance acceptable to the Purchasers.
3.9 APPROVAL OF COUNSEL TO THE PURCHASERS. All actions and
proceedings hereunder and all agreements, schedules, exhibits, certificates,
financial information, filings and other documents required to be delivered by
any Company or any Subsidiary or hereunder or in connection with the
consummation of the transactions contemplated hereby or by the Exchange
Agreements, and all other related matters, shall have been in form and substance
acceptable to
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Morrison Cohen Singer & Weinstein, LLP, counsel to WEP and Whitney, in its
reasonable judgment (including, without limitation, the opinions of counsel
referred to in Section 3.8 hereof).
3.10 CONSENTS AND APPROVALS. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of Law
and with respect to those Contractual Obligations of any Company or Subsidiary
necessary, desirable, or required in connection with (a) the execution, delivery
or performance (including, without limitation, the issuance of Common Stock upon
conversion of the Shares) by any Company or any Subsidiary, or enforcement
against any Company or any Subsidiary, of the Transaction Documents to which it
is a party and (b) the ISD Exchange shall have been obtained and be in full
force and effect, and the Purchasers shall have been furnished with appropriate
evidence thereof, and all waiting periods shall have lapsed without extension or
the imposition of any conditions or restrictions.
3.11 RELEASE AND SETTLEMENT AGREEMENT. PCX, Mr. Stephen H. Clark and
the other parties thereto have duly executed and delivered the Release and
Settlement Agreement.
3.12 CLARK NON-COMPETITION AND CONFIDENTIALITY AGREEMENT. The Holding
Company and Mr. Stephen H. Clark shall have duly executed and delivered the
Clark Non-Competition and Confidentiality Agreement.
3.13 FINLEY EMPLOYMENT AGREEMENT. The Holding Company and Mr. Joe L.
Finley, III shall have duly executed and delivered the Finley Employment
Agreement.
3.14 GILL EMPLOYMENT AGREEMENT. Telesite and Mr. Tracy Gill shall
have duly executed and delivered the Gill Employment Agreement.
3.15 LONG EMPLOYMENT AGREEMENT. The Holding Company and Mr. Robert M.
Long shall have duly executed and delivered the Long Employment Agreement.
3.16 REGISTRATION RIGHTS AGREEMENT. The Holding Company shall have
duly executed and delivered the Registration Rights Agreement.
3.17 STOCKHOLDERS' AGREEMENT. The Stockholders' Agreement shall have
been duly executed and delivered by all of the parties thereto.
3.18 STOCK RESTRICTION AGREEMENT.. The Holding Company and Finley
Family Limited Partnership shall have duly executed and delivered the Stock
Restriction Agreement.
3.19 OPTION ESCROW AGREEMENT AND ESCROW AGREEMENT. WEP and Kitty Hawk
shall have duly executed the Option Escrow Agreement, and the Finley Family
Limited Partnership and the Holding Company shall have executed the Escrow
Agreement.
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3.20 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Holding Company
shall have amended its Certificate of Incorporation and By-laws, in form and
substance satisfactory to the Purchasers.
3.21 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the First
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any Governmental Authority or any condition imposed under any
Requirement of Law which, in the judgment of the Purchasers, would prohibit the
purchase of the Securities hereunder or subject the Purchasers to any penalty or
other onerous condition under or pursuant to any Requirement of Law if the
Securities were to be purchased hereunder.
3.22 ISD EXCHANGE. On the First Closing Date, the ISD Exchange shall
have been consummated upon terms and subject to conditions in form and substance
acceptable to the Purchasers.
3.23 TELESITE RELEASE. The Mercantile Bank of Arkansas ("Mercantile")
shall have executed and delivered an agreement and such other documents, in form
and substance satisfactory to Purchasers, releasing Telesite from all of its
obligations to Mercantile and releasing the Liens in connection therewith.
3.24 BOATMAN'S COMMITMENT. Telesite shall have received a commitment,
in a form and upon terms and conditions satisfactory to Purchasers, to extend
Telesite's existing line of credit with Boatman's National Bank of Arkansas
until August 31, 1997.
3.25 PRO FORMA BALANCE SHEET. The Holding Company shall have
delivered to the Purchasers as of the First Closing Date a pro forma
consolidated balance sheet of the Companies and their Subsidiaries, certified by
the chief executive officer of the Holding Company that such Pro Forma Balance
Sheet fairly presents the pro forma adjustments reflecting the consummation of
the transactions contemplated by this Agreement and the Exchange Agreements,
including, without limitation, all material fees and expenses in connection
therewith.
3.26 GOOD STANDING CERTIFICATES. Each of the Companies shall have
delivered to the Purchasers as of the First Closing Date, good standing
certificates or the equivalent thereof for each of the Companies and each of
their Subsidiaries for each of their respective jurisdictions of incorporation
or organization, as the case may be, and all other jurisdictions where they are
required to be qualified to do business.
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ARTICLE 3A
CONDITION TO THE OBLIGATIONS OF THE PURCHASERS TO PURCHASE
THE OPTION SHARES UPON EXERCISE OF THE WEP OPTION
The obligation of the Purchasers to purchase the Option Shares if WEP
shall have delivered the written notice described in subsection 2.2(b) hereof,
to pay the purchase price for the Option Shares at the Second Closing and to
perform any obligations hereunder with respect thereto (all of which obligations
shall be several and not joint) shall be subject to the satisfaction, as
determined by, or waived by, the Purchasers, of the following conditions on or
before the Second Closing Date. No Purchaser shall be obligated to purchase any
of the Securities to be purchased by it at the Second Closing hereunder unless
the purchase and sale of each of the other Securities required to be purchased
at the Second Closing hereunder occurs simultaneously therewith.
3A.1 NO MATERIAL ADVERSE EFFECT. No event shall have occurred from
the date hereof through the Second Closing Date which has or may have a material
adverse effect on the Condition of the Companies.
3A.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Companies contained in Article 5 hereof shall be true and
correct at and as of the Second Closing Date as if made at and as of such date.
3A.3 COMPLIANCE WITH THIS AGREEMENT; NO DEFAULTS. Each of the
Companies shall have performed and complied with all of its agreements and
conditions set forth or contemplated herein that are required to be performed or
complied with by each Company on or before the Second Closing Date, and there
shall be no defaults by any Company hereunder or under any Transaction Document.
3A.4 COMPLIANCE WITH UST AGREEMENTS, STOCK RESTRICTION AGREEMENT AND
EMPLOYMENT AGREEMENTS; NO DEFAULTS. The UST Agreements, the Stock Restriction
Agreement and the Employment Agreements shall be in full force and effect; each
party thereto shall have performed and complied with all of the agreements and
conditions contemplated thereunder that are required to be performed or complied
with by it; and there shall be no defaults under any of the UST Agreements, the
Stock Restriction Agreement or the Employment Agreements.
3A.5 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the Second
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any Governmental Authority or any condition imposed under any
Requirements of Law which, in the judgment of the Purchasers, would prohibit the
purchase of the Option Shares hereunder or subject the Purchasers to any penalty
or other onerous condition under or pursuant to any Requirements of Law if the
Option Shares were to be purchased hereunder.
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3.A.6 PRO FORMA BALANCE SHEET. The Holding Company shall have
delivered to the Purchasers as of the Second Closing Date a pro forma
consolidated balance sheet of the Companies and their Subsidiaries, certified by
the chief financial officer of the Holding Company that such Pro Forma Balance
Sheet fairly presents the pro forma adjustments reflecting the consummation of
the transactions contemplated by this Agreement and the Exchange Agreements,
including, without limitation, all material fees and expenses in connection
therewith.
3.A.7 OPINIONS OF COUNSEL. The Purchasers shall have received
opinions of outside counsel to the Companies, dated the Second Closing Date
relating to the transactions contemplated by or referred to herein, in form and
substance acceptable to the Purchasers.
3.A.8 APPROVAL OF COUNSEL TO THE PURCHASERS. All actions and
proceedings hereunder and all agreements, schedules, exhibits, certificates,
financial information, filings and other documents required to be delivered by
any Company or any Subsidiary or hereunder or in connection with the
consummation of the transactions contemplated hereby or the Exchange Agreements,
and all other related matters, shall have been in form and substance acceptable
to Morrison Cohen Singer & Weinstein, LLP, counsel, or other legal counsel, to
WEP and Whitney in its reasonable judgment (including, without limitation, the
opinions of counsel referred to in Section 3.A.7 hereof).
3.A.9 CONSENTS AND APPROVALS. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of Law
and with respect to those Contractual Obligations of any Company or Subsidiary
necessary, desirable, or required in connection with (a) the execution, delivery
or performance (including, without limitation, the issuance of Common Stock upon
conversion of the Shares) by any Company or any Subsidiary, or enforcement
against any Company or any Subsidiary, of the Transaction Documents to which it
is a party shall have been obtained and be in full force and effect, and the
Purchasers shall have been furnished with appropriate evidence thereof, and all
waiting periods shall have lapsed without extension or the imposition of any
conditions or restrictions.
ARTICLE 4
CONDITIONS TO THE OBLIGATIONS OF THE HOLDING COMPANY
TO ISSUE AND SELL THE WEP SHARES AND THE KITTY HAWK SHARES
The obligations of the Holding Company to issue and sell the WEP
Shares and the Kitty Hawk Shares and perform its other obligations hereunder
relating thereto shall be subject to the satisfaction as determined by, or
waived by, the Holding Company of the following conditions on or before the
First Closing Date:
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4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained in Article 6 hereof shall be true and
correct at and as of the First Closing Date as if made at and as of such date.
4.2 COMPLIANCE WITH THIS AGREEMENT. The Purchasers shall have
performed and complied with all of their respective agreements and conditions
set forth or contemplated herein that are required to be performed or complied
with by the Purchasers on or before the First Closing Date.
4.3 ISD EXCHANGE. On the First Closing Date, the ISD Exchange shall
have been consummated upon terms and subject to conditions in form and substance
acceptable to the Holding Company.
ARTICLE 4A
CONDITIONS TO THE OBLIGATIONS OF THE HOLDING COMPANY
TO ISSUE AND SELL THE OPTION SHARES
The obligations of the Holding Company to issue and sell the Option
Shares and perform its other obligations hereunder relating thereto shall be
subject to the satisfaction as determined by, or waived by, the Holding Company
of the following conditions on or before the Second Closing Date:
4A.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained in Article 6 hereof shall be true and
correct at and as of the Second Closing Date as if made at and as of such date.
4A.2 COMPLIANCE WITH THIS AGREEMENT. The Purchasers shall have
performed and complied with all of their respective agreements and conditions
set forth or contemplated herein that are required to be performed or complied
with by the Purchasers on or before the Second Closing Date as if made at and as
of such date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
The Companies hereby jointly and severally represent and warrant to
the Purchasers, after giving effect to the transactions contemplated by this
Agreement, as follows:
5.1 EXISTENCE AND POWER. Each Company and each Subsidiary: (a) is a
corporation or a limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case
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may be; (b) has all requisite power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently, or is currently proposed to be, engaged; (c)
is duly qualified, licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except to the extent that the
failure to do so would not have a material adverse effect on the Condition of
the Companies; and (d) has the power and authority to execute, deliver and
perform its obligations under each Transaction Document to which it is or will
be a party.
5.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Company of each Transaction Document to which it is a party
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Securities: (a) has been duly
authorized by all necessary corporate or other appropriate action; (b) does not
contravene the terms of any Company's Certificate of Incorporation, Articles of
Organization, By-laws, or Operating Agreement or any amendment thereto; and (c)
will not violate, conflict with or result in any breach or contravention of or
the creation of any Lien under, any Contractual Obligation of any Company or any
Subsidiary or any Requirement of Law applicable to any Company or any
Subsidiary.
5.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, any Company of the Transaction Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby.
5.4 BINDING EFFECT. Each of the Transaction Documents to which it is
a party has been duly executed and delivered by each Company, and constitutes
the legal, valid and binding obligation of each such Company enforceable against
each Company in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
relating to enforceability.
5.5 NO LEGAL BAR. Neither the execution, delivery and performance of
the Transaction Documents nor the issuance of or performance of the terms of the
Securities will violate any Requirement of Law or any Contractual Obligation of
any Company or Subsidiary. Neither any Company nor any Subsidiary has previously
entered into any agreement which is currently in effect or to which such Company
or Subsidiary is currently bound, granting any rights to any Person which are
inconsistent with the rights to be granted by the Companies in the Transaction
Documents.
5.6 LITIGATION. Except as set forth on Schedule 5.6, there are no
legal actions, suits, proceedings, claims or disputes pending or threatened, at
law, in equity, in arbitration or before any Governmental Authority against or
affecting any Company or Subsidiary. No injunction, writ,
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temporary restraining order, decree or any order of any nature has been issued
by any court or other Governmental Authority purporting to enjoin or restrain
the execution, delivery or performance of the Transaction Documents.
5.7 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.7, the
Companies and their Subsidiaries are in compliance with all Requirements of Law
applicable to them.
5.8 NO DEFAULT OR BREACH. Neither any Company nor any Subsidiary is
in, and the incurrence of the obligations of the Companies contemplated by the
Transaction Documents do not constitute, nor with the giving of notice or lapse
of time or both would constitute, a default under or with respect to any
Contractual Obligation of any Company or Subsidiary in any material respect.
5.9 TITLE TO PROPERTIES. Except as set forth on Schedule 5.9, each of
the Companies and/or each of their Subsidiaries has good record and marketable
title in fee simple to, or holds interests as lessee under leases in full force
and effect in, all real property reflected on the Pro Forma Balance Sheet or
used in connection with its business.
5.10 USE OF REAL PROPERTY. Except as set forth on Schedule 5.10, the
owned and leased real properties reflected on the Pro Forma Balance Sheet or
used in connection with the respective businesses of each Company and
Subsidiary, are used and operated in compliance and conformity with all
applicable leases, contracts, commitments, licenses and permits, to the extent
that the failure so to conform would, in the aggregate, materially adversely
affect the Condition of the Companies; neither any Company nor any Subsidiary
has received notice of violation of any applicable zoning or building
regulation, ordinance or other law, order, regulation or requirement relating to
the operations of any Company or any Subsidiary; and there is no such violation.
Except as set forth on Schedule 5.10, all plants and other buildings that are
owned or covered by leases reflected on the Pro Forma Balance Sheet or used in
connection with the business of any Company or Subsidiary, substantially conform
with all applicable ordinances, codes, regulations and requirements, and no law
or regulation presently in effect or condition precludes or materially restricts
continuation of the present use of such properties. Each of the leases for real
properties reflected on the Pro Forma Balance Sheet or used in connection with
the business of any Company or Subsidiary are in full force and effect and each
Company and Subsidiary enjoys peaceful and undisturbed possession thereunder.
There is no default on the part of any Company or any Subsidiary or event or
condition which with notice or lapse of terms, or both, would constitute a
default on the part of any Company or any Subsidiary under any of such leases.
5.11 TAXES. Except as set forth on Schedule 5.11, the Companies and
their Subsidiaries have filed or caused to be filed, or have properly filed
extensions for, all tax returns which are required to be filed and have paid or
caused to be paid all taxes required to be paid by them and all assessments
received by them to the extent that such taxes have become due, except taxes the
validity or amount of which is being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside. The
Companies and each of their Subsidiaries have paid or caused to be paid, or have
established reserves that the Companies
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reasonably believes to be adequate in all material respects, for all tax
liabilities applicable to the Companies and their Subsidiaries for all fiscal
years which have not been examined and reported on by the taxing authorities (or
closed by applicable statutes).
5.12 FINANCIAL CONDITION.
(a) The Companies have delivered to the Purchasers true and
complete copies of (i) the audited balance sheet of Telesite as at December 31,
1996 and the unaudited balance sheet of Telesite as at December 31, 1995, and
the related statements of income, stockholders' and members' equity and cash
flow for the years ended December 31, 1996 and December 31, 1995 (the "TELESITE
YEAR-END FINANCIAL STATEMENTS") and (ii) the unaudited balance sheet of Telesite
as at March 31, 1997 and the related consolidated statements of income,
stockholders' and members' equity and cash flow for the three-month period ended
March 31, 1997, (the "TELESITE 1997 FINANCIAL STATEMENTS"). The Telesite
Year-End Statements, the Telesite 1997 Financial Statements and the Metrosite
Balance Sheet fairly present, in all material respects, the financial position
of Telesite and Metrosite as of the respective dates thereof, and the results of
operations and cash flows of Telesite as of the respective dates or for the
respective periods set forth therein, all in conformity with GAAP consistently
applied during the periods involved, except as otherwise set forth in the notes
thereto and subject, in the case of the Telesite 1997 Financial Statements and
the Metrosite Balance Sheet, to normal year-end audit adjustments.
(b) None of the Companies have received any letters from any of
its certified public accountants to the management of any such Company other
than the auditor's opinion letter accompanying the above-referenced audited
financial statements.
(c) The Pro Forma Balance Sheet delivered to the Purchasers sets
forth the assets and liabilities of the Companies and their Subsidiaries on a
pro forma consolidated basis after taking into account the consummation of the
transactions contemplated in this Agreement and the Exchange Agreements. The Pro
Forma Balance Sheet has been prepared by the Companies in accordance with GAAP
and fairly presents in all material respects the assets and liabilities of the
Companies and their Subsidiaries on a consolidated basis, reflecting the
consummation of the transactions contemplated by this Agreement and based on the
assumptions set forth therein.
(d) The projections of the Companies and their Subsidiaries on a
consolidated basis heretofore delivered to the Purchasers are based on
assumptions which were reasonable when made and such assumptions and projections
are reasonable on the date hereof and the none of the Companies or any of their
Subsidiaries have delivered to any Person any later dated projections.
5.13 ERISA. The execution and delivery of the Transaction Documents,
the purchase and sale of the Securities hereunder and the consummation of the
transactions contemplated hereby and thereby will not result in any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code.
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5.14 DISCLOSURE.
(a) Agreement and Other Documents. This Agreement, together with
all exhibits and schedules hereto, and the agreements, certificates and other
documents furnished to the Purchasers by the Companies and their Subsidiaries at
the First Closing or the Second Closing, as the case may be, and the Exchange
Transaction Documents do not or will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading.
(b) Material Adverse Effects. There is no fact known to the
Companies, which the Companies have not disclosed to the Purchasers in writing
which materially adversely affects or, insofar as the Companies can reasonably
foresee, could materially adversely affect, the Condition of the Companies or
the ability of any Company or any Subsidiary to perform its obligations under
the Transaction Documents, or any agreement or other document contemplated
thereby to which it is a party.
5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
except as set forth on Schedule 5.15, neither any Company nor any Subsidiary has
(i) issued any stock, bonds or other corporate securities except for the
securities being issued pursuant to the terms of the Transaction Documents and
the Exchange Transaction Documents, (ii) borrowed any amount or incurred any
liabilities (absolute or contingent), other than in the ordinary course of
business, in excess of $10,000, (iii) discharged or satisfied any lien or
incurred or paid any obligation or liability (absolute or contingent), other
than in the ordinary course of business, in excess of $10,000, (iv) declared or
made any payment or distribution to stockholders or purchased or redeemed any
shares of its capital stock or other securities, (v) mortgaged, pledged or
subjected to lien any of its assets, tangible or intangible, (vi) sold, assigned
or transferred any of its tangible assets, or canceled any debts or claims,
(vii) sold, assigned or transferred any patents, trademarks, trade names,
copyrights, trade secrets or other intangible assets, (viii) suffered any losses
of property, or waived any rights of substantial value, (ix) suffered any
material adverse change in the Condition of the Companies, (x) expended any
material amount, granted any bonuses or extraordinary salary increases, (xi)
entered into any transaction involving consideration in excess of $50,000 except
as otherwise contemplated hereby or (xii) entered into any agreement or
transaction, or amended or terminated any agreement, with an Affiliate. To the
knowledge of the Companies, no material adverse change in the Condition of the
Companies is threatened or reasonably likely to occur.
5.16 ENVIRONMENTAL MATTERS. Except as described on Schedule 5.16:
(a) The property, assets and operations of each Company and
Subsidiary are and have been in compliance with all applicable Environmental
Laws; there are no Hazardous Materials stored or otherwise located in, on or
under any of the property or assets of any Company or any Subsidiary, including,
without limitation, the groundwater except in compliance with applicable
Environmental Laws; and there have been no releases or threatened releases of
Hazardous
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Materials in, on or under any property adjoining any of the property or assets
of any Company or any Subsidiary which have not been remediated to the
satisfaction of the appropriate Governmental Authorities.
(b) None of the property, assets or operations of any Company or
any Subsidiary is the subject of any Federal, state or local investigation
evaluating whether (i) any remedial action is needed to respond to a release or
threatened release of any Hazardous Materials into the environment or (ii) any
release or threatened release of any Hazardous Materials into the environment is
in contravention of any Environmental Law.
(c) Neither any Company nor any Subsidiary has received any
notice or claim, nor are there pending, threatened or reasonably anticipated,
lawsuits or proceedings against any of them, with respect to violations of an
Environmental Law or in connection with the presence of or exposure to any
Hazardous Materials in the environment or any release or threatened release of
any Hazardous Materials into the environment, and neither any Company nor any
Subsidiary is or was the owner or operator of any property which (i) pursuant to
any Environmental Law has been placed on any list of Hazardous Materials
disposal sites, including, without limitation, the "NATIONAL PRIORITIES LIST" or
"CERCLIS LIST," (ii) has, or had, any subsurface storage tanks located thereon,
or (iii) has ever been used as or for a waste disposal facility, a mine, a
gasoline service station or, other than for petroleum substances stored in the
ordinary course of business, a petroleum products storage facility.
(d) Neither any Company nor any Subsidiary has any present or
contingent liability in connection with the presence either on or off the
property or assets of any Company or Subsidiary of any Hazardous Materials in
the environment or any release or threatened release of any Hazardous Materials
into the environment.
5.17 INVESTMENT COMPANY/GOVERNMENT REGULATIONS. None of the Companies
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended. Neither any Company nor any Subsidiary is subject to
regulation under the Public Utility Holding Company Act of 1935, as amended, the
Federal Power Act, the Interstate Commerce Act, or any federal or state statute
or regulation limiting its ability to incur Indebtedness.
5.18 SUBSIDIARIES.
(a) Schedule 5.18 sets forth a complete and accurate list of all
of the Subsidiaries of each Company, together with their respective
jurisdictions of incorporation or organization. Except as set forth on Schedule
5.18, each such Subsidiary is or will be, upon the consummation of the
transactions contemplated in the Transaction Documents and the Exchange
Transaction Documents, wholly owned by the Holding Company. All of the
outstanding shares of capital stock of the Subsidiaries that are corporations
are validly issued, fully paid and nonassessable. Except as set forth on
Schedule 5.18, as of the First Closing Date and the Second Closing Date, as the
case may be, all of the outstanding shares of capital stock of, or other
ownership interests in, each
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of the Subsidiaries are and will be owned by the Holding Company free and clear
of any Liens, claims, charges or encumbrances. Except as set forth on Schedule
5.18, no Subsidiary has outstanding options, warrants, subscriptions, calls,
rights, convertible securities or other agreements or commitments obligating the
Subsidiary to issue, transfer or sell any securities of the Subsidiary.
(b) Except as set forth on Schedule 5.18, none of the Companies
owns of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into capital stock of any
other corporation, or (ii) any participating interest in any limited liability
company, partnership, joint venture or other non-corporate business enterprises.
5.19 CAPITALIZATION.
(a) As of the First Closing Date and after giving effect to the
transactions contemplated by this Agreement, the authorized capital stock of the
Holding Company will consist of 5,680,000 shares of Series A Preferred Stock and
12,000,000 shares of Common Stock. As of the First Closing Date and after giving
effect to the transactions contemplated by this Agreement, there will be (i)
3,462,830 shares of Series A Preferred Stock issued and outstanding, (ii)
1,340,517 shares of Common Stock issued and outstanding, (iii) 3,203,118 shares
of Common Stock reserved for issuance upon the conversion of the WEP Shares,
(iv) 259,712 shares of Common Stock reserved for issuance upon the conversion of
the Kitty Hawk Shares, (v) 2,217,170 shares of Series A Preferred Stock reserved
for issuance by the Company, which shares may be issued by the Company, at its
election, as payment in kind dividends on the Series A Preferred Stock, in
accordance with Certificate of Amendment (the "SERIES A DIVIDEND SHARES"), (vi)
2,217,170 shares of Common Stock reserved for issuance upon conversion of the
Series A Dividend Shares reserved for issuance pursuant to clause (v) hereof,
(vii) 150,000 shares of Common Stock reserved for issuance pursuant to the
exercise of the PCX Warrant, and (viii) 967,700 shares of Common Stock reserved
for issuance pursuant to the exercise of stock options issuable in accordance
with the terms of one or more stock option plans of the Holding Company which
plans shall have been approved by the Board of Directors of the Holding Company,
Whitney and WEP (the "STOCK OPTIONS"). The WEP Option, the PCX Warrant and all
outstanding shares of capital stock of the Holding Company have been duly
authorized by all necessary corporate action. All outstanding shares of capital
stock of the Holding Company are, and the issuance of the WEP Shares, the Kitty
Hawk Shares, the Option Shares upon exercise of the WEP Option, the shares of
Common Stock issuable upon exercise of the PCX Warrant and the shares of Common
Stock issuable upon conversion of the Series A Preferred Stock and Series B
Preferred Stock, when issued in accordance with the respective terms and
conditions thereof, will be validly issued, fully paid and nonassessable. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class or series of authorized capital stock of
the Holding Company are as set forth in the Certificate of Incorporation, and
all such designations, powers, preferences, rights, qualifications, limitations
and restrictions are valid, binding and enforceable and in accordance with all
applicable laws. Schedule 5.19 provides an accurate list, after giving effect to
the transactions contemplated by this Agreement, of (A) all stockholders owning
the issued and outstanding Series A Preferred Stock and Common Stock, together
with the number of shares held by each, and (B) all of the holders of warrants,
options,
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rights and securities convertible into Common Stock of the Holding Company,
together with the number of shares of Common Stock to be issued upon the
exercise or conversion of such warrants, options, rights and convertible
securities.
(b) On the First Closing Date, except for the WEP Shares, the
Kitty Hawk Shares, the WEP Option and the PCX Warrant, there will be no
outstanding securities convertible into or exchangeable for capital stock of any
Company or Subsidiary or options, warrants or other rights to purchase or
subscribe to capital stock of any Company or any Subsidiary or contracts,
commitments, agreements, understandings or arrangements of any kind to which any
Company or any Subsidiary is a party relating to the issuance of any capital
stock of any Company or any of Subsidiary, any such convertible or exchangeable
securities or any such options, warrants or rights.
5.20 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by any Company or Subsidiary, or their representatives in
connection with the offer or sale of the Securities. Assuming the accuracy of
the representations and warranties of the Purchasers contained in Article VI
hereof, no registration of the Securities, the Common Stock issuable upon the
conversion of the Shares pursuant to the provisions of the Securities Act or
applicable state securities or "blue sky" laws will be required by the offer,
sale or issuance of the Securities pursuant to this Agreement, or the Common
Stock issuable upon conversion of the Shares. The Companies jointly and
severally agree that neither any Company, nor anyone acting on its behalf, will
offer or sell the Securities or any other security so as to require the
registration of the Securities or the Common Stock issuable upon conversion of
the Shares pursuant to the provisions of the Securities Act or any state
securities or "blue sky" laws, unless such Securities or the Common Stock
issuable upon conversion of the Shares are so registered.
5.21 BROKER'S, FINDER'S OR SIMILAR FEES. Except as set forth in
Section 2.5 hereof, there are no brokerage commissions, finder's fees or similar
fees or commissions payable in connection with the transactions contemplated
hereby based on any agreement, arrangement or understanding with any Company or
any Subsidiary.
5.22 LABOR RELATIONS. Neither any Company nor any Subsidiary has
committed or is engaged in any unfair labor practice. Except as set forth in
Schedule 5.22, there is (a) no unfair labor practice complaint pending or
threatened against any Company or Subsidiary before the National Labor Relations
Board and no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is so pending or threatened, (b) no strike,
labor dispute, slowdown or stoppage pending or threatened against any Company or
Subsidiary, and (c) no union representation question existing with respect to
the employees of any Company or any Subsidiary and no union organizing
activities are taking place. Neither any Company nor any Subsidiary is a party
to any collective bargaining agreement.
5.23 EMPLOYEE BENEFIT PLANS. Neither any Company nor any Subsidiary
nor any ERISA Affiliate has any actual or contingent, direct or indirect,
liability in respect of any employee benefit plan (as defined in Section 3(3) of
ERISA) or other employee benefit arrangement
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(collectively, the "PLANS"), other than those liabilities with respect to such
Plans specifically described on Schedule 5.23(a). Schedule 5.23(a) sets forth
all Plans relating to the Companies. The Companies have delivered to the
Purchasers accurate and complete copies of all of the Plans. All of the Plans
are in substantial compliance with all applicable Requirements of Law. Except as
set forth on Schedule 5.23(b), no "prohibited transaction," as defined in
Section 406 of ERISA and Section 4975 of the Code, has occurred in respect of
any of the Plans, and no civil or criminal action brought pursuant to Part 5 of
Title I of ERISA is pending or, to the best knowledge of the Companies, is
threatened against any fiduciary of any such Plan. No Plan: (i) is subject to
Title IV of ERISA, or is otherwise a Defined Benefit Plan, or is a multiple
employer plan (within the meaning of Section 413(c) of the Code); or (ii)
provides for post-retirement welfare benefits or a "parachute payment" (within
the meaning of Section 280G(b) of the Code).
5.24 PATENTS, TRADEMARKS, ETC. The Companies and their Subsidiaries
own or are licensed or otherwise have the right to use all patents, trademarks,
service marks, trade names, copyrights, licenses, franchises and other rights
(collectively, the "RIGHTS") being used to conduct their businesses as now
operated (a complete list of licenses or other contracts relating to the
Companies' and their Subsidiaries' Rights and of registrations of patents,
trademarks, service marks and copyrights including any applications therefor
constituting such Rights, is attached hereto as Schedule 5.24). No Right or
product, process, method, substance or other material presently sold by or
employed by any Company or any Subsidiary, or which any Company or any
Subsidiary contemplates selling or employing, infringes upon the Rights that are
owned by others. No litigation is pending and no claim has been made against any
Company or any Subsidiary or, to the knowledge of the Companies, is threatened,
contesting the right of any Company or any Subsidiary to sell or use any Right
or product, process, method, substance or other material presently sold by or
employed by any Company or any Subsidiary. Neither any Company nor any
Subsidiary has asserted any claim of infringement, misappropriation or misuse by
any Person of any Rights owned by any Company or any Subsidiary or to which it
has exclusive use. Except as set forth on Schedule 5.24, no employee, officer or
consultant of any Company or any Subsidiary has any proprietary, financial or
other interest in any Rights owned or used by any Company or any Subsidiary in
their businesses. Except as set forth on Schedule 5.24, neither any Company nor
any Subsidiary has any obligation to compensate any Person for the use of any
Rights and neither any Company nor any Subsidiary has granted any license or
other right to use any of the Rights of any Company or any Subsidiaries, whether
requiring the payment of royalties or not. The Companies and their Subsidiaries
have taken all reasonable measures to protect and preserve the security,
confidentiality and value of their Rights, including trade secrets and other
confidential information. All trade secrets and other confidential information
of the Companies and their Subsidiaries are not part of the public domain or
knowledge, nor have they been used, divulged or appropriated for the benefit of
any Person other than any Company or any Subsidiary or otherwise to the
detriment of any Company or any Subsidiary. No employee or consultant of any
Company or Subsidiary has used any trade secrets or other confidential
information of any other Person in the course of his work for any Company or
Subsidiary. No patent, invention, device, principle or any statute, law, rule,
regulation, standard or code is pending or proposed which would restrict any
Company's or any Subsidiary's ability to use any of the Rights.
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5.25 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on Schedule
5.25, no officer, director, stockholder or other security holder of any Company
or any Subsidiary: (a) owns, directly or indirectly, any interest in (excepting
less than 5% stock holdings for investment purposes in securities of publicly
held and traded companies), or is an officer, director, employee or consultant
of, any Person that is, or is engaged in business as, a competitor, lessor,
lessee, supplier, distributor, sales agent or customer of, or lender to or
borrower from, any Company or any Subsidiary; (b) owns, directly or indirectly,
in whole or in part, any tangible or intangible property that any Company or any
Subsidiary used in the conduct of business; or (c) has any cause of action or
other claim whatsoever against, or owes or has advanced any amount to, any
Company or any Subsidiary, except for claims in the ordinary course of business
such as for accrued vacation pay, accrued benefits under employee benefit plans,
and similar matters and agreements existing on the date hereof.
5.26 TRADE RELATIONS. Except as set forth on Schedule 5.26, there
exists no actual or, to the knowledge of the Companies, threatened termination,
cancellation or limitation of, or any adverse modification or change in, the
business relationship of any Company or Subsidiary or its business with any
customer or any group of customers whose purchases are individually or in the
aggregate material to the business of any Company or any Subsidiary, or with any
material supplier, and there exists no present condition or state of facts or
circumstances that would materially adversely affect the Condition of the
Companies or prevent any Company or any Subsidiary from conducting its business
after the consummation of the transactions contemplated by this Agreement, in
substantially the same manner in which such business has heretofore been
conducted.
5.27 OUTSTANDING BORROWINGS. Schedule 5.27 lists (i) the amount of
all Outstanding Borrowings of the Companies and their Subsidiaries (other than
Indebtedness under this Agreement) as of the closing of the transactions
contemplated hereby, (ii) the Liens that relate to such Outstanding Borrowings
and that encumber the assets of any Company or Subsidiary, (iii) the name of
each lender thereof, and (iv) the amount of any unfunded commitments available
to any Company in connection with any Outstanding Borrowings. Except as
indicated on Schedule 5.27, all such Borrowings will continue in effect after
the First Closing on the same terms and conditions as in effect immediately
prior to the First Closing or on such other terms and conditions as may be
satisfactory to the Purchasers.
5.28 MATERIAL CONTRACTS. Neither any Company nor any Subsidiary is a
party to any Contractual Obligation, or is subject to any charge, corporate
restriction, judgment, injunction, decree, or Requirement of Law, materially
adversely affecting the Condition of the Companies. Schedule 5.28 lists all
contracts, agreements and commitments of each Company and Subsidiary as of the
First Closing Date, whether written or oral, other than (a) the Transaction
Documents and the Exchange Transaction Documents, (b) purchase orders in the
ordinary course of business, and (c) any other contracts, agreements and
commitments of any Company or Subsidiary that do not extend beyond one year and
involve the receipt or payment of not more than $10,000. Each of the contracts,
agreements and commitments of the Companies and the Subsidiaries set forth on
Schedule 5.28 is in full force and effect, and there are no defaults thereunder
or notice of defaults delivered pursuant thereto.
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5.29 INSURANCE. Schedule 5.29 accurately summarizes all of the
insurance policies or programs of each Company and Subsidiary in effect as of
the date hereof, and indicates the insurer's name, policy number, expiration
date, amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
All such policies are in full force and effect, are underwritten by financially
sound and reputable insurers, are sufficient for all applicable Requirements of
Law and otherwise are in compliance with the criteria set forth in Section 8.7
hereof. All such policies will remain in full force and effect and will not in
any way be affected by, or terminate or lapse by reason of any of the
transactions contemplated hereby.
5.30 SOLVENCY. The Companies and their Subsidiaries are Solvent.
5.31 OTHER DOCUMENTS. The Companies have delivered to the Purchasers
true, complete and correct copies of all agreements, schedules, exhibits,
certificates, financial information, filings and other documents relating to the
Companies and their Subsidiaries, including, without limitation, the Exchange
Transaction Documents, and all amendments and modifications thereto. Such
documents comprise a full and complete copy of all agreements and understandings
between the parties thereto with respect to the subject matter thereof and all
transactions related thereto, and there are no agreements or understandings,
oral or written, or side agreements not contained therein that relate to or
modify the substance thereof. Each of such documents has been duly authorized by
all necessary corporate and other action on the part of each Company and
Subsidiary which is a party thereto, was validly executed and delivered by each
such Company and Subsidiary and is the legal, valid and binding obligation of
each such Company and Subsidiary and their successors, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting creditors'
rights generally and by general principles of equity relating to enforceability.
Each of such documents is in full force and effect, and none of their provisions
have been waived by any party thereto.
5.32 EXCHANGE TRANSACTION DOCUMENTS. The representations and
warranties made in the Exchange Transaction Documents by each of the parties
thereto are true, correct and accurate in all material respects.
ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser, severally but not jointly, hereby represents and
warrants as to itself as follows:
6.1 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by it of each Transaction Document to which it is a party: (a) is
within its power and authority and
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has been duly authorized by all necessary action; (b) does not contravene the
terms of its organizational documents or any amendment thereof; and (c) will not
violate, conflict with or result in any breach or contravention of any
Contractual Obligation or any Requirement of Law applicable to it.
6.2 BINDING EFFECT. This Agreement has been duly executed and
delivered by it and each Transaction Document to which it is a party constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
6.3 NO LEGAL BAR. The execution, delivery and performance of each
Transaction Document to which it is a party by it will not violate any
Requirement of Law applicable to it.
6.4 EXPERIENCE. It has carefully reviewed the representations
concerning the Companies and the Subsidiaries contained in this Agreement; the
officers of the Companies have made available to such Purchaser any and all
written information which it has requested and have answered to its satisfaction
all inquiries made by it; and it has sufficient knowledge and experience in
investing in companies similar to the Companies so as to be able to evaluate the
risks and merits of its investment in the Securities and is able financially to
bear the risks thereof.
6.5 PURCHASE FOR OWN ACCOUNT. The Securities to be acquired by it
pursuant to this Agreement are being or will be acquired for its own account for
investment and with no intention of distributing or reselling such securities or
any part thereof in any transaction that would be in violation of the securities
laws of the United States of America, or any state, without prejudice, however,
to its right at all times to sell or otherwise dispose of all or any part of the
Securities under an effective registration statement under the Securities Act,
or any applicable state securities laws or under an exemption from such
registration available under the Securities Act, or any applicable state
securities laws and subject, nevertheless, to the disposition of its property
being at all times within its control. If such Purchaser should in the future
decide to dispose of any of the Securities or the Common Stock issuable upon
conversion of the Series A Preferred Stock or the Series B Preferred Stock, it
understands and agrees that it may do so only in compliance with the Securities
Act and applicable state securities laws, as then in effect. It agrees to the
imprinting of a legend on certificates representing all of the Securities to the
following effect: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS."
6.6 EXEMPTION. It understands that the Securities have not been
registered under the Securities Act on the grounds that the sale provided for in
this Agreement and the issuance of
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the Securities is exempt from registration under the Securities Act, and that
the Holding Company's reliance on such exemption is predicated in part on its
representations set forth herein.
6.7 ACCREDITED INVESTOR. Unless it otherwise has indicated in writing
to the Holding Company, it is an accredited investor within the definition set
forth in Rule 501(a) promulgated under the Securities Act.
6.8 NO PUBLIC MARKET. It understands that no public market now exists
for any of the securities issued by the Holding Company and that there is no
assurance that a public market will ever exist for any such securities.
6.9 ERISA. No part of the funds used by it to purchase the Securities
hereunder constitutes assets of any "employee benefit plan" (as defined in
Section 3(3) of ERISA) or "plan" (as defined in Section 4975 of the Code) listed
on Schedule 5.23(b).
6.10 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with it or any action taken by it.
6.11 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by it or enforcement against it of this Agreement or the
transactions contemplated hereby.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION. In addition to all other sums due hereunder or
provided for in this Agreement, the Companies jointly and severally agree to
indemnify and hold harmless each Purchaser and its Affiliates and each of their
respective officers, directors, agents, employees, subsidiaries, partners,
attorneys, accountants and controlling persons (each, an "INDEMNIFIED PARTY") to
the fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including, without limitation, reasonable fees, disbursements
and other charges of counsel incurred by an Indemnified Party in any action or
proceeding between any Company and such Indemnified Party (or Indemnified
Parties) or between an Indemnified Party (or Indemnified Parties) and any third
party or otherwise) or other liabilities, losses, or diminution in value of the
Shares (collectively, "LIABILITIES") resulting from or arising out of (i) any
breach of any representation or warranty, covenant or agreement of the Companies
in this Agreement, the Certificate of Incorporation, the
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Certificate of Amendment, the Second Certificate of Amendment, the Registration
Rights Agreement, the Stockholders' Agreement or the other Transaction
Documents, including, without limitation, the failure to make payment when due
of amounts owing pursuant to this Agreement, the Shares or the other Transaction
Documents, on the due date thereof (whether at the scheduled maturity, by
acceleration or otherwise) or (ii) any legal, administrative or other actions
(including actions brought by either of the Purchasers, any Company, any
Subsidiary or any equity holders of any Company or Subsidiary or derivative
actions brought by any Person claiming through or in any Company's or
Subsidiary's name), proceedings or investigations (whether formal or informal),
or written threats thereof, based upon, relating to or arising out of the
Transaction Documents, the transactions contemplated thereby, or any Indemnified
Party's role therein or in the transactions contemplated thereby; provided,
however, that no Company shall be liable under this Section 7.1 to an
Indemnified Party: (a) for any amount paid by the Indemnified Party in
settlement of claims by the Indemnified Party without the Holding Company's
written consent (which consent shall not be unreasonably withheld), (b) to the
extent that it is finally judicially determined that such Liabilities resulted
primarily from the willful misconduct or gross negligence of such Indemnified
Party or (c) to the extent that it is finally judicially determined that such
Liabilities resulted primarily from the breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement or any other Transaction Document; provided,
further, that if and to the extent that such indemnification is unenforceable
for any reason, the Companies shall make the maximum contribution to the payment
and satisfaction of such Liabilities which shall be permissible under applicable
laws. In connection with the obligation of the Companies to indemnify for
expenses as set forth above, the Companies further jointly and severally agree,
upon presentation of appropriate invoices containing reasonable detail, to
reimburse each Indemnified Party for all such expenses (including, without
limitation, fees, disbursements and other charges of counsel incurred by an
Indemnified Party in any action or proceeding between any Company and such
Indemnified Party (or Indemnified Parties) or between an Indemnified Party (or
Indemnified Parties) and any third party or otherwise) as they are incurred by
such Indemnified Party; provided, however, that if an Indemnified Party is
reimbursed hereunder for any expenses, such reimbursement of expenses shall be
refunded to the extent it is finally judicially determined that the Liabilities
in question resulted primarily from (i) the willful misconduct or gross
negligence of such Indemnified Party or (ii) the breach by such Indemnified
Party of any representation, warranty, covenant or other agreement of such
Indemnified Party contained in this Agreement or any other Transaction Document.
7.2 NOTIFICATION. Each Indemnified Party under this Article 7 will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from any Company under this Article 7,
notify the Holding Company in writing of the commencement thereof. The omission
of any Indemnified Party so to notify the Holding Company of any such action
shall not relieve any Company from any liability which it may have to such
Indemnified Party under this Article 7 unless, and only to the extent that, such
omission results in the Companies' forfeiture of material substantive rights or
defenses. In case any such action, claim or other proceeding shall be brought
against any Indemnified Party and it shall notify the Holding Company of the
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<PAGE> 39
commencement thereof, the Companies shall be entitled to assume and control the
defense thereof at their own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action, claim
or proceeding in which any Company, on the one hand, and an Indemnified Party,
on the other hand, is, or is reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel at the
Companies' expense and to control its own defense of such action, claim or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between any Company, on the one hand, and
such Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that in no event shall the
Companies be required to pay fees and expenses under this Article 7 for more
than one firm of attorneys in any jurisdiction in any one legal action or group
of related legal actions. The Companies jointly and severally agree that they
will not, without the prior written consent of the Purchasers, settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Purchasers and each other Indemnified Party from
all liability arising or that may arise out of such claim, action or proceeding.
No Company shall be liable for any settlement of any claim, action or proceeding
effected against an Indemnified Party without its written consent, which consent
shall not be unreasonably withheld. The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
7.3 LIMITATIONS ON INDEMNIFICATION.
(a) The Companies shall have no indemnification obligation to an
Indemnified Party pursuant to this Article VII with respect to a breach of any
representation or warranty unless such Indemnified Party delivers to the Holding
Company written notice of such breach within the applicable survival period for
such representation or warranty as set forth in Section 9.1 hereof.
(b) No Indemnified Party shall be entitled to indemnification
under this Article VII unless the aggregate amount of Liabilities to which the
Indemnified Parties are entitled to recover exceeds $50,000. In the event that
such Liabilities exceed an aggregate of $50,000, the Indemnified Parties shall
be entitled to indemnification under this Article VII for all Liabilities in
excess of an aggregate of $25,000. The limitation set forth in this paragraph
(b) shall not apply with respect to any (i) any breach of any representation or
warranty set forth in Section 5.21 hereof, (ii) matter constituting fraud or
intentional or willful misconduct, or (iii) covenant or agreement of any Company
to be performed or complied with from and after the Closing Date.
7.4 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to the
contrary in this Article 7, the indemnification and contribution provisions of
the Registration Rights
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Agreement shall govern any claim made with respect to registration statements
filed pursuant thereto or sales made thereunder.
ARTICLE 8
AFFIRMATIVE COVENANTS
For so long as WEP and/or Kitty Hawk shall continue to beneficially
own an aggregate number of shares of Series A Preferred Stock and/or Series B
Preferred Stock that is convertible into at least five percent (5%) of the
aggregate number of shares of Common Stock into which the shares of Series A
Preferred Stock issued on the First Closing Date and the shares of Series B
Preferred Stock issued on the Second Closing Date were convertible into, in each
case, as of the original issue date (after appropriate adjustment for dividends,
subdivisions, combinations or reclassifications of the Series A Preferred Stock
and the Series B Preferred Stock), and until the payment by the Companies of all
amounts due to the Purchasers under this Agreement and the other Transaction
Documents, including, without limitation, all fees, expenses and amounts due at
such time in respect of indemnity obligations under Article 7, the Companies
hereby jointly and severally covenant and agree with the Purchasers as follows:
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Companies shall
maintain, and cause each of their Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP
(it being understood that monthly financial statements are not required to have
footnote disclosures). The Holding Company shall deliver to the Purchasers each
of the financial statements and other reports described below:
(a) Monthly and Quarterly Financial. As soon as available and in
any event within thirty (30) days after the end of each month, the Holding
Company shall deliver to the Purchasers (i) the consolidated and consolidating
balance sheets of the Companies and their Subsidiaries, as at the end of such
month and the related consolidated and consolidating statements of income,
stockholders' and members equity and cash flow for such month and for the period
from the beginning of the then current fiscal year of the Companies to the end
of such month (and, with respect to financial statements delivered for months
that are also the last month of any fiscal quarter, accompanied by the related
consolidated and consolidating statements of income, stockholders' and member's
equity and cash flow for such fiscal quarter) and (ii) a schedule of the
outstanding Indebtedness for borrowed money of the Companies and their
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan.
(b) Year-End Financial. As soon as available and in any event
within ninety (90) days after the end of the fiscal year of the Holding Company,
the Holding Company shall deliver to the Purchasers (i) the consolidated and
consolidating balance sheets of the Companies and
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<PAGE> 41
their Subsidiaries as at the end of such year and the related consolidated and
consolidating statements of income, stockholders' and members' equity and cash
flow for such fiscal year, (ii) a schedule of the outstanding Indebtedness for
borrowed money of the Companies and their Subsidiaries describing in reasonable
detail each such debt issue or loan outstanding and the principal amount and
amount of accrued and unpaid interest with respect to each such debt issue or
loan, and (iii) a report with respect to the financial statements from Arthur
Andersen or another "Big Six" accounting firm of certified public accountants
selected by the Holding Company and reasonably acceptable to the Purchasers,
which report shall be prepared in accordance with Statement of Auditing
Standards No. 58 (the "STATEMENT") entitled "Reports on Audited Financial
Statements" and such report shall be "Unqualified" (as such term is defined in
such Statement). Together with each delivery of financial statements of the
Companies and their Subsidiaries pursuant to this subsection 8.1(b), the Holding
Company shall deliver to the Purchasers a copy of a letter from the Holding
Company to such accounting firm, which letter shall have been delivered to such
accounting firm prior to its delivery of such financial statements, stating that
an intent of the Holding Company in engaging the accounting firm's professional
services to prepare the audit report relating to such financial statements was
to benefit and influence the Purchasers and their successors or assigns. Such
letter shall state that the Purchasers intend to rely on the audit report and
the accounting firm's professional services provided to the Companies and their
Subsidiaries.
(c) Company's Compliance Certificate. Together with each delivery
of financial statements of the Companies and their Subsidiaries pursuant to
subsections 8.1(a) and 8.1(b) above, the Holding Company shall deliver to the
Purchasers a fully and properly completed compliance certificate (in the form of
Exhibit L hereto or in such other form and substance satisfactory to the
Purchasers) signed by the Holding Company's chief executive officer or chief
financial officer.
(d) Accountants' Reports. Promptly upon receipt thereof, each
Company shall deliver to the Purchasers copies of all significant reports
submitted by the Companies' certified public accountants in connection with each
annual, interim or special audit or review of any type of the financial
statements or related internal control systems of the Companies and their
Subsidiaries made by such accountants, including any comment letter submitted by
such accountants to management in connection with their services.
(e) Management Reports. Together with each delivery of financial
statements of the Companies and their Subsidiaries pursuant to subsections
8.1(a) and 8.1(b), the Companies shall deliver to the Purchasers a management
report (i) describing the operations and financial condition of the Companies
and their Subsidiaries for the month then ended and the portion of the current
fiscal year then elapsed (or for the fiscal year then ended in the case of
year-end financials), (ii) setting forth in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year and the
corresponding figures from the most recent projections for the current fiscal
year delivered pursuant to subsection 8.1(f) and (iii) discussing the reasons
for any significant variations. The information above shall be presented in
reasonable detail and shall be certified by the chief financial officer of the
Holding Company to the effect that such information
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fairly presents the results of operations and financial condition of the
Companies and their Subsidiaries as at the dates and for the periods indicated.
(f) Projections. No earlier than sixty (60) days prior nor later
than thirty (30) days after the end of each fiscal year beginning with the
current fiscal year, the Holding Company shall prepare and deliver to the
Purchasers projections of the Companies and their Subsidiaries for the next
succeeding fiscal year, on a month to month basis.
(g) SEC Filings and Press Releases. Promptly upon their becoming
available, each Company shall deliver to the Purchasers copies of (i) all
financial statements, reports, notices and proxy statements sent or made
available by such Company or any of its Subsidiaries to their security holders,
(ii) all regular and periodic reports and all registration statements and
prospectuses, if any, filed by such Company or any of its Subsidiaries with any
securities exchange or with the Commission or any other governmental or private
regulatory authority, and (iii) all press releases and other statements made
available by such Company or any of its Subsidiaries to the public concerning
material developments in the business of such Company or any of its
Subsidiaries.
(h) Events of Default, Etc. Promptly upon any officer of the
Company obtaining knowledge of any of the following events or conditions, such
Company shall deliver to the Purchasers copies of all notices given or received
by such Company or any of its Subsidiaries with respect to any such event of
condition and a certificate of such Company's chief executive officer specifying
the nature and period of existence of such event or condition and what action
the Company has taken, is taking and proposes to take with respect thereto: (i)
any condition or event that constitutes a breach of any provision of this
Agreement; (ii) any notice that any Person has given to any Company or any
Subsidiarily or any other action taken with respect to a claimed default in any
agreement evidencing Indebtedness or any other material agreement to which any
Company or any Subsidiary is a party; or (iii) any event or condition that could
reasonably be expected to result in any material adverse effect on the Condition
of the Companies.
(i) Litigation. Promptly upon any officer of any Company
obtaining knowledge of (i) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Company or
any Subsidiary or any property of any Company or any Subsidiary not previously
disclosed by the Companies to the Purchasers or (ii) any material development in
any action, suit, proceeding, governmental investigation or arbitration at any
time pending against or affecting any Company or any Subsidiary or any property
of any Company or any Subsidiary, which, in each case, is reasonably possible to
have a material adverse effect on the Condition of the Companies, such Company
will promptly give notice thereof to the Purchasers and provide to the
Purchasers such other information as may be reasonably available to such Company
to enable the Purchasers and their respective counsel to evaluate such matter.
(j) Subsidiaries. Not less than fifteen (15) days prior to
creating a Subsidiary or acquiring the stock of a Person, such that such Person
will become a Subsidiary, the Holding Company shall notify the Purchasers of any
Company's or any Subsidiary's intention to
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create such Subsidiary or acquire such stock, and following such notice, such
Subsidiary will not be created or acquired unless such Subsidiary executes a
joinder to this Agreement and the other Transaction Documents in form and
substance satisfactory to the Purchasers.
(k) No Defaults. The Holding Company shall deliver to the
Purchasers concurrently with the delivery of the financial statements referred
to in subsection 8.1(b), a certificate of the Holding Company's Chief Financial
Officer in the form of stating that to his or her knowledge no breach of this
Agreement or any Transaction Document shall have occurred during the period
covered thereby, except as specified in such certificate.
(l) Bank Accounts. No Company shall establish any bank account or
other account with any financial institution unless it provides Purchasers with
prior written notice thereof.
(m) Other Information. With reasonable promptness, each Company
shall deliver to the Purchasers such other information and data with respect to
such Company or any of its Subsidiaries as from time to time may be reasonably
required by the Purchasers.
8.2 PRESERVATION OF CORPORATE EXISTENCE. The Companies shall, and
shall cause each of their Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence;
(b) conduct their businesses in accordance with sound business
practices, keep their properties in good working order and condition (normal
wear and tear excepted), and from time to time make all needed repairs to,
renewals of or replacements of such properties (except to the extent that any of
such properties are obsolete or are being replaced) so that the efficiency of
their business operations shall be fully maintained and preserved; and
(c) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority.
8.3 PAYMENT OF OBLIGATIONS. Each Company shall, and shall cause each
of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including without
limitation:
(a) all tax liabilities, assessments and governmental charges or
levies upon such Company or Subsidiary or their properties or assets, unless the
same are being contested in good faith by appropriate proceedings and adequate
reserves in accordance with GAAP are being maintained by such Company or
Subsidiary;
(b) all lawful claims which such Company or Subsidiary is
obligated to pay, which are due and which, if unpaid, might by law become a Lien
upon its property, unless the
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same are being contested in good faith by appropriate proceedings and adequate
reserves in accordance with GAAP are being maintained by such Company or
Subsidiary; and
(c) all payments of principal, interest and other amounts when
due on Indebtedness.
8.4 COMPLIANCE WITH LAWS. The Companies shall comply, and shall cause
their Subsidiaries to comply, in all material respects with all Requirements of
Law and with the directions of any Governmental Authority having jurisdiction
over them or their business or property (including all applicable Environmental
Laws).
8.5 FILING OF SECOND CERTIFICATE OF AMENDMENT; RESERVATION OF SHARES.
Following delivery by WEP of the written notice described in subsection 2.2(b),
the Holding Company shall on or prior to the Second Closing Date, cause the
Second Certificate of Amendment to be duly executed by and filed with the
Secretary of State of the State of Delaware, all in accordance with the
provisions of the Delaware General Corporation Law, and thereafter, at all times
shall reserve and keep available out of its authorized Series B Preferred Stock,
solely for the purpose of issuance or delivery upon exercise of the WEP Option,
the maximum number of shares of Series B Preferred Stock issuable upon such
exercise. Such shares shall, when issued and paid for in accordance with the
terms of this Agreement, be duly and validly issued and fully paid and
non-assessable. The Holding Company shall at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
or delivery upon (a) exercise of the PCX Warrant, the Stock Options, and (b)
conversion of the Shares, the maximum number of shares of capital stock that may
be issuable or deliverable upon such exercise or conversion, as the case may be
(the "EXERCISABLE SHARES"). The Exercisable Shares shall, when issued or
delivered and paid for in accordance with the PCX Warrant, the Stock Options,
the Certificate of Amendment or the Second Certificate of Amendment with respect
to the Shares, as the case may be, be duly and validly issued and fully paid and
non-assessable. The Holding Company shall issue such capital stock in accordance
with the provisions of the PCX Warrant, the Stock Options or the Certificate of
Amendment or Second Certificate of Amendment with respect to the Shares, as the
case may be, and shall otherwise comply, in each case, with the terms thereof.
8.6 INSPECTION. The Companies will permit, and will cause each of
their Subsidiaries to permit, representatives of the Purchasers to visit and
inspect any of their properties, to examine their corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to discuss
their affairs, finances and accounts with their respective directors, officers
and independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably requested, upon reasonable
advance notice.
8.7 MAINTENANCE OF PROPERTIES; INSURANCE. The Companies and their
Subsidiaries shall maintain or cause to be maintained in good repair, working
order and condition all material properties used in their respective businesses
and will make or cause to be made all appropriate repairs, renewals and
replacements thereof. The Companies and their Subsidiaries will
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maintain or cause to be maintained with financially sound and reputable insurers
that have a rating of "A" or better as established by Best's Rating Guide (or an
equivalent rating with such other publication of a similar nature as shall be in
current use), public liability and property damage insurance with respect to
their respective businesses and properties against loss or damage of the kinds
customarily carried or maintained by companies of established reputation engaged
in similar businesses and in amounts acceptable to Purchasers and will deliver
evidence thereof to Purchasers. Without limiting the foregoing, the Companies
and their Subsidiaries will establish no later than two (2) months after the
First Closing Date and maintain at all times thereafter business interruption
insurance in an amount satisfactory to WEP and the Companies will establish no
later than two (2) months after the First Closing Date and maintain at all times
thereafter, directors' and officers' liability insurance coverage for each of
the members of the Board of Directors of the Holding Company in amounts
satisfactory to WEP; provided, however, that the Holding Company shall not be
obligated to purchase such insurance in the event that reasonable terms and
pricing are not commercially available.
8.8 BOOKS AND RECORDS. The Companies shall, and shall cause each of
their Subsidiaries to, keep proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the assets
and businesses of the Companies and each of their Subsidiaries in accordance
with GAAP consistently applied to the Companies and their Subsidiaries taken as
a whole.
8.9 USE OF PROCEEDS. The Holding Company shall use the proceeds of
the sale of Securities at the First Closing hereunder only for (i) the payment
of the cash purchase price to be paid pursuant to the LLC Exchange Agreement,
(ii) the fees and expenses in connection with the transactions contemplated
hereunder and under the Transaction Documents, and the Exchange Transaction
Documents and (iii) general corporate purposes. The Holding Company shall use
the proceeds from the sale of the Securities at the Second Closing hereunder
only for (i) the payment of the fees and expenses in connection with the
transactions contemplated hereunder and under the Transaction Documents and (ii)
general corporate purposes.
8.10 BOARD NOMINEES. (a) From and after the First Closing, the
Holding Company shall (i) maintain a five-member Board of Directors, (ii) use
its best efforts to have (A) three nominees designated by Whitney (or WEP)
elected to the Holding Company's Board of Directors, (B) two nominees designated
by the management of the Holding Company ("MANAGEMENT") and (C) one nominee of
Whitney (or WEP) elected to each of the Holding Company's audit committee and
compensation committee, and (c) expand the Board of Directors, at Whitney's
request, to accommodate the election to the Board of Directors of one or more
"independent" nominees mutually agreeable to Whitney (or WEP) and Management,
provided that at all times the Holding Company shall use its best efforts to
have that number of nominees of Whitney (or WEP) elected to the Board of
Directors of the Holding Company as would constitute a majority of the Board of
Directors. Notwithstanding the foregoing, at such time as WEP and/or Kitty Hawk
shall no longer beneficially own an aggregate number of shares of Series A
Preferred Stock and Series B Preferred Stock that is convertible into at least
ten percent (10%) of the aggregate
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number of shares of Common Stock into which the shares of Series A Preferred
Stock issued on the First Closing Date and the shares of Series B Preferred
Stock issued on the Second Closing Date were convertible into, in each case, as
of the date of issuance (after appropriate adjustment for dividends,
subdivisions, combinations or reclassifications of the Series A Preferred Stock
and the Series B Preferred Stock), then the Holding Company's obligation to use
its best efforts to elect Whitney's (or WEP'S) designees as set forth above
shall be limited to having one director designated by Whitney (or WEP) elected
to the Holding Company's Board of Directors, audit committee and compensation
committee. The Holding Company shall provide to each director the same
information concerning the Companies and their Subsidiaries, and access thereto,
provided to all other members of the Holding Company's Board of Directors. The
reasonable travel expenses incurred by any such director in attending any such
meetings shall be reimbursed by the Holding Company to the extent consistent
with the Holding Company's then existing policy of reimbursing directors
generally for such expenses.
(b) In the event that Whitney (or WEP) or Kitty Hawk (each an
"INSTITUTIONAL INVESTOR") shall not have a designee serving on the Board of
Directors of the Holding Company for any reason, the Holding Company shall give
such Institutional Investor, notice of (in the same manner as notice is given to
directors), and permit one Person designated by such Institutional Investor to
attend as observer, all meetings of the Holding Company's Board of Directors and
all executive and other committee meetings of the Board of Directors and shall
provide to such Institutional Investor the same information concerning the
Holding Company, and access thereto, provided to members of the Holding
Company's Board of Directors. The reasonable travel expenses incurred by any
such designee of Whitney (or WEP) in attending any board or committee meetings
shall be reimbursed by the Holding Company to the extent consistent with the
Holding Company's then existing policy of reimbursing directors generally for
such expenses.
8.11 GRANTING OF OPTIONS. The Holding Company may grant up to 967,700
Stock Options. If the Stock Options are granted, the Holding Company shall grant
the Stock Options at an exercise price equal to at least the per share fair
market value of the Common Stock (as determined by the Holding Company's Board
of Directors) at the time of such grant.
8.12 BUSINESS ACTIVITIES. The Holding Company shall engage in no
business activity other than the ownership of the capital stock of UST, the
membership interests of Metrosite and Telesite, such other activities relating
thereto, and the performance of its obligations under the Transaction Documents
and the Exchange Transaction Documents. Telesite and Metrosite shall engage in
no business activity other than the business that they are currently engaged in
and the performance of their respective obligation under the Transaction
Documents and the Exchange Transaction Documents.
8.13 KEY-MAN LIFE INSURANCE. The Holding Company shall at all times
maintain a key-man life insurance policy with a reputable and financially sound
insurer on the life of Stephen H. Clark in the face amount of not less than
$3,000,000 and on the life of Joe L. Finley, III, in the face amount of not less
than $1,000,000. Such insurance policies shall (a) be in full force and effect
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by no later than two (2) months after the First Closing Date, (b) name the
Holding Company as beneficiary and (c) provide that such insurance policies may
not be canceled unless the insurance carrier gives at least 30 days' prior
written notice of such cancellation to Purchasers.
ARTICLE 9
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of either
Purchaser, acceptance of the Securities and payment therefor, or termination of
this Agreement until November 30, 1999, except for the representations and
warranties set forth in Sections 5.11, 5.13 and 5.16 and matters constituting
fraud or intentional or willful misconduct, which shall survive for the
applicable statute of limitation periods (including extensions or waivers
thereof). If notification of a breach of any representation or warranty is given
on or before the applicable survival period, any claim with respect to such
breach shall survive until finally resolved by agreement of the parties or
nonappealable court order.
9.2 NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
<TABLE>
<S> <C>
(a) if to WEP or Whitney:
Whitney Equity Partners, L.P.
177 Broad Street
Stamford, Connecticut 06901
Telecopier No.: (203) 973-1422
Attention: Mr. Michael R. Stone
Mr. Daniel J. O' Brien
with a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 735-8708
Attention: David A. Scherl, Esq.
</TABLE>
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<TABLE>
<S> <C>
(b) if to Kitty Hawk:
Kitty Hawk Capital Limited Partnership, III
2700 Coltsgate Road, Suite 202
Charlotte, North Carolina 28211
Telecopier No.: (704) 362-2774
Attention: Mr. W. Chris Hegele
with a copy to:
Smith Helms Mulliss & Moore, LLP
214 North Church Street
Charlotte, North Carolina 28202
Telefacsimile Number: (704) 334-8467
Attention: Harrison Marshall, Esq.
(c) if to any Company:
Integrated Site Development, Inc.
1135 Kildaire Farm Road
Cary, North Carolina 27511
Telecopier No.: (919)481-9255
Attention: Mr. Stephen H. Clark
Mr. Joe L. Finley, III
with a copy to:
Hutchison & Mason PLLC
4011 Westchase Blvd
Suite 400
Raleigh, North Carolina 27607
Telecopier No.: (919) 829-9696
Attention: Fred D. Hutchison, Esq.
</TABLE>
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
9.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the parties
hereto. Subject to applicable securities laws, the Purchasers may assign any of
its rights under any of the Transaction Documents to any Person, and, subject to
the terms of the Stockholders Agreement, any holder of any of the
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Securities or any of the Common Stock issuable upon conversion of the Series A
Preferred Stock or the Series B Preferred Stock may assign any such securities
to any Person. No Company may assign any of its rights under this Agreement
without the prior written consent of the Purchasers. Except as provided in
Article 7, no Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of any of the Transaction
Documents.
9.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any of the parties hereto
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by all of the parties hereto, and (ii) only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on any Company
in any case shall entitle such Company to any other or further notice or demand
in similar or other circumstances.
9.5 SIGNATURES AND COUNTERPARTS. Telefacsimile transmissions of any
executed original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
9.6 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
9.8 JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
AGREES THAT THE ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE SHARES, THE WEP OPTION OR ANY AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE
44
<PAGE> 50
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO
THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND
EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT THE SUCH COURTS
ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 9.2, SUCH SERVICE TO BECOME
EFFECTIVE 10 DAYS AFTER SUCH MAILING.
9.9 SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
9.10 RULES OF CONSTRUCTION. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement.
9.11 ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
9.12 CERTAIN EXPENSES. The Companies jointly and severally agree to
pay all expenses of the Purchasers (including fees, charges and disbursements of
counsel) incurred in connection with any amendment, supplement, modification or
waiver of or to any provision of this Agreement (including, without limitation,
a response to a request by any Company for the Purchasers' consent to any action
otherwise prohibited hereunder), the Certificate of Amendment or the Second
Certificate of Amendment, or consent to any departure by any Company from, the
terms of any provision of this Agreement, the Certificate of Amendment or the
Second Certificate of Amendment.
9.13 PUBLICITY. Except as may be required by applicable law, none of
the parties hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the
45
<PAGE> 51
other party hereto. If any announcement is required by law to be made by any
party hereto, prior to making such announcement such party will deliver a draft
of such announcement to the other parties and shall give the other parties an
opportunity to comment thereon.
9.14 FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
9.15 OBLIGATIONS OF THE PARTIES. Each Purchaser's obligations and the
obligations of the Companies hereunder and are subject to the execution and
delivery by the other Purchaser of this Agreement. The obligations of each
Purchaser hereunder and under the other Transaction Documents to which such
Purchaser is a party shall be several and not joint, and no Purchaser shall be
liable or otherwise responsible for the acts of any other Purchaser. The
obligations of the Companies hereunder shall be joint and several.
46
[INTENTIONALLY LEFT BLANK]
<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
INTEGRATED SITE DEVELOPMENT, INC.
<TABLE>
<S> <C>
By: /s/ STEVEN H. CLARK
-------------------------------------
Steven H. Clark
President
U.S. TOWERS, INC.
By: /s/ STEVEN H. CLARK
-------------------------------------
Steven H. Clark
President
TELESITE SERVICES, LLC
By: /s/ JOE L. FINLEY III
-------------------------------------
Name: Joe L. Finley III
Title: Member Rep.
METROSITE MANAGEMENT, LLC
By: /s/ JOE L. FINLEY III
-------------------------------------
Name: Joe L. Finley III
Title: Member Rep.
WHITNEY EQUITY PARTNERS, L.P.
By: J.H. Whitney Equity Partners LLC,
Its General Partner
By: /s/ MICHAEL R. STONE
-------------------------------------
Name: Michael R. Stone
A Managing Member
</TABLE>
FIRST SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
<PAGE> 53
<TABLE>
<S> <C>
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III
By: Kitty Hawk Partners Limited Partnership, III,
Its General Partner
By: /s/ W. CHRIS HEGELE
--------------------------------------------
W. Chris Hegele
General Partner
</TABLE>
SECOND SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
<PAGE> 1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
BY AND AMONG
SPECTRASITE HOLDINGS, INC.,
WHITNEY EQUITY PARTNERS, L.P.,
J. H. WHITNEY III, L.P.
WHITNEY STRATEGIC PARTNERS III, L.P.,
WALLER-SUTTON MEDIA PARTNERS, L.P.,
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III,
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV,
EAGLE CREEK CAPITAL, L.L.C.
THE NORTH CAROLINA ENTERPRISE FUND, L.P.,
FINLEY FAMILY LIMITED PARTNERSHIP,
WILLIAM R. GUPTON,
JACK W. JACKMAN
AND
ALTON D. ECKERT
--------------------------------
DATED AS OF MARCH 23, 1998
--------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS........................................................3
1.1 Definitions........................................................3
1.2 Accounting Terms: Financial Statements.............................9
1.3 Knowledge of the Company...........................................9
ARTICLE 2 PURCHASE AND SALE OF THE PREFERRED STOCK...........................9
2.1 Purchase and Sale of the Shares....................................9
2.2 Closings..........................................................10
2.3 Default Shares ................................................10
2.4 Financial Accounting Positions; Tax Reporting.....................11
2.5 Fees and Expenses.................................................11
ARTICLE 3 CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE THE SHARES...............................................12
3.1 Representations and Warranties....................................12
3.2 Compliance with this Agreement....................................12
3.3 Compliance with the Series A Purchase Agreements; No defaults.....12
3.4 Secretary's Certificate...........................................13
3.5 Documents.........................................................13
3.6 Purchase of Shares Permitted by Applicable Laws...................13
3.7 Opinion of Counsel................................................13
3.8 Approval of Counsel to the Purchaser..............................13
3.9 Consents and Approvals............................................13
3.10 Registration Rights Agreement.....................................14
3.11 Stockholders' Agreement...........................................14
3.12 Certificate of Incorporation and By-laws..........................14
3.13 No Material Judgment or Order.....................................14
3.14 Good Standing Certificate.........................................14
3.15 Pro Forma Balance Sheet...........................................14
3.16 Stock Option Plan.................................................14
3.17 D & O Insurance...................................................14
3.18 Tower Agreements..................................................14
3.19 Bank Loan.........................................................15
3.20 Clark Key-Man Insurance...........................................15
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 4 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO
ISSUE AND SELL THE SHARES.........................................15
4.1 Representations and Warranties....................................15
4.2 Compliance with this Agreement....................................15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................16
5.1 Existence and Power...............................................16
5.2 Authorization; No Contravention...................................16
5.3 Governmental Authorization; Third Party Consents..................16
5.4 Binding Effect....................................................16
5.5 No Legal Bar......................................................16
5.6 Litigation........................................................17
5.7 Compliance with Laws..............................................17
5.8 No Default or Breach..............................................17
5.9 Title to Properties...............................................17
5.10 Use of Real Property..............................................17
5.11 Taxes.............................................................18
5.12 Financial Condition...............................................18
5.13 ERISA.............................................................19
5.14 Disclosure........................................................19
5.15 Absence of Certain Changes or Events..............................19
5.16 Environmental Matters.............................................19
5.17 Investment Company/Government Regulations.........................20
5.18 Subsidiaries......................................................20
5.19 Capitalization....................................................21
5.20 Private Offering..................................................22
5.21 Broker's, Finder's or Similar Fees................................22
5.22 Labor Relations...................................................22
5.23 Employee Benefit Plans............................................23
5.24 Patents, Trademarks, Etc..........................................23
5.25 Potential Conflicts of Interest...................................24
5.26 Trade Relations...................................................24
5.27 Outstanding Borrowings............................................24
5.28 Material Contracts................................................24
5.29 Insurance.........................................................25
5.30 Solvency..........................................................25
5.31 Compliance with the Series A Purchase Agreement; No Defaults......25
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................26
6.1 Authorization; No Contravention...................................26
6.2 Binding Effect....................................................26
6.3 No Legal Bar......................................................26
6.4 Experience........................................................26
6.5 Purchase for Own Account..........................................26
</TABLE>
iii
<PAGE> 4
<TABLE>
<S> <C> <C>
6.6 Exemption.........................................................27
6.7 Accredited Investor...............................................27
6.8 No Public Market..................................................27
6.9 ERISA.............................................................27
6.10 Broker's, Finder's or Similar Fees................................27
6.11 Governmental Authorization; Third Party Consent...................27
ARTICLE 7 INDEMNIFICATION...................................................28
7.1 Indemnification...................................................28
7.2 Notification......................................................29
7.3 Limitations on Indemnification....................................29
7.4 Registration Rights Agreement.....................................30
ARTICLE 8 AFFIRMATIVE COVENANTS.............................................30
8.1 Financial Statements and Other Information........................30
8.2 Preservation of Corporate Existence...............................33
8.3 Payment of Obligations............................................34
8.4 Compliance with Laws..............................................34
8.5 Inspection........................................................34
8.6 Maintenance of Properties; Insurance..............................34
8.7 Books and Records.................................................35
8.8 Use of Proceeds...................................................35
8.9 Board Nominees....................................................35
8.10 Granting of Options...............................................35
8.11 Business Activities...............................................35
8.12 Key-Man Life Insurance............................................35
8.13 Board Consent.....................................................36
8.14 Reservation of Shares.............................................36
ARTICLE 9 MISCELLANEOUS.....................................................36
9.1 Survival of Representations and Warranties........................36
9.2 Notices...........................................................36
9.3 Successors and Assigns............................................40
9.4 Amendment and Waiver..............................................40
9.5 Signatures and Counterparts.......................................40
9.6 Headings..........................................................40
9.7 Governing Law.....................................................41
9.8 Jurisdiction......................................................41
9.9 Severability......................................................41
9.10 Rules of Construction.............................................41
9.11 Entire Agreement..................................................41
9.12 Certain Expenses..................................................41
</TABLE>
iv
<PAGE> 5
<TABLE>
<S> <C> <C>
9.13 Publicity.........................................................42
9.14 Further Assurances................................................42
9.15 Obligations of the Parties........................................42
9.16 Amendment of Series A Purchase Agreement..........................42
</TABLE>
v
<PAGE> 6
EXHIBITS
- --------
A Certificate of Amendment
B Amended and Restated Registration Rights Agreement
C Second Amended and Restated Stockholders' Agreement
D Compliance Certificate
E Stock Option Plan
SCHEDULES
- ---------
1 List of Purchasers and Allocation of Numbers of Initial Shares at First
Closing
2 List of Purchasers and Allocation of Number of Additional Shares at Second
Closing
vi
<PAGE> 7
STOCK PURCHASE AGREEMENT
AGREEMENT (the "AGREEMENT"), dated as of March 23, 1998, by and among
SPECTRASITE HOLDINGS, INC. (the "COMPANY"), a Delaware corporation, WHITNEY
EQUITY PARTNERS, L.P. ("JHW II"), a Delaware limited partnership, J. H. WHITNEY
III, L.P. ("JHW III"), a Delaware limited partnership, WHITNEY STRATEGIC
PARTNERS III, L.P. ("JHW STRATEGIC III"), a Delaware limited partnership,
WALLER-SUTTON MEDIA PARTNERS, L.P. ("WALLER"), a Delaware limited partnership,
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III ("KITTY HAWK III"), a Delaware
limited partnership, KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV ("KITTY HAWK
IV"), a Delaware limited partnership, EAGLE CREEK CAPITAL, L.L.C. ("EAGLE
CREEK"), a Washington limited liability company, THE NORTH CAROLINA ENTERPRISE
FUND, L.P. ("NCEF"), a North Carolina limited partnership, FINLEY FAMILY LIMITED
PARTNERSHIP ("FINLEY LP"), an Arkansas limited partnership, WILLIAM R. GUPTON
("GUPTON"), a North Carolina resident, JACK W. JACKMAN ("JACKMAN"), a North
Carolina resident, and ALTON D. ECKERT ("ECKERT"), a North Carolina resident
(each of JHW II, JHW III, JHW Strategic III, Waller, Kitty Hawk III, Kitty Hawk
IV, Eagle Creek, NCEF, Finley LP, Gupton, Jackman and Eckert individually, a
"Purchaser" and collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Stock Purchase Agreement (the
"SERIES A PURCHASE AGREEMENT"), dated as of May 12, 1997, by and among
Integrated Site Development, Inc. ("INTEGRATED" or the "COMPANY"), a Delaware
corporation, (now known as SpectraSite Holdings, Inc.), U.S. Towers, Inc. ("UST"
or "SPECTRASITE"), a Delaware corporation (now known as SpectraSite
Communications, Inc.), Telesite Services, LLC ("TELESITE"), an Arkansas limited
liability company, which merged into SpectraSite, and Metrosite Management, LLC
("METROSITE"), an Arkansas limited liability company JHW II and Kitty Hawk III,
(A) JHW II purchased 3,203,118 shares of 8% Series A Cumulative Convertible
Redeemable Preferred Stock, $.001 par value per share, of the Company (the
"SERIES A PREFERRED STOCK"), and (B) Kitty Hawk III purchased 259,712 shares of
Series A Preferred Stock; and
WHEREAS, pursuant to the terms of the Stock Contribution Agreement,
dated as of May 12, 1997, by and among Stephen H. Clark ("CLARK"), Robert M.
Long ("LONG") and UST, (A) Clark acquired 687,395 shares of common stock, $0.001
par value per share, of the Company (the "COMMON STOCK"), and (B) Long acquired
162,605 shares of Common Stock; and
WHEREAS, pursuant to the terms of the Membership Interests
Contribution Agreement, dated as of May 12, 1997, by and among Integrated, Joe
L. Finley, Caroline Finley, the Finley LP, The Central Arkansas Opportunity
Foundation, a charitable trust organized under the laws of Arkansas, Telesite
and Metrosite, the Finley LP acquired 490,517 shares of Common Stock; and
<PAGE> 8
WHEREAS, a warrant held by PCX Corporation ("PCX"), a Delaware
corporation, to purchase 150,000 shares of Common Stock has been transferred and
assigned to NCEF, Kitty Hawk III, Clark, Edward J. Lutkewich ("LUTKEWICH"),
Jackman, Eckert and Gupton, and, as a result of such assignment, NCEF holds a
warrant (the "NCEF WARRANT") to purchase 33,340.42 shares of Common Stock, Kitty
Hawk III holds a warrant to purchase 33,340.42 shares of Common Stock (the
"KITTY HAWK WARRANT"), Clark holds a warrant to purchase 50,416.05 shares of
Common Stock (the "CLARK WARRANT"), Lutkewich holds a warrant to purchase
19,901.07 shares of Common Stock (the "LUTKEWICH WARRANT"), Jackman holds a
warrant to purchase 3,316.85 shares of Common Stock (the "JACKMAN WARRANT"),
Eckert holds a warrant to purchase 3,316.85 shares of Common Stock (the "ECKERT
WARRANT") and Gupton holds a warrant to purchase 6,368.34 shares of Common Stock
(the "GUPTON WARRANT" and together with the NCEF Warrant, the Kitty Hawk
Warrant, the Clark Warrant, the Lutkewich Warrant, the Jackman Warrant and the
Eckert Warrant, the "PCX STOCKHOLDER WARRANTS"); and
WHEREAS, pursuant to a Certificate of Amendment filed with the
Secretary of State of the State of Delaware on October 29, 1997, Integrated
changed its name to SpectraSite Holdings, Inc.;
WHEREAS, pursuant to Articles of Amendment filed with the Secretary
of State of the State of Arkansas, Telesite changed its name to SpectraSite
Communications, LLC ("SPECTRASITE, LLC");
WHEREAS, pursuant to an Agreement and Plan of Merger, dated October
31, 1997, between UST and SpectraSite, LLC, SpectraSite, LLC merged with and
into UST with UST being the surviving corporation, and UST changed its name to
SpectraSite Communications, Inc.;
WHEREAS, pursuant to a Purchase and Sale Agreement, dated February
27, 1998, by and among Apex Site Management L.P., a Delaware limited partnership
("APEX"), the Company and Metrosite, the Company sold to Apex, and Apex
purchased from the Company, all of the issued and outstanding capital membership
units of Metrosite;
WHEREAS, the Company wishes to sell to the Purchasers, and the
Purchasers wish to purchase from the Company, an aggregate of 7,000,000 shares
of its 8% Series B Cumulative Convertible Redeemable Preferred Stock, $0.001 par
value per share (the "SERIES B PREFERRED STOCK"), for an aggregate purchase
price of $28,000,000, upon the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
2
<PAGE> 9
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"ADDITIONAL SHARES" shall have the meaning set forth in Section 2.1
hereof.
"AFFILIATE" shall mean any Person (a) directly or indirectly
controlling, controlled by, or under common control with, the Company, (b)
directly or indirectly owning or holding five percent (5%) or more of any equity
interest in the Company, or (c) five percent (5%) or more of whose voting stock
or other equity interest is directly or indirectly owned or held by the Company.
For purposes of this definition, "control" (including with correlative meanings,
the terms "controlling," "controlled by" and under "common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall mean this Agreement, including the exhibits and
schedules attached hereto, as the same may be amended, supplemented or modified
in accordance with the terms hereof.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 5.12 hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"BY-LAWS" shall mean, unless the context in which it is used
otherwise requires, the by-laws of each of the Company and SpectraSite, as in
effect on the applicable Closing Date.
"CERTIFICATE OF AMENDMENT" shall mean the certificate of amendment to
the certificate of incorporation of the Company, which, among other things, sets
forth the terms, limitations and relative rights and preferences of the Series B
Preferred Stock, substantially in the form attached hereto as Exhibit A.
"CERTIFICATE OF INCORPORATION" shall mean the certificate of
incorporation of the Company (as amended), as in effect on the applicable
Closing Date.
"CHARTER DOCUMENTS" shall mean the Certificate of Incorporation and
the SpectraSite Certificate of Incorporation.
"CLOSING" shall mean the First Closing, the Second Closing or the
Default Shares Closing, as the case may be.
3
<PAGE> 10
"CLOSING DATE" shall mean the First Closing Date, the Second Closing
Date or the Default Shares Closing Date, as the case may be.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"COMMISSION" shall mean the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"COMMON STOCK" shall mean shares of common stock, par value $0.001
per share, of the Company, or any other capital stock of the Company into which
such stock is reclassified or reconstituted.
"COMPANY" shall mean SpectraSite Holdings, Inc., a Delaware
corporation.
"CONDITION OF THE COMPANY" shall mean the assets, business,
properties, operations or financial condition of the Company and its
Subsidiaries, taken as a whole.
"CONTINGENT OBLIGATION" as applied to any Person, shall mean any
direct or indirect liability, contingent or otherwise, of that Person: (i) with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings; or (iii)
under any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATIONS" shall mean as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which such
Person is a party or by which it or any of its property is bound.
4
<PAGE> 11
"DEFAULT SHARES" shall have the meaning set forth in Section 2.3
hereof.
"DEFAULT SHARES CLOSING" shall have the meaning set forth in Section
2.3 hereof.
"DEFAULT SHARES CLOSING DATE" shall have the meaning set forth in
Section 2.3 hereof.
"DEFINED BENEFIT PLAN" shall mean a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, qualified or non-qualified (whether or not subject to ERISA or the
Code).
"ENVIRONMENTAL LAWS" shall mean any Federal, state, territorial,
provincial or local law, common law doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters,
including those pertaining to land use, air, soil, surface water, ground water
(including the protection, cleanup, removal, remediation or damage thereof),
public or employee health or safety or any other environmental matter, together
with any other laws (Federal, state, territorial, provincial or local) relating
to emissions, discharges, releases or threatened releases of any pollutant or
contaminant including, without limitation, medical, chemical, biological,
biohazardous or radioactive waste and materials, into ambient air, land, surface
water, groundwater, personal property or structures, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, discharge or handling of any contaminant, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9601 et seq.), the Hazardous Material Transportation
Act (49 U.S.C. 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), the Clean Air Act (42 U.S.C. 1251 et seq.), the Toxic Substances Control
Act (15 U.S.C. 2601 et seq.), and the Occupational Safety and Health Act (29
U.S.C. 651 et seq.), as such laws have been, or are, amended, modified or
supplemented heretofore or from time to time hereafter and any analogous future
Federal, or present or future state or local laws, statutes and regulations
promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any Person that is treated as a single
employer with any Company or any of its Subsidiaries under Section 414(b), (c),
(m) or (o) of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"EXERCISABLE SHARES" shall have the meaning assigned to that term in
Section 8.14 hereof.
"FIRST CLOSING" shall have the meaning assigned to that term in
Section 2.2 hereof.
5
<PAGE> 12
"FIRST CLOSING DATE" shall have the meaning assigned to that term in
Section 2.2 hereof.
"FINANCIAL STATEMENTS" shall have the meaning assigned to that term
in Section 5.12 hereof.
"GAAP" shall mean generally accepted accounting principles in effect
from time to time within the United States.
"GOVERNMENTAL AUTHORITY" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"HAZARDOUS MATERIALS" shall mean those substances which are regulated
by or form the basis of liability under any Environmental Laws.
"INDEBTEDNESS" shall mean as to any Person (a) all obligations of
such Person for borrowed money (including, without limitation, reimbursement and
all other obligations with respect to surety bonds, unfunded credit commitments,
letters of credit and bankers' acceptances, whether or not matured), (b) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and accrued
commercial or trade liabilities arising in the ordinary course of business, (d)
all interest rate and currency swaps, caps, collars and similar agreements or
hedging devices under which payments are obligated to be made by such Person,
whether periodically or upon the happening of a contingency, (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) any
Contingent Obligation of such Person.
"INITIAL PUBLIC OFFERING" shall mean the sale by the Company or any
of its Subsidiaries of their capital stock pursuant to a registration statement
on Form S-1 or other Form under the Securities Act.
"INITIAL SHARES" shall have the meaning assigned to that term in
Section 2.1 hereof.
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"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences)
including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, or any financing lease having
substantially the same economic effect as any of the foregoing.
"OUTSTANDING BORROWINGS" shall mean all Indebtedness of the Company
and its Subsidiaries for money borrowed that is outstanding at the relevant time
of determination.
"PCX STOCKHOLDERS" shall have the meaning assigned to that term in
the fourth Whereas clause.
"PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, Governmental Authority or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"PLANS" shall have the meaning assigned to that term in Section 5.23
of this Agreement.
"PRO FORMA BALANCE SHEET" shall mean the pro forma consolidated
balance sheet of the Company and its Subsidiaries delivered pursuant to Article
3 hereof.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Amended and Restated
Registration Rights Agreement substantially in the form attached hereto as
Exhibit B.
"REQUIREMENTS OF LAW" shall mean as to any Person, the Charter
Documents and By-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, right, privilege, qualification,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority (including without limitation, the Federal Communications
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
and all Federal and State securities laws, and the rules and regulations
promulgated thereunder), in each case applicable or binding upon such Person or
any of its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"SECOND CLOSING" shall have the meaning assigned to that term in
Section 2.2 hereof.
"SECOND CLOSING DATE" shall have the meaning assigned to that term in
Section 2.2 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
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"SERIES A PURCHASE AGREEMENT" shall have the meaning ascribed to such
term in the first Whereas clause hereof.
"SERIES B PREFERRED STOCK" shall have the meaning ascribed to such
term in the fifth Whereas clause.
"SHARES" shall have the meaning assigned to that term in Section 2.1
hereof.
"SOLVENT" shall mean, with respect to the Company and its
Subsidiaries considered as a whole, based on the Financial Statements, (i) the
assets and the property of the Company and its Subsidiaries, considered as a
whole, exceed the aggregate liabilities (including contingent and unliquidated
liabilities) of the Company and its Subsidiaries, considered as a whole, (ii)
after giving effect to the transactions contemplated by this Agreement, the
Company and its Subsidiaries, considered as a whole, will not be left with
unreasonably small capital, and (iii) after giving effect to the transactions
contemplated by this Agreement, the Company and its Subsidiaries, considered as
a whole, are able to both service and pay their liabilities as they mature. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that is likely to
become an actual or matured liability.
"SPECTRASITE" shall have the meaning assigned to that term in the
first Whereas clause hereof.
"SPECTRASITE CERTIFICATE OF INCORPORATION" shall mean the Certificate
of Incorporation of SpectraSite, as in effect on the applicable Closing Date.
"STOCKHOLDERS' AGREEMENT" shall mean the Second Amended and Restated
Stockholders' Agreement, substantially in the form attached hereto as Exhibit C.
"STOCK OPTION PLAN" shall mean the Stock Option Plan of the Company,
a copy of which is attached hereto as Exhibit E.
"STOCK OPTIONS" shall have the meaning assigned to that term in
Section 5.19 of this Agreement.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation or
other entity (i) of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company or (ii) with respect to which such Person, directly or indirectly,
has the power to elect a majority of the board of directors or similar governing
body, or otherwise direct the management and/or operations thereof.
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"TRANSACTION DOCUMENTS" shall mean collectively, this Agreement, the
Registration Rights Agreement, the Stockholders' Agreement, the Certificate of
Incorporation, the Certificate of Amendment, and the By-laws.
"WHITNEY" shall mean J. H. Whitney & Co.
1.2 ACCOUNTING TERMS: FINANCIAL STATEMENTS. For purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to such terms in conformity with GAAP. Financial statements
and other information furnished to Purchasers pursuant to this Agreement shall
be prepared in accordance with GAAP as in effect at the time of such
preparation. No Accounting Changes (as defined below) shall affect any financial
covenants, standards or terms in this Agreement; provided that the Company shall
prepare footnotes to each compliance certificate and the financial statements
required to be delivered hereunder that show the differences between the
financial statements delivered (which reflect such Accounting Changes) and the
basis for calculating any financial covenant compliance (without reflecting such
Accounting Changes). "ACCOUNTING CHANGES" means: (a) changes in accounting
principles required by GAAP and implemented by the Company; (b) changes in
accounting principles recommended by the Company's certified public accountants
and implemented by the Company; and (c) changes in carrying value of the
Company's or any of its Subsidiaries' assets, liabilities or equity accounts
resulting from adjustments that were applicable to, but not included in, the Pro
Forma Balance Sheet. All such adjustments resulting from expenditures made
subsequent to the First Closing Date (including, without limitation,
capitalization of costs and expenses or payment of pre-closing date liabilities)
shall be treated as expenses in the period the expenditures are made.
1.3 KNOWLEDGE OF THE COMPANY. All references to the knowledge of the
Company or to facts known by the Company shall mean actual knowledge of, or
notice to, the Chairman, Chief Executive Officer, President, Chief Financial
Officer, or any other officer of the Company or any Subsidiary or any division
of the Company or any Subsidiary.
ARTICLE 2
PURCHASE AND SALE OF THE PREFERRED STOCK
2.1 PURCHASE AND SALE OF THE SHARES.
(a) Subject to the terms and conditions herein set forth, the
Company agrees that it will issue and sell to the Purchasers, and each of the
Purchasers agrees that it will acquire from the Company, on the First Closing
Date, that number of shares of Series B Preferred Stock set forth opposite each
Purchaser's name on Schedule 1 hereto (the " INITIAL SHARES"). The Initial
Shares shall have the powers, rights and preferences set forth in the
Certificate of Amendment. The aggregate purchase price for the Initial Shares
shall be $ 17,000,000.
(b) Subject to the terms and conditions herein set forth, the
Company agrees that it will issue and sell to the Purchasers, and each of the
Purchasers agrees that it will acquire
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from the Company, on the Second Closing Date, that number of shares of Series B
Preferred Stock set forth opposite each Purchaser's name on Schedule 2 hereto
(the "ADDITIONAL SHARES"). The Additional Shares shall have the powers, rights
and preferences set forth in the Certificate of Amendment. The aggregate
purchase price for the Additional Shares shall be $ 11,000,000.
(c) Subject to the terms and conditions herein set forth, the
Company agrees that it will issue and sell, in accordance with the provisions of
Section 2.3 hereof, on the Default Shares Closing Date, the Default Shares (as
defined herein). The Default Shares shall have the powers, rights and
preferences set forth in the Certificate of Amendment. The aggregate purchase
price for the Default Shares shall be equal to the purchase price per share for
such Default Shares times the number of Default Shares being purchased. The
Initial Shares, the Additional Shares and the Default Shares shall be
collectively referred to herein as the "SHARES".
2.2 CLOSINGS.
(a) The issuance and purchase of the Initial Shares shall take place
at the closing (the "FIRST CLOSING") to be held at the offices of Hutchison &
Mason PLLC, 4011 Westchase Blvd., Suite 400, Raleigh, NC 27607 at 10:00 a.m.,
Eastern Standard Time, on or before March 24, 1998, or at such other time and
place as the Company and the Purchasers may agree in writing (the "FIRST CLOSING
DATE"). At the First Closing, the Company shall deliver to the Purchasers the
Initial Shares against delivery by the Purchasers to the Company of the purchase
price therefor, payable by wire transfer of immediately available funds to an
account or accounts designated in writing by the Company.
(b) The issuance and purchase of the Additional Shares shall take
place at the closing (the "SECOND CLOSING") to be held at the offices of
Hutchison & Mason PLLC, 4011 Westchase Blvd., Suite 400, Raleigh, NC 27607 at
10:00 a.m., Eastern Standard Time, on June 23, 1998, or at such later time and
place as the Company may request (the "SECOND CLOSING DATE"); provided, however,
that in no event shall the Second Closing Date be later than April 1, 1999. At
the Second Closing, the Company shall deliver to the Purchasers the Additional
Shares against delivery by the Purchasers to the Company of the purchase price
therefor, payable by wire transfer of immediately available funds to an account
or accounts designated in writing by the Company.
(c) The issuance and purchase of the Default Shares shall take place
as set forth in Section 2.3(c) hereof.
2.3 DEFAULT SHARES.
(a) If any Purchaser (a "DEFAULTING PURCHASER") fails or
refuses to purchase and pay for the number of Additional Shares agreed to be
purchased by such Purchaser at the Second Closing, the Company shall immediately
give notice thereof to the Purchasers other than the Defaulting Purchaser (the
"NON-DEFAULTING PURCHASERS").
(b) The Non-Defaulting Purchasers shall have the option, which
must be exercised by written notification to the Company and the other
Non-Defaulting Purchasers
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<PAGE> 17
within five (5) Business Days of receipt of the notice set forth in
Section 2.3(a) hereof (the "OPTION PERIOD"), to purchase the Additional Shares
to be purchased by the Defaulting Purchaser (the "DEFAULT SHARES") in the same
proportions as their purchases of the Initial Shares, or in such proportions as
the Non-Defaulting Purchasers may otherwise agree, all upon the price, terms and
conditions set forth herein and in the Transaction Documents.
(c) If the Non-Defaulting Purchasers (or any of them) elect to
exercise their option to purchase some or all of the Default Shares, the
issuance and purchase of such Default Shares shall take place at the closing
(the "DEFAULT SHARES CLOSING") to be held at the offices of Hutchison & Mason
PLLC, Suite 400, 4011 Westchase Boulevard, Raleigh, North Carolina 27607 at
10:00 a.m., Eastern Standard Time, within twenty (20) Business Days following
the expiration of the Option Period (the "DEFAULT SHARES CLOSING DATE").
2.4 FINANCIAL ACCOUNTING POSITIONS; TAX REPORTING. Each of the
parties hereto agrees to take reporting and other positions with respect to the
Shares which are consistent with the purchase price of the Shares set forth
herein for all financial accounting purposes, unless otherwise required by
applicable GAAP or Commission rules (in which case the parties agree only to
take positions inconsistent with the purchase price of the Shares set forth
herein provided that the Purchasers have consented thereto, which consent shall
not be unreasonably withheld). Each of the parties to this Agreement agrees to
take reporting and other positions with respect to the Shares which are
consistent with the purchase price of the Shares set forth herein for all other
purposes, including without limitation, for all Federal, state and local tax
purposes.
2.5 FEES AND EXPENSES.
(a) The Company shall pay (i) at the First Closing, a
transaction structuring fee of $114,545 to Whitney, $27,273 to Waller and an
aggregate of $8,182 to Kitty Hawk III and Kitty Hawk IV, and (ii) at each of the
Closings, to the extent not previously paid, an amount equal to the
out-of-pocket expenses (including, without limitation, attorneys' fees, charges
and disbursements, consultants' fees and expenses and due diligence expenses) of
Whitney, JHW II, JHW III, JHW Strategic III, Waller, Kitty Hawk III and Kitty
Hawk IV incurred in connection with (A) the negotiation, execution, delivery and
filing of the Transaction Documents and any amendments or modifications thereto
and (B) the transactions contemplated by the Transaction Documents.
(b) Until the consummation of an Initial Public Offering, the
Company shall continue to pay Whitney a monitoring fee payable in cash at the
rate of $10,000 per month (calculated for partial months on a daily basis)
payable quarterly on each March 31, June 30, September 30 and December 31, or if
any such date shall not be a Business Day, on the next succeeding Business Day
to occur after such date. Upon consummation of an Initial Public Offering, the
Company shall pay any unpaid portion of the monthly monitoring fees (calculated
on a daily basis) within five (5) Business Days after receipt by any of the
Companies or their Subsidiaries of the proceeds of such Initial Public Offering.
Notwithstanding the foregoing, however, Whitney, after evaluating the level of
its involvement with the Company, may, in its sole discretion, terminate the
monitoring fee prior to an Initial Public Offering.
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(c) All payments contemplated by this Section 2.5 to be made
to, or on behalf of any of Whitney, JHW II, JHW III, JHW Strategic III, Waller,
Kitty Hawk III or Kitty Hawk IV shall be made by wire transfer of immediately
available funds to an account or accounts designated by such Purchaser.
ARTICLE 3
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS
TO PURCHASE THE SHARES
The obligation of the Purchasers to purchase the Initial Shares, the
Additional Shares or the Default Shares, as the case may be, to pay the purchase
prices therefor at the applicable Closing and to perform any other obligations
hereunder shall be subject to the satisfaction as determined by, or waived by,
the Purchasers of the following conditions on or before the applicable Closing
Date. No Purchaser shall be obligated to purchase any of the Shares to be
purchased by it at such Closing(s) hereunder unless the purchase and sale of
each of the other Shares required to be purchased at such Closing(s) hereunder
occurs simultaneously therewith.
3.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Article 5 hereof shall be true and
correct at and as of the date hereof and the applicable Closing Date as if made
at and as of such date, and the Purchasers shall have received a certificate,
dated as of the applicable Closing Date, signed by the Chairman of the Board,
the President of the Company or the Company's Chief Financial Officer,
certifying compliance with this condition.
3.2 COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed
and complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the applicable Closing Date, and the Purchasers shall have received a
certificate, dated as of the applicable Closing Date, signed by the Chairman of
the Board, the President of the Company or the Company's Chief Financial
Officer, certifying compliance with this condition.
3.3 COMPLIANCE WITH THE SERIES A PURCHASE AGREEMENT; NO DEFAULTS.
Except as set forth on Schedule 5.31, each of the parties to the Series A
Purchase Agreement (other than JHW II and Kitty Hawk III) shall have performed
and complied with all of the agreements and conditions contemplated under the
Series A Purchase Agreement and the agreements, instruments and other documents
delivered thereunder or contemplated thereby, including, without limitation, the
Transaction Documents and the Exchange Transaction Documents (as such terms are
defined therein) that are required to be performed or complied with by each such
party, and, except as set forth on Schedule 5.31, there shall be no default by
any such party thereunder. The Purchasers shall have received such certificates
or other evidence as they may reasonably request to establish compliance with
this condition.
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3.4 SECRETARY'S CERTIFICATE. The Purchasers shall have received a
certificate from the Company, dated the date of the applicable Closing Date, and
signed by the Secretary or an Assistant Secretary of the Company, certifying (a)
that the attached copies of the Certificate of Incorporation and By-laws are
true, complete and correct and remain unamended and in full force and effect,
(b) that the attached copies of the resolutions of the Board of Directors of the
Company approving the Transaction Documents to which it is a party and the
transactions contemplated hereby and thereby, are true, complete and correct and
remain unamended and in full force and effect, and (c) as to the incumbency and
specimen signature of each officer or member of the Company executing any
Transaction Document to which it is a party or any other document delivered in
connection herewith on behalf of the Company.
3.5 DOCUMENTS. The Purchasers shall have received true, complete and
correct copies of such agreements, schedules, exhibits, certificates, documents,
financial information and filings as they may reasonably request in connection
with or relating to the transactions contemplated hereby, all in form and
substance satisfactory to the Purchasers.
3.6 PURCHASE OF SHARES PERMITTED BY APPLICABLE LAWS. The acquisition
of and payment for the Shares to be acquired by the Purchasers hereunder and the
consummation of the transactions contemplated hereby and by the other
Transaction Documents (a) shall not be prohibited by any Requirement of Law, (b)
shall not subject the Purchasers to any penalty or other onerous condition under
or pursuant to any Requirement of Law, and (c) shall be permitted by all
Requirements of Law to which the Purchasers or the transactions contemplated by
or referred to herein or in the other Transaction Documents are subject; and the
Purchasers shall have received such certificates or other evidence as they may
reasonably request to establish compliance with this condition.
3.7 OPINION OF COUNSEL. The Purchasers shall have received an
opinion of outside counsel to the Company, dated the applicable Closing Date,
relating to the transactions contemplated by or referred to herein, in form and
substance acceptable to the Purchasers.
3.8 APPROVAL OF COUNSEL TO THE PURCHASERS. All actions and
proceedings hereunder and all agreements, schedules, exhibits, certificates,
financial information, filings and other documents required to be delivered by
the Company or any Subsidiary or hereunder or in connection with the
consummation of the transactions contemplated hereby, and all other related
matters, shall have been in form and substance acceptable to Morrison Cohen
Singer & Weinstein, LLP, counsel to JHW II, JHW III, JHW Strategic III and
Whitney, in its reasonable judgment (including, without limitation, the opinions
of counsel referred to in Section 3.7 hereof).
3.9 CONSENTS AND APPROVALS. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of Law
and with respect to those Contractual Obligations of the Company or any
Subsidiary necessary, desirable, or required in connection with the execution,
delivery or performance (including, without limitation, the issuance of Common
Stock upon conversion of the Shares) by the Company or any Subsidiary, or
enforcement against the Company or any Subsidiary, of the Transaction Documents
to which it is a party.
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3.10 REGISTRATION RIGHTS AGREEMENT. The Company shall have duly
executed and delivered the Registration Rights Agreement.
3.11 STOCKHOLDERS' AGREEMENT. The Stockholders' Agreement shall have
been duly executed and delivered by all of the parties thereto.
3.12 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company shall have
amended its Certificate of Incorporation and By-laws, in form and substance
satisfactory to the Purchasers.
3.13 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the
applicable Closing Date any judgment or order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirement of Law which, in the judgment of the Purchasers,
would prohibit the purchase of the Shares hereunder or subject the Purchasers to
any penalty or other onerous condition under or pursuant to any Requirement of
Law if the Shares were to be purchased hereunder.
3.14 GOOD STANDING CERTIFICATE. The Company shall have delivered to
the Purchasers as of the Closing Date, a good standing certificate or the
equivalent thereof for the Company and each of its Subsidiaries for each of
their respective jurisdictions of incorporation or organization, as the case may
be, and all other jurisdictions where they are required to be qualified to do
business.
3.15 PRO FORMA BALANCE SHEET. The Company shall have delivered to the
Purchasers as of the applicable Closing Date a pro forma consolidated balance
sheet of the Company and its Subsidiaries, certified by the chief executive
officer of the Company that such Pro Forma Balance Sheet fairly presents the pro
forma adjustments reflecting the consummation of the transactions contemplated
by this Agreement to be consummated as of each such Closing Date, including,
without limitation, all material fees and expenses in connection therewith.
3.16 STOCK OPTION PLAN. As of the First Closing Date, the Company
shall have adopted, and the requisite number of stockholders shall have
approved, the Stock Option Plan. The Purchasers shall have received such
certificates or other evidence as they may reasonably request to establish
compliance with this condition.
3.17 D & O INSURANCE. The Company shall have in place as of the
applicable Closing Date an insurance policy providing directors' and officers'
liability insurance coverage for each of the members of the Board of Directors
of the Company. The Purchasers shall have received such certificates or other
evidence as they may reasonably request to establish compliance with this
condition.
3.18 TOWER AGREEMENTS. As of the First Closing Date, the Company
and/or its Subsidiaries shall have made bids and received orders based on such
bids to construct and lease at least seventy-five (75) telecommunications
towers. As of each other applicable Closing Date, the Company shall have
delivered to the Purchasers, in a form reasonably satisfactory to
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Whitney, evidence that it or its Subsidiaries have constructed, are constructing
or have entered into written agreements to construct at least seventy-five (75)
telecommunications towers.
3.19 BANK LOAN. As of the Second Closing Date, the Company shall have
entered into definitive agreements with Credit Suisse First Boston and/or
certain other lending institution(s), pursuant to which such institution(s)
shall have provided the Company with a $50,000,000 revolving credit facility.
3.20 CLARK KEY-MAN INSURANCE. As of the earlier of (i) two (2) months
after the First Closing Date or (ii) the Second Closing Date, the Company shall
have in place a key-man life insurance policy with a reputable and financially
sound insurer on the life of Stephen H. Clark in the face amount of not less
than $3,000,000. The Purchasers shall have received such certificates or other
evidence as they may reasonably request to establish compliance with this
condition.
ARTICLE 4
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
TO ISSUE AND SELL THE SHARES
The obligations of the Company to issue and sell the Initial Shares,
the Additional Shares or the Default Shares, as the case may be, and perform its
other obligations hereunder relating thereto shall be subject to the
satisfaction as determined by, or waived by, the Company of the following
conditions on or before the applicable Closing Date:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained in Article 6 hereof shall be true and
correct at and as of the applicable Closing Date, as if made at and as of such
date, and the Company shall have received a certificate, dated as of the
applicable Closing Date, signed by each Purchaser certifying that such
representations and warranties made by such Purchaser are true and correct at
and as of the date hereof and at and as of such Closing Date, as if made at and
as of such date.
4.2 COMPLIANCE WITH THIS AGREEMENT. Each of the Purchasers shall
have performed and complied with all of the respective agreements and conditions
set forth or contemplated herein that are required to be performed or complied
with by such Purchaser on or before the applicable Closing Date, and the Company
shall have received a certificate, dated as of the applicable Closing Date,
signed by each Purchaser certifying that such Purchaser has so performed and so
complied with such agreements and conditions.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers, after
giving effect to the transactions contemplated by this Agreement, as follows:
5.1 EXISTENCE AND POWER. The Company and each of its Subsidiaries:
(a) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, as the case
may be; (b) has all requisite power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently, or is currently proposed to be, engaged; (c)
is duly qualified, licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except to the extent that the
failure to do so would not have a material adverse effect on the Condition of
the Company; and (d) has the power and authority to execute, deliver and perform
its obligations under each Transaction Document to which it is or will be a
party.
5.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Company of each Transaction Document to which it is a party
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Shares: (a) has been duly
authorized by all necessary corporate action; (b) does not contravene the terms
of the Company's Certificate of Incorporation, By-laws, or any amendment
thereto; and (c) will not violate, conflict with or result in any breach or
contravention of or the creation of any Lien under, any Contractual Obligation
of the Company or any Subsidiary or any Requirement of Law applicable to the
Company or any Subsidiary.
5.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Company of the Transaction Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby.
5.4 BINDING EFFECT. Each of the Transaction Documents to which it is
a party has been duly executed and delivered by the Company, and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
relating to enforceability.
5.5 NO LEGAL BAR. Neither the execution, delivery and performance of
the Transaction Documents nor the issuance of or performance of the terms of the
Shares will violate any Requirement of Law or any Contractual Obligation of the
Company or any Subsidiary. Neither the Company nor any Subsidiary has previously
entered into any agreement which is
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currently in effect or to which the Company or any Subsidiary is currently
bound, granting any rights to any Person which are inconsistent with the rights
to be granted by the Company in the Transaction Documents.
5.6 LITIGATION. Except as set forth on Schedule 5.6, there are no
legal actions, suits, proceedings, claims or disputes pending or threatened, at
law, in equity, in arbitration or before any Governmental Authority against or
affecting the Company or any Subsidiary. No injunction, writ, temporary
restraining order, decree or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of the Transaction Documents.
5.7 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.7, the
Company and its Subsidiaries are in compliance with all Requirements of Law
applicable to them.
5.8 NO DEFAULT OR BREACH. Except as set forth on Schedule 5.8,
neither the Company nor any Subsidiary is in, and the incurrence of the
obligations of the Company contemplated by the Transaction Documents do not
constitute, nor with the giving of notice or lapse of time or both would
constitute, a default under or with respect to any Contractual Obligation of the
Company or any Subsidiary in any material respect.
5.9 TITLE TO PROPERTIES. Except as set forth on Schedule 5.9, the
Company and/or each of its Subsidiaries has good record and marketable title in
fee simple to, or holds interests as lessee under leases in full force and
effect in, all real property reflected on the Financial Statements or used in
connection with its business.
5.10 USE OF REAL PROPERTY. Except as set forth on Schedule 5.10, the
owned and leased real properties reflected on the Financial Statements or used
in connection with the business of the Company and its Subsidiaries, are used
and operated in compliance and conformity with all applicable leases, contracts,
commitments, licenses and permits, to the extent that the failure so to conform
would, in the aggregate, materially adversely affect the Condition of the
Company; neither the Company nor any Subsidiary has received notice of violation
of any applicable zoning or building regulation, ordinance or other law, order,
regulation or requirement relating to the operations of the Company or any
Subsidiary; and there is no such violation. Except as set forth on Schedule
5.10, all plants and other buildings that are owned or covered by leases
reflected on the Financial Statements or used in connection with the business of
the Company or any Subsidiary, substantially conform with all applicable
ordinances, codes, regulations and requirements, and no law or regulation
presently in effect or condition precludes or materially restricts continuation
of the present use of such properties. Each of the leases for real properties
reflected on the Financial Statements or used in connection with the business of
the Company or any Subsidiary is in full force and effect and the Company and
its Subsidiaries enjoy peaceful and undisturbed possession thereunder. There is
no default on the part of the Company or any Subsidiary or event or condition
which with notice or lapse of terms, or both, would constitute a default on the
part of the Company or any Subsidiary under any of such leases.
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5.11 TAXES. Except as set forth on Schedule 5.11, the Company and its
Subsidiaries have filed or caused to be filed, or have properly filed extensions
for, all tax returns which are required to be filed and have paid or caused to
be paid all taxes required to be paid by them and all assessments received by
them to the extent that such taxes have become due, except taxes the validity or
amount of which is being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside. The Company and
each of its Subsidiaries have paid or caused to be paid, or have established
reserves that the Company reasonably believes to be adequate in all material
respects for, all tax liabilities applicable to the Company and its Subsidiaries
for all fiscal years which have not been examined and reported on by the taxing
authorities (or closed by applicable statutes).
5.12 FINANCIAL CONDITION.
(a) The Company has delivered to the Purchasers true and
complete copies of the consolidated unaudited balance sheet of the Company and
its Subsidiaries, and the related statements of income, stockholders' equity and
cash flow, for the period beginning May 12, 1997 and ending December 31, 1997
(the "FINANCIAL STATEMENTS"), and will deliver, prior to the earlier of April
30, 1998 or the Second Closing Date, true and complete copies of the
consolidated audited balance sheet of the Company and its Subsidiaries, and the
related statements of income, stockholders' equity and cash flow, for the period
beginning May 12, 1997 and ending December 31, 1997 (the "AUDITED FINANCIAL
STATEMENTS"). The Financial Statements fairly present, and the Audited Financial
Statements will fairly present, in all material respects, the financial position
of the Company and its Subsidiaries as of the date thereof, and the results of
operations and cash flows of the Company and its Subsidiaries as of the date or
for the period set forth therein, all in conformity with GAAP consistently
applied during the period involved, except as otherwise set forth in the notes
thereto and subject to normal year-end audit adjustments.
(b) The Company has not received any letters from any of its
certified public accountants to the management of the Company other than the
auditor's opinion letter that will accompany the above-referenced Audited
Financial Statements.
(c) Each Pro Forma Balance Sheet to be delivered to the
Purchasers pursuant to this Agreement shall set forth the assets and liabilities
of the Company and its Subsidiaries on a pro forma consolidated basis after
taking into account the consummation of the transactions contemplated in this
Agreement. Each such Pro Forma Balance Sheet shall have been prepared by the
Company in accordance with GAAP and shall fairly present in all material
respects the assets and liabilities of the Companies and its Subsidiaries on a
consolidated basis, reflecting the consummation of the transactions contemplated
by this Agreement and based on the assumptions set forth therein.
(d) The projections of the Company and its Subsidiaries on a
consolidated basis heretofore delivered to the Purchasers are based on
assumptions which were reasonable when made and such assumptions and projections
are reasonable on the date hereof and neither the Company nor any of its
Subsidiaries have delivered to any Person any later dated projections.
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5.13 ERISA. The execution and delivery of this Agreement and the
other Transaction Documents, the purchase and sale of the Shares hereunder and
the consummation of the transactions contemplated hereby and thereby will not
result in any prohibited transaction within the meaning of Section 406 of ERISA
or Section 4975 of the Code.
5.14 DISCLOSURE.
(a) Agreement and Other Documents. This Agreement, together
with all exhibits and schedules hereto, and the agreements, certificates and
other documents furnished to the Purchasers by the Company and its Subsidiaries
at each Closing do not or will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.
(b) Material Adverse Effects. There is no fact known to the
Company, which the Company has not disclosed to the Purchasers in writing which
materially adversely affects or, insofar as the Company can reasonably foresee,
could materially adversely affect, the Condition of the Company or the ability
of the Company or any Subsidiary to perform its or their obligations under the
Transaction Documents, or any agreement or other document contemplated thereby
to which any of them is a party.
5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since May 12, 1997, except
as set forth on Schedule 5.15, neither the Company nor any Subsidiary has (i)
issued any stock, bonds or other corporate securities except for the securities
being issued pursuant to the terms of the Transaction Documents, (ii) borrowed
any amount or incurred any liabilities (absolute or contingent), other than in
the ordinary course of business, in excess of $10,000, (iii) discharged or
satisfied any lien or incurred or paid any obligation or liability (absolute or
contingent), other than in the ordinary course of business, in excess of
$10,000, (iv) declared or made any payment or distribution to stockholders or
purchased or redeemed any shares of its capital stock or other securities, (v)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, (vi) sold, assigned or transferred any of its tangible assets, or
canceled any debts or claims, (vii) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) suffered any losses of property, or waived any rights of substantial
value, (ix) suffered any material adverse change in the Condition of the
Company, (x) expended any material amount, granted any bonuses or extraordinary
salary increases, (xi) entered into any transaction involving consideration in
excess of $50,000 except as otherwise contemplated hereby or (xii) entered into
any agreement or transaction, or amended or terminated any agreement, with an
Affiliate. To the knowledge of the Company, no material adverse change in the
Condition of the Company is threatened or reasonably likely to occur.
5.16 ENVIRONMENTAL MATTERS. Except as described on Schedule 5.16:
(a) The property, assets and operations of the Company and each
Subsidiary are and have been in compliance with all applicable Environmental
Laws; there are no Hazardous Materials stored or otherwise located in, on or
under any of the property or assets
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of the Company or any Subsidiary, including, without limitation, the groundwater
except in compliance with applicable Environmental Laws; and there have been no
releases or threatened releases of Hazardous Materials in, on or under any
property adjoining any of the property or assets of the Company or any
Subsidiary which have not been remediated to the satisfaction of the appropriate
Governmental Authorities.
(b) None of the property, assets or operations of the Company
or any Subsidiary is the subject of any Federal, state or local investigation
evaluating whether (i) any remedial action is needed to respond to a release or
threatened release of any Hazardous Materials into the environment or (ii) any
release or threatened release of any Hazardous Materials into the environment is
in contravention of any Environmental Law.
(c) Neither the Company nor any Subsidiary has received any
notice or claim, nor are there pending, threatened or reasonably anticipated,
lawsuits or proceedings against any of them, with respect to violations of an
Environmental Law or in connection with the presence of or exposure to any
Hazardous Materials in the environment or any release or threatened release of
any Hazardous Materials into the environment, and neither the Company nor any
Subsidiary is or was the owner or operator of any property which (i) pursuant to
any Environmental Law has been placed on any list of Hazardous Materials
disposal sites, including, without limitation, the "NATIONAL PRIORITIES LIST" or
"CERCLIS LIST," (ii) has, or had, any subsurface storage tanks located thereon,
or (iii) has ever been used as or for a waste disposal facility, a mine, a
gasoline service station or, other than for petroleum substances stored in the
ordinary course of business, a petroleum products storage facility.
(d) Neither the Company nor any Subsidiary has any present or
contingent liability in connection with the presence either on or off the
property or assets of the Company or Subsidiary of any Hazardous Materials in
the environment or any release or threatened release of any Hazardous Materials
into the environment.
5.17 INVESTMENT COMPANY/GOVERNMENT REGULATIONS. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. Neither the Company nor any Subsidiary is subject to regulation
under the Public Utility Holding Company Act of 1935, as amended, the Federal
Power Act, the Interstate Commerce Act, or any federal or state statute or
regulation limiting its ability to incur Indebtedness.
5.18 SUBSIDIARIES.
(a) Schedule 5.18 sets forth a complete and accurate list of
all of the Subsidiaries of the Company, together with their respective
jurisdictions of incorporation or organization. Except as set forth on Schedule
5.18, each such Subsidiary is wholly owned by the Company. All of the
outstanding shares of capital stock of the Subsidiaries that are corporations
are validly issued, fully paid and nonassessable. Except as set forth on
Schedule 5.18, as of the Closing Date, all of the outstanding shares of capital
stock of, or other ownership interests in, each of the Subsidiaries are and will
be owned by the Company free and clear of any Liens, claims, charges or
encumbrances. Except as set forth on Schedule 5.18, no Subsidiary has
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outstanding options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating the Subsidiary to
issue, transfer or sell any securities of the Subsidiary.
(b) Except as set forth on Schedule 5.18, the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into capital stock of any
other corporation, or (ii) any participating interest in any limited liability
company, partnership, joint venture or other non-corporate business enterprises.
5.19 CAPITALIZATION.
(a) As of each Closing Date and after giving effect to the
transactions contemplated by this Agreement to occur at the First Closing, the
authorized capital stock of the Company will consist of 3,462,830 shares of
Series A Preferred Stock, 7,000,000 shares of Series B Preferred Stock and
12,000,000 shares of Common Stock. As of the First Closing Date and after giving
effect to the transactions contemplated by this Agreement to occur at the First
Closing, there will be (i) 3,462,830 shares of Series A Preferred Stock issued
and outstanding, (ii) 1,340,517 shares of Common Stock issued and outstanding,
(iii) 4,250,000 shares of Series B Preferred Stock issued and outstanding, (iv)
3,462,830 shares of Common Stock (subject to adjustment pursuant to the
Certificate of Incorporation) reserved for issuance by the Company upon the
conversion of Series A Preferred Stock, (v) 7,000,000 shares of Common Stock
(subject to adjustment pursuant to the Certificate of Incorporation) reserved
for issuance by the Company upon the conversion of the Series B Preferred Stock,
(vi) 150,000 shares of Common Stock reserved for issuance pursuant to the
exercise of the PCX Stockholder Warrants, and (vii) 1,817,700 shares of Common
Stock reserved for issuance pursuant to the exercise of stock options issuable
in accordance with the terms of the Stock Option Plan (the "STOCK OPTIONS"), of
which 1,244,700 Stock Options have been granted. As of the Second Closing Date
and after giving effect only to the transactions contemplated by this Agreement
to occur at the Second Closing and assuming that no additional Stock Options has
been granted and, with respect to such Second Closing, that all of the
Additional Shares are purchased pursuant to this Agreement, there will be (i)
3,462,830 shares of Series A Preferred Stock issued and outstanding, (ii)
1,340,517 shares of Common Stock issued and outstanding, (iii) 7,000,000 shares
of Series B Preferred Stock issued and outstanding, (iv) 3,462,830 shares of
Common Stock (subject to adjustment pursuant to the Certificate of
Incorporation) reserved for issuance by the Company upon the conversion of
Series A Preferred Stock, (v) 7,000,000 shares of Common Stock (subject to
adjustment to the Certificate of Incorporation) reserved for issuance by the
Company upon the conversion of the Series B Preferred Stock, (vi) 150,000 shares
of Common Stock reserved for issuance pursuant to the exercise of the PCX
Stockholder Warrants, and (vii) 1,817,700 shares of Common Stock reserved for
issuance pursuant to the exercise of Stock Options, of which 1,244,700 Stock
Options have been granted. The outstanding warrants and all outstanding shares
of capital stock of the Company have been duly authorized by all necessary
corporate action. All outstanding shares of capital stock of the Company are,
and the shares of Common Stock issuable upon conversion of the Series A
Preferred Stock and Series B Preferred Stock, when issued in accordance with the
respective terms and conditions thereof, will be validly issued, fully paid and
nonassessable. The designations, powers, preferences, rights,
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qualifications, limitations and restrictions in respect of each class or series
of authorized capital stock of the Company are as set forth in the Certificate
of Incorporation, and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Schedule 5.19 provides an accurate
list, after giving effect to the transactions contemplated by this Agreement, of
(A) all stockholders owning the issued and outstanding Series A Preferred Stock,
Series B Preferred Stock and Common Stock, together with the number of shares
held by each, and (B) all of the holders of warrants, options, rights and
securities convertible into Common Stock of the Company, together with the
number of shares of Common Stock to be issued upon the exercise or conversion of
such warrants, options, rights and convertible securities.
(b) On each applicable Closing Date, except for the outstanding
shares of Series A Preferred Stock, Series B Preferred Stock and the outstanding
options and warrants set forth on Schedule 5.19, there will be no outstanding
securities convertible into or exchangeable for capital stock of the Company or
any Subsidiary or, except as contemplated in the other Transaction Documents
(including, without limitation, the Stockholders' Agreement), options, warrants
or other rights to purchase or subscribe to capital stock of the Company or any
Subsidiary, or contracts, commitments, agreements, understandings or
arrangements of any kind to which the Company or any Subsidiary is a party
relating to the issuance of any capital stock of the Company or any Subsidiary,
any such convertible or exchangeable securities or any such options, warrants or
rights.
5.20 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by the Company or any Subsidiary, or their representatives
in connection with the offer or sale of the Shares. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Article VI hereof,
no registration of the Shares or the Common Stock issuable upon the conversion
of the Shares pursuant to the provisions of the Securities Act or applicable
state securities or "blue sky" laws will be required by the offer, sale or
issuance of the Shares pursuant to this Agreement or the Common Stock issuable
upon conversion of the Shares. The Company agrees that neither the Company, nor
anyone acting on its behalf, will offer or sell the Shares or any other security
so as to require the registration of the Shares or the Common Stock issuable
upon conversion of the Shares pursuant to the provisions of the Securities Act
or any state securities or "blue sky" laws, unless such securities or the Common
Stock issuable upon conversion of the Shares are so registered.
5.21 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with the Company or any Subsidiary. The transaction structuring
fee payable to Whitney, Waller, Kitty Hawk III and Kitty Hawk IV pursuant to
Section 2.5 hereof does not constitute a commission or other remuneration paid
or given directly or indirectly for the solicitation of any Purchaser or
prospective purchaser of the Shares.
5.22 LABOR RELATIONS. Neither the Company nor any Subsidiary has
committed or is engaged in any unfair labor practice. Except as set forth in
Schedule 5.22, there is (a) no unfair labor practice complaint pending or
threatened against the Company or any Subsidiary
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before the National Labor Relations Board and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is so
pending or threatened, (b) no strike, labor dispute, slowdown or stoppage
pending or threatened against the Company or any Subsidiary, and (c) no union
representation question existing with respect to the employees of the Company or
any Subsidiary and no union organizing activities are taking place. Neither the
Company nor any Subsidiary is a party to any collective bargaining agreement.
5.23 EMPLOYEE BENEFIT PLANS. Neither the Company nor any Subsidiary
nor any ERISA Affiliate has any actual or contingent, direct or indirect,
liability in respect of any employee benefit plan (as defined in Section 3(3) of
ERISA) or other employee benefit arrangement (collectively, the "PLANS"), other
than those liabilities with respect to such Plans specifically described on
Schedule 5.23(a). Schedule 5.23(a) sets forth all Plans relating to the Company.
The Company has delivered to the Purchasers accurate and complete copies of all
of the Plans. All of the Plans are in substantial compliance with all applicable
Requirements of Law. Except as set forth on Schedule 5.23(b), no "prohibited
transaction," as defined in Section 406 of ERISA and Section 4975 of the Code,
has occurred in respect of any of the Plans, and no civil or criminal action
brought pursuant to Part 5 of Title I of ERISA is pending or, to the best
knowledge of the Company, is threatened against any fiduciary of any such Plan.
No Plan: (i) is subject to Title IV of ERISA, or is otherwise a Defined Benefit
Plan, or is a multiple employer plan (within the meaning of Section 413(c) of
the Code); or (ii) provides for post-retirement welfare benefits or a "parachute
payment" (within the meaning of Section 280G(b) of the Code).
5.24 PATENTS, TRADEMARKS, ETC. The Company and its Subsidiaries own
or are licensed or otherwise have the right to use all patents, trademarks,
service marks, trade names, copyrights, licenses, franchises and other rights
(collectively, the "RIGHTS") being used to conduct their businesses as now
operated (a complete list of licenses or other contracts relating to the
Company's and its Subsidiaries' Rights and of registrations of patents,
trademarks, service marks and copyrights including any applications therefor
constituting such Rights, is attached hereto as Schedule 5.24). No Right or
product, process, method, substance or other material presently sold by or
employed by the Company or any Subsidiary, or which the Company or any
Subsidiary contemplates selling or employing, infringes upon the Rights that are
owned by others. No litigation is pending and no claim has been made against the
Company or any Subsidiary or, to the knowledge of the Company, is threatened,
contesting the right of the Company or any Subsidiary to sell or use any Right
or product, process, method, substance or other material presently sold by or
employed by the Company or any Subsidiary. Neither the Company nor any
Subsidiary has asserted any claim of infringement, misappropriation or misuse by
any Person of any Rights owned by the Company or any Subsidiary or to which it
has exclusive use. Except as set forth on Schedule 5.24, no employee, officer or
consultant of the Company or any Subsidiary has any proprietary, financial or
other interest in any Rights owned or used by the Company or any Subsidiary in
their businesses. Except as set forth on Schedule 5.24, neither the Company nor
any Subsidiary has any obligation to compensate any Person for the use of any
Rights and neither the Company nor any Subsidiary has granted any license or
other right to use any of the Rights of the Company or any Subsidiary, whether
requiring the payment of royalties or not. The Company and its Subsidiaries have
taken all reasonable measures to protect and preserve the security,
confidentiality and value of their Rights, including trade secrets and other
confidential information. All trade secrets and other confidential
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information of the Company and its Subsidiaries are not part of the public
domain or knowledge, nor have they been used, divulged or appropriated for the
benefit of any Person other than the Company or any Subsidiary or otherwise to
the detriment of the Company or any Subsidiary. No employee or consultant of the
Company or Subsidiary has used any trade secrets or other confidential
information of any other Person in the course of his work for the Company or any
Subsidiary. No patent, invention, device, principle or any statute, law, rule,
regulation, standard or code is pending or proposed which would restrict the
Company's or any Subsidiary's ability to use any of the Rights.
5.25 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on Schedule
5.25, no officer, director, stockholder or other security holder of the Company
or any Subsidiary: (a) owns, directly or indirectly, any interest in (excepting
less than 5% stock holdings for investment purposes in securities of publicly
held and traded companies), or is an officer, director, employee or consultant
of, any Person that is, or is engaged in business as, a competitor, lessor,
lessee, supplier, distributor, sales agent or customer of, or lender to or
borrower from, the Company or any Subsidiary; (b) owns, directly or indirectly,
in whole or in part, any tangible or intangible property that the Company or any
Subsidiary used in the conduct of business; or (c) has any cause of action or
other claim whatsoever against, or owes or has advanced any amount to, the
Company or any Subsidiary, except for claims in the ordinary course of business
such as for accrued vacation pay, accrued benefits under employee benefit plans,
and similar matters and agreements existing on the date hereof.
5.26 TRADE RELATIONS. Except as set forth on Schedule 5.26, there
exists no actual or, to the knowledge of the Company, threatened termination,
cancellation or limitation of, or any adverse modification or change in, the
business relationship of the Company or any Subsidiary or its business with any
customer or any group of customers whose purchases are individually or in the
aggregate material to the business of the Company or any Subsidiary, or with any
material supplier, and there exists no present condition or state of facts or
circumstances that would materially adversely affect the Condition of the
Company or prevent the Company or any Subsidiary from conducting its business
after the consummation of the transactions contemplated by this Agreement, in
substantially the same manner in which such business has heretofore been
conducted.
5.27 OUTSTANDING BORROWINGS. Schedule 5.27 lists (i) the amount of
all Outstanding Borrowings of the Company and its Subsidiaries as of the closing
of the transactions contemplated hereby, (ii) the Liens that relate to such
Outstanding Borrowings and that encumber the assets of the Company or any
Subsidiary, (iii) the name of each lender thereof, and (iv) the amount of any
unfunded commitments available to the Company in connection with any Outstanding
Borrowings. Except as indicated on Schedule 5.27, all such Borrowings will
continue in effect after each Closing on the same terms and conditions as in
effect immediately prior to such Closing or on such other terms and conditions
as may be satisfactory to the Purchasers.
5.28 MATERIAL CONTRACTS. Neither the Company nor any Subsidiary is a
party to any Contractual Obligation, or is subject to any charge, corporate
restriction, judgment, injunction, decree, or Requirement of Law, materially
adversely affecting the Condition of the
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Company. Schedule 5.28 lists all contracts, agreements and commitments of the
Company and each Subsidiary as of the First Closing Date, whether written or
oral, other than (a) the Transaction Documents, (b) purchase orders in the
ordinary course of business, and (c) any other contracts, agreements and
commitments of the Company or any Subsidiary that do not extend beyond one year
and involve the receipt or payment of not more than $10,000. Each of the
contracts, agreements and commitments of the Company and its Subsidiaries
required to be set forth on Schedule 5.28 comprises a full and complete copy of
all agreements and understandings between the parties thereto with respect to
the subject matter thereof and all transactions related thereto, and there are
no agreements or understandings, oral or written, or side agreements not
contained therein that relate to or modify the substance thereof. Each of such
documents (i) has been duly authorized by all necessary corporate and other
action on the part of the Company and each Subsidiary which is a party thereto,
(ii) was validly executed and delivered by the Company and each such Subsidiary,
and (iii) is the legal, valid and binding obligation of the Company and each
such Subsidiary and their successors, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting creditors' rights
generally and by general principles of equity relating to enforceablility. Each
of such documents is in full force and effect, none of their provisions have
been waived by any party thereto and there are no defaults thereunder or notice
of defaults delivered pursuant thereto.
5.29 INSURANCE. Schedule 5.29 accurately summarizes all of the
insurance policies or programs of the Company and its Subsidiaries in effect as
of the date hereof, and indicates the insurer's name, policy number, expiration
date, amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
All such policies are in full force and effect, are underwritten by financially
sound and reputable insurers, are sufficient for all applicable Requirements of
Law and otherwise are in compliance with the criteria set forth in Section 8.6
hereof. All such policies will remain in full force and effect and will not in
any way be affected by, or terminate or lapse by reason of any of the
transactions contemplated hereby.
5.30 SOLVENCY. The Company and its Subsidiaries are Solvent.
5.31 COMPLIANCE WITH THE SERIES A PURCHASE AGREEMENT; NO DEFAULTS.
Except as set forth on Schedule 5.31, each of the parties to the Series A
Purchase Agreement (other than JHW II and Kitty Hawk III) has performed and
complied with all of the agreements and conditions contemplated under the Series
A Purchase Agreement and the agreements, instruments and other documents
delivered thereunder or contemplated thereby, including, without limitation, the
Transaction Documents and the Exchange Transaction Documents (as such terms are
defined therein) that are required to be performed or complied with by each such
party, and, except as set forth on Schedule 5.31, there is no default by any
such party thereunder. The disclosures set forth of Schedule 5.31 shall not
constitute a waiver by JHW II or Kitty Hawk III of any rights or remedies such
party may have with respect to any breach or default by any party to the Series
A Purchase Agreement of the terms of the Series A Purchase Agreement.
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ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser, severally but not jointly, hereby represents and
warrants as to itself or himself as follows:
6.1 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by such Purchaser of each Transaction Document to which such
Purchaser is a party: (a) is within such Purchaser's power and authority and has
been duly authorized by all necessary action; (b) does not contravene the terms
of such Purchaser's organizational documents or any amendment thereof; and (c)
will not violate, conflict with or result in any breach or contravention of any
Contractual Obligation or any Requirement of Law applicable to such Purchaser.
6.2 BINDING EFFECT. This Agreement has been duly executed and
delivered by such Purchaser and each Transaction Document to which such
Purchaser is a party constitutes such Purchaser's legal, valid and binding
obligation, enforceable against such Purchaser in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
6.3 NO LEGAL BAR. The execution, delivery and performance of each
Transaction Document to which such Purchaser is a party by such Purchaser will
not violate any Requirement of Law applicable to such Purchaser.
6.4 EXPERIENCE. Such Purchaser has carefully reviewed the
representations concerning the Company and its Subsidiaries contained in this
Agreement; the officers of the Company have made available to such Purchaser any
and all written information which such Purchaser has requested and have answered
to such Purchaser's satisfaction all inquiries made by such Purchaser; and such
Purchaser has sufficient knowledge and experience in investing in companies
similar to the Company so as to be able to evaluate the risks and merits of the
investment in the Shares and is able financially to bear the risks thereof.
6.5 PURCHASE FOR OWN ACCOUNT. The Shares to be acquired by such
Purchaser pursuant to this Agreement are being or will be acquired for such
Purchaser's own account for investment and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would be
in violation of the securities laws of the United States of America, or any
state, without prejudice, however, to such Purchaser's right at all times to
sell or otherwise dispose of all or any part of the Shares under an effective
registration statement under the Securities Act, or any applicable state
securities laws or under an exemption from such registration available under the
Securities Act, or any applicable state securities laws and subject,
nevertheless, to the disposition of such Purchaser's property being at all times
within such Purchaser's control. If such Purchaser should in the future decide
to dispose of any of the Shares or the Common Stock issuable upon conversion of
the Series B Preferred Stock, such Purchaser
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understands and agrees that such Purchaser may do so only in compliance with the
Securities Act and applicable state securities laws, as then in effect. Such
Purchaser agrees to the imprinting of a legend on certificates representing all
of the Shares to the following effect: "THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
6.6 EXEMPTION. Such Purchaser understands that the Shares have not
been registered under the Securities Act on the grounds that the sale provided
for in this Agreement and the issuance of the Shares are exempt from
registration under the Securities Act, and that the Company's reliance on such
exemption is predicated in part on such Purchaser's representations set forth
herein.
6.7 ACCREDITED INVESTOR. Unless such Purchaser otherwise has
indicated in writing to the Company, such Purchaser is an accredited investor
within the definition set forth in Rule 501(a) promulgated under the Securities
Act.
6.8 NO PUBLIC MARKET. Such Purchaser understands that no public
market now exists for any of the securities issued by the Company and that there
is no assurance that a public market will ever exist for any such securities.
6.9 ERISA. No part of the funds used by such Purchaser to purchase
the Shares hereunder constitutes assets of any "employee benefit plan" (as
defined in Section 3(3) of ERISA) or "plan" (as defined in Section 4975 of the
Code) listed on Schedule 5.23(b).
6.10 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with such Purchaser or any action taken by such Purchaser. Waller,
Kitty Hawk III and Kitty Hawk IV hereby further represent that the transaction
structuring fee payable to Whitney, Waller, Kitty Hawk III and Kitty Hawk IV
pursuant to Section 2.5 hereof does not constitute a commission or other
remuneration paid or given directly or indirectly for the solicitation of any
Purchaser or prospective purchaser of the Shares.
6.11 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by such Purchaser or enforcement against such Purchaser of this
Agreement or the transactions contemplated hereby.
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ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION. In addition to all other sums due hereunder or
provided for in this Agreement, the Company agrees to indemnify and hold
harmless each Purchaser and its Affiliates and each of their respective
officers, directors, agents, employees, subsidiaries, partners, attorneys,
accountants and controlling persons (each, an "INDEMNIFIED PARTY") to the
fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including, without limitation, reasonable fees, disbursements
and other charges of counsel incurred by an Indemnified Party in any action or
proceeding between the Company and such Indemnified Party (or Indemnified
Parties) or between an Indemnified Party (or Indemnified Parties) and any third
party or otherwise) or other liabilities, losses, or diminution in value of the
Shares (collectively, "LIABILITIES") resulting from or arising out of (i) any
breach of any representation or warranty, covenant or agreement of the Company
in this Agreement, the Certificate of Incorporation, the Certificate of
Amendment, the Registration Rights Agreement, the Stockholders' Agreement or the
other Transaction Documents, including, without limitation, the failure to make
payment when due of amounts owing pursuant to this Agreement, the Shares or the
other Transaction Documents, on the due date thereof (whether at the scheduled
maturity, by acceleration or otherwise) or (ii) any legal, administrative or
other actions (including actions brought by either of the Purchasers, the
Company, any Subsidiary or any equity holders of the Company or any Subsidiary
or derivative actions brought by any Person claiming through or in the Company's
or any Subsidiary's name), proceedings or investigations (whether formal or
informal), or written threats thereof, based upon, relating to or arising out of
the Transaction Documents, the transactions contemplated thereby, or any
Indemnified Party's role therein or in the transactions contemplated thereby;
provided, however, that the Company shall not be liable under this Section 7.1
to an Indemnified Party: (a) for any amount paid by the Indemnified Party in
settlement of claims by the Indemnified Party without the Company's written
consent (which consent shall not be unreasonably withheld), (b) to the extent
that it is finally judicially determined that such Liabilities resulted
primarily from the willful misconduct or gross negligence of such Indemnified
Party or (c) to the extent that it is finally judicially determined that such
Liabilities resulted primarily from the breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement or any other Transaction Document; provided,
further, that if and to the extent that such indemnification is unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of such Liabilities which shall be permissible under applicable
laws. In connection with the obligation of the Company to indemnify for expenses
as set forth above, the Company further agrees, upon presentation of appropriate
invoices containing reasonable detail, to reimburse each Indemnified Party for
all such expenses (including, without limitation, fees, disbursements and other
charges of counsel incurred by an Indemnified Party in any action or proceeding
between the Company and such Indemnified Party (or Indemnified Parties) or
between an Indemnified Party (or Indemnified Parties) and any third party or
otherwise) as they are incurred by such Indemnified Party; provided, however,
that if an Indemnified Party is reimbursed hereunder for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Liabilities in question resulted primarily from
(i) the willful misconduct or gross negligence
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of such Indemnified Party or (ii) the breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement or any other Transaction Document.
7.2 NOTIFICATION. Each Indemnified Party under this Article 7 will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Article 7,
notify the Company in writing of the commencement thereof. The omission of any
Indemnified Party so to notify the Company of any such action shall not relieve
the Company from any liability which it may have to such Indemnified Party under
this Article 7 unless, and only to the extent that, such omission results in the
Company's forfeiture of material substantive rights or defenses. In case any
such action, claim or other proceeding shall be brought against any Indemnified
Party and it shall notify the Company of the commencement thereof, the Company
shall be entitled to assume and control the defense thereof at its own expense,
with counsel satisfactory to such Indemnified Party in its reasonable judgment;
provided, however, that any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense. Notwithstanding the foregoing,
in any action, claim or proceeding in which the Company, on the one hand, and an
Indemnified Party, on the other hand, is, or is reasonably likely to become, a
party, such Indemnified Party shall have the right to employ separate counsel at
the Company's expense and to control its own defense of such action, claim or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Company, on the one hand, and
such Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that in no event shall the Company
be required to pay fees and expenses under this Article 7 for more than one firm
of attorneys in any jurisdiction in any one legal action or group of related
legal actions. The Company agrees that it will not, without the prior written
consent of the Purchasers, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated hereby (if any Indemnified Party is a party thereto or
has been actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the Purchasers and
each other Indemnified Party from all liability arising or that may arise out of
such claim, action or proceeding. The Company shall not be liable for any
settlement of any claim, action or proceeding effected against an Indemnified
Party without its written consent, which consent shall not be unreasonably
withheld. The rights accorded to Indemnified Parties hereunder shall be in
addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise.
7.3 LIMITATIONS ON INDEMNIFICATION.
(a) The Company shall have no indemnification obligation to an
Indemnified Party pursuant to this Article VII with respect to a breach of any
representation or warranty unless such Indemnified Party delivers to the Company
written notice of such breach within the applicable survival period for such
representation or warranty as set forth in Section 9.1 hereof.
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(b) No Indemnified Party shall be entitled to indemnification
under this Article VII unless the aggregate amount of Liabilities to which the
Indemnified Parties are entitled to recover exceeds $50,000. In the event that
such Liabilities exceed an aggregate of $50,000, the Indemnified Parties shall
be entitled to indemnification under this Article VII for all Liabilities in
excess of an aggregate of $25,000. The limitation set forth in this paragraph
(b) shall not apply with respect to any (i) any breach of any representation or
warranty set forth in Section 5.21 hereof, (ii) matter constituting fraud or
intentional or willful misconduct, or (iii) covenant or agreement of the Company
to be performed or complied with from and after the Closing Date.
7.4 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to the
contrary in this Article 7, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
ARTICLE 8
AFFIRMATIVE COVENANTS
For so long as the Purchasers shall continue to beneficially own an
aggregate number of shares of Series B Preferred Stock that is convertible into
at least five percent (5%) of the aggregate number of shares of Common Stock
into which the shares of Series B Preferred Stock issued pursuant to this
Agreement were convertible in the aggregate as of the latest Closing Date that
shall have occurred (after appropriate adjustment for dividends, subdivisions,
combinations or reclassifications of the Series B Preferred Stock), and until
the payment by the Company of all amounts due to the Purchasers under this
Agreement and the other Transaction Documents, including, without limitation,
all fees, expenses and amounts due at such time in respect of indemnity
obligations under Article 7, the Company hereby covenants and agrees with the
Purchasers as follows:
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP (it being
understood that monthly financial statements are not required to have footnote
disclosures). The Company shall deliver to the Purchasers each of the financial
statements and other reports described below:
(a) Monthly and Quarterly Financial. As soon as available and
in any event within thirty (30) days after the end of each month, the Company
shall deliver to the Purchasers (i) the consolidated and consolidating balance
sheets of the Company and its Subsidiaries, as at the end of such month and the
related consolidated and consolidating statements of income, stockholders' and
members equity and cash flow for such month and for the period from the
beginning of the then current fiscal year of the Company to the end of such
month (and, with respect to financial statements delivered for months that are
also the last month of any fiscal quarter, accompanied by the related
consolidated and consolidating statements of
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income, stockholders' and member's equity and cash flow for such fiscal quarter)
and (ii) a schedule of the outstanding Indebtedness for borrowed money of the
Company and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan.
(b) Year-End Financial.
(i) As soon as available and in any event within ninety
(90) days after the end of the fiscal year of the Company, the Company shall
deliver to the Purchasers (A) the consolidated and consolidating balance sheets
of the Company and its Subsidiaries as at the end of such year and the related
consolidated and consolidating statements of income, stockholders' and members'
equity and cash flow for such fiscal year, (B) a schedule of the outstanding
Indebtedness for borrowed money of the Company and its Subsidiaries describing
in reasonable detail each such debt issue or loan outstanding and the principal
amount and amount of accrued and unpaid interest with respect to each such debt
issue or loan, and (C) a report with respect to the financial statements from
Ernst & Young or another "Big Six" accounting firm of certified public
accountants selected by the Company and reasonably acceptable to the holders of
a majority of the shares of Series A Preferred Stock and Series B Preferred
Stock, voting as a single class, which report shall be prepared in accordance
with Statement of Auditing Standards No. 58 (the "STATEMENT") entitled "Reports
on Audited Financial Statements" and such report shall be "Unqualified" (as such
term is defined in such Statement). Together with each delivery of financial
statements of the Company and its Subsidiaries pursuant to this subsection
8.1(b), the Company shall deliver to the Purchasers a copy of a letter from the
Company to such accounting firm, which letter shall have been delivered to such
accounting firm prior to its delivery of such financial statements, stating that
an intent of the Company in engaging the accounting firm's professional services
to prepare the audit report relating to such financial statements was to benefit
and influence the Purchasers and their successors or assigns. Such letter shall
state that the Purchasers intend to rely on the audit report and the accounting
firm's professional services provided to the Company and its Subsidiaries.
(ii) Notwithstanding any provision in clause (i) above to
the contrary, in the case of the fiscal year of the Company ended December 31,
1997, the Company shall deliver the financial information and other documents
required pursuant to clause (i) above no later than the earlier of April 30,
1998 or the Second Closing Date.
(c) Company's Compliance Certificate. Together with each
delivery of financial statements of the Company and its Subsidiaries pursuant to
subsections 8.1(a) and 8.1(b) above, the Company shall deliver to the Purchasers
a fully and properly completed compliance certificate (in the form of Exhibit D
hereto or in such other form and substance satisfactory to the Purchasers)
signed by the Company's chief executive officer or chief financial officer.
(d) Accountants' Reports. Promptly upon receipt thereof, the
Company shall deliver to the Purchasers copies of all significant reports
submitted by the Company's certified public accountants in connection with each
annual, interim or special audit
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or review of any type of the financial statements or related internal control
systems of the Company and its Subsidiaries made by such accountants, including
any comment letter submitted by such accountants to management in connection
with their services.
(e) Management Reports. Together with each delivery of
financial statements of the Company and its Subsidiaries pursuant to subsections
8.1(a) and 8.1(b) (but with respect to subsection 8.1(a), with respect only to
financial statements of the Company and its Subsidiaries delivered for months
that are the last month of any fiscal quarter), the Company shall deliver to the
Purchasers a management report (i) describing the operations and financial
condition of the Company and its Subsidiaries for the quarter or fiscal year
then ended and the portion of the current fiscal year then elapsed (or for the
fiscal year then ended in the case of year-end financials), which description,
shall include, without limitation, construction costs, anchor lease rates,
collocation timing and collocation lease rates, (ii) setting forth in
comparative form on a month-to-month basis the corresponding figures from the
most recent projections for the current fiscal year delivered pursuant to
subsection 8.1(f) or otherwise approved by the Board of Directors, and
discussing the reasons for any significant variations, and (iii) setting forth
in reasonable detail the compliance or non-compliance by the Company or any
Subsidiary with any financial or other covenants to which the Company or any
such Subsidiary is subject pursuant to any loan agreement or other agreement
relating to Indebtedness of the Company or such Subsidiary and discussing the
reasons for any non-compliance. The information above shall be presented in
reasonable detail and shall be certified by the chief financial officer of the
Company to the effect that such information fairly presents the results of
operations and financial condition of the Company and its Subsidiaries as at the
dates and for the periods indicated.
(f) Projections. No earlier than sixty (60) days prior nor
later than thirty (30) days after the end of each fiscal year beginning with the
current fiscal year, the Company shall prepare and deliver to the Purchasers
projections of the Company and its Subsidiaries for the next succeeding fiscal
year, on a month to month basis.
(g) SEC Filings and Press Releases. Promptly upon their
becoming available, the Company shall deliver to the Purchasers copies of (i)
all financial statements, reports, notices and proxy statements sent or made
available by the Company or any of its Subsidiaries to their security holders,
(ii) all regular and periodic reports and all registration statements and
prospectuses, if any, filed by the Company or any of its Subsidiaries with any
securities exchange or with the Commission or any other governmental or private
regulatory authority, and (iii) all press releases and other statements made
available by the Company or any of its Subsidiaries to the public concerning
material developments in the business of the Company or any of its Subsidiaries.
(h) Events of Default, Etc. Promptly upon any officer of the
Company obtaining knowledge of any of the following events or conditions, the
Company shall deliver to the Purchasers copies of all notices given or received
by the Company or any of its Subsidiaries with respect to any such event of
condition and a certificate of the Company's chief executive officer specifying
the nature and period of existence of such event or condition and what action
the Company has taken, is taking and proposes to take with respect thereto: (i)
any condition or event that constitutes a breach of any provision of this
Agreement; (ii) any notice that any Person
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has given to the Company or any Subsidiary or any other action taken with
respect to a claimed default in any agreement evidencing Indebtedness or any
other material agreement to which the Company or any Subsidiary is a party; or
(iii) any event or condition that could reasonably be expected to result in any
material adverse effect on the Condition of the Company.
(i) Litigation. Promptly upon any officer of the Company
obtaining knowledge of (i) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any Subsidiary or any property of the Company or any Subsidiary not previously
disclosed by the Company to the Purchasers or (ii) any material development in
any action, suit, proceeding, governmental investigation or arbitration at any
time pending against or affecting the Company or any Subsidiary or any property
of the Company or any Subsidiary, which, in each case, is reasonably possible to
have a material adverse effect on the Condition of the Company, the Company will
promptly give notice thereof to the Purchasers and provide to the Purchasers
such other information as may be reasonably available to the Company to enable
the Purchasers and their respective counsel to evaluate such matter.
(j) Subsidiaries. Not less than fifteen (15) days prior to
creating a Subsidiary or acquiring the stock of a Person, such that such Person
will become a Subsidiary, the Company shall notify the Purchasers of the
Company's or any Subsidiary's intention to create such Subsidiary or acquire
such stock, and following such notice, such Subsidiary will not be created or
acquired unless such Subsidiary executes a joinder to this Agreement and the
other Transaction Documents in form and substance satisfactory to the
Purchasers.
(k) No Defaults. The Company shall deliver to the Purchasers
concurrently with the delivery of the financial statements referred to in
subsection 8.1(b), a certificate of the Company's Chief Financial Officer in the
form of stating that to his or her knowledge no breach of this Agreement or any
Transaction Document shall have occurred during the period covered thereby,
except as specified in such certificate.
(l) Bank Accounts. The Company shall not establish any bank
account or other account with any financial institution unless it provides
Purchasers with prior written notice thereof.
(m) Other Information. With reasonable promptness, the Company
shall deliver to the Purchasers such other information and data with respect to
the Company or any of its Subsidiaries as from time to time may be reasonably
required by the Purchasers.
8.2 PRESERVATION OF CORPORATE EXISTENCE. The Company shall, and
shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its
corporate existence;
(b) conduct their businesses in accordance with sound business
practices, keep their properties in good working order and condition (normal
wear and tear
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excepted), and from time to time make all needed repairs to, renewals of or
replacements of such properties (except to the extent that any of such
properties are obsolete or are being replaced) so that the efficiency of their
business operations shall be fully maintained and preserved; and
(c) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority.
8.3 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause each
of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including without
limitation:
(a) all tax liabilities, assessments and governmental charges
or levies upon the Company or any Subsidiary or their properties or assets,
unless the same are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the Company or
such Subsidiary;
(b) all lawful claims which the Company or such Subsidiary is
obligated to pay, which are due and which, if unpaid, might by law become a Lien
upon its property, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary; and
(c) all payments of principal, interest and other amounts when
due on Indebtedness.
8.4 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
its Subsidiaries to comply, in all material respects with all Requirements of
Law and with the directions of any Governmental Authority having jurisdiction
over them or their business or property (including all applicable Environmental
Laws).
8.5 INSPECTION. The Company will permit, and will cause each of its
Subsidiaries to permit, representatives of the Purchasers to visit and inspect
any of their properties, to examine their corporate, financial and operating
records and make copies thereof or abstracts therefrom, and to discuss their
affairs, finances and accounts with their respective directors, officers and
independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably requested, upon reasonable
advance notice.
8.6 MAINTENANCE OF PROPERTIES; INSURANCE. The Company and its
Subsidiaries shall maintain or cause to be maintained in good repair, working
order and condition all material properties used in their respective businesses
and will make or cause to be made all appropriate repairs, renewals and
replacements thereof. The Company and its Subsidiaries will maintain or cause to
be maintained with financially sound and reputable insurers that have a rating
of "A" or better as established by Best's Rating Guide (or an equivalent rating
with such other publication of a similar nature as shall be in current use),
public liability and property damage insurance with respect to their respective
businesses and properties
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against loss or damage of the kinds customarily carried or maintained by
companies of established reputation engaged in similar businesses and in amounts
acceptable to Purchasers and will deliver evidence thereof to Purchasers.
Without limiting the foregoing, the Company and its Subsidiaries will maintain
at all times business interruption insurance in an amount satisfactory to the
Board of Directors of the Company, and directors' and officers' liability
insurance coverage for each of the members of the Board of Directors of the
Company in amounts satisfactory to the Board of Directors of the Company;
provided, however, that the Company shall not be obligated to purchase or
maintain such insurance in the event that reasonable terms and pricing are not
commercially available.
8.7 BOOKS AND RECORDS. The Company shall, and shall cause each of
its Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
businesses of the Company and each of its Subsidiaries in accordance with GAAP
consistently applied to the Company and its Subsidiaries taken as a whole.
8.8 USE OF PROCEEDS. The Company shall use the proceeds of the sale
of the Shares at the Closing hereunder only for (i) the fees and expenses in
connection with the transactions contemplated hereunder and under the
Transaction Documents, and (ii) general corporate purposes.
8.9 BOARD NOMINEES. The Company shall maintain a Board of Directors
consisting of the number of directors specified in Section 5 of the
Stockholders' Agreement and use its best efforts to have the nominees designated
pursuant to Section 5 of the Stockholders' Agreement elected to the Board of
Directors of the Company in accordance with the terms thereof.
8.10 GRANTING OF OPTIONS. The Company may grant up to an aggregate of
1,817,700 Stock Options, of which 1,244,700 Stock Options have been granted as
of the First Closing Date and 573,000 Stock Options are to be granted in the
future. If the Stock Options are granted, the Company shall grant the Stock
Options at an exercise price equal to at least the per share fair market value
of the Common Stock (as determined by the Company's Board of Directors) at the
time of such grant.
8.11 BUSINESS ACTIVITIES. The Company shall engage in no business or
business activity other than the businesses and business activities in which it
is currently engaged and the performance of its obligations under the
Transaction Documents.
8.12 KEY-MAN LIFE INSURANCE. The Company shall at all times maintain
a key-man life insurance policy with a reputable and financially sound insurer
on the life of Stephen H. Clark in the face amount of not less than $3,000,000.
Such insurance policy shall (a) be in full force and effect by no later than the
earlier of (i) two (2) months after the First Closing Date or (ii) the Second
Closing Date, (b) name the Company as beneficiary and (c) provide that such
insurance policy may not be canceled unless the insurance carrier gives at least
30 days' prior written notice of such cancellation to Purchasers.
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8.13 BOARD CONSENT. The Company shall obtain the consent of the
Company's Board of Directors prior to entering into any single contract or
agreement for the purchase, lease, construction or management of
telecommunication towers that involve the receipt or payment of in excess of
$10,000,000.
8.14 RESERVATION OF SHARES. The Company shall at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance or delivery upon (a) exercise of the warrants set forth on Schedule
5.19, the Stock Options, and (b) conversion of the Shares, the maximum number of
shares of capital stock that may be issuable or deliverable upon such exercise
or conversion, as the case may be (the "EXERCISABLE SHARES"). The Exercisable
Shares shall, when issued or delivered and paid for in accordance with such
warrants, the Stock Options or the Certificate of Amendment with respect to the
Shares, as the case may be, be duly and validly issued and fully paid and
non-assessable. The Company shall issue such capital stock in accordance with
the provisions of such warrants, the Stock Options or the Certificate of
Amendment with respect to the Shares, as the case may be, and shall otherwise
comply, in each case, with the terms thereof.
ARTICLE 9
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of either
Purchaser, acceptance of the Shares and payment therefor, or termination of this
Agreement until November 30, 1999, except for the representations and warranties
set forth in Sections 5.11, 5.13 and 5.16 and matters constituting fraud or
intentional or willful misconduct, which shall survive for the applicable
statute of limitation periods (including extensions or waivers thereof). If
notification of a breach of any representation or warranty is given on or before
the applicable survival period, any claim with respect to such breach shall
survive until finally resolved by agreement of the parties or nonappealable
court order.
9.2 NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to Whitney (or JHW II, JHW III or JHW Strategic III):
c/o J. H. Whitney & Co.
177 Broad Street
Stamford, Connecticut 06901
Telecopier No.: (203) 973-1422
Attention: Michael R. Stone
Daniel J. O' Brien
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with a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 735-8708
Attention: David A. Scherl, Esq.
(b) if to Waller:
Waller-Sutton Media Partners, L.P.
c/o Waller-Sutton Management Group, Inc.
1 Rockfeller Plaza
New York, New York 10020
Telecopier No.: (212) 218-4355
Attention: Andrew J. Armstrong, Jr.
with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
Telecopier No.: (212) 698-7825
Attention: Ronald Greenberg, Esq.
c) if to Kitty Hawk III:
Kitty Hawk Capital Limited Partnership, III
2700 Coltsgate Road, Suite 202
Charlotte, North Carolina 28211
Telecopier No.: (704) 362-2774
Attention: W. Chris Hegele
with a copy to:
Smith Helms Mulliss & Moore, LLP
214 North Church Street
Charlotte, North Carolina 28202
Telefacsimile Number: (704) 334-8467
Attention: Harrison Marshall, Esq.
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(e) if to Kitty Hawk Capital Limited Partnership IV:
Kitty Hawk Capital Limited Partnership, IV
2700 Coltsgate Road, Suite 202
Charlotte, North Carolina 28211
Telecopier No.: (704) 362-2774
Attention: W. Chris Hegele
(f) if to Eagle Creek:
Eagle Creek Capital, L.L.C.
2300 Carillon Point
Kirkland, Washington, 98033
Telecopier No.: (425) 828-8450
Attention: Susan L. Rasinski
(g) if to NCEF:
The North Carolina Enterprise Fund, L.P.
3600 Glenwood Ave, Suite 107
Raleigh, North Carolina 27612
Telecopier No.: (919) 783-9195
Attention: Charles T. Closson, Jr.
with a copy to:
Poyner & Spruill, LLP
3600 Glenwood Ave., Suite 300
Raleigh, North Carolina 27612
Telecopier No.: (919) 783-1075
Attention: Robert B. Womble, Esq.
(g) if to Finley L.P.:
c/o Joe L. Finley, III
10770 Samples Road
Alexander, Arkansas 72002
Telecopier No.: (501) 316-1451
with a copy to:
Friday, Eldridge & Clark
400 West Capitol, Suite 2000
Little Rock, Arkansas 72201
Telecopier No.: (501) 376-2147
Attention: Price C. Gardner, Esq.
38
<PAGE> 45
(h) if to Gupton:
William R. Gupton
c/o PCX Corporation
8343 U.S. Highway 70 East
Clayton, North Carolina 27520
Telecopier No.: (919) 550-2900
(i) if to Jackman:
Jack W. Jackman
c/o PCX Corporation
8343 U.S. Highway 70 East
Clayton, North Carolina 27520
Telecopier No.: (919) 550-2900
(j) if to Eckert:
Alton D. Eckert
c/o PCX Corporation
8343 U.S. Highway 70 East
Clayton, North Carolina 27520
Telecopier No.: (919) 550-2900
(k) if to the Company:
SpectraSite Holdings, Inc.
8000 Regency Park, Suite 570
Cary, North Carolina 27511
Telecopier No.: (919) 468-8522
Attention: Mr. Stephen H. Clark
Mr. Joe L. Finley, III
with a copy to:
Hutchison & Mason PLLC
4011 Westchase Blvd, Suite 400
Raleigh, North Carolina 27607
Telecopier No.: (919) 829-9696
Attention: Fred D. Hutchison, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
39
<PAGE> 46
9.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the parties
hereto. Subject to applicable securities laws, the Purchasers may assign any of
its rights under any of the Transaction Documents to any Person, and, subject to
the terms of the Stockholders' Agreement, any holder of any of the Shares or any
of the Common Stock issuable upon conversion of the Series B Preferred Stock may
assign any such securities to any Person. The Company may not assign any of its
rights under this Agreement without the prior written consent of the Purchasers.
Except as provided in Article 7, no Person other than the parties hereto and
their successors and permitted assigns is intended to be a beneficiary of any of
the Transaction Documents.
9.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any of the parties
hereto in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
parties hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by all of the parties hereto, and (ii) only in the specific instance
and for the specific purpose for which made or given; provided, however, that
any amendment, supplement or modification of or to any provision of Article 8
hereof, and any consent to any departure by any party from the terms of any
provision of Article 8 hereof, shall be effective if it is made or given in
writing and signed by the Purchasers holding a majority of the issued and
outstanding shares of Series B Preferred Stock (provided that such majority
shall include the Whitney Funds and Waller). Except where notice is specifically
required by this Agreement, no notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.
9.5 SIGNATURES AND COUNTERPARTS. Telefacsimile transmissions of any
executed original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
9.6 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
40
<PAGE> 47
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
9.8 JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
AGREES THAT THE ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE SHARES, THE JHW II OPTION OR ANY AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH
COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE
AND ANY CLAIM THAT THE SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN
SECTION 9.2, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
9.9 SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
9.10 RULES OF CONSTRUCTION. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement.
9.11 ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, supersede all prior
agreements and understandings between the parties with respect to such subject
matter. Notwithstanding the foregoing, the Series A Purchase Agreement, as
amended in Section 9.16, shall remain in full force and effect and shall not be
superseded by the terms of this Agreement.
9.12 CERTAIN EXPENSES. The Company agrees to pay all reasonable
expenses of Whitney, JHW II, JHW III, JHW Strategic III, Waller, Kitty Hawk III,
Kitty Hawk IV and NCEF (including reasonable fees, charges and disbursements of
counsel) incurred in connection with
41
<PAGE> 48
any amendment, supplement, modification or waiver of or to any provision of this
Agreement (including, without limitation, a response to a request by the Company
for such Purchasers' consent to any action otherwise prohibited hereunder), the
Certificate of Amendment, or consent to any departure by the Company from, the
terms of any provision of this Agreement or the Certificate of Amendment.
9.13 PUBLICITY. Except as may be required by applicable law, none of
the parties hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the other party hereto. If any
announcement is required by law to be made by any party hereto, prior to making
such announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
9.14 FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
9.15 OBLIGATIONS OF THE PARTIES. Each Purchaser's obligations and the
obligations of the Company hereunder and are subject to the execution and
delivery by the other Purchaser of this Agreement. The obligations of each
Purchaser hereunder and under the other Transaction Documents to which such
Purchaser is a party shall be several and not joint, and no Purchaser shall be
liable or otherwise responsible for the acts or omissions of any other
Purchaser.
9.16 AMENDMENT OF SERIES A PURCHASE AGREEMENT. The Company, JHW II
and Kitty Hawk hereby consent and agree that, effective upon the execution of
this Agreement by the parties hereto, the Series A Purchase Agreement shall be
amended to: (i) delete Section 8.10 thereof in its entirety and to substitute in
lieu thereof the following:
"8.10 BOARD NOMINEES. The Company shall maintain a Board of
Directors consisting of the number of directors specified in Section 5 of
the Second Amended and Restated Stockholders' Agreement, dated as of March
23, 1998, by and among the Company (now known as SpectraSite Holdings,
Inc.), a Delaware corporation, WEP, J. H. Whitney III, L.P., a Delaware
limited partnership, Whitney Strategic Partners III, L.P., a Delaware
limited partnership, Waller-Sutton Media Partners, L.P., a Delaware limited
partnership, Kitty Hawk, Kitty Hawk Capital Limited Partnership, IV, a
Delaware limited partnership, Eagle Creek Capital, L.L.C., a Washington
limited liability company, Stephen H. Clark, Robert M. Long, Finley Family
Limited Partnership, an Arkansas limited partnership, The North Carolina
Enterprise Fund, L.P., a North Carolina limited partnership, Edward J.
Lutkewich, Jack W. Jackman, Alton D. Eckert and William R. Gupton, as such
agreement may be amended from time to time (the "Stockholders' Agreement"),
and use its best efforts to have the nominees designated pursuant to
Section
42
<PAGE> 49
5 of the Stockholders' Agreement elected to the Board of Directors of the
Company in accordance with the terms thereof.";
and (ii) amend Section 8.13 thereof to (A) delete entirely the requirement to
obtain or maintain key-man life insurance on the life of Joe L. Finley, III, and
(B) change the date by which the key-man life insurance policy on the life of
Clark must be in full force and effect to the earlier of (i) two (2) months
after the First Closing Date or (ii) the Second Closing Date.
The Company, JHW and Kitty Hawk III further agree that such amendment
of the Series A Purchase Agreement constitutes full compliance with Section 9.4
of the Series A Purchase Agreement and that, except as herein amended, the terms
and provisions of the Series A Purchase Agreement shall continue unchanged and
in full force and effect as originally executed.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
43
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
SPECTRASITE HOLDINGS, INC.
By: /s/ Stephen H. Clark
---------------------------------------
Name: Stephen H. Clark
Title:President
WHITNEY EQUITY PARTNERS, L.P.
By: J. H. Whitney Equity Partners, LLC,
Its General Partner
By: /s/ Michael R. Stone
--------------------------------------
Name: Michael R. Stone
A Managing Member
J. H. WHITNEY III, L.P.
By: J. H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ Michael R. Stone
--------------------------------------
Name: Michael R. Stone
A Managing Member
WHITNEY STRATEGIC
PARTNERS III, L.P.
By: J. H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ Michael R. Stone
--------------------------------------
Name: Michael R. Stone
A Managing Member
[FIRST SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
<PAGE> 51
WALLER-SUTTON MEDIA PARTNERS, L.P.
By: /s/ Waller -Sutton Media, LLC
------------------------------
Its General Partner
By: /s/ Andrew J. Armstrong, Jr.
------------------------------
Name: Andrew J. Armstrong, Jr.
A General Partner
KITTY HAWK CAPITAL LIMITED
PARTNERSHIP, III
By: Kitty Hawk Partners Limited Partnership, III
Its General Partner
By: /s/ W. Chris Hegele
------------------------------
Name: W. Chris Hegele
A General Partner
KITTY HAWK CAPITAL LIMITED
PARTNERSHIP, IV
By: Kitty Hawk Partners LLC, IV
Its General Partner
By: /s/ W. CHRIS HEGELE
------------------------------
Name: W. CHRIS HEGELE
A Manager
EAGLE CREEK CAPITAL, L.L.C.
By: /s/ Susan L. Rasinski
------------------------------
Name: Susan L. Rasinski
A Manager
[SECOND SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
<PAGE> 52
THE NORTH CAROLINA ENTERPRISE FUND, L.P.
By: The North Carolina Enterprise Corporation,
General Partner
By:/s/ Charles T. Closson, Jr.
-------------------------------
Name: Charles T. Closson, Jr.
Title:President & CEO
FINLEY FAMILY LIMITED PARTNERSHIP
By:/s/ Jeff L. Finley III
-------------------------------
Name: Jeff L. Finley III
Title: Managing General Partner
/s/ WILLIAM R.GUPTON
----------------------------------
WILLIAM R. GUPTON
/s/ JACK W. JACKMAN
----------------------------------
JACK W. JACKMAN
/s/ ALTON D. ECKERT
----------------------------------
ALTON D. ECKERT
[THIRD SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
<PAGE> 53
<PAGE> 1
EXHIBIT 10.3
FIRST AMENDMENT
TO
STOCK PURCHASE AGREEMENT
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT, dated as of May 29, 1998
(the "First Amendment"), by and among SpectraSite Holdings, Inc., a Delaware
corporation (the "Company"), and Whitney Equity Partners, L.P., a Delaware
limited partnership, J. H. Whitney III, L.P., a Delaware limited partnership,
Whitney Strategic Partners III, L.P., a Delaware limited partnership,
Waller-Sutton Media Partners, L.P., a Delaware limited partnership, Kitty Hawk
Capital Limited Partnership, III, a Delaware limited partnership, Kitty Hawk
Capital Limited Partnership, IV, a Delaware limited partnership, Eagle Creek
Capital, L.L.C., a Washington limited liability company, The North Carolina
Enterprise Fund, L.P., a North Carolina limited partnership, Finley Family
Limited Partnership, an Arkansas limited partnership, William R. Gupton, Jack W.
Jackman, and Alton D. Eckert (collectively, the "Stockholders").
WHEREAS, the Company and the Stockholders are parties to a Stock
Purchase Agreement, dated as of March 23, 1998 (the "Stock Purchase Agreement");
and
WHEREAS, pursuant to Section 9 of the Stock Purchase Agreement, the
Company and the Stockholders desire to amend and modify the provisions of the
Stock Purchase Agreement in the manner and to the extent set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the Company and the Stockholders hereby agree as follows:
1. Amendment of Section 3.18. The provisions of the second sentence
of Section 3.18 (Tower Agreements) of the Stock Purchase Agreement are hereby
deleted in their entirety.
2. Amendment of Section 3.19. The provisions of Section 3.19 (Bank
Loan) of the Stock Purchase Agreement are hereby deleted in their entirety and
replaced with the following:
3.19 Debt Financing. As of the Second Closing Date, the Company shall
have: (a) entered into definitive agreements with Credit Suisse First
Boston and/or certain other lending institution(s), pursuant to which
such institution(s) shall have provided the Company with a
$50,000,000 revolving credit facility or (b) consummated the issuance
and sale of at least $50,000,000 of its Senior Discount Notes which
are being underwritten by Credit Suisse First Boston Corporation,
Lehman Brothers Inc., and CIBC Oppenheimer Corp.
3. Effect of First Amendment. The provisions of the Stock Purchase
Agreement are hereby amended and modified by the provisions of this First
Amendment.
<PAGE> 2
If any of the provisions of the Stock Purchase Agreement are materially
different from or inconsistent with the provisions of this First Amendment, the
provisions of this First Amendment shall control, and the provisions of the
Stock Purchase Agreement shall, to the extent of such difference or
inconsistency, be deemed to be amended and modified.
4. Single Agreement. This First Amendment and the Stock Purchase
Agreement, as amended and modified by the provisions of this First Amendment,
shall constitute and shall be construed as a single agreement. The provisions of
the Stock Purchase Agreement, as amended and modified by the provisions of this
First Amendment, are incorporated herein by this reference and are ratified and
affirmed.
IN WITNESS WHEREOF, this First Amendment has been executed and
delivered by the Company and the Stockholders as of the date first written
above.
SPECTRASITE HOLDINGS, INC.
By: /s/ Stephen H. Clark
-------------------------------------
Name: Stephen H. Clark
Title:President
WHITNEY EQUITY PARTNERS, L.P.
By: J. H. Whitney Equity Partners, LLC,
Its General Partner
By: /s/ DANIEL J. O'BRIEN
------------------------------------
Name: Daniel J. O'Brien
A Managing Member
J. H. WHITNEY III, L.P.
By: J. H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ DANIEL J. O'BRIEN
------------------------------------
Name: Daniel J. O'Brien
A Managing Member
<PAGE> 3
WHITNEY STRATEGIC PARTNERS III, L.P.
By: J.H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ DANIEL J. O'BRIEN
------------------------------------
Name: Daniel J. O'Brien
A Managing Member
WALLER-SUTTON-MEDIA PARTNERS, L.P.
By: Waller -Sutton Media, LLC
Its General Partner
By: /s/ Andrew J. Armstrong, Jr.
------------------------------------
Name: Andrew J. Armstrong, Jr.
A General Partner
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III
By: Kitty Hawk Partners Limited
Partnership, III
Its General Partner
By: /s/ W. Chris Hegele
------------------------------------
Name: W. Chris Hegele
A General Partner
<PAGE> 4
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV
By: Kitty Hawk Partners LLC, IV
Its General Partner
By: /s/ W. CHRIS HEGELE
-------------------------------------
Name: W. CHRIS HEGELE
A Manager
EAGLE CREEK CAPITAL, L.L.C.
By: /s/ Susan L. Rasinski
-------------------------------------
Name: Susan L. Rasinski
A Manager
THE NORTH CAROLINA ENTERPRISE FUND, L.P.
By: The North Carolina Enterprise
Corporation,
General Partner
By:/s/ Charles T. Closson, Jr.
----------------------------------
Name: Charles T. Closson, Jr.
Title:President & CEO
<PAGE> 5
FINLEY FAMILY LIMITED PARTNERSHIP
By:/s/ Joe L. Finley III
--------------------------------------------
Name: Joe L. Finley III
Title: Managing General Partner
/s/ WILLIAM R.GUPTON
-----------------------------------------------
WILLIAM R. GUPTON
/s/ JACK W. JACKMAN
-----------------------------------------------
JACK W. JACKMAN
/S/ ALTON D. ECKERT
-----------------------------------------------
ALTON D. ECKERT
<PAGE> 1
EXHIBIT 10.4
SECOND AMENDMENT
TO STOCK PURCHASE AGREEMENT
This SECOND AMENDMENT (this "SECOND AMENDMENT"), dated as of August
27, 1998, by and among SPECTRASITE HOLDINGS, INC. (the "COMPANY"), a Delaware
corporation, WHITNEY EQUITY PARTNERS, L.P. ("JHW II"), a Delaware limited
partnership, J. H. WHITNEY III, L.P. ("JHW III"), a Delaware limited
partnership, WHITNEY STRATEGIC PARTNERS III, L.P., ("JHW STRATEGIC III"), a
Delaware limited partnership, WALLER-SUTTON MEDIA PARTNERS, L.P. ("WALLER"), a
Delaware limited partnership, KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III
("KITTY HAWK III"), a Delaware limited partnership, KITTY HAWK CAPITAL LIMITED
PARTNERSHIP, IV ("KITTY HAWK IV"), a Delaware limited partnership, EAGLE CREEK
CAPITAL, L.L.C. ("EAGLE CREEK"), a Washington limited liability company, THE
NORTH CAROLINA ENTERPRISE FUND, L.P. ("NCEF"), a North Carolina limited
partnership, FINLEY FAMILY LIMITED PARTNERSHIP ("FINLEY LP"), an Arkansas
limited partnership, WILLIAM R. GUPTON ("GUPTON"), a North Carolina resident,
JACK W. JACKMAN ("JACKMAN"), a North Carolina resident, and ALTON D. ECKERT
("ECKERT" and together with JHW II, JHW III, JHW Strategic III, Waller, Kitty
Hawk III, Kitty Hawk IV, Eagle Creek, NCEF, Finley LP, Gupton and Jackman, each
a "PURCHASER" and collectively the "PURCHASERS"), a North Carolina resident, to
the Stock Purchase Agreement (the "STOCK PURCHASE AGREEMENT"), dated as of March
23, 1998, by and among the Company and the Purchasers, as amended by the First
Amendment (the "FIRST AMENDMENT"), dated as of May 29, 1998, by and among, the
Company and the Purchasers. The Stock Purchase Agreement, as amended by the
First Amendment, is hereinafter referred to as the "ORIGINAL AGREEMENT." The
Original Agreement as amended by this Second Amendment is hereinafter referred
to as the "AGREEMENT." All capitalized terms used herein without definition
shall have the respective meanings assigned to such terms in the Stock Purchase
Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to Section 2.2(b) of the Original Agreement, the
Company delivered written notice, dated July 26, 1998, to the Purchasers,
requesting that the Second Closing occur on the date hereof; and
WHEREAS, the issuance and sale by the Company of the Additional Sares
to JHW II would require each of the Company and JHW II to comply with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), which
would result in a delay of the Second Closing beyond the date hereof; and
WHEREAS, the Company desires to proceed with the Second Closing on
the date hereof and to issue and sell all of the Additional Shares, as
contemplated by Section 2.2(b) of the Original Agreement, other than the 675,874
shares (the "JHW II ADDITIONAL SHARES") of Series B Preferred Stock required to
be sold by the Company to JHW II, and purchased by JHW II from the
<PAGE> 2
Company, and the Purchasers desire that, on the date hereof, each of the
Purchasers, other than JHW II, purchase the Additional Shares as contemplated
under the Original Agreement; and
WHEREAS the Company and the Purchasers desire that the Company issue
and sell, and JHW II purchase, the JHW II Additional Shares on the terms set
forth in the Original Agreement after the Company and JHW II have complied with
the requirements of the HSR Act.
NOW THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the sufficiency and receipt of which
is hereby acknowledged, the parties hereto agree to amend the Original Agreement
as follows:
ARTICLE 1
AMENDMENTS TO ORIGINAL AGREEMENT
1.1 PURCHASE AND SALE OF THE OTHER ADDITIONAL SHARES.
Notwithstanding that JHW II will not purchase the JHW II Additional Shares on
the date hereof, each of the Purchasers other than JHW II (the "OTHER
PURCHASERS") shall, on the date hereof, purchase the Additional Shares
contemplated by the Original Agreement to be purchased by them (the "PURCHASER
ADDITIONAL SHARES") subject to the terms and conditions of the Agreement (other
than the condition contained in Article 3 of the Original Agreement that JHW II
simultaneously purchase the JHW II Additional Shares).
1.2 PURCHASE AND SALE OF JHW II ADDITIONAL SHARES. The Company
shall issue and sell to JHW II, and JHW II shall purchase, the JHW II Additional
Shares from the Company subject to the terms and conditions of the Agreement
(other than the condition contained in Article 3 of the Original Agreement that
the Other Purchasers simultaneously purchase the Purchaser Additional Shares).
For all purposes under the Agreement, the JHW II Additional Shares shall be
deemed to be "Shares."
1.3 CLOSING OF THE SALE AND PURCHASE OF THE JHW II ADDITIONAL
SHARES. The issuance and purchase of the JHW II Additional Shares shall take
place at the closing (the "JHW II CLOSING") to be held at the offices of
Hutchison & Mason PLLC, 4011 Westchase Blvd., Suite 400, Raleigh, North
Carolina, on the date that is five business days after all the conditions to the
JHW II Second Closing have been satisfied, including, without limitation, the
condition that the Company and JHW II comply with the requirements of the HSR
Act (the "JHW II SECOND CLOSING DATE"), but in no event later than April 1,
1999. At the JHW II Second Closing, the Company shall deliver to JHW II the JHW
II Additional Shares against delivery by JHW II to the Company of the purchase
price therefor, payable by wire transfer of immediately available funds to an
account or accounts designated in writing by the Company. With respect only to
the sale and purchase of the JHW II Additional Shares, (i) the term "Second
Closing" as used in the Agreement shall mean the JHW II Second Closing and (ii)
the term "Second Closing Date" shall mean the JHW II Second Closing Date.
2
<PAGE> 3
1.4 DEFAULT SHARES. The provisions of Section 2.1(c) and 2.3 of the
Original Agreement shall not apply to JHW II's failure to purchase and pay for
the JHW II Additional Shares on the date hereof, but shall only apply in the
event JHW II fails or refuses to pay for the JHW II Additional Shares, in
accordance with the terms and subject to the conditions of the Agreement, on the
JHW II Second Closing Date.
1.5 CONDITIONS TO CLOSING. In addition to the conditions set forth
in Article 3 of the Original Agreement, the obligations of JHW II to purchase
the JHW II Additional Shares, to pay the purchase price therefor at the JHW II
Second Closing and to perform any other obligations under the Agreement shall be
subject to the consummation of the purchase on the date hereof by the Other
Purchasers of the Additional Shares on the terms set forth in the Agreement.
1.6 HSR ACT. The Company and JHW II shall take all actions
necessary and shall cooperate to comply with the provisions of the HSR Act,
including, without limitation, the filing by each of the Company and JHW II of a
"Notification and Report Form for Certain Mergers and Acquisitions" with the
United States Federal Trade Commission, in connection with the purchase and sale
of the JHW II Additional Shares. The representations and warranties in Sections
5.3 and 6.11 of the Purchase Agreement (as they relate to the JHW II Additional
Shares) are hereby modified by the parties acknowledgment that the purchase and
sale of the JHW II Additional Shares is subject to the provisions of the HSR
Act.
ARTICLE 2
MISCELLANEOUS
2.1 RATIFICATION. The terms and provisions set forth in this Second
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Original Agreement and, except as expressly modified and superseded
by this Second Amendment, the terms and provisions set forth in the Original
Agreement are hereby ratified and confirmed and shall continue in full force and
effect.
2.2 FEES. The Company confirms and agrees that its obligations
under Section 2.5(a) of the Original Agreement include, without limitation, the
obligation of the Company to pay the out-of-pocket expenses (including, without
limitation, attorneys' fees, charges and disbursements, consultants' fees and
expenses and due diligence expenses) of (i) Whitney, JHW II, JHW III, JHW
Strategic III, Waller, Kitty Hawk III and Kitty Hawk IV incurred in connection
with the negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) JHW II incurred
in connection with its compliance with the HSR Act as contemplated by Section
1.6 hereof, including, without limitation, any filing fees required under the
HSR Act.
2.3 SIGNATURES; COUNTERPARTS. Telefacsimile transmissions of any
executed original document and/or retransmission of any executed telefacsimile
transmission shall be deemed
3
<PAGE> 4
to be the same as the delivery of an executed original. At the request of any
party hereto, the other parties hereto shall confirm telefacsimile transmissions
by executing duplicate original documents and delivering the same to the
requesting party or parties. This Second Amendment may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
2.4 HEADINGS. The headings in this Second Amendment are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
2.5 GOVERNING LAW. THE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
2.6 JURISDICTION. EACH PARTY TO THE AGREEMENT HEREBY IRREVOCABLY
AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE
AGREEMENT, THE SHARES, OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY
SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES
THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH
COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE ADDRESS SET FORTH IN SECTION 9.2 OF THE ORIGINAL
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
2.7 SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
2.8 RULES OF CONSTRUCTION. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Second Amendment.
4
<PAGE> 5
2.11 ENTIRE AGREEMENT. The Agreement, together with the exhibits and
schedules thereto and the other Transaction Documents, are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
therein. The Agreement, together with the exhibits and schedules thereto, and
the other Transaction Documents supersede all prior agreements and
understandings between the parties with respect to such subject matter.
2.13. FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed and delivered by their respective officers hereunto
duly authorized as of the date first above written.
SPECTRASITE HOLDINGS, INC.
By: /s/ Stephen H. Clark
------------------------------------
Name: Stephen H. Clark
Title:President
WHITNEY EQUITY PARTNERS, L.P.
By: J. H. Whitney Equity Partners, LLC,
Its General Partner
By: /s/ Michael R. Stone
------------------------------------
Name: Michael R. Stone
A Managing Member
J. H. WHITNEY III, L.P.
By: J. H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ Michael R. Stone
------------------------------------
Name: Michael R. Stone
A Managing Member
WHITNEY STRATEGIC PARTNERS III, L.P.
By: J. H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ Michael R. Stone
------------------------------------
Name: Michael R. Stone
A Managing Member
[FIRST SIGNATURE PAGE TO SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT]
<PAGE> 7
WALLER-SUTTON MEDIA PARTNERS, L.P.
By: /s/ Waller-Sutton Media, LLC
---------------------------------------
Name:
Its General Partner
By: /s/ Andrew J. Armstrong, Jr.
---------------------------------------
Name: Andrew J. Armstrong, Jr.
A General Partner
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III
By: Kitty Hawk Partners Limited Partnership, III
Its General Partner
By: /s/ W. Chris Hegele
--------------------------
Name: W. Chris Hegele
A General Partner
KITTY HAWK CAPITAL LIMITED
PARTNERSHIP, IV
By: Kitty Hawk Partners LLC, IV
Its General Partner
By: /s/ W. CHRIS HEGELE
--------------------------
Name: W. CHRIS HEGELE
A Manager
EAGLE CREEK CAPITAL, L.L.C.
By: /s/ Susan L. Rasinski
--------------------------
Name: Susan L. Rasinski
A Manager
[SECOND SIGNATURE PAGE TO SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT]
<PAGE> 8
THE NORTH CAROLINA ENTERPRISE FUND, L.P.
By: The North Carolina Enterprise Corporation,
General Partner
By: /s/ Charles T. Closson, Jr.
-----------------------------------------
Name: Charles T. Closson, Jr.
Title:President & CEO
FINLEY FAMILY LIMITED PARTNERSHIP
By: /s/ Joe L. Finley III
----------------------------------------
Name: Joe L. Finley III
Title: Managing General Partner
/s/ WILLIAM R.GUPTON
--------------------------------------------
WILLIAM R. GUPTON
/s/ JACK W. JACKMAN
--------------------------------------------
JACK W. JACKMAN
/S/ ALTON D. ECKERT
--------------------------------------------
ALTON D. ECKERT
[THIRD SIGNATURE PAGE TO SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT]
<PAGE> 1
EXHIBIT 10.5
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT"), dated as of March 23, 1998, by and among SPECTRASITE HOLDINGS,
INC. (the "COMPANY"), a Delaware corporation, WHITNEY EQUITY PARTNERS, L.P.
("JHW II"), a Delaware limited partnership, J. H. WHITNEY III, L.P. ("JHW
III"), a Delaware limited partnership, WHITNEY STRATEGIC PARTNERS III, L.P.
("JHW STRATEGIC III"), a Delaware limited partnership, WALLER-SUTTON MEDIA
PARTNERS, L.P. ("WALLER"), a Delaware limited partnership, KITTY HAWK CAPITAL
LIMITED PARTNERSHIP, III ("KITTY HAWK III"), a Delaware limited partnership,
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV ("KITTY HAWK IV"), a Delaware
limited partnership, EAGLE CREEK CAPITAL, L.L.C. ("EAGLE CREEK"), a Washington
limited liability company, THE NORTH CAROLINA ENTERPRISE FUND, L.P. ("NCEF"), a
North Carolina limited partnership, FINLEY FAMILY LIMITED PARTNERSHIP (the
"FINLEY FAMILY LP"), an Arkansas limited partnership, WILLIAM R. GUPTON
("GUPTON"), JACK W. JACKMAN ("JACKMAN"), ALTON D. ECKERT ("ECKERT"), STEPHEN
H. CLARK ("CLARK"), and ROBERT M. LONG ("LONG").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Stock Purchase Agreement
(the "SERIES A PURCHASE AGREEMENT"), dated as of May 12, 1997, by and among
Integrated Site Development, Inc. ("INTEGRATED" OR THE "COMPANY"), a Delaware
corporation (now known as SpectraSite Holdings, Inc.), U.S. Towers, Inc. ("UST"
OR "SPECTRASITE"), a Delaware corporation (now known as SpectraSite
Communications, Inc.), Telesite Services, LLC ("TELESITE"), an Arkansas limited
liability company, which merged into SpectraSite, Metrosite Management, LLC
("METROSITE"), an Arkansas limited liability company, JHW II and Kitty Hawk
III, (i) JHW II purchased 3,203,118 shares (the "JHW II SERIES A SHARES") of 8%
Series A Cumulative Convertible Redeemable Preferred Stock, $0.001 par value
per share (the "SERIES A PREFERRED STOCK"), of the Company and (ii) Kitty Hawk
III purchased 259,712 shares (the "KITTY HAWK SERIES A SHARES") of Series A
Preferred Stock; and
WHEREAS, pursuant to the terms of the Stock Contribution
Agreement, dated as of May 12, 1997, by and among Integrated, Clark, Long and
UST, (i) Clark acquired 687,395 shares (the "CLARK SHARES") of common stock,
$0.001 par value per share, of the Company (the "COMMON STOCK") and (ii) Long
acquired 162,605 shares (the "LONG SHARES") of Common Stock; and
WHEREAS, pursuant to the terms of the Membership Interests
Contribution Agreement, dated as of May 12, 1997, by and among Integrated, Joe
L. Finley, III, Caroline Finley, the Finley Family LP, The Central Arkansas
Opportunity Foundation, a charitable trust organized under the laws of
Arkansas, Telesite and Metrosite, the Finley Family LP acquired 490,517 (the
"FINLEY FAMILY COMMON SHARES") shares of Common Stock; and
<PAGE> 2
WHEREAS, pursuant to a Certificate of Amendment filed with the
Secretary of State of the State of Delaware on October 29, 1997, Integrated
changed its name to SpectraSite Holdings, Inc.; and
WHEREAS, pursuant to Articles of Amendment filed with the
Secretary of State of the State of Arkansas, Telesite changed its name to
SpectraSite Communications, LLC ("SPECTRASITE, LLC");
WHEREAS, pursuant to an Agreement and Plan of Merger, dated
October 31, 1997, between UST and SpectraSite, LLC, SpectraSite, LLC was merged
with and into UST with UST being the surviving corporation, and UST changed its
name to SpectraSite Communications, Inc.; and
WHEREAS, pursuant to a Purchase and Sale Agreement, dated
February 27, 1998, by and among Apex Site Management L.P., a Delaware limited
partnership ("APEX"), the Company, and Metrosite, the Company sold to Apex, and
Apex purchased from the Company, all of the issued and outstanding capital
membership units of Metrosite; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and pursuant to the terms of the Stock Purchase Agreement, dated
March 23, 1998, by and among the Company, JHW II, JHW III, JHW Strategic III,
Waller, Kitty Hawk III, Kitty Hawk IV, Eagle Creek, NCEF, Finley Family LP,
Jackman, Eckert and Gupton (the "SERIES B PURCHASE AGREEMENT"), (i) JHW II has
purchased 1,044,532 shares (the "JHW II SERIES B SHARES" and, together with the
JHW II Series A Shares, the "JHW II SHARES") of 8% Series B Cumulative
Convertible Redeemable Preferred Stock, $0.001 par value per share, of the
Company (the "SERIES B PREFERRED STOCK"), (ii) JHW III has purchased 2,039,910
shares (the "JHW III SHARES") of Series B Preferred Stock, (iii) JHW Strategic
III has purchased 49,155 shares (the "JHW STRATEGIC III SHARES") of Series B
Preferred Stock, (iv) Waller has purchased 746,095 shares (the "WALLER SHARES")
of Series B Preferred Stock, (v) Kitty Hawk III has purchased 37,305 shares
(the "KITTY HAWK III SERIES B SHARES") of Series B Preferred Stock, (vi) Kitty
Hawk IV has purchased 186,524 shares (the "KITTY HAWK IV SERIES B SHARES" and,
together with the Kitty Hawk Series A Shares and the Kitty Hawk III Series B
Shares, the "KITTY HAWK SHARES") of Series B Preferred Stock, (vii) Eagle Creek
has purchased 74,609 shares (the "EAGLE CREEK SHARES") of Series B Preferred
Stock; (viii) NCEF has purchased 30,357 shares (the "NCEF SHARES") of Series B
Preferred Stock, (ix) Finley Family LP has purchased 30,357 shares (the "FINLEY
SERIES B SHARES") of Series B Preferred Stock (x) Jackman has purchased 2,846
shares (the "JACKMAN SHARES") of Series B Preferred Stock, (xi) Eckert has
purchased 2,846 shares (the "ECKERT SHARES") of Series B Preferred Stock and
(xii) Gupton has purchased 5,464 shares (the "GUPTON SHARES") of Series B
Preferred Stock; and
WHEREAS, the Company and the other parties hereto desire to
provide for the circumstances under which the Company will register securities
of the Company on behalf of such other parties.
2
<PAGE> 3
NOW, THEREFORE, as an inducement to JHW II, JHW III, JHW
Strategic III, Waller, Kitty Hawk, Eagle Creek, NCEF, Finley Family LP,
Jackman, Eckert and Gupton to consummate the transactions contemplated by the
Series B Purchase Agreement and in consideration of the premises and of the
mutual covenants and obligations hereinafter set forth, the parties hereto
hereby agree as follows:
1. CERTAIN DEFINITIONS. As used herein, the following
terms shall have the following respective meanings:
"CERTIFICATE OF INCORPORATION" shall mean the
Certificate of Incorporation of the Company, as amended, as in effect on the
date hereof.
"COMPANY" shall mean SpectraSite Holdings, Inc., a
Delaware corporation.
"COMMISSION" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the
Securities Act.
"INSTITUTIONAL INVESTORS" shall mean JHW II, JHW III,
JHW Strategic III, Waller, Kitty Hawk III, Kitty Hawk IV, Eagle Creek and
NCEF, and their respective successors and assigns.
"MANAGEMENT SHARES" shall mean the Clark Shares, the
Long Shares and the Finley Family Common Shares, in each case, the certificates
for which are required to bear the legend set forth in Section 2 hereof.
"MANAGEMENT STOCKHOLDERS" shall mean Clark, Long, and
the Finley Family, LP, and each of their successors and assigns.
"REGISTRATION EXPENSES" shall mean the expenses so
described in Section 7 hereof.
"RESTRICTED SECURITIES" shall mean the Shares, the
Restricted Stock and the Management Shares, for so long as the instruments or
certificates evidencing such securities shall be required to bear the legend
set forth in Section 2 hereof.
"RESTRICTED STOCK" shall mean the shares of Common
Stock into which the Shares are convertible, the certificates for which are
required to bear the legend set forth in Section 2 hereof.
"SECURITIES ACT" shall mean the Securities Act of
1933, as amended, or any similar Federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean the expenses so
described in Section 7 hereof.
3
<PAGE> 4
"SERIES A PREFERRED STOCK" shall have the meaning
assigned to that term in the first Whereas clause hereof.
"SERIES B PREFERRED STOCK" shall have the meaning
assigned to that term in the fifth Whereas clause hereof.
"SHARES" shall mean the JHW II Shares, the JHW III
Shares, the JHW Strategic III Shares, the Waller Shares, the Kitty Hawk
Shares, the Eagle Creek Shares, the NCEF Shares, the Finley Series B Shares,
the Jackman Shares, the Eckert Shares, the Gupton Shares and any additional
shares of Series B Preferred Stock purchased from the Company by JHW II, JHW
III, JHW Strategic III, Waller, Kitty Hawk III, Kitty Hawk IV, Eagle Creek,
NCEF, Finley Family LP, Jackman, Eckert or Gupton after the date hereof
pursuant to the terms of the Series B Purchase Agreement.
"THRESHOLD AMOUNT" shall mean one or more
Institutional Investors holding at least 75% of the Series A Preferred Stock
and the Series B Preferred Stock, collectively.
2. RESTRICTIVE LEGEND. Each certificate representing
the Shares, Restricted Stock and the Management Shares and, except as otherwise
provided in Section 3 hereof, each certificate issued upon exchange or transfer
of any such securities, shall be stamped or otherwise imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 NOR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH
LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed
transfer of any Restricted Securities (other than under the circumstances
described in Section 4 or 5 hereof), the holder thereof shall give written
notice to the Company of its intention to effect such transfer. Each such
notice shall describe the manner of the proposed transfer and, if requested by
the Company, shall be accompanied by an opinion of counsel satisfactory to the
Company to the effect that the proposed transfer may be effected without
registration under the Securities Act, whereupon, subject to the terms of the
Stockholders' Agreement (as defined in the Purchase Agreement), such holder
shall be entitled to transfer such securities in accordance with the terms of
its notice; provided, however, that no such opinion of counsel shall be
required for a transfer by a holder of Shares or Restricted Stock that is a
partnership or limited liability company to a partner, member or employee of
such holder or a retired partner or retired employee of such holder who retires
after the date hereof, or to the estate of any such partner, retired partner,
employee or retired employee, or a transfer by gift, will or intestate
succession from any holder of Shares or Restricted Stock to his or her spouse
or members of his or her or his or her spouse's family or a trust for the
benefit of any of the foregoing persons, if the transferee agrees in writing to
be subject to the terms hereof to the same extent as if such transferee were an
original holder
4
<PAGE> 5
of Shares or Restricted Stock hereunder. All Restricted Securities transferred
as above provided shall bear the legend set forth in Section 2, except that
such securities shall not bear such legend if (i) such transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be
entitled to transfer such securities in a public sale without registration
under the Securities Act.
4. REQUIRED REGISTRATION.
(a) The Threshold Amount of Institutional
Investors may, at any time after May 12, 1998, by written notice, request that
the Company register under the Securities Act all or any portion of the shares
of Restricted Stock held by such Institutional Investors for sale in the manner
specified in such notice; provided, however, that the Company shall not be
obligated to register Restricted Stock pursuant to such request unless at the
time of such request, the Institutional Investors shall hold in the aggregate
five percent (5.0%) or more of the total shares of Restricted Stock on a fully
diluted basis. Notwithstanding anything to the contrary contained herein, no
request may be made under this Section 4 within 360 days after the effective
date of a registration statement filed by the Company covering a firm
commitment underwritten public offering in which the holders of Restricted
Stock shall have been entitled to join pursuant to this Section 4 or Section 5
hereof and in which there shall have been effectively registered all shares of
Restricted Stock as to which registration shall have been so requested (and
which requests shall total at least twenty-five percent of the Restricted Stock
originally purchased by the Institutional Investors, after appropriate
adjustment for dividends, subdivisions, combinations or reclassifications of
Restricted Stock).
(b) Promptly following receipt of any notice
under this Section 4, the Company shall immediately notify any holders of
Restricted Stock from whom notice has not been received and shall file and use
its best efforts to have declared effective a registration statement under the
Securities Act for the public sale, in accordance with the method of
disposition specified in such notice from the requesting holders, of the number
of shares of Restricted Stock specified in such notice (and in any notices
received from other requesting holders of Restricted Stock within 20 days after
the date of such notice from the Company). If such method of disposition shall
be an underwritten public offering, the Company may designate the managing
underwriter of such offering, subject to the approval of a majority in interest
of the selling holders of Restricted Stock, which approval shall not be
unreasonably withheld. The number of shares of Restricted Stock to be included
in such an underwriting may be reduced (pro rata among all of the requesting
holders based on the number of shares requested by each holder to be included)
if and to the extent that the managing underwriter shall be of the opinion that
such inclusion would adversely affect the marketing of the securities to be
sold therein. With respect to the preceding sentence, if the Company elects to
reduce pro rata the amount of Restricted Stock proposed to be offered in the
underwriting, for purposes of making any such reduction, each holder of
Restricted Stock which is a partnership or limited liability company, together
with the affiliates, partners, members, employees, retired partners and retired
employees of such holder, the estates and family members of any such partners,
employees, retired partners and retired employees and of their spouses, and any
trusts for the benefit of any of the foregoing
5
<PAGE> 6
persons shall be deemed to be a single "person", and any pro rata reduction
with respect to such "person" shall be based upon the aggregate amount of
shares of Restricted Stock requested to be included in such registration by all
entities and individuals included as such "person," as defined in this sentence
(and the aggregate amount so allocated to such "person" shall be allocated
among the entities and individuals included in such "person" in such manner as
such holder of Restricted Stock may reasonably determine). The Company shall
be obligated to register Restricted Stock pursuant to requests made by the
Threshold Amount of Institutional Investors under this Section 4 on one
occasion only; provided, however, that as to such occasion such obligation
shall be deemed satisfied only when a registration statement covering all
shares of Restricted Stock specified in notices received as aforesaid, for sale
in accordance with the method of disposition specified by the requesting
holders, shall have become effective and, if such method of disposition is a
firm commitment underwritten public offering, all such shares shall have been
sold pursuant thereto.
(c) Each of (i) the Company and (ii) the other
stockholders, including without limitation, the Management Stockholders, of
the Company ("Other Holders"), as limited below, shall be entitled to include
in any registration statement referred to in this Section 4 for which the
method of distribution is an underwritten public offering, for sale in
accordance with the method of disposition specified by the requesting holders,
shares of Common Stock to be sold by the Company for its own account, or such
other Holders, as the case may be, except as and to the extent that, in the
opinion of the managing underwriter, such inclusion would adversely affect the
marketing of the Restricted Stock to be sold; provided further, that shares of
Common Stock may be included for Other Holders only if and to the extent that,
in the opinion of the managing underwriter, such inclusion would not adversely
affect the marketing of the Restricted Stock or of such shares of Common Stock
as the Company desires be included in such registration. Except with respect
to registration statements on Form S-8, or as otherwise provided in this
paragraph 4(c), the Company will not file with the Commission any other
registration statement with respect to its Common Stock, whether for its own
account or that of other stockholders, from the date of receipt of a notice
from requesting holders pursuant to this Section 4 until the completion of the
period of distribution of the registration contemplated thereby.
5. INCIDENTAL REGISTRATION; FORM S-3 REGISTRATION.
(a) If the Company at any time (other than pursuant to
Section 4 hereof) proposes to register any of its securities under the
Securities Act for sale to the public, whether for its own account or for the
account of other security holders or both (except with respect to registration
statements on Form S-4 or S-8, or another form not available for registering
Restricted Stock for sale to the public), each such time it will give written
notice to all holders of Restricted Stock and Management Shares of its
intention so to do. Upon the written request of any such holder of Restricted
Stock or Management Shares, given within 20 days after the date of any such
notice, to register any of its Restricted Stock or Management Shares, as the
case may be (which request shall state the intended method of disposition
thereof), the Company will use its best efforts to cause the Restricted Stock
and Management Shares as to which registration shall have been so requested to
be included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit the
sale or
6
<PAGE> 7
other disposition by such holders (in accordance with their written request) of
such Restricted Stock or Management Shares, as the case may be so registered.
The Company may withdraw any such registration statement before it becomes
effective or postpone the offering of securities contemplated by such
registration statement without any obligation to the holders of any Restricted
Stock or Management Shares. In the event that any registration pursuant to
this Section 5 shall be, in whole or in part, an underwritten public offering
of Common Stock, any request by a holder pursuant to this Section 5 to register
Restricted Stock or Management Shares, shall specify that either (i) such
Restricted Stock or Management Shares, as the case may be, are to be included
in the underwriting on the same terms and conditions as the shares of Common
Stock otherwise being sold through underwriters under such registration or (ii)
such Restricted Stock or Management Shares, as the case may be, are to be sold
in the open market without any underwriting, on terms and conditions comparable
to those normally applicable to offerings of common stock in reasonably similar
circumstances. The number of shares of Restricted Stock and Management Shares
to be included in such an underwriting may be reduced if and to the extent that
the managing underwriter shall be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein. In such event, the Company shall include in such registration (i)
first, the securities the Company proposes to sell; (ii) second, the Restricted
Stock requested to be included in such registration, pro rata among the holders
thereof on the basis of the number of shares requested by each such holder to
be included in such registration; (iii) third, the Management Shares requested
to be included in such registration, pro rata among the holders thereof on the
basis of the number of shares requested by each such older to be included in
such registration; and (iv) fourth, other securities requested to be included
in such registration by persons other than holders of Restricted Stock and
Management Shares. For purposes of making any such reduction, each holder of
Restricted Stock which is a partnership or limited liability company, together
with the affiliates, partners, members, employees, retired partners and retired
employees of such holder, the estates and family members of any such partners,
employees, retired partners and retired employees and of their spouses, and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "person," and any pro rata reduction with respect to such "person" shall
be based upon the aggregate amount of shares of Restricted Stock requested to
be included in such registration by all entities and individuals included as
such "person," as defined in this sentence (and the aggregate amount so
allocated to such "person" shall be allocated among the entities and
individuals included in such "person" in such manner as such holder of
Restricted Stock may reasonably determine). Notwithstanding anything to the
contrary contained in Section 4 or this Section 5, in the event that there is
an underwritten offering of securities of the Company pursuant to a
registration covering Restricted Stock or Management Shares and a selling
holder does not elect to sell his, her or its Restricted Stock or Management
Shares to the underwriters of the Company's securities in connection with such
offering, such holder shall refrain from selling such Restricted Stock or
Management Shares, as the case may be, not registered pursuant to this Section
5 and any other securities of the Company held by such holder during the period
of distribution of the Company's securities by such underwriters and the period
in which the underwriting syndicate participates in the after market; provided,
however, that such holder shall not, in any event, be restricted from selling
its Restricted Stock, Management Shares and other securities for a period of
in excess of 180 days after the effective date of such registration statement.
7
<PAGE> 8
(b) If, at a time when Form S-3 is available for such
registration, the Company shall receive from any Institutional Investor a
written request that the Company effect a registration on Form S-3 of any of
such holder's Restricted Stock, the Company will promptly give written notice
of the proposed registration to all other holders of Restricted Stock and, as
soon as practicable, effect such registration and all such related
qualifications and compliances as may be reasonably requested and as would
permit or facilitate the sale and distribution of all Restricted Stock as are
specified in such request and any written requests of other holders given
within 20 days after receipt of such notice. The Company shall have no
obligation to effect a registration under this Section 5(b) unless the
aggregate offering price of the securities requested to be sold pursuant to
such registration is, in the good faith judgment of the Company, expected to be
equal to or greater than $1,000,000. Any registration under this Section 5(b)
will not be counted as a registration under Section 4 above.
6. REGISTRATION PROCEDURES. If and whenever the Company
is required by any of the provisions of Section 4 or 5 hereof to use its best
efforts to effect the registration of any shares of Restricted Stock or
Management Shares under the Securities Act, the Company will, as expeditiously
as possible:
(a) prepare and file with the Commission a
registration statement (which, in the case of an underwritten public offering
pursuant to Section 4 hereof, shall be on Form S-1 or other form of general
applicability satisfactory to the managing underwriter selected as therein
provided) with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for the period of
the distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph 6 (a) above and as to
comply with the provisions of the Securities Act with respect to the
disposition of all Restricted Stock and Management Shares covered by such
registration statement in accordance with the sellers' intended method of
disposition set forth in such registration statement for such period;
(c) furnish to each seller and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons may reasonably request in order to facilitate the public sale or other
disposition of the Restricted Stock and Management Shares covered by such
registration statement;
(d) use its best efforts to register or qualify
the Restricted Stock and Management Shares covered by such registration
statement under the securities or blue sky laws of such jurisdictions as the
sellers of Restricted Stock and Management Shares or, in the case of an
underwritten public offering, the managing underwriter shall reasonably
request; provided, however, that the Company shall not be required to register
or qualify in any states which require it to qualify to do business in such
state or subject itself to general service of process.
8
<PAGE> 9
(e) immediately notify each seller under such
registration statement and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
not misleading in the light of the circumstances then existing;
(f) use its best efforts to furnish, at the
request of any seller, on the date that Restricted Stock or Management Shares
are delivered to the underwriters for sale pursuant to an underwritten
registration: (i) an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the underwriters
and to such seller, stating (A) that such registration statement has become
effective under the Securities Act, (B) that, to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act and (C) that the registration statement
and the related prospectus, and each amendment or supplement thereof, comply as
to form in all material respects with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder (except
that such counsel need not express any opinion as to financial statements
contained therein), and to such other effects as may reasonably be requested by
counsel for the underwriters or by such seller or its counsel, and (ii) a
letter dated such date from the independent public accountants retained by the
Company, addressed to the underwriters and to such seller, stating that they
are independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act, and such
letter shall additionally cover such other financial matters (including
information as to the period ending no more than five business days prior to
the date of such letter) with respect to the registration in respect of which
such letter is being given as such underwriters or such seller may reasonably
request; and
(g) make available for inspection by each seller,
any underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
For purposes of paragraphs 6 (a) and (b) above and of Section
4(c) hereof, the period of distribution of Restricted Stock or Management
Shares in a firm commitment underwritten public offering shall be deemed to
extend until each underwriter has completed the distribution of all securities
purchased by it, and the period of distribution of Restricted Stock and
Management Shares in any other registration shall be deemed to extend until the
earlier of the sale of all Restricted Stock and Management Shares covered
thereby or nine months after the effective date thereof.
9
<PAGE> 10
In connection with each registration hereunder, the selling
holders of Restricted Stock or Management Shares shall furnish to the Company
in writing such information with respect to themselves and the proposed
distribution by them as shall be necessary in order to assure compliance with
Federal and applicable state securities laws, and the furnishing of such
information shall be a precondition to inclusion of such holder's shares.
In connection with each registration pursuant to Sections 4
and 5 hereof covering an underwritten public offering, the Company agrees to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between major
underwriters and companies of the Company's size and investment stature,
provided that such agreement shall not contain any such provision applicable to
the Company which is inconsistent with the provisions hereof and provided,
further, that the time and place of the closing under said agreement shall be
as mutually agreed upon between the Company and such managing underwriter.
7. EXPENSES. All expenses incurred by the Company in
complying with Sections 4 and 5 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees of the
National Association of Securities Dealers, Inc., fees of transfer agents and
registrars and costs of insurance and fees and expenses of one law firm
serving as counsel for the sellers of Restricted Stock ("Legal Fees"), but
excluding any Selling Expenses, are herein called "Registration Expenses". All
underwriting discounts, transfer taxes and selling commissions applicable to
the sale of Restricted Stock or Management Shares are herein called "Selling
Expenses." The Company will pay all Registration Expenses in connection with
each registration statement filed pursuant to Section 4 or Section 5 hereof.
All Selling Expenses incurred in connection with any sale of Restricted Stock
or Management Shares by any participating seller shall be borne by such
participating seller, or by such persons other than the Company (except to the
extent the Company shall be a seller) as they may agree.
8. INDEMNIFICATION. In the event of a registration of
any of the Restricted Stock or Management Shares under the Securities Act
pursuant to Section 4 or 5 hereof, the Company will indemnify and hold harmless
each seller of such Restricted Stock or Management Shares thereunder and each
underwriter of such Restricted Stock or Management Shares thereunder and each
other person, if any, who controls such seller or underwriter within the
meaning of the Securities Act, against any and all losses, claims, damages or
liabilities, joint or several, to which such seller or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Restricted Stock or Management Shares were registered under the
Securities Act pursuant to Section 4 or 5, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such seller, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with
10
<PAGE> 11
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by such
seller, such underwriter or such controlling person in writing specifically for
use in such registration statement or prospectus.
In the event of a registration of any of the Restricted Stock
or Management Shares under the Securities Act pursuant to Section 4 or 5
hereof, each seller of such Restricted Stock or Management Shares thereunder,
severally and not jointly, will indemnify and hold harmless the Company and
each person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such officer or director or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
or Management Shares was registered under the Securities Act pursuant to
Section 4 or 5, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, and provided, however, that such seller
will be liable hereunder in any such case if and only to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to such seller, as
such, furnished in writing to the Company by such seller specifically for use
in such registration statement or prospectus; provided, further, however, that
the liability of each seller hereunder shall be limited to the proportion of
any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the shares sold by such seller
under such registration statement bears to the total public offering price of
all securities sold thereunder, but not to exceed the proceeds received by such
seller from the sale of Restricted Stock or Management Shares covered by such
registration statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party under this Section 8. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to assume
and undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
11
<PAGE> 12
indemnified party of its election to assume and undertake the defense thereof,
the indemnifying party shall not be liable to such indemnified party under this
Section 8 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however,
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably and
in good faith concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably and in good
faith may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate
counsel and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall
have the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel.
It is understood that the indemnifying party shall not, in connection with any
action or related actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such jurisdiction to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. If the indemnification provided for in the first two paragraphs of
this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein, then
each indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
the seller or sellers of such Restricted Stock, or Management Shares on the
other, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or actions, as well as any other relevant
equitable considerations including the failure to give any notice under the
third paragraph of this Section 8. 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 by the seller or sellers of such Restricted Stock or Management Shares, on
the other, and to the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the sellers of Restricted Stock and Management
Shares agree that it would not be just and equitable if contribution pursuant
to this Section 8 were determined by pro rata allocation (even if all of the
sellers of Restricted Stock and Management Shares were treated as one entity
for such purpose) or by any other method of allocation which does not take
12
<PAGE> 13
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or action in respect
thereof, referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, 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 and the immediately preceding paragraph, the sellers of such
Restricted Stock or Management Shares shall not be required to contribute any
amount in excess of the amount, if any, by which the total price at which the
Common Stock sold by each of them was offered to the public exceeds the amount
of any damages which they would have otherwise been required to pay by reason
of such untrue or alleged untrue statement of 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 is not
guilty of such fraudulent misrepresentation. The indemnification of
underwriters provided for in this Section 8 shall be on such other terms and
conditions as are at the time customary and reasonably required by such
underwriters. In that event the indemnification of the sellers of Restricted
Stock or Management Shares in such underwriting shall at the sellers' request
be modified to conform to such terms and conditions. Upon the reasonable
request of any stockholder selling Restricted Stock or Management Shares
pursuant to a registration statement or any underwriter of such stock, the
Company shall obtain, if reasonably available, an insurance policy covering the
risks described above in this Section 8 in an amount and with a deductible
reasonably requested by such seller or underwriter and naming such seller, any
underwriter of such stock and any person controlling such seller or underwriter
as beneficiaries. The costs of obtaining and maintaining any such insurance
shall be borne by the Company.
9. CHANGES IN COMMON STOCK. If, and as often as, there
are any changes in the Common Stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof, as may be required, so that
the rights and privileges granted hereby shall continue with respect to the
Common Stock as so changed.
10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Institutional Investors, Jackman,
Eckert, Gupton and the Management Stockholders as follows:
(a) The execution, delivery and performance of
this Agreement by the Company have been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation or
By-laws of the Company, or any provision of any indenture, agreement or other
instrument to which it or any of its properties or assets is bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, result
in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.
13
<PAGE> 14
(b) This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors, rules and laws governing specific performance, injunctive relief
and other equitable remedies, and with respect to the indemnification and
contribution provisions of Section 8 hereof, principles of public policy.
11. RULE 144 REPORTING. The Company agrees with the
Institutional Investors and the Management Stockholders as follows:
(a) The Company shall make and keep public
information available as those terms are understood and defined in Rule 144
under the Securities Act, at all times from and after 90 days following the
effective date of the first registration of the Company under the Securities
Act of an offering of its securities to the general public.
(b) The Company shall file with the Commission in
a timely manner all reports and other documents as the Commission may prescribe
under Section 13(a) or 15(d) of the Exchange Act at any time after the Company
has become subject to such reporting requirements of the Exchange Act.
(c) The Company shall furnish to such holder of
Restricted Stock or Management Shares forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements
of Rule 144 (at any time from and after 90 days following the effective date of
the first registration statement of the Company for an offering of its
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents so filed as a holder may reasonably
request to avail itself of any rule or regulation of the Commission allowing a
holder of Restricted Stock or Management Shares to sell any such securities
without registration.
12. MISCELLANEOUS.
(a) All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. Without limiting the generality of the
foregoing, the registration rights conferred herein on the holders of
Restricted Stock or Management Shares shall inure to the benefit of any and all
subsequent holders from time to time of the Restricted Stock or Management
Shares, as the case may be, for so long as the certificates representing the
Restricted Stock or the Management Shares, as the case may be, shall be
required to bear the legend specified in Section 2 hereof.
(b) All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid, addressed as follows:
14
<PAGE> 15
if to the Company: SpectraSite Holdings, Inc., 8000
Regency Park, Suite 570, Cary, North Carolina 27511, Attention:
Messrs. Stephen H. Clark and Joseph L. Finley, III;
if to JHW II: c/o J. H. Whitney & Co., 177 Broad
Street, Stamford, Connecticut 06901; Attention: Messrs. Michael R.
Stone and Daniel J. O'Brien;
if to Waller: Waller-Sutton Media Partners, L.P.,
c/o Waller-Sutton Management Group, Inc., 1 Rockefeller Plaza, New
York, New York 10020; Attention: Andrew J. Armstrong, Jr.
if to JHW III: c/o J. H. Whitney & Co., 177 Broad
Street, Stamford, Connecticut 06901; Attention: Messrs. Michael R.
Stone and Daniel J. O'Brien;
if to JHW Strategic III: c/o J. H. Whitney & Co.,
177 Broad Street, Stamford, Connecticut 06901; Attention: Messrs.
Michael R. Stone and Daniel J. O'Brien;
if to Kitty Hawk III: Kitty Hawk Capital Limited
Partnership, III, 2700 Coltsgate Road, Suite 202, Charlotte, North
Carolina 28211; Attention: Mr. W. Chris Hegele;
if to Kitty Hawk IV: Kitty Hawk Capital Limited
Partnership, IV, 2700 Coltsgate Road, Suite 202, Charlotte, North
Carolina 28211; Attention: Mr. W. Chris Hegele;
if to Eagle Creek: Eagle Creek Capital, L.L.C., 2300
Carillon Point, Kirkland Washington 98033; Attention: Susan L.
Rasinski;
if to Clark or Long: c/o SpectraSite Communications,
Inc., 8000 Regency Park, Suite 570, Cary, North Carolina 27511;
if to the Finley Family L.P.: c/o Joe L. Finley, III,
10770 Samples Road, Alexander, Arkansas 72002;
if to NCEF: The North Carolina Enterprise Fund, L.P.,
3600 Glenwood Ave., Suite 107, Raleigh, North Carolina 27612;
Attention: Charles T. Closson, Jr.;
if to Jackman, Eckert or Gupton: c/o PCX Corporation,
8343 U.S. Highway 70 East, Clayton, North Carolina 27520;
if to any subsequent holder of Restricted Stock or
Management Shares, to it at such address as may have been furnished to
the Company in writing by such holder; and
15
<PAGE> 16
or, in any case, at such other address or addresses
as shall have been furnished in writing to the Company (in the case of
a holder of Restricted Stock or Management Shares) or to the holders
of Restricted Stock and Management Shares (in the case of the
Company).
(c) This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the principles of conflicts of law of such State.
(d) This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and may not
be modified or amended except in writing.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H. CLARKE
----------------------------------------
Name: Stephen H. Clarke
Title: President
WHITNEY EQUITY PARTNERS, L.P.
By: J.H. Whitney Equity Partners, LLC,
Its General Partner
By: /s/ DANIEL J. O'BRIEN
-------------------------------------
Name: Daniel J. O'Brien
J.H. WHITNEY III, L.P.
By: J.H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ DANIEL J. O'BRIEN
-------------------------------------
Name: Daniel J. O'Brien
A Managing Member
WHITNEY STRATEGIC
PARTNERS III, L.P.
By: J.H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ DANIEL J. O'BRIEN
-------------------------------------
Name: Daniel J. O'Brien
A Managing Member
[FIRST SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
17
<PAGE> 18
WALLER-SUTTON MEDIA PARTNERS, L.P.
By: /s/ WALLER-SUTTON MEDIA LLC
--------------------------------------
Its General Partner
By:/s/ BRUCE M. HERNANDEZ
---------------------------------------
Name: Bruce M. Hernandez
Title: Chief Executive Officer
KITTY HAWK CAPITAL LIMITED
PARTNERSHIP, III
By: Kitty Hawk Partners Limited
Partnership, III,
Its General Partner
By:/s/ W. CHRIS HEGELE
---------------------------------------
Name: W. Chris Hegele
A General Partner
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV
By: Kitty Hawk Partners LLC, IV
Its General Partner
By:/s/ W. CHRIS HEGELE
---------------------------------------
Name: W. Chris Hegele
A Manager
[SECOND SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE> 19
EAGLE CREEK CAPITAL, L.L.C.
By:/s/ SUSAN L. RASINSKI
--------------------------------------
Name: Susan L. Rasinski
A Manager
THE NORTH CAROLINA ENTERPRISE
FUND, L.P.
By: The North Carolina Enterprise
Corporation,
Its General Partner
By:/s/ Nancy P. Owens
--------------------------------------
Name: Nancy P. Owens
Title: Sr. Vice President
/s/ William R. Gupton
-----------------------------------------
WILLIAM R. GUPTON
/s/ Jack W. Jackman
------------------------------------------
JACK W. JACKMAN
/s/ Alton D. Eckert
------------------------------------------
ALTON D. ECKERT
/s/ Stephen H. Clark
------------------------------------------
STEPHEN H. CLARK
/s/ Robert M. Long
------------------------------------------
ROBERT M. LONG
[THIRD SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE> 20
FINLEY FAMILY LIMITED PARTNERSHIP
By: /s/ JOE L. FINLEY III
--------------------------------------
Name: JOE L. FINLEY III
Title: General Partner
[FOURTH SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE> 1
Exhibit 10.6
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Agreement"), dated as of March 23, 1998, by and among SPECTRASITE HOLDINGS,
INC. (the "Company"), a Delaware corporation, WHITNEY EQUITY PARTNERS, L.P.
("JHW II"), a Delaware limited partnership, J.H. WHITNEY III, L.P. ("JHW
III"), a Delaware limited partnership, WHITNEY STRATEGIC PARTNERS III, L.P.
("JHW Strategic III"), a Delaware limited partnership, WALLER-SUTTON MEDIA
PARTNERS, L.P. ("Waller"), a Delaware limited partnership, KITTY HAWK CAPITAL
LIMITED PARTNERSHIP, III ("Kitty Hawk III"), a Delaware limited partnership,
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV ("Kitty Hawk IV"), a Delaware
limited partnership, EAGLE CREEK CAPITAL, LLC ("Eagle Creek"), a Washington
limited liability company, STEPHEN H. CLARK ("Clark"), ROBERT M. LONG ("Long"),
FINLEY FAMILY LIMITED PARTNERSHIP ("Finley LP"), an Arkansas limited
partnership, THE NORTH CAROLINA ENTERPRISE FUND, L.P. ("NCEF"), a North
Carolina limited partnership, EDWARD J. LUTKEWICH ("Lutkewich"), JACK W.
JACKMAN ("Jackman"), ALTON D. ECKERT ("Eckert") and WILLIAM R. GUPTON
("Gupton"). JHW II, JHW III, JHW Strategic III, Waller, Kitty Hawk III, Kitty
Hawk IV, Eagle Creek, Clark, Long, the Finley LP, NCEF, Lutkewich, Jackman,
Eckert and Gupton are sometimes hereinafter collectively referred to as the
"Stockholders" and each individually as a "Stockholder."
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Stock Purchase Agreement
(the "Series A Purchase Agreement"), dated as of May 12, 1997, by and among
Integrated Site Development, Inc. ("Integrated" or the "Company"), a Delaware
corporation (now known as SpectraSite Holdings, Inc.), U.S. Towers, Inc. ("UST"
or "SpectraSite"), a Delaware corporation (now known as SpectraSite
Communications, Inc.), Telesite Services, LLC ("Telesite"), an Arkansas limited
liability company, which merged into SpectraSite, Metrosite Management, LLC
("Metrosite"), an Arkansas limited liability company, JHW II and Kitty Hawk
III, (A) JHW II purchased 3,203,118 shares of 8% Series A Cumulative
Convertible Redeemable Preferred Stock, $0.001 par value per share (the "Series
A Preferred Stock"), of the Company and (B) Kitty Hawk III purchased 259,712
shares of Series A Preferred Stock; and
WHEREAS, pursuant to the terms of the Stock Contribution
Agreement, dated as of May 12, 1997, by and among Integrated, Clark, Long and
UST, (A) Clark acquired 687,395 shares of common stock, $0.001 par value per
share, of the Company (the "Common Stock"), and (B) Long acquired 162,605
shares of Common Stock; and
WHEREAS, pursuant to the terms of the Membership Interests
Contribution Agreement, dated as of May 12, 1997, by and among Integrated, Joe
L. Finley, Caroline Finley, Finley LP, The Central Arkansas Opportunity
Foundation, a charitable trust organized the under the laws of Arkansas,
Telesite and Metrosite, the Finley LP acquired 490,517 shares of Common Stock;
and
<PAGE> 2
WHEREAS, a warrant held by PCX Corporation ("PCX"), a Delaware
corporation, to purchase 150,000 shares of Common Stock has been transferred
and assigned to NCEF, Kitty Hawk III, Clark, Lutkewich, Jackman, Eckert and
Gupton, and, as a result of such assignment, NCEF holds a warrant (the "NCEF
Warrant") to purchase 33,340.42 shares of Common Stock, Kitty Hawk III holds a
warrant to purchase 33,340.42 shares of Common Stock (the "Kitty Hawk
Warrant"), Clark holds a warrant to purchase 50,416.05 shares of Common Stock
(the "Clark Warrant"), Lutkewich holds a warrant to purchase 19,901.07 shares
of Common Stock (the "Lutkewich Warrant"), Jackman holds a warrant to purchase
3,316.85 shares of Common Stock (the "Jackman Warrant"), Eckert holds a warrant
to purchase 3,316.85 shares of Common Stock (the "Eckert Warrant") and Gupton
holds a warrant to purchase 6,368.34 shares of Common Stock (the "Gupton
Warrant" and together with the NCEF Warrant, the Kitty Hawk Warrant, the Clark
Warrant, the Lutkewich Warrant, the Jackman Warrant and the Eckert Warrant, the
"PCX Stockholder Warrants"); and
WHEREAS, pursuant to a Certificate of Amendment filed with the
Secretary of State of the State of Delaware on October 29, 1997, Integrated
changed its name to SpectraSite Holdings, Inc.; and
WHEREAS, pursuant to Articles of Amendment filed with the
Secretary of State of the State of Arkansas, Telesite changed its name to
SpectraSite Communications, LLC ("SpectraSite, LLC"); and
WHEREAS, pursuant to an Agreement and Plan of Merger, dated
October 31, 1997, between UST and SpectraSite, LLC, SpectraSite, LLC merged
with and into UST with UST being the surviving corporation, and UST changed its
name to SpectraSite Communications, Inc.; and
WHEREAS, pursuant to a Purchase and Sale Agreement, dated
February 27, 1998, by and among Apex Site Management L.P., a Delaware limited
partnership ("Apex"), the Company, and Metrosite, the Company sold to Apex, and
Apex purchased from the Company, all of the issued and outstanding capital
membership units of Metrosite; and
WHEREAS, pursuant to the terms of the Stock Purchase Agreement
(the "Series B Purchase Agreement"), dated as of March 23, 1998, by and among
the Company, JHW II, JHW III, JHW Strategic III, Waller, Kitty Hawk III, Kitty
Hawk IV, Eagle Creek, NCEF, Finley LP, Jackman, Eckert and Gupton, and
concurrently with the execution and delivery of the Series B Purchase
Agreement, (A) JHW II has purchased from the Company 1,044,532 shares of 8%
Series B Cumulative Convertible Redeemable Preferred Stock, $0.001 par value
per share, of the Company (the "Series B Preferred Stock"), (B) JHW III has
purchased 2,039,910 shares of Series B Preferred Stock, (C) JHW Strategic III
has purchased 49,155 shares of Series B Preferred Stock, (D) Waller has
purchased 746,095 shares of Series B Preferred Stock, (E) Kitty Hawk III has
purchased 37,305 shares of Series B Preferred Stock, (F) Kitty Hawk IV has
purchased 186,524 shares of Series B Preferred Stock, (G) Eagle Creek has
purchased 74,609 shares of Series B Preferred Stock, (H) NCEF has purchased
30,357 shares of Series B Preferred Stock, (I) Finley LP has purchased 30,357
shares of Series B Preferred Stock, (J) Jackman has
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purchased 2,846 shares of Series B Preferred Stock, (K) Eckert has purchased
2,846 shares of Series B Preferred Stock and (L) Gupton has purchased 5,464
shares of Series B Preferred Stock; and
WHEREAS, in connection with the Series A Purchase Agreement,
the Company, JHW II, Kitty Hawk III, Clark, Long, the Finley LP and PCX entered
into a Stockholders' Agreement, dated as of May 12, 1997, which was amended and
restated as of July 1, 1997, with an effective date of May 12, 1997 (the
"Stockholders' Agreement"); and
WHEREAS, the Stockholders believe that it is in the best
interest of the Company and the Stockholders that provision be made for the
continuity and stability of the business and policies of the Company, and,
accordingly, desire to make certain arrangements among themselves with respect
to the election of directors of the Company and with respect to certain other
matters and in connection therewith, to amend and restate the Stockholders'
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenant and obligations hereinafter set forth and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby amend and restate the Original Stockholders' Agreement as
follows:
SECTION 1. Definitions. As used herein, the following terms
shall have the following respective meanings:
(a) "Affiliate" shall mean (i) in the case of an entity,
any Person who or which, directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
any specified Person or (ii) in the case of an individual, such individual's
spouse, children, grandchildren or parents or a trust primarily for the benefit
of any of the foregoing.
(b) "Bona Fide Purchaser" shall mean any Person (other
than a selling Stockholder's Affiliates) who or which has delivered a good
faith written offer to purchase all or any portion of such Stockholder's
Shares.
(c) "Certificate of Incorporation" shall mean the
Certificate of Incorporation of the Company, as amended, as in effect as of
March 23,1998.
(d) "Common Stock" shall have the meaning assigned to
that term in the second Whereas clause of this Agreement.
(e) "Company" shall mean SpectraSite Holdings, Inc., a
Delaware corporation.
(f) "Dispose" or "Disposition" (and any derivatives
thereof) shall mean (i) a voluntary or involuntary sale, assignment, mortgage,
grant, pledge, hypothecation, exchange,
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transfer, conveyance or other disposition of a Stockholder's Shares, and (ii)
any agreement, contract or commitment to do any of the foregoing.
(g) "Encumbrance" or "Encumber" shall mean or refer to
any lien, claim, charge, pledge, mortgage, encumbrance, security interest,
preferential arrangement, restriction on voting or alienation of any kind,
adverse interest, or the interest of a third party under any conditional sale
agreement, capital lease or other title retention agreement.
(h) Initial Public Offering" shall mean the consummation
of a public offering by either the Company or any of its Subsidiaries of its
capital stock pursuant to a registration statement on Form S-1 or other
registration statement under the Securities Act (other than a registration
statement relating solely to an employee benefit plan or transaction covered by
Rule 145 of the Securites Act).
(i) "Kitty Hawk" means Kitty Hawk III and Kitty Hawk IV.
(j) "PCX Stockholders" shall mean NC Enterprise Fund,
Kitty Hawk, Clark, Lutkewich, Jackman, Eckert and Gupton.
(k) "PCX Stockholder Warrants" shall have the meaning
assigned to that term in the fourth Whereas clause hereof.
(l) "Permitted Transferees" shall mean in the case of (i)
JHW II, JHW III and JHW Strategic III, the Affiliates, partners and retired
partners of JHW II, JHW III, JHW Strategic III or Whitney, the estates and
family members of any such partners and retired partners and of their spouses,
and any trusts for the benefit of any of the foregoing Persons, (ii) Waller,
the Affiliates, partners and retired partners of Waller, the estates and family
members of any such partners and retired partners and of their spouses, and any
trusts for the benefit of any of the foregoing Persons, (iii) Kitty Hawk III
and Kitty Hawk IV, the Affiliates, partners and retired partners of Kitty Hawk
III and Kitty Hawk IV, the estates and family members of any such partners and
retired partners and of their spouses, and any trusts for the benefit of any of
the foregoing Persons, (iv) Eagle Creek, the Affiliates, members and retired
members of Eagle Creek, the estates and family members of any such members and
retired members and of their spouses, and any trusts for the benefit of any of
the foregoing Persons, (v) NCEF, the Affiliates, partners and retired partners
of NCEF, the estates and family members of any such partners and retired
partners and of their spouses, and any trusts for the benefit of any of the
foregoing Persons, (vi) in the case of the Finley LP, the partners of the
Finley LP, provided that such partners are family members of Joe L. Finley,
III, the estates and family members of any such partners and of their spouses,
and any trusts for the benefit of any of the foregoing Persons, (vii) in the
case of the other Stockholders who are not trusts, the estates and family
members of such Stockholder, and any trusts for the benefit of the foregoing
Persons, (viii) in the case of the other Stockholders who are trusts, the
estates and family members of such trusts beneficiaries, and any other trusts
for the benefit of such beneficiaries, and (ix) in the case of a PCX
Stockholder, any other PCX Stockholder with respect to any transfer effected
pursuant to the original terms of the Warrant Holders Agreement; provided,
however, that in each case such person shall agree in
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writing with the parties hereto to be bound by and to comply with all
applicable provisions of this Agreement.
(m) "Person" shall mean any individual, partnership,
corporation, limited liability company, joint venture, trust, firm,
association, unincorporated organization or other entity.
(n) "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar Federal statute, and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(o) "Shares" shall mean, with respect to any Stockholder,
(i) the shares of capital stock of the Company, including, without limitation,
Common Stock, Series A Preferred Stock and Series B Preferred Stock, held at
any time by such Stockholder, and, if applicable, (ii) any option, warrant,
including, without limitation, the PCX Stockholder Warrants, or other right,
held at any time by any Stockholder, exercisable for shares of capital stock of
the Company, and (iii) any security, including, without limitation, Series A
Preferred Stock and Series B Preferred Stock, held at any time by such
Stockholder, convertible into or exchangeable for capital stock of the Company.
(p) "Stockholder" shall mean each person so identified in
the preamble hereto and shall include any other person who agrees in writing
with the parties hereto to be bound by and to comply with all applicable
provisions of this Agreement.
(q) "Subsidiaries" shall mean, with respect to any
Person, a corporation or other entity of which 50% or more of the voting power
of the voting equity securities or equity interest is owned, directly or
indirectly, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Company.
(r) "Warrant Holders Agreement" shall mean the Warrant
Holders Agreement, dated as of the date hereof and effective as of May 12,
1997, by and among the PCX Stockholders and Hutchison & Mason PLLC, as the
Escrow Agent named therein.
(s) "Whitney" shall mean J.H. Whitney & Co.
(t) "Whitney Funds" shall mean JHW II, JHW III and JHW
Strategic III.
SECTION 2. Preemptive Rights. (a) If at any time the Company
wishes to issue any shares of Common Stock or any rights to acquire Common
Stock, including, without limitation, any rights to acquire securities
exercisable for, convertible into or exchangeable for Common Stock
(collectively the "Equity Equivalents") to any Person or Persons, the Company
shall promptly deliver a notice of its intention to sell (the "Company's Notice
of Intention to Sell") to the Stockholders setting forth a description of the
Equity Equivalents to be sold, the proposed purchase price thereof and the
terms of sale. Upon receipt of the Company's Notice of Intention to Sell, each
Stockholder shall have the right to elect to purchase, at the price and on
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the terms stated in the Company's Notice of Intention to Sell, a number of the
Equity Equivalents equal to such Stockholder's aggregate proportionate
ownership of Equity Equivalents (calculated on a fully-diluted basis) held by
all Stockholders immediately prior to the issuance of the Equity Equivalents
proposed to be sold by the Company (for each Stockholder, the "Pro Rata
Percentage"), multiplied by the number of Equity Equivalents proposed to be
sold by the Company. Such election is to be made by each Stockholder by
written notice (the "Election Notice") to the Company within 10 days after
receipt by such Stockholder of the Company's Notice of Intention to Sell (the
"Acceptance Period for Equity Equivalents"). Each Stockholder shall also have
the option, exercisable by so specifying in such Election Notice, to purchase
such Stockholder's Pro Rata Percentage of any remaining Equity Equivalents not
purchased by other Stockholders pursuant to this Section, in which case the
Stockholders exercising such further option shall be deemed to have elected to
purchase such Stockholders' Pro Rata Percentage of such remaining Equity
Equivalents, up to an aggregate maximum number of Equity Equivalents which such
Stockholder shall have specified in such Election Notice. The Company shall
promptly notify each electing Stockholder in writing of each Election Notice
received from other Stockholders pursuant to this paragraph 2(a). The Company
may, subject to paragraph 2(b) below, offer and sell to another Person or
Persons any remaining Equity Equivalents not elected to be purchased as
evidenced by Election Notices timely received by the Company.
(b) If effective acceptances shall not be received
pursuant to Section 2(a) above in respect of all the Equity Equivalents, then
the Company may, at its election, during a period of 120 days following the
expiration of the Acceptance Period for Equity Equivalents, sell and issue the
remaining Equity Equivalents to another Person at a price and upon terms not
more favorable to such Person than those stated in the Company's Notice of
Intention to Sell; provided, however, that failure by a Stockholder to exercise
his, her or its option to purchase with respect to one offering, sale and
issuance of Equity Equivalents shall not affect his, her or its option to
purchase Equity Equivalents in any subsequent offering, sale and purchase. In
the event the Company has not sold the Equity Equivalents, or entered into an
agreement to sell the Equity Equivalents, within such 120 day period, the
Company shall not thereafter issue or sell any Equity Equivalents without first
offering such securities to each Stockholder in the manner provided in Section
2(a) hereof.
(c) If a Stockholder gives the Company notice, pursuant
to the provisions of this Section 2, that such Stockholder desires to purchase
any of the Equity Equivalents, payment therefor shall be by check or wire
transfer, against delivery of the securities at the executive offices of the
Company within 15 business days after giving the Company such notice, or, if
later, the closing date for the sale of such Equity Equivalents. In the event
that any such proposed issuance is for a consideration other than cash, such
Stockholder will be entitled to pay cash for each share or other unit, in lieu
of such other consideration, in the amount determined in good faith by the
Board of Directors of the Company to constitute the fair value of such
consideration other than cash to be paid per share or other unit.
(d) The preemptive rights contained in this Section 2
shall not apply to (i) securities issued (A) as a stock dividend to holders of
Common Stock,
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Series A Preferred Stock or Series B Preferred Stock or upon any subdivision or
combination of shares of Common Stock, Series A Preferred Stock or Series B
Preferred Stock, (B) pursuant to an Initial Public Offering, (C) upon the
conversion of any equity security or debt security of the Company issued on or
prior to the date hereof or contemplated by the Series A Purchase Agreement or
the Series B Purchase Agreement, (D) upon the exercise of any option, warrant
or other right to subscribe for, purchase or otherwise acquire either Common
Stock or any equity security or debt security convertible into Common Stock,
issued prior to the date hereof or contemplated by the Series A Purchase
Agreement or the Series B Purchase Agreement (including, without limitation,
the PCX Stockholder Warrants), (E) upon the exercise of up to 1,817,700
options, of which 1,244,700 options have been granted as of the date hereof and
573,000 options which may be granted in the future (the "Options") to purchase
shares of Common Stock reserved or to be reserved for issuance upon the
exercise of such stock options, granted or to be granted exclusively to
employees, officers, directors or consultants of the Company pursuant to the
Company's employee stock option plan(s) to be established with the approval of
the Board of Directors of the Company and Whitney, (F) pursuant to the
acquisition of another corporation or business entity by the Company or any one
or more of its wholly-owned Subsidiaries by merger, consolidation, share
exchange, purchase of substantially all the assets or other reorganization
whereby the stockholders (and/or their Affiliates) of the Company immediately
prior to the transaction own in the aggregate more than 50% of the voting power
of the Company or other surviving entity after the transaction, or (G) in
connection with any borrowings by the Company or any of its subsidiaries from,
or indebtedness of the Company or any of its subsidiaries to, any institutional
lender that may be reasonably satisfactory to Whitney; or (ii) the issuance of
shares of Series B Preferred Stock pursuant to the Series B Purchase Agreement.
(e) Notwithstanding any provision in this Agreement to
the contrary, unless the Whitney Funds otherwise agree, the Company shall not
issue or sell any shares of capital stock or securities or rights exercisable
for, convertible into or exchangeable for capital stock of the Company (other
than the Options and any shares of Common Stock issued upon the exercise of the
Options) to any Person who at the time of such issuance or sale is not a party
to this Agreement unless such Person agrees in writing to be bound by all of
the provisions of this Agreement as if such Person were a Stockholder on the
same terms as are applicable generally to all the Stockholders other than the
Whitney Funds or Waller, except that such Person shall not be subject to or
entitled to the benefits of Section 2 hereof.
SECTION 3. Transfer of Shares; General Right of First
Refusal. (a) No Stockholder (other than any of the Whitney Funds) shall effect
a Disposition of any of his, her or its Shares, except to a Permitted
Transferee or as otherwise provided in this Agreement. Notwithstanding the
foregoing, each PCX Stockholder may effect a Disposition of his or its PCX
Stockholder Warrant to another PCX Stockholder pursuant to the original terms
of the Warrant Holders Agreement without complying with this Section 3.
(b) If any Stockholder (hereinafter an "Offeror
Stockholder"), other than any of the Whitney Funds, Waller, Eagle Creek or
Kitty Hawk, desires to sell all, or any part, of the Shares owned by such
Stockholder (hereinafter the "Offered Shares") to a Bona Fide Purchaser, the
Offeror Stockholder shall send a notice to the Company (hereinafter the
"Company Share Notice") stating (i) the Offeror Stockholder's desire to sell
the Offered Shares, and (ii) the price and terms of the Bona Fide Purchaser's
offer (the "Purchase Offer") to purchase the Offered
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Shares. Upon the receipt of the Company Share Notice, the Company shall have
thirty (30) days within which to elect to purchase the Offered Shares specified
therein. If the Company chooses not to purchase all of the Offered Shares, the
Company, in turn, shall promptly send a counter notice to the Offeror
Stockholder informing the Offeror Stockholder of the Company's decision, as
well as notices (hereinafter the "Share Offer Notices") to the other
Stockholders (hereinafter the "Share Offer Recipients") stating (i) the Offeror
Stockholder's desire to sell the Offered Shares, (ii) the number of Offered
Shares each Share Offer Recipient is entitled to purchase, as determined on a
pro rata basis according to the number of Shares then owned by each such Share
Offer Recipient in relation to the aggregate number of Shares then owned by all
the Share Offer Recipients (calculated on a fully diluted basis), and (iii) the
price and terms of the Purchaser Offer. Upon the receipt of such Share Offer
Notice, each Share Offer Recipient shall have a non-assignable option to
purchase any or all of the Offered Shares specified in such Share Offer Notice,
exercisable in accordance with the terms provided for below.
(c) The options referred to in Section 3(b) above may be
exercised by the Share Offer Recipients by giving a counter notice (the "Share
Counter Notice") within thirty (30) days after the receipt of the Share Offer
Notice, to the Company and the Offeror Shareholder stating the number of
Offered Shares a particular Share Offer Recipient wishes to purchase at the
price and terms indicated in the Share Offer Notice.
(d) If any Share Offer Recipient fails to give a Share
Counter Notice or gives a Share Counter Notice with respect to fewer Offered
Shares than such Share Offer Recipient would be entitled to acquire pursuant to
this paragraph (hereinafter a "Declining Share Recipient"), the Offered Shares
as to which options have not been exercised by any Declining Share Recipient
shall be reoffered to the Whitney Funds and to Waller by using procedures for
providing notice that are similar to those described in Section 3(b) above. The
Whitney Funds and Waller thereupon will each have the option exercisable within
twenty (20) days from the giving of the Share Offer Notice to acquire all or
any part of such reoffered Shares on a pro rata basis according to the number
of Shares then owned by each of Waller and the Whitney Funds in relation to the
aggregate number of Shares then owned by Waller and the Whitney Funds together
(calculated on a fully diluted basis). If the Whitney Funds and Waller fail to
exercise such option in full, then the Shares not so elected to be purchased
shall be reoffered to the other Share Offer Recipients (hereinafter "Accepting
Share Recipients") who have given Share Counter Notices with respect to all of
the Offered Shares they are respectively entitled to pursuant to this Section
by using procedures for providing notice that are similar to those described in
Section 3(b) above. Each Accepting Share Recipient thereupon will have the
option, exercisable by giving a Share Counter Notice to the Company and the
Offeror Shareholder within ten (10) days from the giving of the Share Offer
Notice, to acquire such reoffered Shares on a pro rata basis according to the
number of Shares then owned by each such Accepting Share Recipient in relation
to the aggregate number of Shares then owned by all the Accepting Share
Recipients (calculated on a fully diluted basis). Each Accepting Share
Recipient who has exercised his, her or its option to the fullest extent
permitted hereby shall have such number of additional ten (10) day options,
exercised on the terms and in the manner provided for herein, as may be
required until at least one Shareholder has the opportunity to acquire all of
the remaining Offered Shares. The Share Counter Notice shall be deemed an
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irrevocable offer by the Share Offer Recipient to purchase the number of
Offered Shares specified therein at the price and terms set forth in the
corresponding Share Offer Notice.
(e) If all the Offered Shares are not accepted for
purchase by the Company and/or the Share Offer Recipients, then the Offeror
Stockholder, may at his, her or its election, (i) either sell to the Company
and/or the Share Offer Recipients the Offered Shares, if any, which the Company
and/or the Share Offer Recipients have elected to purchase, and sell any
remaining Offered Shares to the Bona Fide Purchaser, or (ii) rescind its offer
to sell the Offered Shares, which rescission shall be effected by written
notice delivered to the Share Offer Recipients and the Company within ten (10)
days after the final ten (10) day option referred to in Section 3(d) expires,
and keep all, but not less than all, of the Offered Shares, subject to the
restrictions set forth in this Agreement. In the event that all the Offered
Shares are accepted for purchase by the Company and/or the Share Offer
Recipients or the Offeror Stockholder elects to sell the Offered Shares
pursuant to clause (i) of this Section 3(e), the Company, the Share Offer
Recipients, and/or the Bona Fide Purchaser, as the case may be, must purchase
such Shares no more than sixty (60) days after the end of the final ten (10)
day option referred to in Section 3(d) strictly in accordance with the terms
and conditions of the Purchaser Offer. The prospective Bona Fide Third Party,
as a condition precedent to the purchase of the Offered Shares, or any part
thereof, shall subscribe to this Agreement and agree to be bound by all of the
terms and conditions hereof. In the event that an Offeror Stockholder shall
not have sold all of his, her or its Offered Shares on or before the expiration
of such sixty (60) day period, such Offeror Stockholder shall not thereafter
sell any Shares pursuant to the Purchaser Offer or otherwise without first
offering such Shares to the other Stockholders in the manner set forth in this
Section 3 hereof.
SECTION 3A. First Special Right of First Refusal. (a) None of
Kitty Hawk III, Kitty Hawk IV or Eagle Creek shall effect a Disposition of any
of their Shares, except as provided in this Agreement.
(b) If any of Kitty Hawk III, Kitty Hawk IV or Eagle
Creek desires to sell all, or any part, of their Shares (hereinafter the
"Section 3A Offered Shares") to a Bona Fide Purchaser, Kitty Hawk III, Kitty
Hawk IV or Eagle Creek, as the case may be (each, a "Section 3A Offeror") shall
send a notice to the Whitney Funds and, if the Section 3A Offered Shares are
shares of Series B Preferred Stock (or Common Stock issued upon conversion of
Series B Preferred Stock) to Waller (hereinafter the "Section 3A Share
Notice"), stating (i) the Section 3A Offeror's desire to sell the Section 3A
Offered Shares, and (ii) the price and terms of the Bona Fide Purchaser's offer
(the "Section 3A Purchase Offer") to purchase the Section 3A Offered Shares.
Upon the receipt of the Section 3A Share Notice, the Whitney Funds and Waller
(if applicable) shall have thirty (30) days within which to elect to purchase
all, but not less than all, of the Section 3A Offered Shares specified therein.
The right of first refusal provided for Waller under this Section 3A shall only
apply to the sale by any of Kitty Hawk III, Kitty Hawk IV or Eagle Creek of its
shares of Series B Preferred Stock or shares of Common Stock issued upon
conversion of its Series B Preferred Stock. The number of Section 3A Offered
Shares that each of the Whitney Funds and, if applicable, Waller, is entitled
to purchase shall be determined on a pro rata basis, according to the number of
Shares then owned by each of the Whitney Funds and Waller (if applicable) in
relation to the aggregate number of Shares then owned by the Whitney Funds and,
if applicable, Waller (calculated on a fully diluted basis), or in such other
proportion
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as the Whitney Funds (provided that the Whitney Funds may allocate among
themselves as they may agree the number of Section 3A Offered Shares allocated
to the Whitney Funds) and Waller (if applicable) shall agree. If either the
Whitney Funds or Waller (if applicable) fails to purchase all of its pro rata
share of the Section 3A Offered Shares, the remaining Whitney Funds and/or
Waller (if applicable) shall have an additional ten (10) days within which to
elect to purchase all, but not less than all, of the remaining Section 3A
Offered Shares. If all the Section 3A Offered Shares are not accepted for
purchase by the Whitney Funds and/or Waller (if applicable), then the Section
3A Offeror may, at its election, (i) either sell to the Whitney Funds or Waller
(if applicable) the Section 3A Offered Shares, if any, which the Whitney Funds
and/or Waller (if applicable) have elected to purchase, and sell any remaining
Section 3A Offered Shares to the Bona Fide Purchaser, or (ii) rescind its offer
to sell the Section 3A Offered Shares, which rescission shall be effected by
written notice delivered to the Whitney Funds and Waller (if applicable) within
ten (10) days of the end of the thirty (30) day period referred to above, and
keep all, but not less than all, of the Section 3A Offered Shares, subject to
the restrictions set forth in this Agreement. In the event that all the
Section 3A Offered Shares are accepted for purchase by the Whitney Funds and
Waller (if applicable) or the Section 3A Offeror elects to sell the Section 3A
Offered Shares pursuant to clause (i) of this Section 3A(b), the Whitney Funds
and Waller (if applicable) and/or the Bona Fide Purchaser, as the case may be,
must purchase such shares no more than sixty (60) days after the end of the
thirty (30) day period referred to above strictly in accordance with the terms
and conditions of the Section 3A Purchaser Offer. The prospective Bona Fide
Purchaser, as a condition precedent to the purchase of the Section 3A Offered
Shares, or any part thereof, shall subscribe to this Agreement and agree to be
bound by all of the terms and conditions hereof. In the event that the Section
3A Offeror shall not have sold all of its Section 3A Offered Shares on or
before the expiration of such sixty (60) day period, the Section 3A Offeror
shall not thereafter sell any of the Section 3A Offered Shares pursuant to the
Section 3A Purchase Offer or otherwise without first offering such shares to
the Whitney Funds and Waller (if applicable) in the manner set forth in this
Section 3A hereof.
SECTION 3B. Second Special Right of First Refusal. (a) Waller
shall not effect a Disposition of any of its Shares, except as provided in this
Agreement.
(b) If Waller desires to sell all, or any part, of its
Shares (hereinafter the "Section 3B Offered Shares") to a Bona Fide Purchaser,
Waller shall send a notice to the Whitney Funds (hereinafter the "Section 3B
Share Notice"), stating (i) Waller's desire to sell the Section 3B Offered
Shares, and (ii) the price and terms of the Bona Fide Purchaser's offer (the
"Section 3B Purchase Offer") to purchase the Section 3B Offered Shares. Upon
the receipt of the Section 3B Share Notice, the Whitney Funds shall have thirty
(30) days within which to elect to purchase all, but not less than all, of the
Section 3B Offered Shares specified therein. The number of Section 3B Offered
Shares that each of the Whitney Funds is entitled to purchase shall be
determined on a pro rata basis, according to the number of Shares then owned by
each of the Whitney Funds in relation to the aggregate number of Shares then
owned by all of the Whitney Funds (calculated on a fully diluted basis), or
such other proportion as the Whitney Funds may agree. If any of the Whitney
Funds fails to purchase all of its pro rata share of the Section 3B Offered
Shares, the remaining Whitney Funds shall have an additional ten (10) days
within which to elect to purchase all, but not less than all, of the remaining
Section 3B Offered Shares. If all the Section 3B Offered Shares are not
accepted for purchase by the Whitney Funds, then
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Waller may, at its election, (i) either sell to the Whitney Funds the Section
3B Offered Shares, if any, which the Whitney Funds have elected to purchase,
and sell any remaining Section 3B Offered Shares to the Bona Fide Purchaser, or
(ii) rescind its offer to sell the Section 3B Offered Shares, which rescission
shall be effected by written notice delivered to the Whitney Funds within ten
(10) days of the end of the thirty (30) day period referred to above, and keep
all, but not less than all, of the Section 3B Offered Shares, subject to the
restrictions set forth in this Agreement. In the event that all the Section 3B
Offered Shares are accepted for purchase by the Whitney Funds or Waller elects
to sell the Section 3B Offered Shares pursuant to clause (i) of this Section
3B(b), the Whitney Funds and/or the Bona Fide Purchaser, as the case may be,
must purchase such shares no more than sixty (60) days after the end of the
thirty (30) day period referred to above strictly in accordance with the terms
and conditions of the Section 3B Purchaser Offer. The prospective Bona Fide
Purchaser, as a condition precedent to the purchase of the Section 3B Offered
Shares, or any part thereof, shall subscribe to this Agreement and agree to be
bound by all of the terms and conditions hereof. In the event that Waller
shall not have sold all of its Section 3B Offered Shares on or before the
expiration of such sixty (60) day period, Waller shall not thereafter sell any
of the Section 3B Offered Shares pursuant to the Section 3B Purchase Offer or
otherwise without first offering such shares to the Whitney Funds in the manner
set forth in this Section 3B hereof.
SECTION 4. Right of Bring-Along.
(a) If the Whitney Funds propose to Dispose of all (but
not less than all) of the Shares owned by them to a Bona Fide Purchaser, other
than any transfers by the Whitney Funds to its Permitted Transferees, then,
notwithstanding anything in this Agreement to the contrary, the Whitney Funds
may require the other Stockholders (the "Other Shareholders") to Dispose of
their Shares to such Bona Fide Purchaser for the same consideration such Other
Shareholders would have received if the Company had been sold and liquidated in
accordance with the provisions of the Certificate of Incorporation and
otherwise on the same terms and conditions (other than with respect to
representations and warranties) upon which the Whitney Funds effect the
Disposition of their Shares; provided, however, that the Other Shareholders
must receive in consideration for their Shares an amount determined by an
independent, nationally recognized investment bank or appraisal firm mutually
acceptable to the Whitney Funds and a majority in interest of all Other
Shareholders to be fair market value therefor (without discount for a minority
interest).
(b) In the event that the Whitney Funds desire to
exercise their rights pursuant to Section 4(a), the Whitney Funds shall deliver
to the Company and the Other Shareholders written notice ("Sale Notice")
setting forth the consideration per share to be paid by such Bona Fide
Purchaser and the other terms and conditions of such Disposition (the Sale
Notice shall have attached to it the fairness opinion, valuation report or
similar document from the investment bank or appraisal firm opining on the fair
market value of the Other Shareholders' Shares, as required by Section 4(a)).
Within 10 days following the date of such notice, each of the Other
Shareholders shall deliver to the Whitney Funds (i) a stock certificate or
certificates or other appropriate instrument evidencing such Other
Shareholders' Shares, together with an appropriate assignment separate from
certificate or instrument duly executed in a proper form to effect the
Disposition of such Shares from the Other Shareholders to the Bona Fide
Purchaser on the books
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and records of the Company and (ii) a limited power-of-attorney authorizing the
Whitney Funds to effect the Disposition of such Shares pursuant to the terms of
such Bona Fide Purchaser's offer as such terms may be modified by the Whitney
Funds, provided, that all of the Other Shareholders' Shares are disposed of for
the same consideration per share and otherwise on the same terms and conditions
upon which the Whitney Funds effect the Disposition of their Shares. In the
event that any Other Shareholder shall fail to deliver such stock
certificate(s) or instrument(s), assignment separate from certificate and
limited power-of-attorney to the Whitney Funds, the Company shall cause a
notation to be made on its books and records to reflect that the Shares of such
Other Shareholder are bound by the provisions of this Section 4 and that the
Disposition of such Shares may be effected without such Other Shareholder's
consent or surrender of its Shares.
In addition, in the event the Whitney Funds exercise their
rights under Section 4(a), the Other Shareholders shall be required to make to
a Bona Fide Purchaser such unqualified representations and warranties with
respect to their Shares as are set forth in Section 4(e) hereof and
representations and warranties with respect to all other matters as are
reasonably requested by the Bona Fide Purchaser, provided that the Other
Shareholders will only be required to provide representations and warranties on
the same basis and subject to the same qualifications as the Whitney Funds and
will only be required to indemnify the Bona fide Purchaser against breaches of
such representations and warranties up to an aggregate dollar amount not to
exceed their respective consideration received other than with respect to
representations and warranties regarding ownership of stock and authority to
consummate the transaction in question.
(c) Promptly (but in no event later than the day of
receipt) after the consummation of the Disposition of Shares pursuant to this
Section 4, the Whitney Funds shall (i) deliver notice thereof to the Other
Shareholders, (ii) remit to the Other Shareholders the total sales price of
their respective Shares Disposed of pursuant hereto, and (iii) furnish such
other evidence of the completion and time of completion of such Disposition and
the terms thereof as may be reasonably requested in writing by the Other
Shareholders.
(d) If, within ninety 90 days after the Whitney Funds'
delivery of the notice required pursuant to Section 4(b), the Whitney Funds
shall not have completed the Disposition of its Shares and that of the Other
Shareholders in accordance herewith, the Whitney Funds shall return to the
Other Shareholders (i) the stock certificates, instruments and assignments of
certificates or instruments with respect to the Other Shareholders' Shares
which the Other Shareholders delivered pursuant to this Section 4 and (ii) the
related limited power-of-attorney. Upon the Other Shareholders' receipt of
such materials, all the restrictions on Disposition contained in this Agreement
with respect to the Shares owned by the Stockholders shall again be in effect.
(e) All sales of Shares to be made pursuant to this
Section 4 shall be subject to the following terms:
(1) the Disposing Stockholder shall deliver to
the Bona Fide Purchaser the certificates and instruments evidencing the Shares
being sold, free and clear of Encumbrances, together with duly executed stock
transfer powers or other instruments of
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<PAGE> 13
assignment in favor of the Bona Fide Purchaser or its nominees and such other
documents, including evidence of ownership and authority, as the Bona Fide
Purchaser may reasonably request;
(2) except as otherwise specifically set forth
herein, the Disposing Stockholder shall not be required to make any
representations or warranties to any Person in connection with such sale,
except as to (i) good title to the Shares being sold, (ii) the absence of
Encumbrances with respect to the Shares being sold, (iii) its valid existence
and good standing (if applicable), (iv) the authority for, and validity and
binding effect of (as against such Disposing Stockholder), any agreement
entered into by such Disposing Stockholder in connection with such sale, (v)
all required material consents to Disposing Stockholder's sale and material
governmental approvals having been obtained (excluding any securities laws) and
(vi) the fact that no broker's commission is payable by the Disposing
Stockholder as a result of Disposing Stockholder's conduct in connection with
the sale; and
(3) the Disposing Stockholder shall not be
required to provide any indemnities in connection with such sale except for
breach of the representations and warranties specifically required by the terms
of this Agreement.
SECTION 5. Election of Directors.
(a) At any annual or special stockholders' meeting called
for such purpose, or by written consent in lieu of a meeting, the Stockholders
agree to vote the Shares owned of record or beneficially by them to (i)
maintain a seven-member Board of Directors, (ii) elect to the Board of
Directors of the Company (A) three nominees designated by the Whitney Funds,
who shall initially be Michael R. Stone, Anthony M. Abate and W. Chris Hegele,
(B) one nominee designated by Waller, who shall initially be Andrew J.
Armstrong, Jr., (C) two nominees designated by the management of the Company
("Management"), who shall initially be Clark and Finley, and (E) one
"independent" nominee mutually acceptable to the Whitney Funds, Waller, Kitty
Hawk and Management, and (iii) elect two nominees of the Whitney Funds and one
nominee designated by Management to each of the Company's audit committee and
compensation committee.
(b) All such directors shall hold office until their
respective successors shall have been elected and shall have qualified.
Notwithstanding the foregoing, at such time as the Whitney Funds shall no
longer beneficially own an aggregate number of shares of Series A Preferred
Stock and Series B Preferred Stock that is convertible into at least ten
percent (10%) of the aggregate number of shares of Common Stock into which the
shares of Series A Preferred Stock and Series B Preferred Stock beneficially
owned by the Whitney Funds as at the latest Closing Date (as defined in the
Series B Purchase Agreement) that occurred were convertible as at such Closing
Date (after appropriate adjustment for dividends, subdivisions, combinations or
reclassifications), then the Stockholders' obligations to elect the designees
of the Whitney Funds as set forth in subsection (a) above shall be limited to
having one director designated by the Whitney Funds elected to the Company's
Board of Directors, who shall also be elected to serve on the audit committee
and compensation committee.
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<PAGE> 14
(c) For so long as the Whitney Funds shall continue to
beneficially own an aggregate number of shares of Series A Preferred Stock and
Series B Preferred Stock that is convertible into at least ten percent (10%) of
the aggregate number of shares of Common Stock into which the shares of Series
A Preferred Stock and Series B Preferred Stock beneficially owned by the
Whitney Funds as at the latest Closing Date (as defined in the Series B
Purchase Agreement) that occurred were convertible, as at such Closing Date
(after appropriate adjustments for dividends, subdivisions, combinations or
reclassifications), the Whitney Funds may, in their sole discretion, require
the Stockholders to, at any annual or special stockholders' meeting called for
such purpose, or by written consent in lieu of a meeting, vote the Shares owned
of record or beneficially by them to increase the size of the Company's Board
of Directors by two members (so as to establish up to a nine (9) member Board
of Directors) and to have two (2) additional nominees (for a total of five (5)
nominees) designated by the Whitney Funds elected to serve as such additional
members of the Company's Board of Directors.
(d) In the event that any of the Whitney Funds, Waller or
Kitty Hawk (each an "Institutional Investor") shall not have a designee serving
on the Board of Directors of the Company for any reason, the Company shall give
each such Institutional Investor notice of (in the same manner as notice is
given to directors), and permit one Person designated by each such
Institutional Investor to attend as observer, all meetings of the Company's
Board of Directors and all executive and other committee meetings of the Board
of Directors and shall provide to each such Institutional Investor the same
information concerning the Company, and access thereto, provided to members of
the Company's Board of Directors. The reasonable travel expenses incurred by
any such designee of the Whitney Funds in attending any board or committee
meetings shall be reimbursed by the Company to the extent consistent with the
Company's then existing policy of reimbursing directors generally for such
expenses.
(e) The parties hereto agree to use their best efforts to
cause the Company's Board of Directors to meet at least once every three months
or more frequently to the extent that the directors designated by the Whitney
Funds, or in the event no such directors are then serving on the Board of
Directors, an observer designated by the Whitney Funds, reasonably wishes the
Board of Directors to meet.
(f) The respective rights of each of the Whitney Funds,
on the one hand, and Waller, on the other hand, under subsections (a) and (b)
of this Section 5 shall survive, in each case, for so long as the Whitney
Funds, collectively, or Waller, as the case may be, shall beneficially own an
aggregate number of shares of Series A Preferred Stock and Series B Preferred
Stock that in the aggregate is convertible into at least five percent (5%) of
the aggregate number of shares of Common Stock into which the shares of Series
A Preferred Stock and Series B Preferred Stock beneficially owned by the
Whitney Funds, collectively, or Waller, as the case may be, as at the latest
Closing Date (as defined in the Series B Purchase Agreement) that occurred were
convertible, as at such Closing Date (after appropriate adjustment for
dividends, subdivisions, combinations or reclassifications).
SECTION 6. Co-Sale Rights.
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(a) If any of the Whitney Funds desires to sell (other
than to its Permitted Transferees) all, or any part, of their Shares consisting
of Series B Preferred Stock or Common Stock issued upon conversion of such
shares of Series B Preferred Stock (hereinafter the "Whitney Offered Shares")
to a Bona Fide Purchaser, such Whitney Fund(s) (each, a "Whitney Offeror")
shall send a notice (hereinafter the "Whitney Sale Notice") to Waller, Kitty
Hawk IV and Eagle Creek (each, a "Co-Sale Offeree" and collectively, the
"Co-Sale Offerees") stating (i) the Whitney Offeror's desire to sell the
Whitney Offered Shares, and (ii) the price and terms of the Bona Fide
Purchaser's offer (the "Whitney Purchase Offer"). Upon the receipt of the
Whitney Sale Notice, each of the Co-Sale Offerees shall have thirty (30) days
to give written notice (a "Tag-Along Notice") to the Whitney Offeror that such
Co-Sale Offeree wishes to participate in such proposed sale of Whitney Offered
Shares, with respect to the same class of Shares and at the same time and on
the same terms and conditions as specified in the Whitney Purchase Offer, and
specifying the number of "Co-Sale Offeree Shares" (which, for the purposes of
this Section 6, shall mean, for each Co-Sale Offeree, any Shares of Series B
Preferred Stock and Common Stock issued upon conversion of such Shares of
Series B Preferred Stock then owned by such Co-Sale Offeree) that such Co-Sale
Offeree desires to include in such proposed sale. Each Co-Sale Offeree may
sell all or any part of that number of Co-Sale Offeree Shares equal to the
product obtained by multiplying (x) the aggregate number of Whitney Offered
Shares covered by the Whitney Purchase Offer by (y) a fraction, the numerator
of which is the number of Co-Sale Offeree Shares at the time owned by such
Co-Sale Offeree and the denominator of which is the aggregate number of Co-Sale
Offeree Shares and "Whitney Offeror Shares" (which, for the purposes of this
Section 6, shall mean any Shares of Series B Preferred Stock and Common Stock
issued upon conversion of such Shares of Series B Preferred Stock then owned by
the Whitney Offeror). If none of the Co-Sale Offerees gives a timely Tag-Along
Notice with respect to the sale proposed in the Whitney Sale Notice, the
Whitney Offeror may transfer the Whitney Offered Shares within the ninety (90)
day period following the date of the Whitney Sale Notice, on terms and
conditions no more favorable than those set forth in the Whitney Sale Notice.
If any of the Co-Sale Offerees shall give the Whitney Offeror a timely
Tag-Along Notice, then the Whitney Offeror shall request of the Bona Fide
Purchaser that the Bona Fide Purchaser agree to acquire all Co-Sale Offeree
Shares identified in the Tag-Along Notice (up to the maximum number of shares
permitted under this Section 6(a)), upon the same terms and conditions
(including, without limitation, the ability to receive a ratable share of all
consideration being paid, directly or indirectly, to the Whitney Offeror as set
forth in the Whitney Sale Notice). If the Bona Fide Purchaser is unwilling or
unable to acquire all of the Co-Sale Offeree Shares upon such terms, then the
Whitney Offeror may rescind its offer to sell the Whitney Offered Shares, which
rescission shall be effected by written notice delivered to the Co-Sale
Offerees within ten (10) days of the end of the ninety (90) day period referred
to above, and keep all, but not less than all, of the Whitney Offered Shares,
subject to the restrictions set forth in this Agreement. The prospective Bona
Fide Purchaser, as a condition precedent to the purchase of the Whitney Offered
Shares (including any shares proposed to be sold by the Co-Sale Offerees
pursuant to the terms of this Section 6), shall subscribe to this Agreement and
agree to be bound by all of the terms and conditions hereof. In the event that
the Whitney Offeror shall not have sold all of its Whitney Offered Shares
pursuant to this Section 6 within a period of ninety (90) days following the
date of the Whitney Sale Notice, the Whitney Offeror shall not thereafter sell
any of the Whitney Offered Shares pursuant to the Whitney Purchase
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<PAGE> 16
Offer or otherwise without first offering such shares to the Co-Sale Offerees
in the manner set forth in this Section 6 hereof.
(b) If any of the Co-Sale Offerees exercises its right
pursuant to Section 6(a) above, upon the request of the Whitney Offeror, such
Co-Sale Offeree shall deliver to the Whitney Offeror, as agent for such Co-Sale
Offeree, for transfer to the Bona Fide Purchaser, one or more certificates
properly endorsed for transfer, which represent the number of Co-Sale Offeree
Shares which such Co-Sale Offeree so elects to Dispose pursuant to Section
6(a). The stock certificate or certificates delivered by such Co-Sale Offeree
to the Whitney Offeror pursuant to this paragraph shall be transferred by the
Whitney Offeror to the Bona Fide Purchaser in consummation of the Disposition
of the Shares pursuant to the terms and conditions specified in Section 6(a),
and the Whitney Offeror shall promptly thereafter remit, or cause to be
remitted, to such Co-Sale Offeree that portion of the Disposition proceeds to
which such Co-Sale Offeree is entitled by reason of its participation in such
Disposition.
(c) Notwithstanding anything contained in this Section 6
or any notice given hereunder, the provisions of this Section 6 shall be
suspended immediately upon the occurrence of any event within the scope of
Section 4 hereof.
(d) The Whitney Funds shall have corresponding co-sale
rights on the same terms and conditions as are set forth in subsections (a) and
(b) of this Section 6 with respect to any proposed sale by any of the Co-Sale
Offerees of any of their Co-Sale Offeree Shares.
SECTION 7. Put Rights.
(a) Subject to Section 7(c) hereof, the Company hereby
irrevocably grants to each holder of Series B Preferred Stock (each, a "Series
B Holder") the right and option, beginning on March 23, 2004, to sell to the
Company (hereinafter referred to as the "Put") all or any portion of the shares
of Series B Preferred Stock then held by such Series B Holder (the "Put
Shares"), at a purchase price per Put Share equal to the greater of (a) $4.00
(subject to appropriate adjustment for subdivisions and combinations of the
Series B Preferred Stock) plus any accrued but unpaid dividends on the Put
Shares and (b) the Fair Market Value (as defined below) per Put Share (the
"Purchase Price"). For the purposes of this Section 7, the "Fair Market Value"
per Put Share on any date shall be deemed to be the average of the daily
closing prices per share of Common Stock for the ten (10) consecutive trading
days commencing fifteen (15) trading days before such date. If on any such
date the shares of Common Stock are not listed or admitted for trading on any
national securities exchange or quoted by NASDAQ or a similar service, the Fair
Market Value shall be the fair market value of such shares on such date, as
determined by an independent investment banking firm or other appraiser (the
"Appraiser") reasonably acceptable to such Series B Holder(s) and Management.
If such parties cannot agree on the selection of the Appraiser, the fair market
value per Put Shares shall be determined as follows: (i) Each of the Series B
Holder(s) exercising the Put, on the one hand, and the management of the
Company ("Management"), on the other hand, shall select one Appraiser (each, an
"Appraiser") reasonably acceptable to such Series B Holder(s) and Management to
determine the fair market value per Put Share; (ii) the two Appraisers selected
by Management and such Series B Holder(s) shall then mutually agree on and
select a third Appraiser; (iii) each
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<PAGE> 17
of the Appraisers shall submit to the Company and such Series B Holder(s) a
written determination of the fair market value per Put Share; and (iv) the Fair
Market Value shall be the average of the values submitted by the three
Appraisers. The total cost and expenses incurred by the Appraiser or
Appraisers, as the case may be, in determining the Fair Market Value shall be
borne by such Series B Holders as exercise the Put, pro rata according to the
number of Put Shares being put by each such Series B Holder.
(b) Subject to the provisions of Sections 7(a), 7(c) and
7(d) hereof, and at any time on or after March 23, 2004, each Series B Holder
may exercise the Put and sell to the Company, and the Company agrees to
purchase from such Series B Holder, all or any portion of the Put Shares. A
Series B Holder shall exercise the Put by providing written notice to the
Company specifying the number of Put Shares as to which the Put is exercised
and effective date of the exercise.
(c) The payment for and delivery of Put Shares shall be
made as set forth below.
(i) Subject to clause (iii) below, the Company
shall pay the Purchase Price to each Series B Holder exercising the Put in
accordance with clause (ii) below for each Put Share put by such Series B
Holder and purchased by the Company in exchange for the delivery to the Company
of a stock certificate or certificates representing the total number of Put
Shares being put and purchased, duly endorsed in blank by such Series B Holder
or having attached thereto a stock power executed by such Series B Holder in
proper form for transfer.
(ii) The Company shall pay the Purchase Price for
the Put Shares by paying the Purchase Price in cash or by certified, cashier's
or other check acceptable to each such Series B Holder, or by wire transfer
pursuant to such Series B Holder's instructions, within 45 days after the
determination of the Fair Market Value, as described above, subject to such
Series B Holder's compliance with the delivery requirements set forth in clause
(ii) above.
(iii) In the event that any payment to be made by
the Company under this Section 7 is prohibited by applicable provisions of
corporate law or by any other applicable law, or by any loan or other covenant
("Restrictive Covenants") contained in agreements between the Company or any of
its subsidiaries and any lending or other financial institution, then such
payment shall be immediately made by the Company at the next earliest time, and
to the extent possible, when compliance with said law may be effected, or
waiver or termination of any such Restrictive Covenant shall occur, and the
Company agrees that it will execute all such documents and take all such other
steps as may be necessary to expedite and effectuate to the extent possible
such compliance or waiver. In connection with the foregoing sentence, the
Company agrees to cooperate with the Series B Holders and take such actions
from time to time as the Series B Holders may reasonably propose, including,
without limitation, the sale of designated assets of the Company in order to
facilitate the repurchase of the Put Shares, to the extent that such actions,
in the determination and discretion of the Board of Directors of the Company,
do not materially impair either the business operations of the Company or the
rights of the Company's creditors. Any Put Shares for which a Put has been
exercised and payment in full shall not have been made by the Company shall
continue to be deemed issued and outstanding
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<PAGE> 18
shares of Series B Preferred Stock (for all purposes, including, without
limitation, with respect to dividends) until the date such payment is made.
(d) The Put (and all rights related thereto) shall
terminate, whether or not it has then become exercisable, upon the first to
occur of (i) an Initial Public Offering, (ii) a sale of all or substantially
all of the assets of the Company, (iii) a merger or consolidation of the
Company with or into another corporation or entity (other than a transaction in
which the holders of capital stock of the Company immediately prior to such
merger or consolidation continue to hold at least a majority of the voting
power of the surviving entity), or (iv) with respect to each share of Series B
Preferred Stock, the date of conversion of such share into Common Stock.
SECTION 8. Special Approval Rights.
(a) Notwithstanding anything in the Certificate of
Incorporation to the contrary, the following actions by the Company shall
require the prior written consent of Waller and the Whitney Funds:
(1) Engaging in any business other than the business
in which the Company or its Subsidiaries are currently engaged;
(2) Any amendment, restatement or modification of
the Certificate of Incorporation which adversely affects the rights of the
holders of the Series B Preferred Stock;
(3) The entering into of any agreement with, or the
making of any payments (other than as provided in the Certificate of
Incorporation) to, any holder of Series A Preferred Stock with respect to its
Series A Preferred Stock (including, without limitation, the redemption (other
than as provided in the Certificate of Incorporation), repurchase or other
acquisition by the Company of Series A Preferred Stock), the effect of which
would be to advantage such holder to the detriment of the holders of the Series
B Preferred Stock;
(4) A voluntary liquidation or dissolution of the
Company; or
(5) The filing by the Company of a petition under
bankruptcy or other insolvency laws, or the admission in writing that the
Company is bankrupt, insolvent or generally unable to pay its debts as they
become due.
(b) The respective rights of each of the Whitney Funds,
on the one hand, and Waller, on the other hand, under this Section 8 shall
survive, in each case, for so long as the Whitney Funds, collectively, or
Waller, as the case may be, shall beneficially own an aggregate number of
shares of Series A Preferred Stock and Series B Preferred Stock that in the
aggregate is convertible into at least five percent (5%) of the aggregate
number of shares of Common Stock into which the shares of Series A Preferred
Stock and Series B Preferred Stock beneficially owned by the Whitney Funds,
collectively, or Waller, as the case may be, as at the latest Closing Date (as
defined in the Series B Purchase Agreement) that occurred were convertible as
at such Closing Date (after appropriate adjustment for dividends, subdivisions,
combinations or reclassifications).
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SECTION 9. Legend on Stock Certificates. Each certificate of
the signatories hereto representing Shares shall bear the following legend
until such time as the Shares represented thereby are no longer subject to the
provisions hereof:
"THE SALE, TRANSFER OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, DATED AS OF MARCH 23,
1998, AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AMONG SPECTRASITE
HOLDINGS, INC. AND CERTAIN HOLDERS OF ITS OUTSTANDING CAPITAL STOCK. COPIES OF
SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF SPECTRASITE HOLDINGS, INC.
SECTION 10. Duration of Agreement. The rights and obligations
of each Stockholder under this Agreement shall terminate as to such Stockholder
upon the transfer of all Shares owned by such Stockholder in accordance with
this Agreement. Upon consummation of an Initial Public Offering,
notwithstanding anything to the contrary in this Agreement, the rights and
obligations of each Stockholder under Sections 2, 3, 3A, 3B, 4, 6, 7 and 8 of
this Agreement shall terminate.
SECTION 11. Representations and Warranties. Each Stockholder
represents and warrants to the other Stockholders as follows:
(a) The execution, delivery and performance of this
Agreement by such Stockholder will not violate any provision of law, any order
of any court or other agency of government, or any provision of any indenture,
agreement or other instrument to which such Stockholder or any of his, her or
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of such Stockholder.
(b) This Agreement has been duly executed and delivered
by such Stockholder and constitutes the legal, valid and binding obligation of
such Stockholder, enforceable in accordance with its terms.
(c) The Shares of such Stockholder listed on Schedule I
hereto constitute all the shares of capital stock of the Company owned by such
Stockholder as of the date hereof, and such Stockholder does not have any right
or obligation to acquire any additional shares of capital stock of the Company.
SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
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STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH
STATE.
SECTION 13. Benefits of Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, legal representatives and heirs. Any Disposition of
the Shares in violation of the provisions of this Agreement shall be void.
SECTION 14. Notices. All notices, requests and other
communications to be given or otherwise made to any Stockholder or other party
hereto shall be deemed to be sufficient if contained in a written instrument
duly transmitted by telecopy or telex or duly sent by overnight courier service
or first class registered or certified mail, postage prepaid, addressed to such
party at the address set forth below or at such other address as may hereafter
be designated in writing by the addressee to the addressor listing all parties:
(a) if to the Company:
SpectraSite Holdings, Inc.
8000 Regency Parkway, Suite 570
Cary, North Carolina 27511
Telecopier: (919) 468-8522
Attention: Stephen H. Clark
Joe. L. Finley, III
with a copy to:
Hutchison & Mason PLLC
4011 Westchase Blvd, Suite400
Raleigh, North Carolina 27607
Telecopier: (919) 829-9696
Attention: Fred D. Hutchison, Esq.
(b) if to JHW II, JHW III and JHW Strategic III:
c/o J.H. Whitney & Co.
177 Broad Street
Stamford, Connecticut 06901
Telecopier No.: (203) 975-1422
Attention: Michael R. Stone
Daniel J. O'Brien
with a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
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Telecopier No.: (212) 735-8708
Attention: David A. Scherl, Esq.
(c) if to Waller:
Waller-Sutton Media Partners, L.P.
c/o Waller-Sutton Management Group, Inc.
1 Rockfeller Plaza
New York, New York 10020
Telecopier No.: (212) 218-4355
Attention: Andrew J. Armstrong, Jr.
with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza, 29th Floor
New York, NY 10112
Telecopier No: (212) 698-7825
Attention: Ronald Greenberg, Esq.
(d) if to Kitty Hawk III or Kitty Hawk IV:
Kitty Hawk Capital Limited Partnership
2700 Coltsgate Road, Suite 202
Charlotte, North Carolina 28211
Telecopier No.: (704) 362-2774
Attention: W. Chris Hegele
with a copy to:
Smith Helms Mulliss & Moore, LLP
214 North Church Street
Charlotte, North Carolina 28202
Telefacsimile Number: (704) 334-8467
Attention: Harrison Marshall, Esq.
(e) if to Eagle Creek:
Eagle Creek Capital, L.L.C.
2300 Carillon Point
Kirkland, Washington, 98033
Telecopier No.: (425) 828-8450
Attention: Susan L. Rasinski
(f) if to Clark:
21
<PAGE> 22
Stephen H. Clark
c/o SpectraSite Holdings, Inc.
8000 Regency Parkway
Suite 570
Cary, North Carolina 27511
Telecopier No.: (919) 468-8522
with a copy to:
Hutchison & Mason PLLC
4011 Westchase Blvd., Suite 400
Raleigh, North Carolina 27607
Telecopier No.: (919) 829-9696
Attention: Fred D. Hutchison, Esq.
(g) if to Long:
Robert M. Long
c/o SpectraSite Holdings, Inc.
8000 Regency Parkway
Suite 570
Cary, North Carolina
Telecopier No.: (919) 468-8522
with a copy to:
Hutchison & Mason PLLC
4011 Westchase Blvd., Suite 400
Raleigh, North Carolina 27607
Telecopier No.: (919) 829-9696
Attention: Fred D. Hutchison, Esq.
(h) if to the Finley LP:
c/o Joe L. Finley, III
10770 Samples Road
Alexander, Arkansas 72002
Telecopier No.: (501) 316-1451
with a copy to:
Friday, Eldridge & Clark
400 West Capitol
Suite 2000
Little Rock, Arkansas 72201
Attention: Price C. Gardner, Esq.
22
<PAGE> 23
Telecopier No.: (501) 376-2147
(i) If to any PCX Stockholder other than Kitty Hawk,
Clark or NCEF:
c/o PCX Corporation
8343 U.S. Highway 70 East
Clayton, North Carolina 27520
Telecopier No.: (919) 550-2900
Attention: President
with a copy to:
Poyner & Spruill, LLP
3600 Glenwood Avenue, Suite 300
Raleigh, North Carolina 27605
Telecopier No. (919) 783-1075
Attention: Robert B. Womble, Esq.
(j) If to NCEF:
The North Carolina Enterprise Fund, L.P.
3600 Glenwood Avenue, Suite 107
Raleigh, North Carolina 27612
Telecopier No.: (919) 783-9195
Attention: Charles T. Closson, Jr.
with a copy to:
Poyner & Spruill, LLP
3600 Glenwood Avenue, Suite 300
Raleigh, North Carolina 27605
Telecopier No. (919) 783-1075
Attention: Robert B. Womble, Esq.
or to such other address or addresses as shall have been
furnished in writing to the other parties hereto. Each Stockholder agrees, at
all times, to provide the Company with an address for notices hereunder.
All notices hereunder shall be effective on the date of
transmission if transmitted by telex or telecopy, on the first day after
delivery to an overnight national courier service if sent by such service and
on the date of receipt if sent by mail.
SECTION 15. Modification. Except as otherwise provided
herein, neither this Agreement nor any provision hereof shall be modified,
changed, discharged or terminated except by an instrument in writing signed by
the party against whom the enforcement of any modification, change, discharge
or termination is sought or by the agreement of the Whitney
23
<PAGE> 24
Funds and a majority of all other holders of the Shares, if any, subject to
this Agreement (calculated on a fully-diluted basis); provided, however, that
no modification or amendment shall be effective to reduce the percentage of the
Shares the consent of the holders of which is required under this Section 14;
and provided further, that the provisions of Sections 6 or 7 shall not be
modified, changed, discharged or terminated except by an instrument in writing
signed by the party against whom the enforcement of any such modification,
change, discharge or termination is sought or by the agreement of the Whitney
Funds and a majority of the other holders of Series B Preferred Stock
(calculated on a fully-diluted basis); and provided further, that the
provisions of Sections 8 shall not be modified, changed, discharged or
terminated except by an instrument in writing signed by the party against whom
the enforcement of any such modification, change, discharge or termination is
sought or by the agreement of the Whitney Funds and Waller.
SECTION 16. Entire Agreement. If the terms of this Agreement
and the terms of the Warrant Holders Agreement conflict, the terms of this
Agreement shall govern. This Agreement and the Warrant Holders Agreement
constitute the entire agreement among the undersigned with respect to matters
or understandings involving the ownership, control or disposition of their
Shares and supersedes any and all prior agreements or understandings, oral or
written, among any or all of the undersigned relating to such ownership,
control or disposition (including, without limitation, the Stockholders'
Agreement).
SECTION 17. Counterparts. Telefacsimile transmissions of any
executed original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
SPECTRASITE HOLDINGS, INC.
By:/s/ STEPHEN H. CLARK
----------------------------------------
Name: Stephen H. Clark
Title: President
WHITNEY EQUITY PARTNERS, L.P.
By: J.H. Whitney Equity Partners, LLC,
Its General Partner
By:/s/ DANIEL J. O'BRIEN
---------------------------------------
Name: Daniel J. O'Brien
A Managing Member
J.H. WHITNEY III, L.P.
By: J.H. Whitney Equity Partners III, LLC
Its General Partner
By:/s/ DANIEL J. O'BRIEN
---------------------------------------
Name: Daniel J. O'Brien
A Managing Member
[FIRST SIGNATURE PAGE TO SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT]
25
<PAGE> 26
WHITNEY STRATEGIC
PARTNERS III, L.P.
By: J.H. Whitney Equity Partners III, LLC
Its General Partner
By:/s/ DANIEL J. O'BRIEN
---------------------------------------
Name: Daniel J. O'Brien
A Managing Member
WALLER-SUTTON MEDIA PARTNERS, L.P.
By: WALLER-SUTTON MEDIA, LLC
--------------------------------------
Its General Partner
By: /s/ BRUCE M. HERNANDEZ
--------------------------------------
Name: Bruce M. Hernandez
Title: Chief Executive Officer
KITTY HAWK CAPITAL LIMITED
PARTNERSHIP, III
By: Kitty Hawk Partners Limited
Partnership, III,
Its General Partner
By:/s/ W. CHRIS HEGELE
----------------------------------------
Name: W. Chris Hegele
A General Partner
[SECOND SIGNATURE PAGE TO SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT]
<PAGE> 27
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV
By: Kitty Hawk Partners LLC, IV
Its General Partner
By:/s/ W. CHRIS HEGELE
--------------------------------------
Name: W. Chris Hegele
A Manager
EAGLE CREEK CAPITAL, L.L.C.
By:/s/ SUSAN L. RASINSKI
---------------------------------------
Name: Susan L. Rasinski
A Manager
/s/ STEPHEN H. CLARK
------------------------------------------
STEPHEN H. CLARK
/s/ ROBERT M. LONG
------------------------------------------
ROBERT M. LONG
FINLEY FAMILY LIMITED PARTNERSHIP
By:/s/ JOE L. FINLEY III
------------------------------------------
Name: Joe L. Finley III
Title: General Partner
[THIRD SIGNATURE PAGE TO SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT]
<PAGE> 28
THE NORTH CAROLINA ENTERPRISE
FUND, L.P.
By: The North Carolina Enterprise
Corporation,
General Partner
By:/s/ NANCY P. OWENS
---------------------------------------
Name: Nancy P. Owens
Title: Sr. Vice President
/s/ Edward J. Lutkewich
------------------------------------------
EDWARD J. LUTKEWICH
/s/ Jack W. Jackman
------------------------------------------
JACK W. JACKMAN
/s/ Alton D. Eckert
------------------------------------------
ALTON D. ECKERT
/s/ William R. Gupton
------------------------------------------
WILLIAM R. GUPTON
[FOURTH SIGNATURE PAGE TO SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT]
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SHARES
------------------- ----------------
<S> <C>
1. Issued and Outstanding Common Stock:
Stephen H. Clark 687,395
Robert M. Long 162,605
Finley Family Limited Partnership 490,517
2. Issued and Outstanding Series A Convertible Preferred Stock:
Whitney Equity Partners, L.P. 3,203,118
Kitty Hawk Capital Limited Partnership, III 259,712
3. Issued and Outstanding Series B Convertible Preferred Stock:
Whitney Equity Partners, L.P. 1,044,532
J.H. Whitney III, L.P. 2,039,910
Whitney Strategic Partners III, LLC 49,155
Waller-Sutton Media Partners, L.P. 746,095
Kitty Hawk Capital Limited Partnership, III 37,305
Kitty Hawk Capital Limited Partnership, IV 186,524
Eagle Creek Capital, L.L.C. 74,609
The North Carolina Enterprise Fund, L.P. 30,357
Jack W. Jackman 2,846
Alton D. Eckert 2,846
William R. Gupton 5,464
Finley Family Limited Partnership 30,357
4. Warrants to Purchase Common Stock:
Kitty Hawk Capital Limited
Partnership, III 33,340.42
The North Carolina Enterprise Fund, L.P. 33,340.42
Edward J. Lutkewich 19,901.07
Jack W. Jackman 3,316.85
Alton D. Eckert 3,316.85
William R. Gupton 6,368.34
Stephen H. Clark 50,416.05
</TABLE>
<PAGE> 30
<TABLE>
<S> <C>
5. Options to Purchase Common Stock:
Stephen H. Clark 725,000
Robert M. Long 38,800
</TABLE>
<PAGE> 1
EXHIBIT 10.7
FIRST AMENDMENT
TO
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED STOCKHOLDERS'
AGREEMENT, dated as of May 29, 1998 (the "First Amendment"), by and among
SpectraSite Holdings, Inc., a Delaware corporation (the "Company"), the "Whitney
Funds," as defined in the "Stockholders' Agreement," as defined herein, and the
other parties that execute and deliver this First Amendment who are a majority
of the other holders of the Company's "Series B Preferred Stock," as defined in
the Stockholders' Agreement (calculated on a fully-diluted basis) (the
"Stockholders").
WHEREAS, the Company, Whitney Equity Partners, L.P., a Delaware
limited partnership, J. H. Whitney III, L.P., a Delaware limited partnership,
Whitney Strategic Partners III, L.P., a Delaware limited partnership,
Waller-Sutton Media Partners, L.P., a Delaware limited partnership, Kitty Hawk
Capital Limited Partnership, III, a Delaware limited partnership, Kitty Hawk
Capital Limited Partnership, IV, a Delaware limited partnership, Eagle Creek
Capital, L.L.C., a Washington limited liability company, Stephen H. Clark,
Robert M. Long, Finley Family Limited Partnership, an Arkansas limited
partnership, The North Carolina Enterprise Fund, L.P., a North Carolina limited
partnership, Edward J. Lutkewich, Jack W. Jackman, Alton D. Eckert, and William
R. Gupton are parties to a Second Amended and Restated Stockholders' Agreement,
dated as of March 23, 1998 (the "Stockholders' Agreement"); and
WHEREAS, pursuant to Section 15 of the Stockholders' Agreement, the
Company and the Stockholders desire to amend and modify the provisions of the
Stockholders' Agreement in the manner and to the extent set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the Company and the Stockholders hereby agree as follows:
1. Deletion of Section 7. The provisions of Section 7 (Put Rights)
of the Stockholders' Agreement are hereby deleted in their entirety.
2. Effect of First Amendment. The provisions of the Stockholders'
Agreement are hereby amended and modified by the provisions of this First
Amendment. If any of the provisions of the Stockholders' Agreement are
materially different from or inconsistent with the provisions of this First
Amendment, the provisions of this First Amendment shall control, and the
provisions of the Stockholders' Agreement shall, to the extent of such
difference or inconsistency, be deemed to be amended and modified.
3. Single Agreement. This First Amendment and the Stockholders'
Agreement, as amended and modified by the provisions of this First Amendment,
shall constitute and shall be construed as a single agreement. The provisions of
the
<PAGE> 2
Stockholders' Agreement, as amended and modified by the provisions of this
First Amendment, are incorporated herein by this reference and are ratified and
affirmed.
IN WITNESS WHEREOF, this First Amendment has been executed and
delivered by the Company and the Stockholders as of the date first written
above.
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H. CLARK
---------------------------------------
Name: Stephen H. Clark
Title: President
WHITNEY EQUITY PARTNERS, L.P.
By: J. H. Whitney Equity Partners, LLC,
Its General Partner
By: /s/ DANIEL J. O'BRIEN
----------------------------------------
Name: Daniel J. O'Brien
A Managing Member
J. H. WHITNEY III, L.P.
By: J. H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ DANIEL J. O'BRIEN
----------------------------------------
Name: Daniel J. O'Brien
A Managing Member
<PAGE> 3
WHITNEY STRATEGIC PARTNERS III, L.P.
By: J. H. Whitney Equity Partners III, LLC
Its General Partner
By: /s/ DANIEL J. O'BRIEN
----------------------------------------
Name: Daniel J. O'Brien
A Managing Member
WALLER-SUTTON MEDIA PARTNERS, L.P.
By: Waller-Sutton Media, LLC
Its General Partner
By: /s/ ANDREW J. ARMSTRONG, JR.
----------------------------------------
Title: General Partner
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III
By: Kitty Hawk Partners Limited
Partnership, III,
Its General Partner
By: /s/ W. CHRIS HEGELE
----------------------------------------
Name: W. Chris Hegele
A General Partner
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, IV
By: Kitty Hawk Partners LLC, IV
Its General Partner
By: /s/ W. CHRIS HEGELE
----------------------------------------
Name: W. Chris Hegele
A Manager
<PAGE> 4
EAGLE CREEK CAPITAL, L.L.C.
By: /s/ SUSAN L. RASINSKI
----------------------------------------
Name: Susan L. Rasinski
A Manager
/s/ STEPHEN H. CLARK
--------------------------------------------
STEPHEN H. CLARK
/s/ ROBERT M. LONG
--------------------------------------------
ROBERT M. LONG
FINLEY FAMILY PARTNERSHIP
By: /s/ JOE L. FINLEY III
----------------------------------------
Name: Joe L. Finley III
Title: General Partner
THE NORTH CAROLINA ENTERPRISE
FUND, L.P.
By: The North Carolina Enterprise
Corporation,
General Partner
By: /s/ CHARLES T. CLOSSON
----------------------------------------
Name: Charles T. Closson
Title: President & CEO
/s/ EDWARD J. LUTKEWICH
--------------------------------------------
EDWARD J. LUTKEWICH
<PAGE> 5
/s/ JACK W. JACKMAN
--------------------------------------------
JACK W. JACKMAN
/s/ ALTON D. ECKERT
--------------------------------------------
ALTON D. ECKERT
/s/ WILLIAM R. GUPTON
--------------------------------------------
WILLIAM R. GUPTON
<PAGE> 1
Exhibit 10.8
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), made effective
as of May 12, 1997, by Integrated Site Development, Inc., a Delaware
corporation (the "Corporation"), and Joe L. Finley, III (the "Executive"), an
individual residing in Saline County, Arkansas.
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in all aspects of wireless
communications site acquisition, tower development and ownership, site
management, co-location marketing, project management, and site maintenance;
WHEREAS, by virtue of Executive's demonstrated and expected experience
and service to the Corporation, the Corporation wishes to employ Executive, and
Executive desires to accept employment with the Corporation, all upon the terms
and conditions enumerated below;
WHEREAS, as a part of said employment by the Corporation, Executive is
expected to make new contributions and inventions of value to the Corporation
and Executive will otherwise have access to confidential and proprietary
information of the Corporation;
WHEREAS, the Corporation desires to receive from Executive a covenant
not to disclose certain information relating to the Corporation's business and
certain other covenants;
WHEREAS, the obligations of the Corporation pursuant to the Membership
Interests Contribution Agreement, of even date herewith, by and among the
Corporation and Executive, Caroline M. Finley, Finley Family Limited
Partnership, Central Arkansas Opportunity Foundation, Telesite Services, LLC
and Metrosite Management, LLC are conditioned upon and subject to the
Corporation and Executive entering into this Agreement; and
WHEREAS, Executive is the owner, of record and beneficially, of
490,517 shares of the Common Stock, par value $0.001 per share, of the
Corporation (the "Shares").
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises herein contained, and of other good and valuable consideration,
including the employment of Executive by the Corporation and the compensation
received by Executive from the Corporation from time to time, and specifically
the compensation to be received by the Executive pursuant to paragraphs 5(a),
(c) and (d) herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending legally to be bound, hereby agree
as follows:
1. EMPLOYMENT. The Corporation hereby employs Executive and
Executive hereby accepts employment upon the terms and conditions hereinafter
set forth. Upon termination of this Agreement as provided herein, Executive's
employment with the Corporation shall immediately terminate. Executive agrees
to serve as the Vice President of the Corporation and as
<PAGE> 2
the Vice Chairman of the Board of Directors of the Corporation. Executive's
principal responsibilities are set forth on Exhibit A attached hereto.
2. TERM. Subject to the provisions for termination that are
hereinafter provided, the term of this Agreement shall be deemed to have
commenced on May 12, 1997 (the "Effective Date") and shall continue until May
31, 1999, and thereafter shall automatically be renewed on a year-to-year basis
on the same terms and conditions set forth herein unless terminated as provided
herein or unless amended or modified by mutual agreement of the parties hereto.
(As used throughout this Agreement, "Term" shall include the initial term and
any renewals or extensions thereof in accordance with this Agreement).
3. DUTIES. Executive shall faithfully perform all duties set forth
on Exhibit A hereto and in the Bylaws of the Corporation related to the
position or positions held and those additional duties that are prescribed from
time to time by the Board of Directors, the Chairman of the Board, or other
designated parties within the Corporation.
4. EXCLUSIVE SERVICE. Executive agrees to devote substantially all
of his full time and attention to the performance of his duties and
responsibilities on behalf of the Corporation and in furtherance of only its
best interests. Executive agrees to comply with all policies, standards and
regulations of the Corporation now existing or hereafter promulgated.
5. COMPENSATION. During the Term of this Agreement, Executive's
compensation shall be determined and paid as follows (all payments are subject
to required withholding):
(a) Base Salary. Executive shall receive as compensation
a salary of Three Hundred Fifty Thousand Dollars ($350,000.00) per
year for the initial term to be paid consistent with the payroll
payment schedule of the Corporation. Thereafter, Executive's salary
will be subject to annual review by the Board of Directors of the
Corporation based on merit and area job size benchmarking.
(b) Benefits. In addition to Executive's salary,
Executive shall receive those benefits provided from time-to-time to
other executive employees of the Corporation. All such benefits are
subject to change from time-to-time by the Corporation without the
consent of Executive or any other employee of the Corporation.
(c) Vacation. Executive shall be entitled to two (2)
weeks paid vacation per fiscal year (with the vacation for any partial
year being prorated). Vacation days may not be used in any subsequent
fiscal year and no cash shall be paid in lieu of unused vacation.
(d) Business Expenses. The Corporation shall pay all
reasonable expenses incurred by Executive directly related to conduct
of the business of the Corporation, provided Executive complies with
the policies for reimbursement or advance of business expenses
established by the Board of Directors of the Corporation, which shall
include at a minimum providing reasonable evidence of such expenses
and the business reason for such expenses.
2
<PAGE> 3
6. TERMINATION. This Agreement shall or may be terminated, as the
case may be, upon the terms and conditions hereinafter provided. Upon
termination, all salary due as of the date of termination shall be paid:
(a) Voluntary Termination. This Agreement shall be
considered voluntarily terminated by the parties upon the occurrence
of any of the following events, whichever shall first occur:
(i) If Executive or the Corporation shall have given
written notice to the other of intention not to renew this
Agreement for the coming year, such notice to be delivered at
least ninety (90) days prior to the last day of the initial
term or any renewal term.
(ii) At any time on or after May 31, 1999 upon
ninety (90) days, prior written notice by the Corporation or
Executive to the other that this Agreement shall be
terminated.
(b) Involuntary Termination. The Corporation may
terminate this Agreement upon notice in writing to Executive (or his
personal representative) in any of the following events:
(i) In the event of the death of Executive, in which
case this Agreement immediately shall be terminated; provided
such termination shall not prejudice any benefits payable to
Executive's spouse or beneficiaries which are fully vested as
of the date of death.
(ii) In the event of the permanent disability (as
hereinafter defined) of Executive, in which case this
Agreement immediately shall be terminated; provided such
termination shall not prejudice any benefits payable to
Executive, Executive's spouse or beneficiaries which are fully
vested as of the date of permanent disability.
(iii) In the event of the liquidation, dissolution
or discontinuance of business by the Corporation in any manner
or the filing of any petition by or against the Corporation
under any federal or state bankruptcy or insolvency laws,
which petition shall not be dismissed within sixty (60) days
after filing; provided such termination shall not prejudice
Executive's rights as a shareholder or a creditor of the
Corporation.
(iv) At the election of the Corporation "for cause",
as hereinafter defined, immediately upon written notice to
Executive. "For cause" shall mean:
(1) Any material breach of the terms of this
Agreement by Executive, or the failure of Executive
to diligently and properly perform his duties for the
Corporation which is not otherwise cured or remedied
within thirty (30) days of Executive's receipt of
written notice from the Corporation alleging such
breach or failure (the foregoing cure period
3
<PAGE> 4
shall apply only if such breach or failure is curable
and only to the first two (2) such alleged breaches
or failures); or
(2) Any material failure to comply with the
policies and/or directives of the Board of Directors
which is not otherwise cured or remedied within
thirty (30) days of Executive's receipt of written
notice from the Corporation alleging such breach or
default (the foregoing cure period shall apply only
if such failure is curable and only to the first two
(2) such alleged failures); or
(3) Any dishonest or illegal action
(including, without limitation, embezzlement) or any
other action whether or not dishonest or illegal by
Executive which is materially detrimental to the
interest and well-being of the Corporation,
including, without limitation, harm to its
reputation; or
(4) Executive fails to fully disclose any
material conflict of interest he may have with the
Corporation in a transaction between the Corporation
and any third party which is materially detrimental
to the interest and well-being of the Corporation; or
(5) Any adverse act or omission which would
be required to be disclosed pursuant to public
securities laws or which would limit the ability of
the Corporation or any entity affiliated with the
Corporation to sell securities under any Federal or
state law or which would disqualify the Corporation
or any affiliated entity from any exemption otherwise
available to it, all of which are materially
detrimental to the interest and well-being of the
Corporation.
7. PERMANENT DISABILITY DEFINED. For purposes of this Agreement,
Executive shall be considered permanently disabled when a qualified medical
doctor mutually acceptable to the Corporation and Executive or his personal
representative shall have certified in writing that: (i) he is unable because
of a medically determinable physical or mental disability to perform
substantially all of his duties for more than ninety (90) calendar days
measured from the last full day of work; or (ii) by reason of mental or
physical disability, it is unlikely that he will be able, within ninety (90)
calendar days, to resume substantially all business duties and responsibilities
in which he was previously engaged and otherwise discharge his duties under
this Agreement.
8. CONFIDENTIALITY AND COVENANT NOT TO COMPETE.
(a) Confidentiality. Executive acknowledges that, in and
as a result of his employment by the Corporation, he has been and will
be making use of, acquiring and/or adding to confidential information
of a special and unique nature and value, including, without
limitation, the Corporation's trade secrets, products, systems,
programs, procedures, manuals, guides (as periodically updated or
supplemented), confidential reports and communications (including,
without limitation, customer information, technical information on the
performance and reliability of the Corporation's products and the
development or acquisition of future products or product enhancements
by the
4
<PAGE> 5
Corporation) and lists of customers, as well as the nature and type of
the services rendered by the Corporation and the fees paid by the
Corporation's customers. Executive further acknowledges that any
information and materials received by the Corporation or Executive
from third parties in confidence (or subject to non-disclosure
covenants) shall be deemed to be and shall be confidential information
within the meaning of this Section 8(a). As a material inducement to
the Corporation to continue to employ Executive and to pay to
Executive compensation as set forth herein for such services to be
rendered to the Corporation by Executive (it being understood and
agreed by the parties hereto that such compensation shall also be paid
and received in consideration hereof), Executive covenants and agrees
that he shall not, except with the prior written consent of the Board
of Directors of the Corporation, at any time during or following the
termination of his employment with the Corporation, directly or
indirectly, divulge, use, reveal, report, publish, transfer or
disclose, for any purpose whatsoever, any of such confidential
information which has been obtained by or disclosed to him as a result
of his employment with the Corporation, including, without limitation,
any Proprietary Information, as defined in Section 9 hereof. The
aforementioned obligation of confidentiality and non-disclosure shall
not apply when:
(i) Public Domain. The Proprietary Information
disclosed to Executive was in the public domain at the time of
disclosure, or at any time after disclosure has become a part
of the public domain by publication or otherwise through
sources other than Executive, directly or indirectly, and
without fault on the part of Executive in failing to keep such
information confidential; or
(ii) Requirement of Law or Order. Disclosure is
required by law or court order or required in the opinion of
Executive's counsel, provided Executive gives the Corporation
prior written notice of any such disclosure and fully
cooperates with the Corporation in connection with, and uses
his best efforts to limit the nature and extent of, such
disclosure; or
(iii) Agreement. Disclosure is made with the prior
written agreement of the Board of Directors of the
Corporation; or
(iv) Prior Information. The information was in
Executive's possession prior to the Effective Date, as shown
by written records in existence prior to the Effective Date;
or
(v) Third Party Disclosure. The Proprietary
Information is lawfully disclosed to Executive after the
termination of his employment by a third party who is under no
obligation of confidentiality to the Corporation with respect
to such information; or
(vi) Independently Developed. Such information is
independently developed by Executive subsequent to the
termination of his employment with the Corporation, as
demonstrated by written records of Executive which are
contemporarily maintained.
5
<PAGE> 6
(b) Covenant Not To Compete. It is recognized and understood
by the parties hereto that Executive, through his association with the
Corporation as an employee, has and shall acquire a considerable
amount of knowledge and goodwill with respect to the business of the
Corporation, which knowledge and goodwill are extremely valuable to
the Corporation and which would be extremely detrimental to the
Corporation if used by Executive to compete with the Corporation. It
is, therefore, understood and agreed by the parties hereto that,
because of the nature of the business of the Corporation, it is
necessary to afford fair protection to the Corporation from such
unfair competition by Executive. Consequently, as material inducement
to employ Executive in the aforementioned position, Executive
covenants and agrees to the following:
(i) that at any time while engaged as an employee
of the Corporation and for a period of three (3) years
following his termination, he will not, directly or
indirectly, with or through any family member or former
director, officer or employee of the Corporation, or acting
alone or as a director, employee, agent, consultant, member of
a partnership, firm, corporation or other entity or as a
holder of or investor in as much as 5% of any security of any
class of any corporation or other business entity:
(1) engage anywhere in those states in which
the Corporation conducted business at any time within three
(3) years prior to the termination of Executive's employment
with the Corporation in any business related to wireless
communications site acquisition, tower development and
ownership, site management, co-location marketing, project
management, and site maintenance then being actively pursued
or reasonably anticipated to be pursued by the Corporation at
the time of such termination; or
(2) interfere with, or seek to interfere
with, the relationship between the Corporation and any
affiliate of the Corporation with the following: (a) any of
the employees of such entities; (b) any of the customers of
such entities then existing or existing at any time within two
(2) years prior to termination of Executive's employment with
the Corporation; or (c) any of the suppliers of such entities
then existing or existing at any time within three (3) years
prior to termination of Executive's employment with the
Corporation.
(ii) The parties hereto agree that in the event
that the lengths of time and geographic areas set forth in
paragraph (i) are deemed too restrictive to be enforceable in
any court proceeding, the court may reduce such time
restrictions to that which it deems reasonable under the
circumstances.
9. DEFINITION OF PROPRIETARY INFORMATION. For purposes of this
Agreement, the term "Proprietary Information" shall mean all of the following
materials and information (whether or not reduced to writing and whether or not
patentable or protectable by copyright) which Executive receives, receives
access to, conceives of or develops, in whole or in part, as a direct or
indirect result of his employment with the Corporation, in the course of his
employment with the Corporation (in any capacity, whether executive,
managerial, planning,
6
<PAGE> 7
technical, sales, research, development, manufacturing, engineering, or
otherwise) or through the use of any of the Corporation's facilities or
resources:
(a) Manufactured products, assembled or unassembled, and
related goods or systems thereof and any and all future products
developed or derived therefrom;
(b) With respect to the items described in Section 9(a)
above, all specifications, design concepts, documents and manuals; all
security systems relating to the product or procedures; all hardware
and software (and associated source and object codes) relating to
their design or manufacture, if any;
(c) Trade secrets, production processes, marketing
techniques, software programs, marketing plans, formulae, data,
mailing lists, purchasing information, price lists, pricing policies,
quoting procedures, financial information, customer and prospect names
and requirements, customer data, customer site information, pricing
strategies and other materials or information relating to the manner
in which the Corporation does business;
(d) Discoveries, concepts and ideas, whether or not
patentable or protectable by copyright, including, without limitation,
the nature and results of research and development activities,
technical information on product or program performance and
reliability, processes, formulas, techniques, "know-how", source
codes, object codes, designs, drawings and specifications;
(e) Any other materials or information related to the
business or activities of the Corporation which are not generally
known to others engaged in similar businesses or activities;
(f) Any other materials or information that has been
created, discovered or developed, or otherwise become known to the
Corporation which has commercial value in the business in which the
Corporation is engaged; and
(g) All ideas which are derived from or relate to
Executive's access to or knowledge of any of the above-enumerated
materials and information.
Failure to mark any of the Proprietary Information as confidential
shall not affect its status as Proprietary Information under the terms of this
Agreement.
10. OWNERSHIP OF INFORMATION.
(a) Executive hereby assigns to the Corporation all of
Executive's right, title and interest in any idea (whether or not
patentable or protectable by copyright), invention, product, design,
formula, computer software program or other computer-related equipment
or technology, conceived or developed in whole or in part, or in which
Executive may have aided development, while employed by the
Corporation, including, without limitation, any Proprietary
Information (an "Invention"). If any one or more of the
aforementioned are deemed in any way to fall within the definition of
"work made by
7
<PAGE> 8
hire" as such term is defined in 17 U.S.C. Section 101, such work
shall be considered "work made for hire," copyright of which shall be
owned solely by, or assigned or transferred completely and exclusively
to the Corporation. Executive agrees to execute any instruments and
to do all other things reasonably requested by the Corporation (both
during and after Executive's employment with the Corporation) in order
to more fully vest in the Corporation all ownership rights in those
items thereby transferred by Executive to the Corporation. Executive
further agrees to disclose immediately to the Corporation all
Proprietary Information conceived of or developed in whole or in part
by him during the term of his employment with the Corporation and to
assign to the Corporation any right, title or interest he may have in
such Proprietary Information.
(b) Notwithstanding anything in this Agreement to the
contrary, the obligation of Executive to assign or offer to assign his
rights in an Invention to the Corporation shall not extend or apply to
an Invention that Executive developed entirely on his own time without
using the Corporation's equipment, supplies, facility or trade secret
information unless such Invention (i) relates to the Corporation's
business or actual or demonstrably anticipated research or
development, or (ii) results from any work performed by Executive for
the Corporation. Executive shall bear the burden of proof in
establishing that his Invention qualifies for exclusion under this
Section 10(b). With respect to Section 10(b) it is agreed and
acknowledged that during Executive's employment, the Corporation, with
the concurrence of its Board of Directors and consistent with the
Corporation's mission, may enter other lines of business, which are
related or unrelated to its current lines of business, in which case
this Agreement would be expanded to cover such new lines of business.
11. INDEMNIFICATION. Executive agrees to indemnify and hold
harmless the Corporation, its directors, officers, agents and employees from
and against any liabilities and expenses, including amounts paid in settlement,
incurred by any of them in connection with any claim by any of Executive's
prior employers that the termination of Executive's employment with such
employer, Executive's employment by the Corporation, or use of any skills and
knowledge of Executive by the Corporation is a violation of contract or law.
12. EXECUTIVE REPRESENTATIONS.
(a) Executive represents that his performance of all of
the terms of this Agreement, Employee's employment by the Corporation,
or Employee's use of any skills and knowledge does not and will not
breach any agreement to keep in confidence proprietary information
acquired by Executive in confidence or in trust prior to Executive's
employment by the Corporation. Executive represents that he has not
entered into, and agrees not to enter into, any agreement either oral
or written in conflict herewith.
(b) Executive understands as part of the consideration
for this Agreement and for Executive's employment or continued
employment by the Corporation, that Executive has not brought and will
not bring with Executive to the Corporation, or use in the performance
of Executive's responsibilities for the Corporation, any materials or
documents of a former employer which are not generally available to
the public or which
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<PAGE> 9
did not belong to Executive prior to his employment with the
Corporation, unless Executive has obtained written authorization from
the former employer or other owner for their possession and use and
provided the Corporation with a copy thereof.
(c) Executive understands that during his employment for
the Corporation he is not to breach any obligation of confidentiality
that Executive has to a former employer or any other person or entity.
13. RECORDS. All notes, data, tapes, reference materials,
sketches, drawings, memoranda, models and records in any way relating to any of
the information referred to in Sections 8, 9 and 10 hereof (including without
limitation, any Proprietary Information) or to the Corporation's business shall
belong exclusively to the Corporation and Executive agrees to turn over to the
Corporation all such materials and all copies of such materials in his
possession or then under his control at the request of the Corporation or, in
the absence of such request, upon the termination of Executive's employment
with the Corporation.
14. REASONABLENESS OF RESTRICTIONS.
(a) Executive has carefully read and considered the
provisions of Sections 8, 9 and 10 hereof and, having done so, agrees
that the restrictions set forth therein are fair and reasonable and
are reasonably required for the protection of the interests of the
Corporation, its officers, directors, stockholders and employees.
Executive agrees that the length of time, geographic area and any
other restrictions contained in this Agreement are reasonable to
protect the legitimate interests of the Corporation and do not
unfairly restrict or penalize Executive.
(b) In the event that, notwithstanding the foregoing, any
part of the covenants set forth in Sections 8 through 13 hereof shall
be held to be invalid and unenforceable, the court so deciding may
reduce or limit the terms of such provision to allow such provision to
be enforced.
15. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions, nor shall any waiver or relinquishment of any
right or power granted hereunder at any particular time be deemed a waiver or
relinquishment of such rights or power at any time or times. Each party agrees
and acknowledges that nothing herein shall be construed to prohibit the other
party from pursuing any remedies available to it for breach or threatened
breach of this Agreement, including the recovery of money damages.
16. REMEDY. Executive understands and agrees that the Corporation
will suffer irreparable harm in the event that Executive breaches any of his
obligations under this Agreement and that monetary damages will be inadequate
to compensate the Corporation for such breach. Accordingly, Executive agrees
that, in the event of a breach or threatened breach by Executive of any of the
provisions of this Agreement, the Corporation, in addition to and not in
limitation of any other rights, remedies or damages available to the
Corporation at law or in equity, shall be entitled to a permanent injunction in
order to prevent or to restrain any such breach by Executive, or by Executive's
partners, agents, representatives, servants, employers,
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<PAGE> 10
employees and/or any and all persons directly or indirectly acting for or with
him; provided such injunction shall not affect Executive's ownership rights in
the Corporation or compensation earned or due Executive.
17. ATTORNEYS' FEES. In the event that it shall become necessary for
either party to retain the services of an attorney to enforce any terms under
this Agreement, the prevailing party, in addition to all other rights and
remedies hereunder or as provided by law, shall be entitled to reasonable
attorneys' fees and costs of suit.
18. SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and the invalidity or unenforceability of any provision (or
part thereof) of this Agreement shall in no way affect the validity or
enforceability of any other provision (or remaining part thereof).
19. GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Arkansas, without reference to
the choice of law provisions of such laws.
20. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing and sent by certified or registered mail, return
receipt requested, first-class postage prepaid, in the case of Executive, to
his address as shown on the Corporation's records, and in the case of the
Corporation, to its principal office in the State of North Carolina.
21. BENEFIT. This Agreement shall be binding upon and shall inure
to the benefit of each of the parties hereto, and to their respective heirs,
representatives, successors and permitted assigns. This Agreement shall be
binding upon the Corporation and upon any successor corporation. Executive may
not assign any of his rights or delegate any of his duties under this Agreement
without the prior written consent of the Board of Directors of the Corporation.
22. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understandings by and between the Corporation and Executive with
respect to the covenants herein described, and no representations, promises,
agreements or understandings, written or oral, not herein contained shall be of
any force or effect. No change or modification hereof shall be valid or
binding unless the same is in writing and signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless the same is in
writing and signed by the party against whom such waiver is sought to be
enforced; moreover, no valid waiver of any other provision of this Agreement at
any time shall be deemed a waiver of any other provision of this Agreement at
such time nor will it be deemed a valid waiver of such provision at any other
time.
23. CAPTIONS. The captions in this Agreement are for convenience
only and in no way define, bind or describe the scope or intent of this
Agreement.
24. SURVIVAL OF COVENANTS. The provisions set forth in Sections 8
through 13 hereof shall survive the termination of this Agreement.
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[THE REMAINDER OF THIS PAGE IS INENTIONALLY LEFT BLANK.]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Employment Agreement and affixed their seals as of the day and year first above
written.
INTEGRATED SITE DEVELOPMENT, INC.
By: /s/ Stephen H. Clark
-------------------------------
Stephen H. Clark, President
EXECUTIVE:
/s/ Joe L. Finley III
-----------------------------------
Joe L. Finley, III
12
<PAGE> 13
EXHIBIT A
PRINCIPAL RESPONSIBILITIES
a. Assist CEO with identifying and qualifying new opportunities
b. Assisting with corporate marketing to service providers
c. Assist with development of strategic plans
d. Participate in the development of corporate presentations
e. Participate in strengthening and developing client
relationships at the management level
f. Oversee Metrosite Management, LLC operations
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<PAGE> 1
Exhibit 10.9
ASSIGNMENT AND AMENDMENT OF EMPLOYMENT AGREEMENT
This Assignment and Amendment of Employment Agreement (the
"Agreement") is made as of October 31, 1997 by and between SpectraSite
Holdings, Inc. f/k/a Integrated Site Development, a Delaware corporation
("SpectraSite Holdings"), SpectraSite Communications, Inc., a Delaware
corporation and a wholly-owned subsidiary of Holdings ("SpectraSite
Communications"), and Joe L. Finley, III (the "Executive").
In consideration of the mutual agreements contained herein, the
parties agree as follows:
1. Assignment of Employment Agreement. SpectraSite Holdings
hereby assigns, sells, transfers, and delivers to SpectraSite Communications
all of the right, title, and interest of SpectraSite Holdings in, and delegates
to SpectraSite Communications all of the duties, obligations, and liabilities
of SpectraSite Holdings under, the Executive Employment Agreement (the
"Employment Agreement"), dated as of May 12, 1997, by SpectraSite Holdings and
the Executive to have and to hold the same, upon and subject to the covenants,
terms, and conditions contained therein for the remainder of the term thereof.
A photocopy of the Employment Agreement is attached as an Exhibit hereto.
2. Assumption of Employment Agreement. SpectraSite
Communications hereby assumes the Employment Agreement for the remainder of the
term thereof, accepts and agrees to satisfy all of the duties, obligations, and
liabilities of SpectraSite Holdings thereunder, including without limitation,
all liabilities for the payment of the amounts provided therein and agrees to
perform all of the covenants, terms, and conditions contained therein.
3. Amendment of Employment Agreement. All references in the
Employment Agreement to the "Corporation," as defined in the Employment
Agreement, shall be deemed to refer to SpectraSite Communications. The second
sentence of Section 1 of the Employment Agreement is hereby deleted in its
entirety and replaced with the following: Executive agrees to serve as the
Vice President of the Corporation and as the Vice Chairman of SpectraSite
Holdings.
4. Consent to Assignment. The Executive hereby consents to and
approves the assignment of the Employment Agreement by SpectraSite Holdings to
SpectraSite Communications.
5. Additional Documents. From and after the date hereof, each of
the parties shall, at the request of any other party, prepare, execute and
deliver to such other party such additional documents and instruments and take
such action as such other party may deem reasonably necessary to further effect
or evidence any of the transactions
<PAGE> 2
contemplated herein. All costs and expenses reasonably and necessarily
incurred by any party in connection with the preparation of any such documents
and instruments or the taking of any such action shall be borne by the party
requesting the same.
6. Effect of Agreement. This Agreement shall be binding on and
inure to the respective benefit of each of the parties hereto and his or its
respective heirs, successors, and assigns.
7. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision.
8. Modification. No provision of this Agreement, including the
provisions of this Paragraph, may be modified, deleted or amended in any manner
except by an agreement in writing executed by all of the parties hereto.
9. Construction. This Agreement is executed and delivered in the
State of Arkansas and shall be construed and enforced in accordance with the
laws of such State without regard to its rules with respect to choice of laws.
10. Original Copies. This Agreement is executed in more than one
counterpart, each of which shall be deemed an original.
11. Headings. The underlined headings herein are for convenience
only and shall not affect the interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the date written above.
SPECTRASITE HOLDINGS, INC.
BY: /s/ Stephen H. Clark
-----------------------------------
Stephen H. Clark, President
SPECTRASITE COMMUNICATIONS, INC.
BY: /s/ Stephen H. Clark
-----------------------------------
Stephen H. Clark, President
/s/ Joe L. Finley III
--------------------------------------------
Joe L. Finley, III
<PAGE> 1
Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made effective as of May
12, 1997, by Telesite Services LLC, an Arkansas limited liability company (the
"Corporation"), and Tracy Gill (the "Employee"), an individual residing in
Pulaski County, Arkansas.
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in all aspects of wireless
communications site acquisition, tower development and ownership, site
management, co-location marketing, project management, and site maintenance;
WHEREAS, by virtue of Employee's demonstrated and expected experience
and service to the Corporation, the Corporation wishes to employ Employee, and
Employee desires to accept employment with the Corporation, all upon the terms
and conditions enumerated below;
WHEREAS, as a part of said employment by the Corporation, Employee is
expected to make new contributions and inventions of value to the Corporation
and Employee will otherwise have access to confidential and proprietary
information of the Corporation; and
WHEREAS, the Corporation desires to receive from Employee a covenant
not to disclose certain information relating to the Corporation's business and
certain other covenants.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises herein contained, and of other good and valuable consideration,
including the employment of Employee by the Corporation and the compensation
received by Employee from the Corporation from time to time, and specifically
the compensation to be received by the Employee pursuant to paragraphs 5(a),
(c) and (d) herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending legally to be bound, hereby agree
as follows:
1. EMPLOYMENT. The Corporation hereby employs Employee and Employee
hereby accepts employment upon the terms and conditions hereinafter set forth.
Upon termination of this Agreement as provided herein, Employee's employment
with the Corporation shall immediately terminate. Employee agrees to serve as
the President of the Corporation. Employee's principal responsibilities are
set forth on Exhibit A attached hereto.
2. TERM. Subject to the provisions for termination that are
hereinafter provided, the term of this Agreement shall be deemed to have
commenced on May 12, 1997 (the "Effective Date") and shall continue until May
31, 1998, and thereafter shall automatically be renewed on a year-to-year basis
on the same terms and conditions set forth herein unless terminated as provided
herein or unless amended or modified by mutual agreement of the parties hereto.
(As used throughout this Agreement, "Term" shall include the initial term and
any renewals or extensions thereof in accordance with this Agreement).
<PAGE> 2
3. DUTIES. Employee shall faithfully perform all duties set forth on
Exhibit A hereto and in the Bylaws of the Corporation related to the position
or positions held and those additional duties that are prescribed from time to
time by the Board of Directors, the Chairman of the Board, or other designated
parties within the Corporation.
4. EXCLUSIVE SERVICE. Employee agrees to devote substantially all of
his full time and attention to the performance of his duties and
responsibilities on behalf of the Corporation and in furtherance of only its
best interests. Employee agrees to comply with all policies, standards and
regulations of the Corporation now existing or hereafter promulgated.
5. COMPENSATION. During the Term of this Agreement, Employee's
compensation shall be determined and paid as follows (all payments are subject
to required withholding):
(a) Base Salary. Employee shall receive as compensation
a salary of One Hundred Four Thousand Dollars ($104,000) for the first
calendar year of the Term to be paid consistent with the payroll
payment schedule of the Corporation. Employee's salary will be
subject to annual review by the Board of Directors of the Corporation
based on merit and area job size benchmarking.
(b) Benefits. In addition to Employee's salary, Employee
shall receive those benefits provided from time-to-time to other
Employee employees of the Corporation. All such benefits are subject
to change from time-to-time by the Corporation without the consent of
Employee or any other employee of the Corporation. Notwithstanding
the foregoing, the Corporation shall contribute an annual amount equal
to fifty percent (50%) of the cost of dependent care coverage under
the then existing health insurance coverage plan maintained by the
Corporation.
(c) Performance Based Stock Options or Bonuses. In the
event the Corporation institutes a performance based stock option or
bonus program, Employee will be entitled to participate on a
comparable basis, taking into account the relative duties and
compensation of the top management participating in the program. Any
such benefit established would be subject to change from time-to-time
by the Corporation without the consent of Employee or any other
employee of the Corporation.
(d) Vacation. Employee shall be entitled to two (2)
weeks paid vacation per fiscal year (with the vacation for any partial
year being prorated). Vacation days may not be used in any subsequent
fiscal year and no cash shall be paid in lieu of unused vacation.
(e) Business Expenses. The Corporation shall pay all
reasonable expenses incurred by Employee directly related to conduct
of the business of the Corporation, provided Employee complies with
the policies for reimbursement or advance of business expenses
established by the Board of Directors of the Corporation, which shall
include at a minimum providing reasonable evidence of such expenses
and the business reason for such expenses.
(f) Automobile. The Corporation shall provide Employee
with the use of a leased automobile. The Corporation shall insure the
automobile under such fleet liability
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<PAGE> 3
and casualty insurance policies as may be maintained by it from time
to time. Pursuant to Section 5(e) hereof, the Corporation shall pay
or reimburse Employee for fuel, tolls, parking, repairs, and other
costs and expenses reasonably and necessarily incurred by Employee in
connection with the use and operation of such automobile in the
performance of the services rendered by him hereunder.
6. TERMINATION. This Agreement shall or may be terminated, as
the case may be, upon the terms and conditions hereinafter provided.
(a) Voluntary Termination. This Agreement shall be
considered voluntarily terminated by the parties upon the occurrence
of any of the following events, whichever shall first occur:
(i) If Employee or the Corporation shall have given
written notice to the other of intention not to renew this
Agreement for the coming year, such notice to be delivered at
least ninety (90) days prior to the last day of the initial
term or any renewal term. Upon such termination, all salary
due through the last day of the initial term or the then
current renewal term shall be paid.
(ii) At any time upon ninety (90) days prior written
notice by the Corporation or Employee to the other that this
Agreement shall be terminated. Upon such termination by
Employee, all salary due as of the date of termination shall
be paid. Upon such termination by the Corporation, all salary
due through the last day of the initial term or the then
current renewal term shall be paid.
(b) Involuntary Termination. The Corporation may
terminate this Agreement upon notice in writing to Employee "for
cause," as hereinafter defined, immediately upon written notice to
Employee. "For cause" shall mean:
(1) Any material breach of the terms of
this Agreement by Employee, or the failure of
Employee to diligently and properly perform his
duties for the Corporation which is not cured or
otherwise remedied within thirty (30) days of the
Employee's receipt of written notice alleging such
breach or failure (the foregoing cure period shall
apply only if such breach or failure is curable and
only to the first two (2) alleged breaches or
failure); or
(2) Any material failure to comply with
the policies and/or directives of the Board of
Directors which is not cured or otherwise remedied
within thirty (30) days of the Employee's receipt of
written notice alleging such failure (the foregoing
cure period shall apply only if such failure is
curable and only to the first two (2) alleged
failures); or
(3) Any dishonest or illegal action
(including, without limitation, embezzlement) or any
other action whether or not dishonest or illegal by
Employee which is materially detrimental to the
interest and
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<PAGE> 4
well-being of the Corporation, including, without
limitation, harm to its reputation; or
(4) Employee fails to fully disclose any
material conflict of interest he may have with the
Corporation in a transaction between the Corporation
and any third party which is materially detrimental
to the interest and well-being of the Corporation; or
(5) Any adverse act or omission which
would be required to be disclosed pursuant to public
securities laws or which would limit the ability of
the Corporation or any entity affiliated with the
Corporation to sell securities under any Federal or
state law or which would disqualify the Corporation
or any affiliated entity from any exemption otherwise
available to it, all of which are materially
detrimental to the interest and well-being of the
Corporation.
Upon such termination, all salary due as of the date of termination
shall be paid.
7. CONFIDENTIALITY AND COVENANT NOT TO COMPETE.
(a) Confidentiality. Employee acknowledges that, in and
as a result of his employment by the Corporation, he has been and will
be making use of, acquiring and/or adding to confidential information
of a special and unique nature and value, including, without
limitation, the Corporation's trade secrets, products, systems,
programs, procedures, manuals, guides (as periodically updated or
supplemented), confidential reports and communications (including,
without limitation, customer information, technical information on the
performance and reliability of the Corporation's products and the
development or acquisition of future products or product enhancements
by the Corporation) and lists of customers, as well as the nature and
type of the services rendered by the Corporation and the fees paid by
the Corporation's customers. Employee further acknowledges that any
information and materials received by the Corporation or Employee from
third parties in confidence (or subject to non-disclosure covenants)
shall be deemed to be and shall be confidential information within the
meaning of this Section 7(a). As a material inducement to the
Corporation to continue to employ Employee and to pay to Employee
compensation as set forth herein for such services to be rendered to
the Corporation by Employee (it being understood and agreed by the
parties hereto that such compensation shall also be paid and received
in consideration hereof), Employee covenants and agrees that he shall
not, except with the prior written consent of the Board of Directors
of the Corporation, at any time during or following the termination of
his employment with the Corporation, directly or indirectly, divulge,
use, reveal, report, publish, transfer or disclose, for any purpose
whatsoever, any of such confidential information which has been
obtained by or disclosed to him as a result of his employment with the
Corporation, including, without limitation, any Proprietary
Information, as defined in Section 8 hereof. The aforementioned
obligation of confidentiality and non-disclosure shall not apply when:
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<PAGE> 5
(i) Public Domain. The Proprietary Information
disclosed to Employee was in the public domain at the time of
disclosure, or at any time after disclosure has become a part
of the public domain by publication or otherwise through
sources other than Employee, directly or indirectly, and
without fault on the part of Employee in failing to keep such
information confidential; or
(ii) Requirement of Law or Order. Disclosure is
required by law or court order or otherwise required in the
opinion of the Employee's counsel, provided Employee gives the
Corporation prior written notice of any such disclosure and
fully cooperates with the Corporation in connection with, and
use his best efforts to limit the nature and extent of such
disclosure; or
(iii) Agreement. Disclosure is made with the prior
written agreement of the Board of Directors of the
Corporation; or
(iv) Prior Information. The information was in
Employee's possession prior to the Effective Date, as shown by
written records in existence prior to the Effective Date; or
(v) Third Party Disclosure. The Proprietary
Information is lawfully disclosed to Employee after the
termination of his employment by a third party who is under no
obligation of confidentiality to the Corporation with respect
to such information; or
(vi) Independently Developed. Such information is
independently developed by Employee subsequent to the
termination of his employment with the Corporation, as
demonstrated by written records of Employee which are
contemporarily maintained.
(b) Covenant Not To Compete. It is recognized and understood
by the parties hereto that Employee, through his association with the
Corporation as an employee, has and shall acquire a considerable
amount of knowledge and goodwill with respect to the business of the
Corporation, which knowledge and goodwill are extremely valuable to
the Corporation and which would be extremely detrimental to the
Corporation if used by Employee to compete with the Corporation. It
is, therefore, understood and agreed by the parties hereto that,
because of the nature of the business of the Corporation, it is
necessary to afford fair protection to the Corporation from such
unfair competition by Employee. Consequently, as material inducement
to employ Employee in the aforementioned position, Employee covenants
and agrees to the following:
(i) that at any time while engaged as an employee
of the Corporation and, if Employee voluntarily terminates
this Agreement or the Corporation terminates this Agreement
"for cause," for the period of the initial term or the then
current renewal term, he will not, directly or indirectly,
with or through any family member or former director, officer
or employee of the Corporation, or acting alone or as a
director, employee, agent, consultant, member of a
partnership, firm, corporation or other entity or as a holder
of or investor in as
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<PAGE> 6
much as 5% of any security of any class of any corporation or
other business entity:
(1) engage anywhere in those states in which
the Corporation conducted business at any time within three
(3) years prior to the termination of Employee's employment
with the Corporation in any business related to wireless
communications site acquisition, tower development and
ownership, site management, co-location marketing, project
management, and site maintenance then being actively pursued
or reasonably anticipated to be pursued by the Corporation at
the time of such termination; or
(2) interfere with, or seek to interfere
with, the relationship between the Corporation and any
affiliate of the Corporation with the following: (a) any of
the employees of such entities; (b) any of the customers of
such entities then existing or existing at any time within two
(2) years prior to termination of Employee's employment with
the Corporation; or (c) any of the suppliers of such entities
then existing or existing at any time within three (3) years
prior to termination of Employee's employment with the
Corporation.
(ii) The parties hereto agree that in the event
that the lengths of time and geographic areas set forth in
paragraph (i) are deemed too restrictive to be enforceable in
any court proceeding, the court may reduce such time
restrictions to that which it deems reasonable under the
circumstances.
8. DEFINITION OF PROPRIETARY INFORMATION. For purposes of this
Agreement, the term "Proprietary Information" shall mean all of the following
materials and information (whether or not reduced to writing and whether or not
patentable or protectable by copyright) which Employee receives, receives
access to, conceives of or develops, in whole or in part, as a direct or
indirect result of his employment with the Corporation, in the course of his
employment with the Corporation (in any capacity, whether Employee, managerial,
planning, technical, sales, research, development, manufacturing, engineering,
or otherwise) or through the use of any of the Corporation's facilities or
resources:
(a) Manufactured products, assembled or unassembled, and
related goods or systems thereof and any and all future products
developed or derived therefrom;
(b) With respect to the items described in Section 8(a)
above, all specifications, design concepts, documents and manuals; all
security systems relating to the product or procedures; all hardware
and software (and associated source and object codes) relating to
their design or manufacture, if any;
(c) Trade secrets, production processes, marketing
techniques, software programs, marketing plans, formulae, data,
mailing lists, purchasing information, price lists, pricing policies,
quoting procedures, financial information, customer and prospect names
and requirements, customer data, customer site information, pricing
strategies and
6
<PAGE> 7
other materials or information relating to the manner in which the
Corporation does business;
(d) Discoveries, concepts and ideas, whether or not
patentable or protectable by copyright, including, without limitation,
the nature and results of research and development activities,
technical information on product or program performance and
reliability, processes, formulas, techniques, "know-how", source
codes, object codes, designs, drawings and specifications;
(e) Any other materials or information related to the
business or activities of the Corporation which are not generally
known to others engaged in similar businesses or activities;
(f) Any other materials or information that has been
created, discovered or developed, or otherwise become known to the
Corporation which has commercial value in the business in which the
Corporation is engaged; and
(g) All ideas which are derived from or relate to
Employee's access to or knowledge of any of the above-enumerated
materials and information.
Failure to mark any of the Proprietary Information as confidential
shall not affect its status as Proprietary Information under the terms of this
Agreement.
9. OWNERSHIP OF INFORMATION.
(a) Employee hereby assigns to the Corporation all of
Employee's right, title and interest in any idea (whether or not
patentable or protectable by copyright), invention, product, design,
formula, computer software program or other computer-related equipment
or technology, conceived or developed in whole or in part, or in which
Employee may have aided development, while employed by the
Corporation, including, without limitation, any Proprietary
Information (an "Invention"). If any one or more of the
aforementioned are deemed in any way to fall within the definition of
"work made by hire" as such term is defined in 17 U.S.C. Section 101,
such work shall be considered "work made for hire," copyright of which
shall be owned solely by, or assigned or transferred completely and
exclusively to the Corporation. Employee agrees to execute any
instruments and to do all other things reasonably requested by the
Corporation (both during and after Employee's employment with the
Corporation) in order to more fully vest in the Corporation all
ownership rights in those items thereby transferred by Employee to the
Corporation. Employee further agrees to disclose immediately to the
Corporation all Proprietary Information conceived of or developed in
whole or in part by him during the term of his employment with the
Corporation and to assign to the Corporation any right, title or
interest he may have in such Proprietary Information.
(b) Notwithstanding anything in this Agreement to the
contrary, the obligation of Employee to assign or offer to assign his
rights in an Invention to the Corporation shall not extend or apply to
an Invention that Employee developed entirely on his own time without
using the Corporation's equipment, supplies, facility or trade secret
information
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<PAGE> 8
unless such Invention (i) relates to the Corporation's business or
actual or demonstrably anticipated research or development, or (ii)
results from any work performed by Employee for the Corporation.
Employee shall bear the burden of proof in establishing that his
Invention qualifies for exclusion under this Section 9(b). With
respect to Section 9(b) it is agreed and acknowledged that during
Employee's employment, the Corporation, with the concurrence of its
Board of Directors and consistent with the Corporation's mission, may
enter other lines of business, which are related or unrelated to its
current lines of business, in which case this Agreement would be
expanded to cover such new lines of business.
10. INDEMNIFICATION. Employee agrees to indemnify and hold
harmless the Corporation, its directors, officers, agents and employees from
and against any liabilities and expenses, including amounts paid in settlement,
incurred by any of them in connection with any claim by any of Employee's prior
employers that the termination of Employee's employment with such employer,
Employee's employment by the Corporation, or use of any skills and knowledge of
Employee by the Corporation is a violation of contract or law.
11. EMPLOYEE REPRESENTATIONS.
(a) Employee represents that his performance of all of
the terms of this Agreement, Employee's employment by the Corporation,
or Employee's use of any skills or knowledge does not and will not
breach any agreement to keep in confidence proprietary information
acquired by Employee in confidence or in trust prior to Employee's
employment by the Corporation. Employee represents that he has not
entered into, and agrees not to enter into, any agreement either oral
or written in conflict herewith.
(b) Employee understands as part of the consideration for
this Agreement and for Employee's employment or continued employment
by the Corporation, that Employee has not brought and will not bring
with Employee to the Corporation, or use in the performance of
Employee's responsibilities for the Corporation, any materials or
documents of a former employer which are not generally available to
the public or which did not belong to Employee prior to his employment
with the Corporation, unless Employee has obtained written
authorization from the former employer or other owner for their
possession and use and provided the Corporation with a copy thereof.
(c) Employee understands that during his employment for
the Corporation he is not to breach any obligation of confidentiality
that Employee has to a former employer or any other person or entity.
12. RECORDS. All notes, data, tapes, reference materials,
sketches, drawings, memoranda, models and records in any way relating to any of
the information referred to in Sections 7, 8 and 9 hereof (including without
limitation, any Proprietary Information) or to the Corporation's business shall
belong exclusively to the Corporation and Employee agrees to turn over to the
Corporation all such materials and all copies of such materials in his
possession or then under his control at the request of the Corporation or, in
the absence of such request, upon the termination of Employee's employment with
the Corporation.
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<PAGE> 9
13. REASONABLENESS OF RESTRICTIONS.
(a) Employee has carefully read and considered the
provisions of Sections 7, 8 and 9 hereof and, having done so, agrees
that the restrictions set forth therein are fair and reasonable and
are reasonably required for the protection of the interests of the
Corporation, its officers, directors, stockholders and employees.
Employee agrees that the length of time, geographic area and any other
restrictions contained in this Agreement are reasonable to protect the
legitimate interests of the Corporation and do not unfairly restrict
or penalize Employee.
(b) In the event that, notwithstanding the foregoing, any
part of the covenants set forth in Sections 7 through 12 hereof shall
be held to be invalid and unenforceable, the court so deciding may
reduce or limit the terms of such provision to allow such provision to
be enforced.
14. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions, nor shall any waiver or relinquishment of any
right or power granted hereunder at any particular time be deemed a waiver or
relinquishment of such rights or power at any time or times. Each party agrees
and acknowledges that nothing herein shall be construed to prohibit the other
party from pursuing any remedies available to it for breach or threatened
breach of this Agreement, including the recovery of money damages.
15. REMEDY. Employee understands and agrees that the Corporation
will suffer irreparable harm in the event that Employee breaches any of his
obligations under this Agreement and that monetary damages will be inadequate
to compensate the Corporation for such breach. Accordingly, Employee agrees
that, in the event of a breach or threatened breach by Employee of any of the
provisions of this Agreement, the Corporation, in addition to and not in
limitation of any other rights, remedies or damages available to the
Corporation at law or in equity, shall be entitled to a permanent injunction in
order to prevent or to restrain any such breach by Employee, or by Employee's
partners, agents, representatives, servants, employers, employees and/or any
and all persons directly or indirectly acting for or with him; provided such
injunction shall not affect Employee's ownership rights in the Corporation or
compensation earned or due Employee.
16. ATTORNEYS' FEES. In the event that it shall become necessary for
either party to retain the services of an attorney to enforce any terms under
this Agreement, the prevailing party, in addition to all other rights and
remedies hereunder or as provided by law, shall be entitled to reasonable
attorneys' fees and costs of suit.
17. SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and the invalidity or unenforceability of any provision (or
part thereof) of this Agreement shall in no way affect the validity or
enforceability of any other provision (or remaining part thereof).
9
<PAGE> 10
18. GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Arkansas, without reference to
the choice of law provisions of such laws.
19. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing and sent by certified or registered mail, return
receipt requested, first-class postage prepaid, in the case of Employee, to his
address as shown on the Corporation's records, and in the case of the
Corporation, to its principal office in the State of North Carolina.
20. BENEFIT. This Agreement shall be binding upon and shall inure
to the benefit of each of the parties hereto, and to their respective heirs,
representatives, successors and permitted assigns. This Agreement shall be
binding upon the Corporation and upon any successor corporation. Employee may
not assign any of his rights or delegate any of his duties under this Agreement
without the prior written consent of the Board of Directors of the Corporation.
21. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understandings by and between the Corporation and Employee with
respect to the covenants herein described, and no representations, promises,
agreements or understandings, written or oral, not herein contained shall be of
any force or effect. No change or modification hereof shall be valid or
binding unless the same is in writing and signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless the same is in
writing and signed by the party against whom such waiver is sought to be
enforced; moreover, no valid waiver of any other provision of this Agreement at
any time shall be deemed a waiver of any other provision of this Agreement at
such time nor will it be deemed a valid waiver of such provision at any other
time.
22. CAPTIONS. The captions in this Agreement are for convenience
only and in no way define, bind or describe the scope or intent of this
Agreement.
23. SURVIVAL OF COVENANTS. The provisions set forth in Sections 7
through 12 hereof shall survive the termination of this Agreement.
[The remainder of this page is intentionally left blank.]
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Employee
Employment Agreement and affixed their seals as of the day and year first above
written.
TELESITE SERVICES, LLC
By: /s/ Stephen H. Clark
-------------------------------
Stephen H. Clark, Chairman
EMPLOYEE:
/s/ Tracy Gill
-----------------------------------
Tracy Gill
11
<PAGE> 12
EXHIBIT A
PRINCIPAL RESPONSIBILITIES
a. Manage the operations of Telesite Services, LLC
b. Develop responses to requests for quotation from service
providers
c. Participate in developing strategies for Telesite Services, LLC
d. Review contracts
e. Participate in strengthening and developing client
relationships at the management level
f. Coordinate inter-company projects
12
<PAGE> 1
Exhibit 10.11
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (the "Agreement"),
made effective as of May 12, 1997, by and between Integrated Site Development,
Inc., a Delaware corporation (the "Corporation"), and Stephen H. Clark
("Clark"), an individual residing in Wake County, North Carolina.
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in all aspects of wireless
communications site acquisition, tower development and ownership, site
management, co-location marketing, project management, and site maintenance;
WHEREAS, as a part of said employment by the Corporation, Clark is
expected to make new contributions and inventions of value to the Corporation
and Clark will otherwise have access to confidential and proprietary
information of the Corporation;
WHEREAS, the Corporation desires to receive from Clark a covenant not
to disclose certain information relating to the Corporation's business and
certain other covenants;
WHEREAS, the obligations of Whitney Equity Partners, L.P., a Delaware
limited partnership, and Kitty Hawk Capital Limited Partnership, III, a
Delaware limited partnership, pursuant to the Stock Purchase Agreement, of even
date herewith, by and among the Purchasers, the Corporation, U.S. Towers, Inc.,
a Delaware corporation, Telesite Services, LLC, an Arkansas limited liability
company, and Metrosite Management LLC, an Arkansas limited liability company,
are conditioned upon and subject to the Corporation's and Clark's entering into
this Agreement; and
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises herein contained, and of other good and valuable consideration,
including the employment of Clark by the Corporation, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:
1. CONFIDENTIALITY. Clark acknowledges that, in and as a result of
his employment by the Corporation, he has been and will be making use of,
acquiring and/or adding to confidential information of a special and unique
nature and value, including, without limitation, the Corporation's trade
secrets, products, systems, programs, procedures, manuals, guides (as
periodically updated or supplemented), confidential reports and communications
(including, without limitation, customer information, technical information on
the performance and reliability of the Corporation's products and the
development or acquisition of future products or product enhancements by the
Corporation) and lists of customers, as well as the nature and type of the
services rendered by the Corporation and the fees paid by the Corporation's
customers. Clark further acknowledges that any information and materials
received by the Corporation or Clark from third parties in confidence (or
subject to non-disclosure covenants) shall be deemed to be and shall be
confidential information within the
<PAGE> 2
meaning of this Section 1. As a material inducement to the Corporation to
continue to employ Clark, Clark covenants and agrees that he shall not, except
with the prior written consent of the Board of Directors of the Corporation, at
any time during or following the termination of his employment with the
Corporation, directly or indirectly, divulge, use, reveal, report, publish,
transfer or disclose, for any purpose whatsoever, any of such confidential
information which has been obtained by or disclosed to him as a result of his
employment with the Corporation, including, without limitation, any Proprietary
Information, as defined in Section 2 hereof. The aforementioned obligation of
confidentiality and non-disclosure shall not apply when:
(i) Public Domain. The Proprietary Information disclosed
to Clark was in the public domain at the time of disclosure, or at any
time after disclosure has become a part of the public domain by
publication or otherwise through sources other than Clark, directly or
indirectly, and without fault on the part of Clark in failing to keep
such information confidential; or
(ii) Requirement of Law or Order. Disclosure is required
by law or court order, provided Clark gives the Corporation prior
written notice of any such disclosure and fully cooperates with the
Corporation in connection with, and uses his best efforts to limit the
nature and extent of, such disclosure; or
(iii) Agreement. Disclosure is made with the prior written
agreement of the Board of Directors of the Corporation; or
(iv) Prior Information. The information was in Clark's
possession prior to the Effective Date, as shown by written records in
existence prior to the Effective Date; or
(v) Third Party Disclosure. The Proprietary Information
is lawfully disclosed to Clark after the termination of his employment
by a third party who is under no obligation of confidentiality to the
Corporation with respect to such information; or
(vi) Independently Developed. Such information is
independently developed by Clark subsequent to the termination of his
employment with the Corporation, as demonstrated by written records of
Clark which are contemporarily maintained.
2. COVENANT NOT TO COMPETE. It is recognized and understood by
the parties hereto that Clark, through his association with the Corporation as
an employee, has and shall acquire a considerable amount of knowledge and
goodwill with respect to the business of the Corporation, which knowledge and
goodwill are extremely valuable to the Corporation and which would be extremely
detrimental to the Corporation if used by Clark to compete with the
Corporation. It is, therefore, understood and agreed by the parties hereto
that, because of the nature of the business of the Corporation, it is necessary
to afford fair protection to the Corporation from such unfair competition by
Clark. Consequently, as material inducement to employ Clark in the
aforementioned position, Clark covenants and agrees to the following:
(i) that at any time while engaged as an employee of the
Corporation and for a period of three (3) years following his
termination, he will not, directly or indirectly, with or through any
family member or former director, officer or employee of the
2
<PAGE> 3
Corporation, or acting alone or as a director, employee, agent,
consultant, member of a partnership, firm, corporation or other entity
or as a holder of or investor in as much as 5% of any security of any
class of any corporation or other business entity:
(1) engage anywhere in those states in which the
Corporation conducted business at any time within three (3)
years prior to the termination of Clark's employment with the
Corporation (the "Noncompetition Area") in any business
related to wireless communications site acquisition, tower
development and ownership, site management, co-location
marketing, project management, and site maintenance then being
actively pursued or reasonably anticipated to be pursued by
the Corporation at the time of such termination; or
(2) interfere with, or seek to interfere with, the
relationship between the Corporation and any affiliate of the
Corporation with the following: (a) any of the employees of
such entities; (b) any of the customers of such entities then
existing or existing at any time within two (2) years prior to
termination of Clark's employment with the Corporation; or (c)
any of the suppliers of such entities then existing or
existing at any time within three (3) years prior to
termination of Clark's employment with the Corporation.
(ii) The parties hereto agree that in the event that the
Noncompetition Area set forth in paragraph (i) is deemed too
restrictive to be enforceable in any court proceeding, the court may
reduce the Noncompetition Area as follows:
(1) In the event that the Noncompetition
Area set forth in paragraph (i) is deemed too restrictive to
be enforceable in any court proceeding, the Noncompetition
Area shall be those counties in those states in which the
Corporation conducted business at any time within three (3)
years prior to the termination of Clark's employment with the
Corporation;
(2) In the event that the foregoing
Noncompetition Area is deemed too restrictive to be
enforceable in any court proceeding, the Noncompetition Area
shall be a radius of twenty-five (25) miles of any wireless
communication tower or system designed or constructed by the
Corporation or with respect to which the Corporation provided
site acquisition or project management services or site
maintenance services at any time within three (3) years prior
to the termination of Clark's employment with the Corporation;
or
(3) In the event that the foregoing
Noncompetition Area is deemed too restrictive to be
enforceable in any court proceeding, the Noncompetition Area
shall be a radius of ten (10) miles of any wireless
communication tower or system designed or constructed by the
Corporation or with respect to which the Corporation provided
site acquisition or project management services or site
maintenance services at any time within three (3) years prior
to the termination of Clark's employment with the Corporation;
or
3
<PAGE> 4
(iii) The parties hereto agree that in the event that the
lengths of time and geographic areas set forth in paragraphs (i) or
(ii) are deemed too restrictive to be enforceable in any court
proceeding, the court may reduce such time restrictions to that which
it deems reasonable under the circumstances.
3. DEFINITION OF PROPRIETARY INFORMATION. For purposes of this
Agreement, the term "Proprietary Information" shall mean all of the following
materials and information (whether or not reduced to writing and whether or not
patentable or protectable by copyright) which Clark receives, receives access
to, conceives of or develops, in whole or in part, as a direct or indirect
result of his employment with the Corporation, in the course of his employment
with the Corporation (in any capacity, whether executive, managerial, planning,
technical, sales, research, development, manufacturing, engineering, or
otherwise) or through the use of any of the Corporation's facilities or
resources:
(i) Manufactured products, assembled or unassembled, and
related goods or systems thereof and any and all future products
developed or derived therefrom;
(ii) With respect to the items described in Section 3(a)
above, all specifications, design concepts, documents and manuals; all
security systems relating to the product or procedures; all hardware
and software (and associated source and object codes) relating to
their design or manufacture, if any;
(iii) Trade secrets, production processes, marketing
techniques, software programs, marketing plans, formulae, data,
mailing lists, purchasing information, price lists, pricing policies,
quoting procedures, financial information, customer and prospect names
and requirements, customer data, customer site information, pricing
strategies and other materials or information relating to the manner
in which the Corporation does business;
(iv) Discoveries, concepts and ideas, whether or not
patentable or protectable by copyright, including, without limitation,
the nature and results of research and development activities,
technical information on product or program performance and
reliability, processes, formulas, techniques, "know-how", source
codes, object codes, designs, drawings and specifications;
(v) Any other materials or information related to the
business or activities of the Corporation which are not generally
known to others engaged in similar businesses or activities;
(vi) Any other materials or information that has been
created, discovered or developed, or otherwise become known to the
Corporation which has commercial value in the business in which the
Corporation is engaged; and
(vii) All ideas which are derived from or relate to Clark's
access to or knowledge of any of the above-enumerated materials and
information.
4
<PAGE> 5
Failure to mark any of the Proprietary Information as confidential
shall not affect its status as Proprietary Information under the terms of this
Agreement.
4. OWNERSHIP OF INFORMATION.
(a) Clark hereby assigns to the Corporation all of
Clark's right, title and interest in any idea (whether or not patentable or
protectable by copyright), invention, product, design, formula, computer
software program or other computer-related equipment or technology, conceived
or developed in whole or in part, or in which Clark may have aided development,
while employed by the Corporation, including, without limitation, any
Proprietary Information (an "Invention"). If any one or more of the
aforementioned are deemed in any way to fall within the definition of "work
made by hire" as such term is defined in 17 U.S.C. Section 101, such work shall
be considered "work made for hire," copyright of which shall be owned solely
by, or assigned or transferred completely and exclusively to the Corporation.
Clark agrees to execute any instruments and to do all other things reasonably
requested by the Corporation (both during and after Clark's employment with the
Corporation) in order to more fully vest in the Corporation all ownership
rights in those items thereby transferred by Clark to the Corporation. Clark
further agrees to disclose immediately to the Corporation all Proprietary
Information conceived of or developed in whole or in part by him during the
term of his employment with the Corporation and to assign to the Corporation
any right, title or interest he may have in such Proprietary Information.
(b) Notwithstanding anything in this Agreement to the
contrary, the obligation of Clark to assign or offer to assign his rights in an
Invention to the Corporation shall not extend or apply to an Invention that
Clark developed entirely on his own time without using the Corporation's
equipment, supplies, facility or trade secret information unless such Invention
(i) relates to the Corporation's business or actual or demonstrably anticipated
research or development, or (ii) results from any work performed by Clark for
the Corporation. Clark shall bear the burden of proof in establishing that his
Invention qualifies for exclusion under this Section 9(b). With respect to
Section 9(b) it is agreed and acknowledged that during Clark's employment, the
Corporation, with the concurrence of its Board of Directors and consistent with
the Corporation's mission, may enter other lines of business, which are related
or unrelated to its current lines of business, in which case this Agreement
would be expanded to cover such new lines of business.
5. REASONABLENESS OF RESTRICTIONS.
(a) Clark has carefully read and considered the
provisions of Sections 1 and 2 hereof and, having done so, agrees that the
restrictions set forth therein are fair and reasonable and are reasonably
required for the protection of the interests of the Corporation, its officers,
directors, stockholders and employees. Clark further acknowledges that the
nature of the Corporation's products are such that its natural market is
throughout the United States. Accordingly, Clark agrees that the length of
time, geographic area and any other restrictions contained in this Agreement
are reasonable to protect the legitimate interests of the Corporation and do
not unfairly restrict or penalize Clark.
5
<PAGE> 6
(b) In the event that, notwithstanding the foregoing, any
part of the covenants set forth in Sections 1 and 2 hereof shall be held to be
invalid and unenforceable, the court so deciding may reduce or limit the terms
of such provision to allow such provision to be enforced.
6. REMEDY. Clark understands and agrees that the Corporation
will suffer irreparable harm in the event that Clark breaches any of his
obligations under this Agreement and that monetary damages will be inadequate
to compensate the Corporation for such breach. Accordingly, Clark agrees that,
in the event of a breach or threatened breach by Clark of any of the provisions
of this Agreement, the Corporation, in addition to and not in limitation of any
other rights, remedies or damages available to the Corporation at law or in
equity, shall be entitled to a permanent injunction in order to prevent or to
restrain any such breach by Clark, or by Clark's partners, agents,
representatives, servants, employers, employees and/or any and all persons
directly or indirectly acting for or with him; provided such injunction shall
not affect Clark's ownership rights in the Corporation or compensation earned
or due Clark.
7. ATTORNEYS' FEES. In the event that it shall become necessary
for either party to retain the services of an attorney to enforce any terms
under this Agreement, the prevailing party, in addition to all other rights and
remedies hereunder or as provided by law, shall be entitled to reasonable
attorneys' fees and costs of suit.
8. RECOUPMENT OF PROFITS. Clark covenants and agrees that, if he
shall violate any of his covenants or agreements under this Agreement, the
Corporation shall be entitled to an accounting and repayment of all profits,
compensation, commissions, remunerations or benefits which Clark directly or
indirectly has realized and/or may realize as a result of, growing out of or in
connection with any such violation; such remedy shall be in addition to and not
in limitation of any other remedy, including without limitation, damages for
lost profits of the Corporation or any affiliates of the Corporation,
injunctive relief or other rights or remedies to which the Corporation is or
may be entitled at law, in equity or under this Agreement.
9. SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and the invalidity or unenforceability of any provision (or
part thereof) of this Agreement shall in no way affect the validity or
enforceability of any other provision (or remaining part thereof).
10. GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of North Carolina, without
reference to the choice of law provisions of such laws.
11. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing and sent by certified or registered mail, return
receipt requested, first-class postage prepaid, in the case of Clark, to his
address as shown on the Corporation's records, and in the case of the
Corporation, to its principal office in the State of North Carolina.
12. BENEFIT. This Agreement shall be binding upon and shall inure
to the benefit of each of the parties hereto, and to their respective heirs,
representatives, successors and permitted assigns. This Agreement shall be
binding upon the Corporation and upon any successor
6
<PAGE> 7
corporation. Clark may not assign any of his rights or delegate any of his
duties under this Agreement without the prior written consent of the Board of
Directors of the Corporation.
13. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understandings by and between the Corporation and Clark with
respect to the covenants herein described, and no representations, promises,
agreements or understandings, written or oral, not herein contained shall be of
any force or effect. No change or modification hereof shall be valid or
binding unless the same is in writing and signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless the same is in
writing and signed by the party against whom such waiver is sought to be
enforced; moreover, no valid waiver of any other provision of this Agreement at
any time shall be deemed a waiver of any other provision of this Agreement at
such time nor will it be deemed a valid waiver of such provision at any other
time.
14. CAPTIONS. The captions in this Agreement are for convenience
only and in no way define, bind or describe the scope or intent of this
Agreement.
15. SURVIVAL OF COVENANTS. The provisions set forth in Sections 1
and 2 hereof shall survive the termination of this Agreement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this
Confidentiality and Non-Competition Agreement and affixed their seals as of the
day and year first above written.
INTEGRATED SITE DEVELOPMENT, INC.
By: /s/ Robert M. Long
-------------------------------
Robert M. Long, Secretary
/s/ Stephen H. Clark
-------------------------------
Stephen H. Clark
8
<PAGE> 1
Exhibit 10.12
MEMBERSHIP INTERESTS PURCHASE AGREEMENT
BY AND AMONG
SPECTRASITE COMMUNICATIONS, INC.
AND
JEFFREY K. HAWKINS, EDWIN L. KEUCK,
AND
H&K INVESTMENTS, LLC
DATED
DECEMBER 31, 1997
<PAGE> 2
MEMBERSHIP INTERESTS PURCHASE AGREEMENT
THIS MEMBERSHIP INTERESTS PURCHASE AGREEMENT (together with the
Schedules and Exhibits hereto, the "Agreement"), dated December 31, 1997 and
effective January 1, 1998 (the "Effective Date"), is entered into by and among
SpectraSite Communications, Inc., a Delaware corporation ("SpectraSite"), and
Jeffrey K. Hawkins, an individual residing in Jackson County, Missouri
("Hawkins"), and Edwin L. Keuck, an individual residing in Jackson County,
Missouri ("Keuck"), and H&K Investments, LLC, a Missouri limited liability
company ("H&K").
WHEREAS, Hawkins and Keuck are the owners of all of the membership
interests in H&K (the "Membership Interests"), and Hawkins and Keuck are the
sole members of H&K;
WHEREAS, H&K is engaged in the business of owning and leasing space on
telecommunications towers;
WHEREAS, SpectraSite is engaged in all aspects of the
telecommunications tower business; and
WHEREAS, on the "Closing Date," as defined herein, Hawkins and Keuck
wish to sell to SpectraSite, and SpectraSite wishes to purchase from Hawkins
and Keuck, all of the Membership Interests for the consideration and pursuant
to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations, and warranties set forth herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
In addition to the other terms defined herein, the following
definitions will apply throughout this Agreement:
1.1 ACM's. The term "ACM's" has the meaning set forth in Section
3.19(b).
1.2 Affiliate. The term "Affiliate" has the meaning set forth in
Rule 405 of the Securities Act of 1933, as amended.
1.3 Claims. The term "Claims" has the meaning set forth in
Section 3.14.
1.4 Closing. The term "Closing" has the meaning set forth in
Section 9.1.
1.5 Closing Date. The term "Closing Date" has the meaning set
forth in Section 9.1.
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1.6 Deposit. The term "Deposit" has the meaning set forth in
Section 2.3.
1.7 Easements. The term "Easements" has the meaning set forth in
Section 3.9D.
1.8 Effective Date. The term "Effective Date" has the meaning set
forth in the Recitals hereof.
1.9 Escrow Agent. The term "Escrow Agent" has the meaning set
forth in Section 2.3.
1.10 Escrow Agreement. The term "Escrow Agreement" has the meaning
set forth in Section 2.3.
1.11 Environmental Laws. The term "Environmental Laws" has the
meaning set forth in Section 5.19.
1.12 Financial Statements. The term "Financial Statements" has the
meaning set forth in Section 3.6.
1.13 H&K. The term "H&K" has the meaning set forth in the Recitals
hereof.
1.14 H&K Agreements. The term "H&K Agreements" means all
agreements, documents and other instruments executed and delivered by H&K in
connection with the consummation of the transactions contemplated by this
Agreement.
1.15 H&K Indemnified Party. The term "H&K Indemnified Party" has
the meaning set forth in Section 10.2.
1.16 Hawkins. The term "Hawkins" has the meaning set forth in the
Recitals hereof.
1.17 Hawkins Agreements. The term "Hawkins Agreements" means all
agreements, documents and other instruments executed and delivered by Hawkins
in connection with the consummation of the transaction contemplated by this
Agreement.
1.18 Hazardous Materials. The term "Hazardous Materials" has the
meaning set forth in Section 3.19(b).
1.19 Improvements. The term "Improvements" has the meaning set
forth in Section 3.9B.
1.20 Indemnified Party. The term "Indemnified Party" has the
meaning set forth in Section 10.3.
1.21 Indemnity Obligor. The term "Indemnity Obligor" has the
meaning set forth in Section 10.3.
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1.22 Keuck. The term "Keuck" has the meaning set forth in the
Recitals hereof.
1.23 Keuck Agreements. The term "Keuck Agreements" means all
agreements, documents and other instruments executed and delivered by Hawkins
in connection with the consummation of the transaction contemplated by this
Agreement.
1.24 Leased Real Property. The term "Leased Real Property" has the
meaning set forth in Section 3.9A.
1.25 Loan Payments. The term "Loan Payments" has the meaning set
forth in Section 6.1.
1.26 Loss. The term "Loss" has the meaning set forth in Section
10.1(a).
1.27 Membership Interests. The term "Membership Interests" has the
meaning set forth in the Recitals hereof.
1.28 PCB's. The term "PCB's" has the meaning set forth in Section
3.19(e).
1.29 Permits. The term "Permits" has the meaning set forth in
Section 3.16.
1.30 Person. The term "person" means any individual, firm,
corporation, limited liability company, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, governmental
authority or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity.
1.31 Promissory Notes. The term "Promissory Notes" has the meaning
set forth in Section 2.3.
1.32 Purchase Price. The term "Purchase Price" has the meaning set
forth in Section 2.2.
1.33 Purchase Price Escrow. The term "Purchase Price Escrow" has
the meaning set forth in Section 2.3.
1.34 Real Property Leases. The term "Real Property Leases" has the
meaning set forth in Section 3.9A
1.35 Receivables. The term "Receivables" has the meaning set forth
in Section 3.12.
1.36 Representatives. The term "Representatives" has the meaning
set forth in Section 6.3.
1.37 Required Consents. The term "Required Consents" has the
meaning set forth in Section 3.5.
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1.38 Revenue Escrow. The term "Revenue Escrow" shall have the
meaning set forth in Section 6.1 hereof.
1.39 Rules. The term "Rules" has the meaning set forth in Section
3.15.
1.40 Specifications. The term "Specifications" has the meaning set
forth in Section 3.9C.
1.41 SpectraSite. The term "SpectraSite" has the meaning set forth
in the Recitals hereof.
1.42 SpectraSite Agreements. The term "SpectraSite Agreements"
means all agreements, documents and other instruments executed and delivered by
SpectraSite in connection with the consummation of the transaction contemplated
by this Agreement.
1.43 SpectraSite Indemnified Party. The term "SpectraSite
Indemnified Party" has the meaning set forth in Section 10.1(a).
1.44 Tax Returns. The term "Tax Returns" has the meaning set forth
in Section 3.18.
1.45 Taxes. The term "Taxes" has the meaning set forth in Section
3.18.
1.46 Tower Attachment Leases. The term "Tower Attachment Leases"
has the meaning set forth in Section 3.10.
1.47 Tower Sites. The term "Tower Sites" has the meaning set forth
in Section 3.9A.
1.48 Towers. The term "Towers" has the meaning set forth in
Section 3.9B.
1.49 Warranties. The term "Warranties" has the meaning set forth
in Section 3.9C.
ARTICLE II
PURCHASE OF SHARES AND PURCHASE PRICE
2.1 Purchase of Membership Interests. At the Closing, Hawkins and
Keuck shall sell to SpectraSite, and SpectraSite shall purchase from Hawkins
and Keuck, all of the Membership Interests.
2.2 Purchase Price. The aggregate purchase price of the
Membership Interests is $1,400,000.00 (the "Purchase Price")
2.3 Payment of Purchase Price. Simultaneously with the execution
and delivery of this Agreement, SpectraSite shall wire transfer immediately
available funds to H&K in the amount of $100,000.00 (the "Deposit"). H&K shall
hold the Deposit in trust and escrow as security for the performance by
SpectraSite of its obligations hereunder. Simultaneously with the execution
and delivery of this Agreement, the parties hereto and Bannister Bank and Trust
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Company (the "Escrow Agent") shall execute and deliver an Escrow Agreement in
the form attached hereto as Exhibit A (the "Escrow Agreement"). Simultaneously
with the execution and delivery of this Agreement, SpectraSite shall wire
transfer immediately available funds in the amount of $1,200,000.00 (the
"Purchase Price Escrow") to the Escrow Agent and the Escrow Agent shall hold
the Purchase Price Escrow pursuant to the terms and conditions hereof and the
terms and conditions of the Escrow Agreement. At the Closing, the Purchase
Price shall be satisfied and paid by SpectraSite as follows: (a) the Escrow
Agent shall wire transfer immediately available funds in the amount of one-half
(1/2) of the Purchase Price Escrow, less the amount of the Loan Payments, to
each of Hawkins and Keuck and (b) SpectraSite shall make and deliver to each of
Hawkins and Keuck a promissory note payable to their respective order in the
aggregate principal amount of $50,000.00, which shall bear interest at the rate
of nine percent (9.0%) per annum and shall be in the form attached hereto as
Exhibit B (collectively, the "Promissory Notes"). The Promissory Notes shall
be subject to offset by SpectraSite for indemnification claims pursuant to
Section 10.6 hereof. The amount of the Loan Payments shall be dispersed in
accordance with Sections 9.2(i) and 9.3(d) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HAWKINS, KEUCK, AND H&K
Hawkins, Keuck, and H&K jointly and severally represent and warrant to
SpectraSite as follows:
3.1 Organization and Good Standing. H&K is a limited liability
company duly organized and validly existing under the laws of the State of
Missouri. H&K has all requisite power and authority to own, operate, and lease
its assets and to conduct the operations of its business as presently
conducted. H&K is not required to qualify to conduct business as a foreign
corporation in any state. H&K has previously delivered to SpectraSite true and
complete copies of its Articles of Organization and Operating Agreement,
including all amendments thereto. H&K does not have any subsidiaries and does
not own any equity interest or any security convertible, exercisable, or
exchangeable into any equity interest of any Person.
3.2 Authority. Hawkins, Keuck, and H&K have the unrestricted
legal right and power to execute and deliver this Agreement, the Hawkins
Agreements, the Keuck Agreements, and the H&K Agreements, as the case may be,
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery, and performance of this Agreement and the H&K Agreements,
and the consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all necessary manager and member action.
This Agreement, the Hawkins Agreements, the Keuck Agreements, and the H&K
Agreements have been, or with respect to the Hawkins Agreements, the Keuck
Agreements, and the H&K Agreements to be executed at the Closing, will be duly
executed and delivered by the Hawkins, Keuck, and H&K, as the case may be, and
each constitutes, or will constitute when executed and delivered, a valid and
binding obligation of Hawkins, Keuck, and H&K, enforceable against Hawkins,
Keuck, and H&K, as the case may be, in accordance with its terms.
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3.3 Membership Interests. Hawkins and Keuck are the sole
beneficial and record owners of the Membership Interests, with each owning
fifty percent (50%) of such Membership Interests, free and clear of all
security interests, mortgages, liens, claims, and encumbrances of every kind.
There are no outstanding subscriptions, options, warrants, calls, puts, or
other agreements or instruments which may entitle or obligate Hawkins, Keuck,
H&K, or any other Person to acquire the Membership Interests or any other
membership interest in H&K.
3.4 No Conflict or Breach. The execution, delivery and
performance of this Agreement, the Hawkins Agreements, the Keuck Agreements,
and the H&K Agreements does not and will not:
(a) conflict with the Articles of Organization or
Operating Agreement of H&K;
(b) violate any law, statute, judgment, order, decree, or
regulation of any legislative body, court, administrative agency, governmental
authority, or arbitrator applicable to or relating to H&K, the Towers, or the
Improvements;
(c) conflict with, constitute a default under, result in
a breach or acceleration of or, except as set forth on Schedule 3.5, require
notice to or the consent of any third party under any of the Real Property
Leases or the Tower Attachment Leases or any other contract, agreement,
commitment, mortgage, note, license or other instrument or obligation to which
H&K is party or by which it is bound or by which the Towers or the Improvements
are affected; or
(d) result in the creation or imposition of any lien,
charge, or encumbrance of any nature whatsoever on any of the Towers or the
Improvements.
3.5 Consents and Approvals. Schedule 3.5 describes: (a) each
consent, approval, authorization, registration, or filing with any federal,
state or local judicial or governmental authority or administrative agency and
(b) each consent, approval, authorization of or notice to any other third
party, which is required in connection with the valid execution and delivery of
this Agreement or the consummation of the transactions contemplated herein or
therein (the items described in clauses (a) and (b), collectively, the
"Required Consents").
3.6 Financial Statements. H&K has previously delivered to
SpectraSite a true and complete copy of its unaudited Balance Sheet as of
October 31, 1997 (the "Financial Statements"). The Financial Statements: (a)
are true, complete and correct; (b) are in accordance with the books and
records of H&K; (c) present fairly the assets, liabilities and financial
condition of H&K as of the respective dates thereof, and the results of
operations for the periods then ending; and (d) have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved.
H&K has no liability or obligation, whether accrued, absolute, or
contingent that is not reflected or reserved against in the Financial
Statements, except for those that are not required by generally accepted
accounting principles to be included therein. Any items of income or expense
which are unusual or of a nonrecurring nature are separately disclosed in the
Financial
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Statements. H&K has not received from any of its certified public accountants
letters to the management of H&K with respect to the Financial Statements.
3.7 Books and Records. The books and records of H&K relating to
its business and assets are true, accurate, and complete in all material
respects.
3.8 Inventory and Personal Property. H&K does not own any
inventory, machinery, equipment, tools, furniture, office equipment, supplies,
materials, vehicles, or any other personal property other than such personal
property as may be included in the Improvements.
3.9 Real Property, Towers, and Improvements.
A. H&K does not own any real property. Schedule 3.9(A)
contains: (i) a complete list of all leases for the real property leased by
H&K (the "Real Property Leases"), true and complete copies of which have been
previously delivered by H&K to SpectraSite and (ii) with respect to each of the
Real Property Leases, a true and complete description of all real property that
is leased by H&K thereunder (the "Leased Real Property"), including a separate
true and complete description of the portion on which each of the Towers and
the Improvements is located (the "Tower Sites"). Each of the Real Property
Leases is valid, binding, and enforceable in accordance with its terms and is
in full force and effect, and there are no offsets or defenses by either
landlord or H&K thereunder. There are no existing defaults, and no events or
circumstances have occurred which, with or without notice or lapse of time or
both, would constitute defaults, under any of the Real Property Leases. The
execution, delivery and performance of this Agreement, the Hawkins Agreements,
the Keuck Agreements, and the H&K Agreements does not and will not, with
respect to any such Real Property Lease: (i) permit the landlord to accelerate
the rent or cause the lease terms to be renegotiated; (ii) constitute a default
thereunder; or (iii) require the consent of the landlord thereunder or any
third party.
Other than H&K and the lessees under the Tower Attachment
Leases, there are no parties in possession of any portion of the Leased Real
Property as lessees, subtenants, tenants at sufferance, or trespassers.
B. Schedule 3.9(B) contains: (i) a true and complete
description, including the type and height, of each of the towers that is
located on the Leased Real Property (the "Towers"); (ii) a true and complete
description of all buildings, equipment shelters, fixtures, antenna,
communications equipment, and other improvements located on the Leased Real
Property and the Towers (the "Improvements"); and (iii) a true and complete
description of all Improvements that H&K is required to construct within six
(6) months after the Effective Date pursuant to the Tower Attachment Leases.
H&K is the sole owner of the Towers free and clear of all
security interests, mortgages, liens, claims, and encumbrances of every kind
except those listed on Schedule 3.9(C), all of which shall be removed at or
prior to the Closing.
The lessee under the applicable Tower Attachment Lease is the
owner of the Improvements subject only to customary security interests,
mortgages, liens, claims, and
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encumbrances of every kind. The Improvements are being used, occupied, and
maintained by H&K and the owner thereof in accordance with all applicable
Easements, Real Property Leases, Tower Attachment Leases, permits, insurance
requirements, restrictions, ordinances, zoning laws, building setback lines,
covenants, and reservations.
Each of the Leased Real Properties is serviced by all public
utilities adequate in type and capacity to serve the Towers consistent with
past practice.
None of the Leased Real Properties, nor any portion thereof,
is subject to any pending suit for condemnation or other taking by any public
authority, and to the best knowledge of H&K, Hawkins, and Keuck, no such
condemnation or other taking is threatened or contemplated.
Each of the Towers (including guy anchors and wires) and the
Improvements, and any fence surrounding the same, are located wholly within the
Tower Site and do not encroach any other real property. No portion of the
Tower Site has been leased or subleased (except pursuant to the Tower
Attachment Leases), including for grazing purposes. No Tower Site is located
within an area that has been designated by the Federal Insurance
Administration, the Army Corps of Engineers, or the Federal Emergency
Management Administration, or any other governmental authority as being subject
to any special or increases flooding hazards.
H&K has previously delivered to SpectraSite true and complete
copies of all deeds, title opinions, title insurance policies, surveys, and
copies of all reports of engineers, environmental consultants, or other
consultants in its possession that relate to the Leased Real Property.
C. H&K has previously delivered to SpectraSite true and
complete copies of the construction contracts, specifications (the
"Specifications"), and the warranties (the "Warranties") for the Towers and the
Improvements. Each of the Towers and the Improvements was constructed in
accordance with, and as of the date hereof meets and complies with, the
Specifications in all respects. Each of the Towers and the Improvements is free
from structural and mechanical defects and is in good operating order,
condition and ordinary wear and tear excepted, is suitable for immediate use in
the ordinary course of H&K's business, is free from defects, is merchantable
and is of a quality and quantity presently usable in the ordinary course of
H&K's business. None of the Towers or the Improvements is in need of repair or
replacement other than as part of routine maintenance in the ordinary course of
business.
Each of the Warranties is valid, binding, and enforceable in
accordance with its terms and is in full force and effect, and there are no
offsets or defenses by either the party making the Warranty or H&K thereunder.
There are no existing defaults, and no events or circumstances have occurred
which, with or without notice or lapse of time or both, would constitute
defaults, under any of the Warranties. The execution, delivery and performance
of this Agreement, the Hawkins Agreements, the Keuck Agreements, and the H&K
Agreements does not and will not, with respect to any such Warranty: (i)
invalidate such Warranty; (ii) constitute a default thereunder or (iii) require
the consent of the party making the Warranty or any other Person.
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D. Schedule 3.9(D) contains: (i) a complete list of all surface
easements located on or used in connection with the Leased Real Property (the
"Easements"), true and complete copies of the documents creating the Easements
have been previously delivered by H&K to SpectraSite and (ii) with respect to
each of the Easements, the name of the grantor and grantee thereof, the date of
grant thereof, and the term thereof. The Person identified on Schedule 3.9(D)
as the grantee under each of the Easements is the original grantee or has
validly succeeded to the rights of the original grantee thereof and has good
and valid title to such Easement, free and clear of all security interests,
mortgages, liens, claims, and encumbrances of every kind. Each of the
Easements is in full force and effect and has been paid for in full. No events
or circumstances have occurred which, with or without notice of lapse of time
or both, would constitute defaults, under any of the Easements. The execution,
delivery and performance of this Agreement, the Hawkins Agreements, the Keuck
Agreements, and the H&K Agreements does not and will not, with respect to any
such Easement: (i) invalidate such Easement; (ii) constitute a default
thereunder or (iii) require the consent of the grantor thereof or any third
party.
Each of the Tower Sites has direct pedestrian and vehicular access to
public roads with the use of any easement, license, or right of way other than
as provided in the Real Property Leases. Such access is the only access that
has been needed by H&K to conduct its business during the twelve (12) month
period prior to the Effective Date.
3.10 Tower Attachment Leases. Schedule 3.10 contains: (i) a
complete list of all leases for the rental of space on the Towers (the "Tower
Attachment Leases"), true and complete copies of which have been previously
delivered by H&K to SpectraSite; (ii) with respect to each of the Tower
Attachment Leases, a true and complete description of all space that is leased
thereunder and all of the equipment that is attached to the Towers pursuant
thereto and (iii) with respect to each of the Tower Attachment Leases, a list
of all monthly rental and other revenue payable to H&K thereunder. Each of the
Tower Attachment Leases is valid, binding, and enforceable in accordance with
its terms and is in full force and effect. There are no existing defaults, and
no events or circumstances have occurred which, with or without notice or lapse
of time or both, would constitute defaults, under any of the Tower Attachment
Leases. The execution, delivery, and performance of this Agreement, the
Hawkins Agreements, the Keuck Agreements, and the H&K Agreements does not and
will not, with respect to any Tower Attachment Lease: (i) constitute a default
thereunder, (ii) require the consent of any person or party; or (iii) affect
the continuation, validity and effectiveness thereof or the terms thereof.
3.11 Contracts. Except for the Real Property Leases and the Tower
Attachment Leases, H&K is not a party to, and the Towers and the Improvements
are not bound or affected by, any other contracts, commitments, agreements
(including, without limitation, agreements for the borrowing of money or the
extension of credit, licenses, understandings and obligations) whether written
or oral, except as described on Schedule 3.9(C).
3.12 Receivables. All accounts receivable and trade accounts due
to H&K in connection with its business consist of lease payments due to H&K
under the Tower Attachment Leases all of which are reflected on the Financial
Statements (the "Receivables"). All Receivables owing on the Effective Date
are, and to be owing at the Closing Date will be, legal, valid, and binding
obligations, of the respective lessees under the applicable Tower Attachment
Lease. All Receivables owing on the Effective Date are, and to be owing at the
Closing Date
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will be, collectible in full within the time period set forth in the applicable
Tower Attachment Lease. There are no set-offs, counterclaims, or disputes
asserted with respect to any Receivable and no discount or allowance from any
Receivable has been made or agreed to.
3.13 Intellectual Property. H&K does not own or license from any
Person, and does not use in the conduct of its business, any intellectual
property rights, including: (a) trademarks, service marks, trade names, logos,
and other designations; (b) copyrights; (c) inventions that are the subject of
letters patent or applications therefor; and (d) confidential or proprietary
processes, formulas, technical data, and other information that is of
commercial value to H&K.
3.14 Litigation. There are no claims, actions, suits, arbitration
proceedings, inquiries, hearings, injunctions, or investigations ("Claims")
pending, or to the best knowledge of Hawkins, Keuck, and H&K, threatened,
against H&K, its operations or its business. No Claims have been brought
within the last two years against H&K or its business, or affecting the Towers,
or relating to H&K's ownership, use, or operation of the Towers. There are no
facts or circumstances which could serve as the basis for any Claim against H&K
involving its business or the Towers, or, by virtue of the execution, delivery
and performance of this Agreement, against SpectraSite.
3.15 Compliance with Decrees and Laws. There is no outstanding or,
to the best knowledge of Hawkins, Keuck, and H&K, threatened, order, writ,
injunction, or decree of any court, governmental agency or arbitration tribunal
against or involving H&K or its business or the Towers. H&K is currently, and
has been at all times, in full compliance with all laws, statutes (including,
without limitation, the Federal Communications Act of 1934, as amended, and the
rules and regulations promulgated pursuant thereto), rules, regulations,
orders, and licensing requirements ("Rules") of federal, state, local and
foreign agencies and authorities applicable to the business, properties and
operations of H&K (including, without limitation, those relating to antitrust
and trade regulation, civil rights, labor and discrimination, safety and
health). To the best knowledge of Hawkins, Keuck, and H&K, there has been no
allegation of any violation of any such Rules, and no investigation or review
by any federal, state or local body or agency is pending, threatened or planned
with respect to H&K or its business or the Towers.
3.16 Permits. H&K has obtained all permits, authorizations,
certificates, approvals, licenses, exemptions, and classifications (including
those issued by the Federal Aviation Administration and the Federal
Communications Commission) required for the conduct of its business and the
ownership and operation of the Towers (the "Permits"), all of which are listed
on Schedule 3.16 and true and complete copies of which H&K has previously
delivered to SpectraSite. Each of the permits is in full force and effect, and
H&K has paid all fees and other amounts due and owing in connection with the
Permits. H&K is not in violation of any of the Permits, and no proceedings are
pending or, to the best knowledge of Hawkins, Keuck, and H&K, threatened, to
revoke or limit any of the Permits. There are no existing defaults, and no
events or circumstances have occurred which, with or without notice or lapse of
time or both, would constitute defaults, under any of the Permits. The Permits
are free and clear of all security interests, liens, claims, and encumbrances
of every kind.
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3.17 Customers. No lessee under any of the Tower Attachment Leases
has any present intention to terminate such Tower Attachment Lease or to
otherwise discontinue or materially alter its relationship with H&K as a result
of the consummation of the transactions contemplated by this Agreement or
otherwise.
3.18 Taxes. H&K has properly completed, duly and timely filed in
correct form with the appropriate United States, state, and local governmental
agencies and with the appropriate foreign countries and political subdivisions
thereof, all tax returns, reports and declarations of estimated tax (the "Tax
Returns") required to be filed before the Closing Date. All of the Tax Returns
are accurate, complete, and correct as filed, and H&K has paid in full or made
adequate provision in the Financial Statements for all amounts shown to be due
thereon. All United States, state, and local income, profits, franchise,
sales, use, occupancy, property, severance, excise, value added, withholding
and other taxes, and all taxes owing to any foreign countries and political
subdivisions thereof (including, without limitation, interest, penalties and
any additions to tax) ("Taxes") due from or claimed to be due by each taxing
authority in respect of H&K or its business or the Towers, for all periods
through the Effective Date, have been, and for all periods through the Closing
Date will be, fully paid or adequately provided for in the Financial
Statements. H&K has timely made and will timely make all withholdings of Taxes
required to be made under all applicable United States, state, and local tax
regulations, and such withholdings have either been paid or will be paid to the
respective governmental agencies or set aside in accounts for such purpose or
accrued, reserved against and entered upon the books of H&K. Estimated income
taxes which are not yet due to be paid to the Internal Revenue Service or any
state or local taxing authority have been accrued, reserved against and entered
upon the books of H&K. All Tax Returns required to be filed after the
Effective Date by H&K, shall, in each case, be prepared and filed by H&K in a
manner consistent in all respects (including, without limitation, elections and
accounting methods and conventions) with such Tax Return most recently filed by
H&K, in the relevant jurisdiction prior to the date hereof, except as otherwise
required by law or regulation or agreed to by SpectraSite. If any such Tax
Return required to be filed after the Effective Date shall reflect any new
elections or the adoption of any new accounting methods or conventions or other
similar items, the reflection or adoption of any such items shall, except to
the extent such particular reflection or adoption is required to comply with
any law or regulation, be subject to the prior written approval of SpectraSite.
All deficiencies asserted as a result of any examinations of the Tax Returns
have been paid or adequately provided for in the Financial Statements, and no
issue has been raised by a taxing authority in any such examination which, if
raised with regard to any other period not so examined, would be expected to
result in a proposed deficiency for any other period not so examined. H&K will
not have any liability, either in its own right or as a transferee, for Taxes
in excess of the amount paid or reserved for any period prior to the Closing.
There are no outstanding agreements or waivers extending the statutory period
of limitation applicable to any Tax Return, or the period for assessment or
collection of any Taxes. H&K is not a party to any pending action or
proceeding, nor to the best knowledge of H&K, is there threatened any action or
proceeding, by any governmental authority for assessment or collection of
Taxes, and H&K is not currently under audit or review and has not been notified
by any governmental authority that an audit or review of any tax matter is
contemplated. There are no tax liens (other than liens for taxes for current
and subsequent years which are not yet due and payable) upon any of the Towers.
H&K has not agreed, nor is it required, to make any adjustment under Section
481(a) of
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the Code, by reason of a change in accounting method or otherwise. H&K has
not consented to the application to it of Section 341 (f)(2) of the Code.
3.19 Environmental Protection. The existing and prior uses of the
Towers, the Improvements, the Leased Real Property, and the operation of H&K's
business comply with, and at all times have complied with, and H&K is not in
violation of, and has not violated, in connection with the ownership, use,
maintenance, or operation of the Towers, the Improvements, the Leased Real
Property, and the operation of its business, any applicable federal, state,
county or local statues, laws, regulations, rules, ordinances, codes, licenses
or permits of any governmental authorities relating to environmental matters,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act as amended, the Resource Conservation Recovery
Act as amended, the Clean Air Act, the Clean Water Act, the Occupational Safety
and Health Act, the Toxic Substances Control Act, and "Superfund" or
"Superlien" law, the North Carolina Oil Pollution and Hazardous Substances
Control Act of 1978, or any other federal, state or local statue, law,
ordinance, code, rule, regulation, order, decree or guideline (whether
published or unpublished) regulating, relating to or imposing liability or
standards of conduct concerning any petroleum, petroleum by-product (including
but not limited to crude oil, diesel oil, fuel oil, gasoline, lubrication oil,
oil refuse, oil mixed with other waste, oil sludge, and all other liquid
hydrocarbons, regardless of specific gravity), natural or synthetic gas,
hazardous substance or materials, toxic or dangerous waste, substance or
material, pollutant or contaminant (collectively "Environmental Laws").
Specifically, but not in limitation of the foregoing:
(a) H&K has obtained and is in full compliance with the
terms and provisions of all licenses and permits necessary for compliance with
the Environmental Laws with respect to the Towers, the Improvements, and its
business, all of which are listed on Schedule 3.19;
(b) The Towers, the Improvements, and the Leased Real
Property are free of asbestos containing materials ("ACM's"), and are free of
Hazardous Materials except for current inventories of gasoline, diesel fuel,
fuel oil greases, motor oils and other lubricants. As used in this Agreement,
"Hazardous Material" means and includes asbestos, ACM's, polychlorinated
biphenyls, lead-based paints, any petroleum product, petroleum by-products
(including but not limited to crude oil or any fraction of it, diesel oil, fuel
oil, gasoline, lubrication oil, oil refuse, oil mixed with other wastes, oil
sludge and all other liquid hydrocarbons, regardless of specific gravity),
natural or synthetic gas products and/or hazardous substance or materials,
waste, pollutant or contaminant, and all other material defined as such in (or
for the purposes of) the Environmental Laws.
(c) H&K and its predecessors in interest have operated
the Towers, the Improvements, and the Leased Real Property, and have at all
times received, handled, used, stored, treated and disposed of all Hazardous
Materials, in strict compliance with all Environmental Laws. H&K has not
transported or arranged for the transport of any Hazardous Materials to or from
any of the Leased Real Property.
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(d) No Hazardous Material has been released, deposited,
discharged, placed, disposed of or originated on or under the Leased Real
Property, nor has any of the Leased Real Property been used at any time by any
person as a landfill or a waste disposal site.
(e) There is no electrical equipment, including
transformers, containing polychlorinated biphenyls ("PCB's") included in the
Towers, the Improvements, or the Leased Real Property.
(f) There are no monitoring wells on any of the Leased
Real Property for monitoring any Hazardous Materials.
(g) There are no underground or above-ground tanks
situated on any of the Leased Real Property.
(h) There are no liens on any of the Towers, the
Improvements, or the Leased Real Property resulting from any cleanup or
proposed cleanup under the Environmental Laws.
(i) No part of the Leased Real Property constitutes
"wetlands" as defined under any Environmental Law or other law or regulation.
(j) No Environmental Law, and to the best knowledge of
Hawkins and H&K, no proposed Environmental Law, imposes standards or
requirements, or will impose standards or requirements, which will require the
owner or operator of the Towers, the Improvements, or the lessee of the Leased
Real Property to engage in any work, repairs, construction or capital
expenditures in excess of $5,000.00 in the aggregate in order to comply with
such Environmental Law or such proposed Environmental Law.
(k) No notices of any violation, inquiries or requests
for information relating to any of the matters referred to in Subsections (a)
through (k) above relating to the Towers, the Improvements, or the Leased Real
Property or their use have been received by Hawkins, Keuck, or H&K.
3.20 Insurance. Schedule 3.20 describes all insurance policies
maintained by H&K with respect to the Towers, the Improvements, and its
business. Such policies are valid, binding, and enforceable in accordance with
their terms, are in full force and effect, and all premiums due thereon have
been paid and will be paid through the Closing Date. Such policies provide
adequate coverage for all risks customarily insured against by insured of
similar size and in similar business. H&K has not been refused any insurance
by any insurance carrier during the past two (2) years.
3.21 Labor and Employment Matters. H&K has no employees and does
not pay or provide any retirement, health, welfare, or other benefits of any
kind or description whatsoever.
3.22 Absence of Certain Changes. Except as described in Schedule
3.22, since October 31, 1997, H&K has conducted the operations of its business
only in the ordinary course, and has not:
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(a) Suffered any damage, destruction or loss to any of
the Towers or the Improvements, whether or not covered by insurance;
(b) Sold, transferred, distributed or otherwise disposed
of any assets used in the operation of its business;
(c) Declared, made, or paid any distribution or dividend
to Hawkins or Keuck;
(d) Amended or terminated any of the Real Property Leases
or any other contract, lease, license, or commitment relating to the conduct of
its business, the Towers, or the Improvements;
(e) Incurred any obligation or liability (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
except normal trade or business obligations incurred in the ordinary course of
business;
(f) Introduced any new method of management, operations
or accounting;
(g) Suffered any adverse change in the condition
(financial or otherwise), results of operations of its business, the Towers, or
the Improvements, or any other event or condition of any character that might
reasonably be expected to have an adverse effect on its business, the Towers,
the Improvements, or the Tower Attachment Leases; or
(h) Agreed, whether in writing or otherwise, to take any
action described in this Section.
3.23 Product Warranties. There are no continuing or outstanding
warranties applicable to the services provided by H&K or the space on the
Towers leased by H&K pursuant to the Tower Attachment Leases.
3.24 Brokers. No finder, broker, agent or other intermediary has
acted for or on behalf of H&K, Hawkins, or Keuck in connection with the
negotiation or consummation of this Agreement, and there are no claims for any
brokerage commission, finder's fee or similar payment due from H&K, Hawkins, or
Keuck.
3.25 Disclosure. No representation, warranty, or statement made by
H&K, Hawkins, or Keuck in this Agreement, or any document furnished or to be
furnished to SpectraSite pursuant to this Agreement, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary to make the statements contained herein or therein not
misleading. The fact that H&K has delivered copies of certain documents to
SpectraSite shall not alone constitute disclosure of facts required to be
disclosed on any Schedule to this Agreement, unless such document is expressly
referenced in such Schedule. Receipt by SpectraSite of such documents and
notice of their contents (other than by reference on a Schedule) shall in no
way limit H&K's, Hawkins', or Keuck's other obligations or SpectraSites, other
rights under this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPECTRASITE
SpectraSite represents and warrants to H&K, Hawkins, and Keuck as
follows:
4.1 Organization and Good Standing. SpectraSite is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
4.2 Authority. SpectraSite has all requisite power and authority
to execute, deliver and perform this Agreement and the SpectraSite Agreements
and transactions contemplated hereby and thereby. The execution, delivery, and
performance of this Agreement and the SpectraSite Agreements, and the
consummation of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary corporate action on the part of
SpectraSite. This Agreement and the SpectraSite Agreements, have been, or,
with respect to the SpectraSite Agreements to be executed at the Closing, will
be duly executed and delivered by SpectraSite and each constitutes, or will
constitute when executed and delivered, a valid and binding obligation of
SpectraSite, enforceable against SpectraSite in accordance with its terms.
4.3 No Conflict or Breach. The execution, delivery and
performance of this Agreement and the SpectraSite Agreements do not and will
not: (a) conflict with or constitute a violation of the Certificate of
Incorporation or Bylaws of SpectraSite or (b) conflict with or constitute a
violation of any statute, judgment, order, decree or regulation of any court,
administrative agency, governmental authority, or arbitrator applicable to or
relating to SpectraSite.
4.4 Governmental Approvals. No consent, approval, authorization,
registration, or filing with any federal, state or local judicial or
governmental authority or administrative agency is required in connection with
the valid execution and delivery by SpectraSite of this Agreement and the
SpectraSite Agreements or the consummation by SpectraSite of the transactions
contemplated herein or therein.
4.5 Brokers. No finder, broker, agent or other intermediary has
acted for or on behalf of SpectraSite in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from SpectraSite.
ARTICLE V
COVENANTS OF HAWKINS, KEUCK, H&K
Hawkins, Keuck, and H&K covenant and agree with SpectraSite as
follows:
5.1 Conduct of Business. Between the Effective Date and the
Closing Date, Hawkins, Keuck, and H&K shall except as otherwise specifically
consented to in writing by SpectraSite:
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(a) Conduct the business and operations of H&K in the
normal and customary manner in the ordinary course of business;
(b) Maintain and keep the Towers and Improvements in good
operating order, repair and condition ordinary wear and tear excepted;
(c) Keep in full force and effect the insurance described
in Section 3.20;
(d) Perform all of its obligations under all of the Real
Property Leases and the Tower Attachment Leases, and not amend, alter or modify
any provision thereof;
(e) Use their best efforts to preserve H&K's organization
intact and maintain their relationships with the landlords under the Real
Property Leases and the lessees under the Tower Attachment Leases;
(f) Promptly advise SpectraSite of any adverse change in
the condition (financial or otherwise) of H&K's business, the Towers, or the
Improvements;
(g) Promptly advise SpectraSite of the occurrence of any
event or circumstance which affects the consummation of the transactions
contemplated by this Agreement or which, if in existence on the date of this
Agreement, would have been required to have been disclosed in a Schedule to
this Agreement;
(h) Not create or permit to exist any security interest,
mortgage, pledge, lien, charge, encumbrance or adverse claim of any kind or
nature with respect to any of the Towers, the Improvements, or the Real
Property Leases;
(i) Not sell or dispose of any of the Towers or the
Improvements;
(j) Not declare, make, or pay any distribution or
dividend; or
(k) Not make any capital improvement or expenditure.
5.2 Access and Information. Between the Effective Date and the
Closing Date, Hawkins, Keuck, and H&K shall permit SpectraSite and its
Representatives full access during normal business hours to all the properties,
assets, books, records, agreements and other documents of H&K. Hawkins, Keuck,
and H&K shall furnish to SpectraSite and its Representatives all information
concerning H&K and its business and assets as SpectraSite may request.
Hawkins, Keuck, and H&K shall permit and facilitate communications between
SpectraSite and the landlords under the Real Property Leases and the lessees
under the Tower Attachment Leases and other persons having relationships with
H&K and its business.
5.3 No Other Solicitations. Until the earlier of the Closing Date
or the termination of this Agreement, Hawkins, Keuck, and H&K and their
respective Representatives shall not, directly or indirectly, initiate contact
with or solicit or encourage any inquiries or proposal from, or solicit,
initiate, encourage or participate in any discussion or negotiations with, or
provide any
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confidential information to, any Person (other than SpectraSite and its
Representatives) in connection with any possible proposal regarding a sale of
the Membership Interests, a sale of all or a substantial portion of the assets
of H&K, a merger of H&K with or into any other Person, or any other transaction
similar to any of the foregoing.
ARTICLE VI
MUTUAL COVENANTS
Each of SpectraSite, Hawkins, Keuck, and H&K covenants and agrees with
the other as follows:
6.1 Revenue Escrow. Hawkins, Keuck, and H&K shall immediately
send to the Escrow Agent all rental and other revenue received by them for the
period beginning on the Effective Date and ending as of the Closing from the
lessees under the Tower Attachment Leases and any leases for the rental of
space on the Towers entered into by H&K after the Effective Date, net of all
amounts due by H&K under the Real Property Leases and H&K's loan from the
Escrow Agent (the "Loan Payments"), to be held and dispersed by the Escrow
Agent pursuant to the terms and conditions of the Escrow Agreement (the
"Revenue Escrow"). Not later than five (5) business days after the end of each
calendar month prior to the Closing, Hawkins, Keuck, and H&K shall submit, by
notice to SpectraSite, a report setting forth the aggregate amount of such
revenue received by them and sent to the Escrow Agent during each such calendar
month, including a list of all amounts paid therefrom under the Real Property
Leases and the Loan Payments.
6.2 Best Efforts. Each of SpectraSite, Hawkins, Keuck, and H&K
shall use its best efforts to make or obtain all consents, approvals,
authorizations, registrations, and filings with all federal, state, or local
judicial or governmental authorities or administrative agencies as are required
in connection with the consummation of the transactions contemplated by this
Agreement. In addition, each of Hawkins and H&K shall use its best efforts to
obtain as promptly as possible all of the Required Consents.
6.3 Confidentiality. In recognition of the confidential nature of
certain of the information which will be provided to any party by the other
parties, each of SpectraSite, Hawkins, Keuck, and H&K agrees to retain in
confidence, and to require its directors, officers, employees, consultants,
professional representatives and agents (collectively, its "Representatives")
to retain in confidence all information transmitted or disclosed to it by any
other party, and further agrees that it shall not use for its own benefit and
shall not use or disclose to any third party, or permit the use or disclosure
to any third party of, any information obtained from or revealed by any other
party, except that each of SpectraSite, Hawkins, Keuck, and H&K may disclose
the information to those of its Representatives who need the information for
the proper performance of their assigned duties with respect to the
consummation of the transactions contemplated hereby. In making such
information available to its Representatives, each of SpectraSite, Hawkins,
Keuck, and H&K shall take any and all precautions necessary to ensure that its
Representatives use the information only as permitted hereby. Notwithstanding
anything to the contrary in the foregoing provisions, such information may be
disclosed: (a) where it is
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necessary to any regulatory authorities or governmental agencies; (b) if it is
required by court order or decree or applicable law; (c) if it is ascertainable
or obtained from public or published information; (d) if it is received from a
third party not known to the recipient to be under an obligation to keep such
information confidential; or (e) if the recipient can demonstrate that such
information was in its possession prior to disclosure thereof in connection
with this Agreement. If any party is required to make disclosure of any such
information by operation of law, such disclosing party will give the other
parties prior notice of the making of such disclosure and will use all
reasonable efforts to afford such other parties an opportunity to contest the
making of such disclosure. In the event that the Closing does not occur, each
of SpectraSite, Hawkins, Keuck, and H&K shall immediately deliver, or cause to
be delivered, to the other (without retaining any copies thereof) any and all
documents, statements or other written information obtained from the other that
contain confidential information.
ARTICLE VII
CONDITIONS PRECEDENT TO SPECTRASITE'S OBLIGATIONS
The obligations of SpectraSite to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions on or before the Closing Date, unless specifically waived in writing
by SpectraSite prior to the Closing Date:
7.1 Representations and Warranties. The representations and
warranties of each of Hawkins, Keuck, and H&K contained in this Agreement shall
have been true and correct on the Effective Date and shall be true and correct
on the Closing Date as though made on and as of the Closing Date.
7.2 Compliance with Covenants. Each of Hawkins, Keuck, and H&K
shall have duly performed and complied with all covenants, agreements, and
obligations required by this Agreement to be performed or complied with by it
on or prior to the Closing.
7.3 Absence of Litigation. No action or proceeding shall be
pending or, in the reasonable opinion of SpectraSite, threatened by or before
any court or other governmental body or agency seeking to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which would
adversely affect the right of SpectraSite to lease, occupy, operate, or control
the Leased Real Property, the Towers, or the Improvements after the Closing
Date.
7.4 Absence of Changes. Between the Effective Date and the
Closing, no material adverse change shall have occurred in the business,
operations, or financial or other condition of H&K and its business, the Leased
Real Property, the Towers, or the Improvements, nor shall there have occurred
any casualty loss or destruction of, or damage to, any of the Towers or the
Improvements.
7.5 Consents and Approvals. All: (a) Required Consents; (b)
licenses; (c) other orders or notifications of, or registrations, declarations
or filings with, or expiration of waiting periods imposed by, any applicable
governmental or judicial authority; and (d) consents, approvals, authorizations
or notifications of any other third parties, all as required in connection
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with consummation of the transactions contemplated by this Agreement, shall
have been made or obtained or shall have occurred.
7.6 Due Diligence. SpectraSite shall have received all
information requested by it pursuant to Section 5.2 and shall be satisfied with
all aspects of H&K, H&K's business, the Towers, the Improvements, the Real
Property Leases, and the Tower Attachment Leases and no information shall have
been acquired by SpectraSite between the Effective Date and the Closing Date
that could, in the reasonable opinion of SpectraSite, result in a material
adverse change in the business or prospects of H&K or its business after the
Closing.
7.7 Monthly Rental Revenue. On the Closing Date, the aggregate
gross monthly rental revenue under the Tower Attachment Leases and any new
leases for the rental of space on the Towers entered into by H&K prior to the
Closing Date shall be at least $13,000.00.
7.8 No Arreages. On the Closing Date, H&K shall not be in
arrears in any payments then due under the Real Property Leases or H&K's loan
from the Escrow Agent.
7.9 Landlord Estoppel Certificates. SpectraSite shall have
received from each of the landlords under the Real Property Leases a Landlord
Estoppel Certificate in a form reasonably satisfactory to SpectraSite.
7.10 Lessee Estoppel Certificates. SpectraSite shall have received
from each of the lessees under the Tower Attachment Leases a Lessee Estoppel
Certificate in a form reasonably satisfactory to SpectraSite.
7.11 Legal Opinion. SpectraSite shall have received from Barton &
Hall, counsel to Hawkins, Keuck, and H&K, an opinion, dated the Closing Date,
in a form reasonably satisfactory to SpectraSite.
ARTICLE VIII
CONDITIONS PRECEDENT TO HAWKINS', KEUCK'S, AND H&K'S OBLIGATIONS
The obligations of Hawkins, Keuck, and H&K to consummate the
transactions contemplated by this Agreement are subject to the satisfaction of
each of the following conditions on or before the Closing Date, unless
specifically waived in writing by Hawkins, Keuck, and H&K prior to the Closing:
8.1 Representations and Warranties. The representations and
warranties of SpectraSite contained in this Agreement shall have been true and
correct on the Effective Date, and shall be true and correct on the Closing
Date as through made on and as of the Closing Date.
8.2 Compliance with Covenants. SpectraSite shall have duly
performed and complied with all covenants, agreements and obligations required
by this Agreement to be performed or complied with by it on or before the
Closing Date.
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8.3 Absence of Litigation. No action or proceeding shall be
pending by or before any court or other governmental body or agency seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
8.4 Consents and Approvals. All Required Consents shall have been
obtained prior to or at the Closing.
8.5 Legal Opinion. Hawkins, Keuck, and H&K shall have received
from Hutchison & Mason PLLC, counsel to SpectraSite, an opinion, dated the
Closing Date, in a form reasonably satisfactory to them.
ARTICLE IX
CLOSING
9.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Hutchison & Mason
PLLC, in Raleigh, North Carolina at 10:00 a.m., local time, on May 1, 1998, or
such other date as may be mutually agreed upon by the parties hereto; provided,
however, as follows: (a) if one or more conditions to this Agreement is not
satisfied by such date, the party benefiting from such condition may elect, in
its sole discretion, one or more postponements of the Closing for the purpose
of enabling such condition to be satisfied and (b) notwithstanding the
provisions of the preceding clause (a), in no event may the Closing be
postponed beyond June 1, 1998. The date of the Closing is referred to as the
"Closing Date." For the purposes of passage of title and risk of loss,
allocation of expenses, adjustments and other economic or financial effects of
the transactions contemplated hereby, the Closing when completed shall be
deemed to have occurred at 12:01 a.m., Raleigh, North Carolina time, on the
Closing Date.
9.2 Deliveries by Hawkins, Keuck, and H&K. At the Closing,
Hawkins, Keuck, and H&K shall deliver or cause to be delivered to SpectraSite
or the Escrow Agent, as the case may be, the following:
(a) Assignments of the Membership Interests in a form
satisfactory to SpectraSite.
(b) A certificate of Hawkins, Keuck, and the President of
H&K confirming the satisfaction of the conditions set forth in Sections 7.1 and
7.2 hereof as to representations, warranties, and covenants of Hawkins, Keuck,
and H&K and Section 7.4 hereof as to absence of changes.
(c) A copy of all resolutions of H&K authorizing the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated herein, accompanied by the certification of the
Secretary of H&K to the effect that such resolutions are in full force and
effect and have not been amended, modified or rescinded.
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(d) A Good Standing Certificate from the Secretary of
State of the State of Missouri for H&K.
(e) The legal opinion referred to in Section 7.9.
(f) Evidence of that all Consents have been obtained or
satisfied.
(g) The Landlord Estoppel Certificates referred to in
Section 7.7.
(h) The Lessee Estoppel Certificates referred to in
Section 7.8.
(i) A joint notice with SpectraSite directing the Escrow
Agent to disperse the "Purchase Price Escrow," as defined in the Escrow
Agreement, less the amount of the Loan Payments, to Hawkins and Keuck in
accordance with Section 2.3 hereof and the "Revenue Escrow," as defined in the
Escrow Agreement, and the amount of the Loan Payments, to a bank account
designated by SpectraSite.
(j) Evidence, satisfactory to SpectraSite within its sole
discretion, of the removal of the security interests, mortgages, liens, claims,
and encumbrances described on Schedule 3.9(c).
(k) Such other documents and instruments as SpectraSite
may reasonably request to effect and evidence the consummation of the
transaction contemplated by this Agreement.
9.3 Deliveries by SpectraSite. At the Closing, SpectraSite shall
deliver or cause to be delivered to Hawkins, Keuck, and H&K or the Escrow
Agent, as the case may be, the following:
(a) A certificate of the President or Chief Financial
Officer of SpectraSite confirming the satisfaction of the conditions set forth
in Sections 8.1 and 8.2 as to representations, warranties and covenants of
SpectraSite.
(b) A copy of all corporate resolutions authorizing the
execution, delivery, and performance of this Agreement, and the consummation of
the transactions contemplated herein, accompanied by the certification of the
Secretary of SpectraSite to the effect that such resolutions are in full force
and effect and have not been amended, modified or rescinded.
(c) The legal opinion referred to in Section 8.5.
(d) A joint notice with Hawkins, Keuck, and H&K directing
the Escrow Agent to disperse the Purchase Price Escrow to Hawkins and Keuck in
accordance with Section 2.3 hereof and the Revenue Escrow and the amount of the
Loan Payments to a bank account designated by SpectraSite.
(e) The Promissory Notes.
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(f) Such other documents and instruments as Hawkins and
H&K may reasonably request to effect and evidence the consummation of the
transactions contemplated by this Agreement.
9.4 Further Assurances. Hawkins, Keuck, and H&K shall, at any
time on or after the Closing Date, take all actions requested by SpectraSite to
effect and evidence the transfer to and reduction of possession of SpectraSite,
or its successors or assigns to the Membership Interests.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Hawkins, Keuck, and H&K.
(a) In addition to all other sums due hereunder or
provided for in this Agreement, Hawkins, Keuck, and H&K, jointly and severally,
agree to indemnify and hold harmless SpectraSite and its Affiliates and each of
their respective officers, directors, agents, employees, subsidiaries,
partners, attorneys, accountants, and controlling persons (each, a "SpectraSite
Indemnified Party") to the fullest extent permitted by law from and against any
and all losses, claims, damages, expenses (including, without limitation,
reasonable fees, disbursements, and other charges of counsel incurred by a
SpectraSite Indemnified Party in any action or proceeding between Hawkins,
Keuck, or H&K and such SpectraSite Indemnified Party (or SpectraSite
Indemnified Parties) or between a SpectraSite Indemnified Party (or SpectraSite
Indemnified Parties) and any third party) or other liabilities, losses, or
diminution in value of H&K, or SpectraSite (collectively, "Loss") resulting
from or arising out of any breach of any representation or warranty of Hawkins,
Keuck, or H&K in this Agreement, any breach of any covenant or agreement of
Hawkins, Keuck, or H&K in this Agreement or in any Hawkins Agreement, Keuck
Agreement, or H&K Agreement, including, without limitation, the failure to make
payment when due of amounts owing pursuant to this Agreement or any Hawkins
Agreement, Keuck Agreement, or H&K Agreement, on the due date thereof (whether
at the scheduled maturity, by acceleration or otherwise) or any legal,
administrative or other actions (including actions brought by SpectraSite or
any equity holders of H&K or derivative actions brought by any Person claiming
through or in H&K's name), proceedings or investigations (whether formal or
informal), or written threats thereof, based upon, relating to or arising out
of this Agreement or any Hawkins Agreement, Keuck Agreement, or H&K Agreement,
the transactions contemplated hereby or thereby, or any SpectraSite Indemnified
Party's role therein or in the transactions contemplated thereby, any and all
liabilities and obligations of Hawkins, Keuck, and H&K of any kind or nature
whatsoever, whether accrued, absolute, contingent or otherwise, known or
unknown, that are not set forth on the Financial Statements; or Hawkins' and
Keuck's ownership and operation of the H&K's business, the Towers, and the
Improvements prior to the Closing Date; provided, however, that neither
Hawkins, Keuck, nor H&K shall be liable under this Section 10.1 to a
SpectraSite Indemnified Party: (a) for any amount paid by the SpectraSite
Indemnified Party in settlement of claims by the SpectraSite Indemnified Party
without the consent of Hawkins and Keuck (which consent shall not be
unreasonably withheld), (b) to the extent that it is finally judicially
determined that such Loss resulted primarily from the willful misconduct or
gross negligence of such SpectraSite Indemnified Party or (c) to the extent
22
<PAGE> 24
that it is finally judicially determined that such Loss resulted primarily from
the breach by such SpectraSite Indemnified Party of any representation,
warranty, covenant or other agreement of such SpectraSite Indemnified Party
contained in this Agreement or any SpectraSite Agreement; provided, further,
that if and to the extent that such indemnification is unenforceable for any
reason, Hawkins, Keuck, and H&K shall make the maximum contribution to the
payment and satisfaction of such Loss which shall be permissable under
applicable laws. In connection with the obligation of Hawkins, Keuck, and H&K
to indemnify for expenses as set forth above, Hawkins, Keuck, and H&K further,
jointly and severally, agree, upon presentation of appropriate invoices
containing reasonable detail, to reimburse each SpectraSite Indemnified Party
for all such expenses (including, without limitation, fees, disbursements and
other charges of counsel incurred by a SpectraSite Indemnified Party in any
action or proceeding between SpectraSite and such SpectraSite Indemnified Party
(or SpectraSite Indemnified Parties) or between a SpectraSite Indemnified Party
(or SpectraSite Indemnified Parties) and any third party) as they are incurred
by such SpectraSite Indemnified Party; provided, however, that if a SpectraSite
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
that the Loss in question resulted primarily from (i) the willful misconduct or
gross negligence of such SpectraSite Indemnified party or (ii) the breach by
such SpectraSite Indemnified Party of any representation, warranty, covenant,
or other agreement of such SpectraSite Indemnified Party contained in this
Agreement or any SpectraSite Agreement.
(b) Notwithstanding the foregoing, from and after the
Closing Date, Hawkins and Keuck shall be primarily responsible for the
obligations under this Article X and shall have no right of contribution or
other rights against H&K with respect to such obligations.
10.2 Indemnification by SpectraSite. In addition to all other sums
due hereunder or provided for in this Agreement, SpectraSite agrees to
indemnify and hold harmless Hawkins, Keuck, and H&K and each of their
respective officers, directors, agents, employees, partners, attorneys,
accountants and controlling persons (each, a "H&K Indemnified Party") to the
fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including, without limitation, reasonable fees,
disbursements and other charges of counsel incurred by a H&K Indemnified Party
in any action or proceeding between SpectraSite and such H&K Indemnified Party
(or H&K Indemnified Parties) or between a H&K Indemnified Party (or H&K
Indemnified Parties) and any third party) or other liabilities, losses, or
diminution in value (collectively, "Loss") resulting from or arising out of any
breach of any representation or warranty, covenant or agreement of SpectraSite
in this Agreement or in any SpectraSite Agreement, including, without
limitation, the failure to make payment when due of amounts owing pursuant to
this Agreement or any SpectraSite Agreement, on the due date thereof (whether
at the scheduled maturity, by acceleration or otherwise) or any legal,
administrative or other actions (including actions brought by SpectraSite, or
any equity holders of SpectraSite or derivative actions brought by any Person
claiming through or in SpectraSite's name), proceedings or investigations
(whether formal or informal), or written threats thereof, based upon, relating
to or arising out of this Agreement or any SpectraSite Agreement, the
transactions contemplated hereby or thereby; provided, however, that
SpectraSite shall be liable under this Section 10.2 to a H&K Indemnified Party:
(a) for any amount paid by the H&K Indemnified Party in settlement of claims by
the H&K Indemnified Party without the consent of SpectraSite (which consent
shall not be unreasonably withheld), (b) to the extent that it is finally
judicially determined that such Loss resulted primarily from the willful
misconduct or gross
23
<PAGE> 25
negligence of such H&K Indemnified Party or (c) to the extent that it is
finally judicially determined that such Loss resulted primarily from the breach
by such H&K Indemnified Party of any representation, warranty, covenant or
other agreement of such H&K Indemnified Party contained in this Agreement or
any H&K Agreement; provided, further, that if and to the extent that such
indemnification is unenforceable for any reason, SpectraSite shall make the
maximum contribution to the payment and satisfaction of such Loss which shall
be permissible under applicable laws. In connection with the obligation of
SpectraSite to indemnify for expenses as set forth above, SpectraSite further
agrees, upon presentation of appropriate invoices containing reasonable detail,
to reimburse each H&K Indemnified Party for all such expenses (including,
without limitation, fees, disbursements and other charges of counsel incurred
by a H&K Indemnified Party in any action or proceeding between Hawkins, Keuck,
and H&K and such H&K Indemnified Party (or H&K Indemnified Parties) or between
a H&K Indemnified Party (or H&K Indemnified Parties) and any third party) as
they are incurred by such H&K Indemnified Party; provided, however, that if a
H&K Indemnified Party is reimbursed hereunder for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Loss in question resulted primarily from (i) the
willful misconduct or gross negligence of such H&K Indemnified Party or (ii)
the breach by such H&K Indemnified Party of any representation, warranty,
covenant or other agreement of such H&K Indemnified Party contained in this
Agreement or any H&K Agreement.
10.3 Notification. Each party entitled to indemnification under
this Article X (an "Indemnified Party") shall, promptly after the receipt of
notice of the commencement of any action, investigation, claim, or other
proceeding against such Indemnified Party in respect of which indemnity may be
sought from any other party under this Article X (the "Indemnity Obligor"),
notify the Indemnity Obligor in writing of the commencement thereof. The
omission of any Indemnified Party so to notify the Indemnity Obligor of any
such action shall not relieve any Indemnity Obligor from any liability which it
may have to such Indemnified Party (a) other than pursuant to this Article X or
(b) under this Article X unless, and only to the extent that, such omission
results in the Indemnity Obligor's forfeiture of material substantive rights or
defenses. In case any such action, claim or other proceeding shall be brought
against any Indemnified Party and it shall notify the Indemnity Obligor of the
commencement thereof, the Indemnity Obligor shall be entitled to assume the
defense thereof at their own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action,
claim or proceeding in which any Indemnity Obligor, on the one hand, and an
Indemnified Party, on the other hand, is, or is reasonably likely to become, a
part, such Indemnified Party shall have the right to employ separate counsel at
the Indemnity Obligor's expense and to control its own defense of such action,
claim or proceeding; if, in the reasonable opinion of counsel to such
Indemnified Party, a conflict or potential conflict exists between any
Indemnity Obligor, on the one hand, and such Indemnified Party, on the other
hand, that would make such separate representation advisable; provided,
however, that in no event shall the Indemnity Obligors be required to pay fees
and expenses under this Article X for more than one firm of attorneys in any
jurisdiction in any one legal action or group of related legal actions. The
Indemnity Obligors jointly and severally agree that they will not, without the
prior written consent of the Indemnified Parties, settle, compromise or consent
to the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated hereby (if any Indemnified
Party is a party thereto or has been actually threatened to be made a party
thereto) unless such settlement, compromise or consent includes an
24
<PAGE> 26
unconditional release of the Indemnified Party and each other Indemnified Party
from all liability arising or that may arise out of such claim, action or
proceeding. No Indemnity Obligor shall be liable for any settlement of any
claim, action or proceeding effected against an Indemnified Party without its
written consent, which consent shall not be unreasonably withheld. The rights
accorded to Indemnified Parties hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate agreement or
otherwise.
10.4 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the fifth annual anniversary of the Closing
Date.
10.5 Other Remedies. The foregoing indemnification provisions are
in addition to, and not in derogation of, any statutory, equitable or common
law remedy any party may have as a result of a Loss.
10.6 Right to Offset. Subject to the limitations set forth in
Article X, Hawkins, Keuck and H&K agree that, if SpectraSite should suffer any
Loss described in Section 10.1 above, then, in addition to and without
limitation of any other rights or remedies to which SpectraSite may be entitled
as a result of such Loss, SpectraSite shall have the unconditional right to
offset (dollar for dollar) the amount of such Loss against the principal amount
and accrued interest owed pursuant to the Promissory Notes.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of all of the parties
to this Agreement;
(b) By Hawkins, Keuck, and H&K (if they are not then in
breach of any term of this Agreement), if SpectraSite: (i) fails to perform in
any material respect its agreements contained herein required to be performed
on or prior to the Closing Date or (ii) materially breaches any of its
representations or warranties contained herein, which failure or breach is not
cured within ten days after Hawkins, Keuck, and H&K have notified SpectraSite
of their intent to terminate this Agreement pursuant to this subparagraph;
(c) By SpectraSite (if SpectraSite is not then in breach
of any term of this Agreement), if Hawkins, Keuck, or H&K: (i) fails to
perform in any material respect its agreements contained herein required to be
performed on or prior to the Closing Date, or (ii) materially breaches any of
its representations or warranties contained herein , which failure or breach is
not cured within ten days after SpectraSite has notified them of its intent to
terminate this Agreement pursuant to this subparagraph;
25
<PAGE> 27
(d) By any of the parties, if there is any order, writ,
injunction or decree of any court or governmental or regulatory agency binding
on such party which prohibits or restrains such party from consummating the
transactions contemplated hereby; or
(e) By any of the parties, if the Closing has not
occurred by June 1, 1998, for any reason other than delay or nonperformance of
the party seeking such termination.
11.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligation of the parties hereunder, except
for the obligations under Sections 12.3 (with respect to expenses), 12.4 (with
respect to publicity), and 6.2 (with respect to confidentiality); provided,
however, that termination pursuant to subparagraphs (b) or (c) of Section 11.1
will not relieve the defaulting or breaching party from any liability to the
other party hereto. In the event of termination under subsection (c),
SpectraSite shall have the rights and remedies with respect to specific
performance as set forth in Section 12.15 hereof, in addition to any other
remedies that may be available at law or in equity.
11.3 Release of Deposit and Escrow. If this Agreement is
terminated pursuant to Section 11.1(a), 11.1(d), or 11.1(e), the parties shall
deliver to the Escrow Agent a joint notice directing the Escrow Agent to
disperse the Purchase Price Escrow and the Revenue Escrow to a bank account
designated by SpectraSite, and H&K shall retain the Deposit. If this Agreement
is terminated pursuant to Section 11.1(b), the parties shall deliver to the
Escrow Agent a joint notice directing the Escrow Agent to disperse the Purchase
Price Escrow to a bank account designated by SpectraSite and the Revenue Escrow
to a bank account designated by H&K, and H&K shall retain the Deposit. In such
event, the amount of the Revenue Escrow and the Deposit shall constitute
liquidated damages accepted by Hawkins, Keuck, and H&K in full and complete
satisfaction and settlement of all claims that Hawkins, Keuck, and H&K may then
have or thereafter may assert against SpectraSite as a result of such
termination and the transactions contemplated in this Agreement. If this
Agreement is terminated pursuant to Section 11.1(c), the parties shall deliver
to the Escrow Agent a joint notice directing the Escrow Agent to disperse the
Purchase Price Escrow and the Revenue Escrow to a bank account designated by
SpectraSite, and H&K shall immediately return the Deposit to SpectraSite. In
such event, the amount of the Revenue Escrow shall constitute liquidated
damages accepted by SpectraSite in full and complete satisfaction and
settlement of all claims that SpectraSite may then have or thereafter may
assert against Hawkins, Keuck, and H&K as a result of such termination and the
transactions contemplated in this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Survival of Representations. All representations and
warranties of the parties hereto contained in this Agreement or otherwise made
in writing in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the Closing hereunder
for the period described in Section 10.4. All of the other covenants and
agreements of the parties hereto contained in this Agreement or otherwise made
in writing in
26
<PAGE> 28
connection with the transactions contemplated hereby shall survive the
execution and delivery of this Agreement and the Closing hereunder.
12.2 Risk of Loss. The risk of loss, damage or condemnation of any
of the Towers and the Improvements from any cause whatsoever shall be borne by
Hawkins, Keuck, and H&K at all times prior to the completion of the Closing. In
the event of any loss, damage or condemnation of any of the Towers or the
Improvements prior to completion of the Closing, SpectraSite shall have the
option, in its sole discretion, to:
(a) terminate this Agreement by written notice to
Hawkins, Keuck, and H&K;
(b) postpone the Closing for a period of up to ninety
(90) days to permit Hawkins and H&K to repair, replace or restore such Towers
and Improvements to their prior condition; or
(c) proceed to close this Agreement and complete the
restoration and replacement of such damaged Tower or Improvements after the
Closing Date, in which event Hawkins and H&K shall assign to SpectraSite the
right to receive all insurance proceeds payable in connection with such damage.
12.3 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses, whether or not the transactions
contemplated by this Agreement are consummated.
12.4 Publicity. Each of the parties agrees it will not make any
press releases or other announcements prior to the Closing with respect to the
transactions contemplated hereby, except as required by applicable law, without
the prior approval of the other parties.
12.5 Best Efforts. Each party hereto agrees to use its best
efforts to satisfy the conditions to the Closing set forth in this Agreement
and otherwise to consummate the transactions contemplated by this Agreement.
12.6 Notices. All notices, demands and other communications made
hereunder will be in writing and shall be given either by personal delivery, by
nationally recognized overnight courier (with charges prepaid) or by telecopy
(with telephone confirmation), and will be deemed to have been given or made
when personally delivered, the day following the date deposited with such
overnight courier service or when transmitted to telecopy machine and confirmed
by telephone, addressed to the respective parties at the following addresses
(or such other address for a party as shall be specified by like notice):
If to Hawkins, Keuck, or H&K:
Jeffrey K. Hawkins
24005 Poindexter
Lee's Summit, Missouri 64086
Telephone: (816) 524-8242
27
<PAGE> 29
Telecopy: (816) 625-7204
Edwin L. Keuck
14308 Outer Belt Extension
Loan Jack, Missouri 64070
Telephone: (816) 524-8242
Telecopy: (816) 625-7204
With a copy (which shall not constitute notice) to:
Barton & Hall
Attention: L. Clay Barton, Esq.
1117 South Broadway
Oak Grove, Missouri 64075
Telephone: (816) 690-4111
Telecopy: (816) 625-7204
If to SpectraSite:
SpectraSite Communications, Inc.
Attention: David P. Tomick
8000 Regency Parkway, Suite 570
Cary, North Carolina 27511
Telephone: (919) 468-9678
Telecopy: (919) 468-8522
With a copy (which shall not constitute notice) to:
Hutchison & Mason PLLC
Attention: Merrill M. Mason, Esq.
4011 Westchase Boulevard, Suite 400
Raleigh, North Carolina 27607
Telephone: (919) 829-9600
Telecopy: (919) 829-9696
12.7 Obligations of the Parties. All of the obligations of
Hawkins, Keuck, and H&K hereunder shall be joint and several.
12.8 Knowledge. All references to the knowledge of a party or to
facts known by a party means the actual knowledge of such party, if such party
is a natural person, and the actual knowledge of the Chairman, Chief Executive
Officer, President or Chief Financial Officer of such party, if such party is
not a natural person.
12.9 Governing Law. This agreement will be governed by the laws of
the State of North Carolina without regard to its rules regarding choice of
law.
28
<PAGE> 30
12.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
12.11 Assignment. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interest or obligations
hereunder may be assigned by any of the parties hereto without the prior
written consent of all other parties hereto, and any purported assignment
without such consent shall be void.
12.12 Third Party Beneficiaries. None of the provisions of this
Agreement or any document contemplated hereby is intended to grant any right or
benefit to any person or entity which is not a party to this Agreement.
12.13 Headings. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement.
12.14 Amendments. Any waiver, amendment, modification or supplement
of or to any term or condition of this Agreement will be effective only if in
writing and signed by all parties hereto, and the parties hereto waive the
right to amend the provisions of this Section orally.
12.15 Specific Performance. Hawkins, Keuck, and H&K acknowledge
that the Membership Interests are unique and that if Hawkins, Keuck, and H&K
fail to consummate the transactions contemplated by this Agreement such failure
will cause irreparable harm to SpectraSite for which there will be no adequate
remedy at law. SpectraSite shall be entitled, in addition to its other
remedies at law or at equity, to specific performance of this Agreement if
Hawkins, Keuck, and H&K will, without cause, refuse to consummate the
transactions contemplated by this Agreement.
12.16 Severability. In the event that any provision in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect, the remaining provisions of this Agreement will not be in any way
impaired, and the illegal, invalid or unenforceable provision shall be fully
severed from this Agreement and there will be automatically added in lieu
thereof a provision as similar in terms and intent to such severed provision as
may be legal, valid and enforceable.
12.17 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings between the parties with respect
to such subject matter, including without limitation, the letter of intent,
dated October 9, 1997, between SpectraSite and Hawkins which is hereby
expressly terminated.
29
<PAGE> 31
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its duly authorized officer as of the date first
above written.
SPECTRASITE COMMUNICATIONS, INC.
By: /s/ David P. Tomick
-------------------------------------
David P. Tomick
Chief Financial Officer
/s/ Jeffrey K Hawkins
------------------------------------------
Jeffrey K. Hawkins
/s/ Edwin L Keuck
------------------------------------------
Edwin L. Keuck
H&K INVESTMENTS, LLC
By: /s/ Jeffrey K. Hawkins
--------------------------------------
Jeffrey K. Hawkins
President
30
<PAGE> 1
Exhibit 10.13
FIRST AMENDMENT
TO
MEMBERSHIP INTERESTS PURCHASE AGREEMENT
FIRST AMENDMENT TO MEMBERSHIP INTERESTS PURCHASE AGREEMENT, dated as
of May 29, 1998 (the "First Amendment"), by and among SpectraSite
Communications, Inc., a Delaware corporation (the "Company"), Jeffrey K.
Hawkins ("Hawkins"), Edwin L. Keuck ("Keuck"), and H&K Investments, LLC, a
Missouri limited liability company ("H&K").
WHEREAS, the Company, Hawkins, Keuck, and H&K are parties to a
Membership Interests Purchase Agreement, dated December 31, 1997 (the "Purchase
Agreement");and
WHEREAS, pursuant to Section 12.14 of the Purchase Agreement, the
Company, Hawkins, Keuck, and H&K desire to amend and modify the provisions of
the Purchase Agreement in the manner and to the extent set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the Company, Hawkins, Keuck, and H&K hereby agree as follows:
1. Amendment of Section 9.1. The reference in the first sentence
of Section 9.1 of the Purchase Agreement to May 1, 1998 is hereby changed to
June 10, 1998. The reference in the first sentence of Section 9.1 of the
Purchase Agreement to June 1, 1998 is hereby changed to June 30, 1998.
2. Amendment to Section 11.1(e). The reference in the first
sentence of Section 11.1(e) of the Purchase Agreement to June 1, 1998 is hereby
changed to June 30, 1998.
3. Effect of First Amendment. The provisions of the Purchase
Agreement are hereby amended and modified by the provisions of this First
Amendment. If any of the provisions of the Purchase Agreement are materially
different from or inconsistent with the provisions of this First Amendment, the
provisions of this First Amendment shall control, and the provisions of the
Purchase Agreement shall, to the extent of such difference or inconsistency, be
deemed to be amended and modified.
4. Single Agreement. This First Amendment and the Purchase
Agreement, as amended and modified by the provisions of this First Amendment,
shall constitute and shall be construed as a single agreement. The provisions
of the Purchase Agreement, as amended and modified by the provisions of this
First Amendment, are incorporated herein by this reference and are ratified and
affirmed.
<PAGE> 2
IN WITNESS WHEREOF, this First Amendment has been executed and
delivered by the Company, Hawkins, Keuck, and H&K as of the date first written
above.
SPECTRASITE COMMUNICATIONS, INC.
By /s/ David P. Tomick
----------------------------------
David P. Tomick
Chief Financial Officer
/s/ Jeffrey K. Hawkins
-------------------------------------
Jeffrey K. Hawkins
/s/ Edwin L. Keuck
-------------------------------------
Edwin L. Keuck
H&K INVESTMENTS, LLC
By /s/ Jeffrey K. Hawkins
----------------------------------
Jeffrey K. Hawkins
President
2
<PAGE> 1
EXHIBIT 10.14
PURCHASE AND SALE AGREEMENT
DATED FEBRUARY 20, 1998
AMONG
SPECTRASITE HOLDINGS, INC.
AND
METROSITE MANAGEMENT, LLC
AND
APEX SITE MANAGEMENT, L.P.
<PAGE> 2
TABLE OF CONTENTS
PURCHASE AGREEMENT
<TABLE>
<S> <C>
ARTICLE I.
PURCHASE AND SALE............................................................................................... 1
SECTION 1.1 Agreement to Purchase and Sell Units................................................. 1
SECTION 1.2 Purchase Price....................................................................... 1
SECTION 1.3 Payment for Non-Compete Agreement.................................................... 3
SECTION 1.4 Closing.............................................................................. 3
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF
SELLER AND COMPANY.............................................................................................. 3
SECTION 2.1 Disclosure Schedule................................................................. 3
SECTION 2.2 Incorporation and Qualification...................................................... 3
SECTION 2.3 Capital Units of the Company......................................................... 4
SECTION 2.4 Subsidiaries and Other Business Entities............................................. 4
SECTION 2.5 Authority of Seller and the Company; Enforceability.................................. 4
SECTION 2.6 No Conflicts; Consents............................................................... 5
SECTION 2.7 Corporate Records of the Company..................................................... 5
SECTION 2.8 Financial Statements................................................................. 5
SECTION 2.9 Absence of Certain Changes, Events and Conditions.................................... 6
SECTION 2.10 Accounts Receivable.................................................................. 8
SECTION 2.11 Tangible Personal Property........................................................... 8
SECTION 2.12 Inventory............................................................................ 8
SECTION 2.13 Intellectual Property................................................................ 8
SECTION 2.14 Contracts............................................................................ 9
SECTION 2.15 Employee Benefits.................................................................... 10
SECTION 2.16 Labor Matters........................................................................ 12
SECTION 2.17 Taxes................................................................................ 12
SECTION 2.18 Litigation........................................................................... 13
SECTION 2.19 Licenses............................................................................. 13
SECTION 2.20 Compliance with Laws................................................................. 13
SECTION 2.21 Insurance............................................................................ 13
SECTION 2.22 Bank Accounts........................................................................ 14
SECTION 2.23 Brokers.............................................................................. 14
SECTION 2.24 Governmental Authorization........................................................... 14
SECTION 2.25 Amounts Owing........................................................................ 14
SECTION 2.26 Employees; Immigration............................................................... 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 2.27 No Undisclosed Liabilities........................................................... 15
SECTION 2.28 Real Property........................................................................ 15
SECTION 2.29 Certain Interests.................................................................... 15
SECTION 2.30 Powers of Attorney................................................................... 15
SECTION 2.31 Other Information.................................................................... 15
SECTION 2.32 Environmental Compliance............................................................. 15
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER................................................................................................ 17
SECTION 3.1 Organization and Authority of Purchaser.............................................. 17
SECTION 3.2 No Conflicts......................................................................... 18
SECTION 3.3 Investment Purpose................................................................... 18
SECTION 3.4 Brokers.............................................................................. 18
ARTICLE IV.
ADDITIONAL COVENANTS............................................................................................ 18
SECTION 4.1 Conduct of Business Prior to the Closing............................................. 18
SECTION 4.2 Confidentiality and Public Announcements............................................. 19
SECTION 4.3 COBRA Compliance..................................................................... 19
SECTION 4.4 Inconsistent Activities.............................................................. 19
SECTION 4.5 Amounts Owing........................................................................ 20
SECTION 4.6 Governmental Filings, Section 338(h)(10). .......................................... 20
SECTION 4.7 Prepayment of Debts.................................................................. 20
SECTION 4.8 Certain Taxes Arising in Connection with this Agreement.............................. 20
SECTION 4.9 Apportionment of Taxes............................................................... 20
ARTICLE V.
CLOSING......................................................................................................... 21
SECTION 5.1 Purchaser's Closing Deliveries....................................................... 21
SECTION 5.2 Seller's Closing Deliveries.......................................................... 21
SECTION 5.3 Employees............................................................................ 22
SECTION 5.4 Allocation Schedule.................................................................. 22
SECTION 5.5 Further Assurances................................................................... 23
ARTICLE VI.
INDEMNIFICATION; LIABILITY...................................................................................... 23
SECTION 6.1 Survival of Representations and Warranties........................................... 23
SECTION 6.2 Indemnification by Seller............................................................ 23
SECTION 6.3 Indemnification by Purchaser......................................................... 23
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 6.4 General Indemnification Provisions................................................... 24
SECTION 6.5 Limits on Indemnification and Liability.............................................. 25
SECTION 6.6 Right of Offset...................................................................... 25
ARTICLE VII.
Intentionally Deleted........................................................................................... 25
ARTICLE VIII.
GENERAL PROVISIONS.............................................................................................. 25
SECTION 8.1 Notices.............................................................................. 25
SECTION 8.2 Headings............................................................................. 26
SECTION 8.3 Severability......................................................................... 26
SECTION 8.4 Entire Agreement..................................................................... 27
SECTION 8.5 Assignment........................................................................... 27
SECTION 8.6 No Third-Party Beneficiaries......................................................... 27
SECTION 8.7 Amendment............................................................................ 27
SECTION 8.8 Counterparts......................................................................... 27
SECTION 8.9 Governing Law........................................................................ 27
SECTION 8.10 Jurisdiction......................................................................... 27
SECTION 8.11 Binding Agreement.................................................................... 27
</TABLE>
iii
<PAGE> 5
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into as of the 20th day of February, 1998, by and among APEX SITE MANAGEMENT,
L.P., a Delaware limited partnership ("Purchaser"), and SPECTRASITE HOLDINGS,
INC., a Delaware corporation ("Seller"), and METROSITE MANAGEMENT, LLC, an
Arkansas limited liability company ("Company").
WITNESSETH:
WHEREAS, Seller owns all of the issued and outstanding capital
membership units ("Units") of the Company;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Units;
NOW, THEREFORE, in consideration of the, Closing, the Purchase Price,
and the premises and the mutual covenants herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE
SECTION 1.1 Agreement to Purchase and Sell Units. Subject to
the terms and conditions of this Agreement, Seller agrees to sell to Purchaser,
and Purchaser agrees to purchase from Seller, on the Closing Date, all of the
Units free and clear of all security interests, pledges, liens, encumbrances,
charges, or restrictions on the ownership, use, voting, transfer, receipt of
dividends or other attributes of ownership or obligations to make
distributions.
SECTION 1.2 Purchase Price for Units; Pro Rations. The purchase
price for the Units will be paid to Seller by Purchaser at Closing as follows:
(a) Cash Portion. Two Hundred and Eighty-Eight Thousand
Five Hundred Seventy-Five and No/100 Dollars ($288,575.00) by cashier's checks,
wire transfer or other good, immediately available U.S. funds ("Cash Portion");
and
(b) Royalty. Purchaser shall pay to Seller a royalty
("Royalty") in the following amounts calculated as follows:
A) Royalty on Old Clients. Ten percent (10%) of the
fee income actually collected by the Company or the Purchaser, as the
case may be, pursuant to those
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Management Agreements (defined in Section 2.14 below) executed prior
to the Closing Date.
B) Royalty on New Clients. Five percent (5%) of the
fee income actually collected by the Company or the Purchaser, as the
case may be, pursuant to those Management Agreements executed
subsequent to the Closing Date.
C) Payment. On or before the thirtieth (30th) day
after the end of each calendar quarter, the Company or the Purchaser,
as the case may be, shall deliver to Seller (i) a statement showing
the revenues actually collected by the Company or the Purchaser, as
the case may be, together with a statement showing the calculation of
the Royalty due for such quarter (the "Report"), and (ii) a check in
the amount of the Royalty then due, if any. The first Royalty
payment, if any, is due and payable on April 30, 1998.
D) Seller's Right to Audit. Seller shall have thirty
(30) days following the receipt of the Report within which to examine
and/or audit, at Seller's initial expense, the Company's or the
Purchaser's, as the case may be, books and records maintained upon
which the Report was based, and to contest the Company's or the
Purchaser's, as the case may be, determination of Royalty for the
period of time in question. If Seller does not give the Company or
the Purchaser, as the case may be, notice in writing that it contests
the Company's or the Purchaser's, as the case may be, determination of
the Royalty within said thirty (30) days period, then said Report and
the Company's or the Purchaser's, as the case may be, payment of
Royalty based thereon shall be final and conclusive. In the event
that Seller's review or audit reveals any error in the computation or
payment of Royalty then any overpayment shall be refunded by Seller to
the Company, or the Purchaser, as the case may be, or any underpayment
shall be paid by the Company or the Purchaser, as the case may be, to
Seller, within fifteen (15) days after Seller's notice to the Company
or the Purchaser, as the case may be, of the amount thereof. If any
underpayment is in excess of ten percent (10%) of the amount of the
Royalty theretofore paid, then, in addition, the Company shall
reimburse Seller or the Purchaser, as the case may be, for all of its
reasonable costs and expenses of performing or causing such review
and/or audit.
E) Term. Purchaser's obligation to pay Royalties shall
expire with respect to fee income collected pursuant to Section
1.2(b)(A) or (B) hereof by the Company or the Purchaser, as the case
may be, on or before the sixth (6th) anniversary of the Closing Date.
F) Company's Right of Set-Off. Whenever Seller shall
become indebted to Purchaser pursuant to Section 6.1 below, then said
obligation of Seller shall be repaid to Purchaser by offset against,
and reduction of, the Royalty, as of the date of the Notice (as
defined below) unless Seller disputes such offset. Prior to any
offset from the Royalty, and unless Seller disputes such offset,
Purchaser shall provide ten (10) days
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prior written notice (the "Notice") setting forth: (1) the reason for
the offset; and (2) the amount of the offset. Seller shall have full
legal and equitable rights and remedies to challenge any offset. This
right of offset, however, shall not be exclusive of any other right or
remedy Purchaser may have at law or in equity.
(c) Pro Rations. The Cash Portion of the Purchase Price
shall be adjusted at Closing for accounts receivable and accounts payable of
the Company.
SECTION 1.3 Payment for Non-Compete Agreement. As consideration
for the non-compete agreement to be executed by Seller at Closing (the "Non
Compete Agreement"), Purchaser shall pay to Seller at Closing the sum of Ten
Thousand and No/100 Dollars ($10,000.00) by cashier's checks, wire transfer or
other good, immediately available U.S. funds.
SECTION 1.4 Closing. The closing of the transactions
contemplated in this Agreement (the "Closing") shall take place at the offices
of Arnall Golden & Gregory, LLP on February 27, 1998 (the "Closing Date").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF
SELLER AND COMPANY
As an inducement to the Purchaser to enter into this Agreement, Seller
and the Company each hereby jointly and severally represent and warrant to
Purchaser (each of which representation and warranty is material to and relied
upon by Purchaser) as follows:
SECTION 2.1 Disclosure Schedule. Attached hereto and
incorporated herein by reference is a schedule (the "Disclosure Schedule")
containing certain information regarding the Company as indicated at various
places in this Agreement. The Disclosure Schedule shall be deemed for all
purposes of this Agreement to constitute an integral part of this Agreement and
the representations and warranties of Seller and the Company, as applicable,
contained herein.
SECTION 2.2 Incorporation and Qualification.
(a) Company. The Company is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Arkansas and, except as set forth in Section 2.19 of the Disclosure
Schedule, has all right, power and authority, together with all governmental
licenses, authorizations, consents and approvals, required to own, operate or
lease the properties and assets now owned, operated or leased by the Company
and to carry on its business. The Company is duly qualified as a foreign
limited liability company to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary and where the
failure to qualify would have a Material Adverse Effect (defined below) upon the
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Company. All jurisdictions in which the Company is qualified as a foreign
limited liability company are set forth in Section 2.2(a) of the Disclosure
Schedule.
For purposes of this Agreement, "Material Adverse Effect" means a
material adverse effect on the condition (financial or otherwise), business,
assets, results of operations or prospects of the Company taken as a whole.
(b) Seller. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all right, power and authority, together with all governmental
licenses, authorizations, consents and approvals, required to own, operate or
lease the properties and assets now owned, operated or leased by the Seller and
to carry on its business.
SECTION 2.3 Capital Units of the Company. The authorized
capital Units of the Company consists of one hundred (100) units, all of which
are solely owned, of record and beneficially by Seller. Each outstanding Unit
has been duly authorized and validly issued, and is fully paid and
non-assessable. Seller has, and will have on the Closing Date, good, valid and
marketable title to the Units free and clear of any Units Encumbrances (defined
below). There are outstanding (i) no securities of any nature whatsoever of
the Company except as set forth in this Section 2.3, (ii) no securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) no options (including employee stock options),
warrants or rights of conversion or other rights, agreements, arrangements or
commitments obligating, or which may obligate, the Company to sell or issue any
additional Units or other equity interests in the Company, (iv) no obligation
of the Company to issue any voting securities or securities convertible into or
exchangeable for Units or other voting securities of the Company and (v) no
equity equivalents, interests in the ownership or earnings, or other similar
rights of or with respect to the Company (the items in clauses (i), (ii),
(iii), (iv) and (v) being referred to collectively as "Company Securities").
There are no outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any of Company Securities. Upon Closing, Seller shall
transfer to Purchaser all right, title and interest in and to the Units free
and clear of any Units Encumbrances. As used in this Agreement, "Units
Encumbrances" shall mean any security interest, pledge, lien, charge, adverse
claim of ownership or use, or any restriction on ownership, use, voting,
transfer or receipt of dividends or distributions, or any other encumbrance of
any kind.
SECTION 2.4 Subsidiaries and Other Business Entities. There are
no corporations, limited liability companies, partnerships, joint ventures or
other business entities in which the Company owns, of record or beneficially,
any direct or indirect equity interest or any right (contingent or otherwise)
to acquire the same.
SECTION 2.5 Authority of Seller and the Company; Enforceability.
(i) Seller and the Company have all necessary power and authority to enter into
this Agreement, to carry out its respective obligations hereunder and to
consummate the transactions contemplated hereby; (ii) this Agreement has been
duly authorized, executed and delivered by the Company and Seller,
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and this Agreement (and the respective obligations of the Company and Seller set
forth herein), assuming due authorization, execution and delivery by Purchaser,
constitutes the legal, valid and binding obligation of the Company and Seller,
enforceable against the Company and Seller respectively in accordance with its
terms, subject to the effect, if any, of bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights of creditors generally
and the effect, if any, of general principles of equity.
SECTION 2.6 No Conflicts; Consents. Section 2.6 of the
Disclosure Schedule sets forth all of the consents, approvals, authorizations,
filings, notifications and other actions necessary to consummate all of the
transactions described herein. Assuming all consents, approvals,
authorizations and other actions described in Section 2.6 of the Disclosure
Schedule have been obtained and all filings and notifications listed in Section
2.6 of the Disclosure Schedule have been made, the execution, delivery and
performance of this Agreement by Seller and the Company does not and will not:
(a) violate or conflict with the certificate of
incorporation or bylaws or other organizational documents of the Seller or
violate or conflict with the articles of organization, operating agreement or
other organizational documents of Company;
(b) conflict with or violate any law, rule or regulation
of, or any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any foreign, federal, state or local
governmental authority, body, agency official, regulatory or administrative
agency, body or official, or governmental commission, court, tribunal, or
arbitral body (singularly and collectively, the "Governmental Authority")
applicable to Seller or the Company or their respective businesses;
(c) (i) conflict with, (ii) result in any breach of,
(iii) constitute a material default (or constitute an event which with the
giving of notice or lapse of time, or both, would become or result in a
conflict, breach or default) under, (iv) give to others any rights of
termination, amendment, acceleration or cancellation of or (v) result in the
creation of any security interest, pledge, mortgage, lien, charge, adverse
claim of ownership or use or any encumbrance of any kind (collectively, the
"Encumbrance") on the Seller, the Company or their assets pursuant to, any
agreement, contract or other instrument to which the Seller or the Company is a
party, or by which any of their assets or properties is bound.
SECTION 2.7 Corporate Records of the Company. The records and
minute book of the Company heretofore furnished to Purchaser by the Company
correctly show the total number of Units issued and outstanding and all Company
action taken by the members and managers of the Company (including actions
taken by consent without a meeting), and contain true, correct and complete
copies or originals, as in effect as of the date hereof of the articles of
organization and operating agreement and bylaws and all amendments thereto.
SECTION 2.8 Financial Statements. Section 2.8 of the Disclosure
Schedule sets forth the true, correct and complete internally prepared and
unaudited Balance Sheets and
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Income Statements for the months ended April 30, 1997, May 31, 1997, June 30,
1997, July 31, 1997, August 31, 1997, September 30, 1997, October 31, 1997,
November 30, 1997, and December 31, 1997 (collectively, the "Financial
Statements"). All of the Financial Statements present fairly and accurately the
financial condition of the Company as of the respective dates thereof and the
results of its operations for the periods then ended; provided that the
Financial Statements do not include footnotes and that non-year-end Financial
Statements are subject to normal, recurring, year-end adjustments, none of which
are material. All of the books and records of the Company have been maintained
in accordance with good business practice and are in all material respects in
accordance with all laws, regulations and other requirements applicable to its
business and operations.
SECTION 2.9 Absence of Certain Changes, Events and Conditions.
(a) Since May 31, 1997, there has not been any material
adverse change in the condition (financial or otherwise) of the business or the
liabilities, assets, operations, results of operations, prospects or condition
(financial or other) of the Company.
(b) Except as set forth in Section 2.9(b) of the
Disclosure Schedule, since May 31, 1997, the Company has operated its business
in the ordinary course consistent with past practice, and the Company has not:
(i) permitted or allowed any of its assets to
be mortgaged, pledged or subjected to any Encumbrance;
(ii) written down, or written up the value of
any of its inventory or other assets;
(iii) amended, terminated, cancelled or
compromised any claims or waived any other rights, or sold,
transferred or otherwise disposed of any properties or assets, real,
personal or mixed (including, without limitation, contracts, leasehold
interests and intangible property);
(iv) disposed of or permitted to lapse any
patent, trademark, assumed name, service mark, trade name or copyright
application, registration or license to its business, or under which
the Company has any right or license, or disclosed to any person any
trade secret or process of its business, or under which the Company
has any right or license;
(v) granted any general increase in the
compensation of the employees of the Company (including, without
limitation, any such increase pursuant to any Plan, as defined in
Section 2.15), or established or increased or promised to increase any
benefits under any such Plan;
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(vi) made any material changes in the customary
methods of operation of its business, including practices and policies
relating to leasing, purchasing, marketing or selling;
(vii) declared, made, or set aside any
distributions (whether in cash, securities or other property) to its
owners with respect to the Units, or redeemed any of its equity
interests;
(viii) incurred or assumed any indebtedness for
borrowed money or guaranteed any such indebtedness;
(ix) issued or sold any of its stock, notes,
bonds or other securities (including treasury shares), or any option,
warrant or other rights to purchase the same;
(x) sustained any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the
business or assets of the Company;
(xi) entered into any transaction, commitment,
contract or agreement relating to its assets or business (including
the acquisition or disposition of any assets) or the relinquishment of
any contract or other right;
(xii) A) granted any severance or termination pay
to any director, officer or employee of the Company, B) entered into
any employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director,
officer or employee of the Company, C) increased benefits payable
under any existing severance or termination pay policies or employment
agreements or D) increased compensation, bonus or other benefits
payable to directors, officers or employees of the Company;
(xiii) granted any option to purchase, or other
right to acquire, capital stock or any security or other instrument
convertible into an equity interest of the Company to any Person
(defined below);
(xiv) changed any method of accounting or
accounting practice (including in each case tax accounting);
(xv) entered into, extended, amended or
terminated, any contract, agreement, lease, franchise, permit or
license or any material term of any outstanding security of the
Company other than in the ordinary course of business and consistent
with past practices;
(xvi) made any amendment to its articles of
organization or operating agreement;
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(xvii) had any labor dispute or pending labor
negotiation, or any event that is expected to cause or to give rise to
any such labor dispute or negotiation, or any activity or proceeding
by a labor union or representative thereof to organize any employees
of the Company, or any lockout, strike, slowdown, work stoppage or
threat thereof by or with respect to such employees;
(xviii) made any loan, advance or capital
contributions to or investment in any Person; or
(xix) agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 2.9(b).
As used in this Agreement, "Person" means an individual, a
corporation, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
SECTION 2.10 Accounts Receivable. All accounts receivable
existing on the Closing Date will be valid obligations of the respective makers
thereof and not subject to any offset or counterclaim. All amounts due under
the Site Agreements which are currently due and payable have been collected by
the Company.
SECTION 2.11 Tangible Personal Property. Section 2.11 of the
Disclosure Schedule lists all of the machinery, equipment, tools, parts,
supplies, furniture, fixtures, personalty, and other tangible personal property
(the "Tangible Personal Property") used in the Company's business. The
Tangible Personal Property is in good operating condition and repair, normal
wear and tear excepted. Except as set forth in Section 2.11 of the Disclosure
Schedule, the Company has good and indefeasible title to and own the Tangible
Personal Property free and clear of all Encumbrances or similar rights of third
parties. The Tangible Personal Property of the Company is being maintained at
normal and customary levels adequate for the conduct of the business of the
Company as currently conducted and includes all Tangible Personal Property and
assets applicable to or used in connection with the business of the Company.
SECTION 2.12 Inventory. The Company does not currently, and will
not as of the Closing Date, own any inventory.
SECTION 2.13 Intellectual Property. Section 2.13 of the
Disclosure Schedule lists any trademark, service mark, registration thereof or
application for registration therefor, (domestic and foreign) trade name,
invention, patent, patent application, trade secret, know-how, copyright,
copyright registration, application for copyright registration, or any other
similar type of proprietary intellectual property (including without limitation
any such right in computer software) owned by the Company or used in the conduct
of the Company's business (collectively, the "Intellectual Property"). The
Company is the sole owner of all such Intellectual Property and has the sole and
exclusive right to use same. The consummation of the transactions contemplated
hereby will not alter or impair the Company's rights to own and
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use the Intellectual Property. The Intellectual Property of the Company is
sufficient for the conduct of the business of the Company as currently
conducted.
SECTION 2.14 Contracts.
(a) Section 2.14(a) of the Disclosure Schedule is a
true, correct and complete list of all contracts, agreements and obligations to
which the Company is a party pursuant to which the Company provides its primary
business services, including, without limitation, all "Wireless Communications
Consulting and Marketing Agreements" to which the Company is a party
(collectively, "Management Agreements").
(b) Section 2.14(b) of the Disclosure Schedule is a
true, correct and complete list of all contracts, agreements and obligations
which have been procured by, or on behalf of, the Company pursuant to the
Company performing its duties under the Management Agreements (collectively,
"Site Agreements").
(c) Section 2.14(c) of the Disclosure Schedule is a
true, correct and complete list of all contracts, agreements and obligations to
which the Company is a party other than the Management Agreements and the Site
Agreements (collectively, "Other Agreements"; the Management Agreements, Site
Agreements and the Other Agreements are hereinafter collectively referred to as
the "Contracts").
(d) The Company has delivered to Purchaser true, correct
and complete copies of each of the Contracts, as in effect as of the date
hereof. Said Contracts have not been modified or amended since the
commencement of the terms specified in the respective Contracts. The Company
is not in default under, or in breach of, any of the terms or conditions of the
Contracts; no condition exists or has occurred which, with the giving of notice
or the lapse of time, or both, would constitute a default or breach by the
Company of any of the terms or conditions of the Contracts; to Seller's
knowledge, no counterparty to the Contracts is in default or breach thereunder;
all of the Contracts are valid, binding, in full force and effect and
enforceable in accordance with their terms, except that the enforceability of
such Contracts and agreements may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights generally and (B) equitable principles which may limit the availability
of certain equitable remedies (such as specific performance); and except as set
forth in Section 12.14(d) of the Disclosure Schedule, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance with the terms and provisions hereof, will
require the consent or approval of any person pursuant to, or will result in
the termination or impairment of, any such Contract.
(e) Except as set forth in Section 12.19(d) of the
Disclosure Schedule, no consents, approvals, authorizations, filings,
notifications or other actions are necessary to consummate the transactions
described in this Agreement and/or for Purchaser to have the right to enforce
any of the Contracts.
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(f) The merger of the Company into the Seller and its
subsequent correction, does not give rise to a default or breach by the Company
of the terms or conditions of any of the Contracts. The transfer by Telesite
Services, LLC of its interest in the Contracts to the Company does not give
rise to a default or breach of the terms or conditions of any of the Contracts.
SECTION 2.15 Employee Benefits.
(a) Schedule 2.15(a) sets forth a list of each "employee
benefit plan" (as defined by Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), and any other bonus, profit
sharing, pension, compensation, deferred compensation, stock option, stock
purchase, fringe benefit, severance, post-retirement, scholarship, disability,
sick leave, vacation, individual employment, commission, bonus, payroll
practice, retention, or other plan, agreement, policy, trust fund or
arrangement (each such plan, agreement, policy, trust fund or arrangement is
referred to herein as an "Employee Benefit Plan", and collectively, the
"Employee Benefit Plans") that is currently in effect, was maintained since
December 31, 1991 or which has been approved before the date hereof but is not
yet effective, for the benefit of (i) directors or employees of the Company or
any other persons performing services for the Company, (ii) former directors or
employees of the Company or any other persons formerly performing services for
the Company, or (iii) beneficiaries of anyone described in (i) or (ii)
(collectively, "Company Employees") or with respect to which the Company or any
"ERISA Affiliate" (hereby defined to include any trade or business, whether or
not incorporated, other than the Company, which has employees who are or have
been at any date of determination treated pursuant to Section 4001(a)(14) of
ERISA and/or Section 414 of the Code as employees of a single employer which
includes the Company) has or has had any obligation on behalf of any Company
Employee. Except as disclosed on Schedule 2.15(a) attached hereto, there are
no other benefits to which any Company Employee is entitled or for which the
Company has any obligation.
(b) To the extent applicable, Seller has delivered (or
prior to the Closing Date, shall deliver) to the Purchaser, with respect to
each Employee Benefit Plan, true and complete copies of (i) the documents
embodying, including the current plan documents and documents creating any
trust maintained pursuant thereto, all amendments, group annuity contracts,
insurance contracts, collective bargaining agreements, the most recent summary
plan description with each summary of material modification, if any, and
employee handbooks; (ii) annual reports including but not limited to Forms
5500, 990 and 1041 for the last three (3) years for the plan and any related
trust; (iii) actuarial valuation reports and financial statements for the last
three years; and (iv) each communication involving the plan or any related
trust to or from the Internal Revenue Service ("IRS"), Department of Labor
("DOL"), Pension Benefit Guaranty Corporation ("PBGC") or any other governmental
authority including, without limitation, the most recent determination letter
received from the IRS pertaining to any Employee Benefit Plan intended to
qualify under Sections 401(a) or 501(c)(9) of the Code.
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(c) The Company has no obligation to contribute to or
provide benefits pursuant to, and has no other liability of any kind with
respect to, (i) a "multiple employer welfare arrangement" (within the meaning
of Section 3(40) of ERISA), or (ii) a "plan maintained by more than one
employer" (within the meaning of Section 413(c) of the Code).
(d) The Company is not subject to any liens, and excise
or other taxes under ERISA, the Code or other applicable law relating to any
Employee Benefit Plan; has not ceased operations at a facility so as to become
subject to the provisions of Section 4062(e) of ERISA; has not withdrawn as a
substantial employer so as to become subject to the provisions of Section 4063
of ERISA; and has not ceased making contributions to any Employee Benefit Plan
subject to 4064(a) of ERISA to which the Company or any ERISA Affiliate made
contributions at any time.
(e) In the case of any Employee Benefit Plan that is a
Multiemployer Plan, the Company has no withdrawal liability under Part 1 of
Subtitle E of Title IV of ERISA as a result of either a "complete withdrawal"
(as defined in Section 4203 of ERISA) or a "partial withdrawal" (as defined in
Section 4205 of ERISA) by the Seller or the Company from such Employee Benefit
Plan occurring on or prior to the date hereof.
(f) The consummation of the transactions contemplated by
this Agreement will not give rise to any liability for any employee benefits,
including, without limitation, liability for severance pay, unemployment
compensation, termination pay or withdrawal liability.
(g) Except as set forth on Schedule 2.15(a) attached
hereto, no Employee Benefit Plan in any way provides for any benefits of any
kind whatsoever (other than under Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA, the Federal Social Security Act or any Employee
Benefit Plan qualified under Section 401(a) of the Code) to any Company
Employee who, at the time the benefit is to be provided, is a former director
or employee of, or other provider of services to, the Company or an ERISA
Affiliate (or a beneficiary of any such person), or any other Company Employee,
nor have any representations, agreements, covenants or commitments been made to
provide such benefits.
(h) Any contribution, insurance premium, excise tax,
interest charge or other liability or charge imposed or required with respect
to any Employee Benefit Plan which is attributable to any period or any portion
of any period prior to the Closing will be paid by Seller including, without
limitation any portion of the matching contribution required with respect to
Seller's 401(k) Plan for the plan year ending after the Closing which is
attributable to elective contributions made by participants in such plan prior
to the Closing (including a pro rata portion of the matching contribution
required with respect to elective contributions made by participants in
February, 1998 and treating all participants as if they were employed by the
Company as of the end of such plan year.
(i) The Purchaser will not, as a result of the
transactions contemplated by this Agreement (or any employment by Purchaser of
any Company Employee): (i) become liable for
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any contribution, tax, lien, penalty, cost, interest, claim, loss, action, suit,
damage, cost assessment or other similar type of liability or expense of the
Seller or any ERISA Affiliate, including predecessors thereof, with regard to
any Employee Benefit Plan or any Employee Benefit Plan sponsored, maintained or
contributed to by an ERISA Affiliate (including predecessors thereof) (assuming
a like definition of "Employee Benefit Plan" were applicable to ERISA Affiliates
as to those same types of agreements, policies, trusts, funds and arrangements
sponsored, maintained or contributed to by them) (each such plan for an ERISA
Affiliate, an "ERISA Affiliate Employee Benefit Plan"), including, without
limitation withdrawal liability arising under Title IV, Subtitle E, Part 1 of
ERISA, liabilities to the PBGC, or liabilities under Section 412 of the Code or
Section 302(a)(2) of ERISA, or (ii) be or become a party to any Employee Benefit
Plan or any ERISA Affiliate Employee Benefit Plan.
SECTION 2.16 Labor Matters. (a) The Company is not a party to
any collective bargaining agreement or other labor union contract applicable to
persons employed by the Company; (b) there are no unfair labor practice
complaints (or any basis therefor) pending against the Company before the
National Labor Relations Board or any other Governmental Authority; (c) to
Seller's knowledge, and the best knowledge of the Company, there have been no
efforts by any union, or local thereof, to seek to represent, at any location
where they do not currently represent such employees, any employees of the
Company; and (d) there have been no strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the
Company; and (e) neither Seller nor the Company have any knowledge that any
party with whom the Company has entered a Contract is involved in or threatened
with or affected by any labor dispute or other proceeding or order.
SECTION 2.17 Taxes.
(a) The following terms shall have the following
meanings:
"Tax Return" shall mean any return, report,
information statement, schedule or other document (including any related or
supporting information and including any Form 1099 or other document or report
required to be provided by any of the Sellers to third parties) required to be
supplied to any taxing authority or jurisdiction (foreign and domestic) with
respect to Taxes, and any amended Tax Returns.
"Taxes" shall mean any and all taxes, charges, fees,
levies or other assessments, including, without limitation, income, real or
personal property, sales, withholding, use, franchise, transfer and recording
taxes, fees and charges, imposed by any taxing authority (whether domestic or
foreign including, without limitation, any federal, state, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)); and such term shall include any interest, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments.
(b) Except as set forth in Section 2.17(b) of the
Disclosure Schedule (i) the Company has timely filed all Tax Returns required
to be filed (taking into account applicable
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extensions) and all such returns were true, correct and complete in all material
respects when filed; (ii) the Company has paid all Taxes due on such Tax Returns
and has properly accrued for all Taxes with respect to the Company or the assets
and properties of the Company for periods subsequent to the periods covered by
such Tax Returns on financial statements provided to Purchaser; (iii) there are
no outstanding written requests, agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against the Company; (iv) the Company is not a party to any
agreement providing for the allocation or sharing of Taxes; and (v) there are no
liens for Taxes upon the Company.
SECTION 2.18 Litigation. There are no pending (or the best
knowledge of Seller and the Company, threatened) claims, disputes, actions,
suits, arbitrations, inquiries, audits, proceedings or investigations (or any
basis therefor) by or against the Company or any of its assets, properties,
managers or members or against Seller with respect to the Company or the
Company's assets.
SECTION 2.19 Licenses. Except as set forth in Section 2.19 of
the Disclosure Schedule, the Company is now, and at the Closing will be, the
holder of all licenses, authorizations, permits and certificates (the
"Licenses") required by any Governmental Authority to conduct its business, and
all of the Licenses are now, and at the Closing will be, in full force and
effect.
SECTION 2.20 Compliance with Laws. Except as set forth in
Section 2.19 of the Disclosure Schedule, the Company is not in violation of,
and has not violated, any applicable Federal, state, local, foreign or other
law, regulation or order or any other requirement of any governmental,
regulatory or administrative agency or authority or court or other tribunal
relating to it; and the Company is not now charged with, and to the best
knowledge of Seller and the Company, the Company is not now under investigation
with respect to, any possible violation of any applicable law, regulation,
order or requirement relating to any of the foregoing in connection with the
business of the Company, and the Company has filed all reports required to be
filed with any governmental, regulatory or administrative agency or authority
on or before the date hereof.
SECTION 2.21 Insurance. Section 2.21 of the Disclosure Schedule
contains a list and description of all policies of insurance and fidelity bonds
relating to the assets of the Company or the business or employees of the
Company (except for any such policies maintained to provide benefits to
employees under a benefit plan or arrangement described in Section 2.15
hereof), presently maintained by the Company, all of which are, and will be
maintained through the Closing Date, in full force and effect. All premiums
thereon have been paid, and the Company has not received any notice of
cancellation with respect thereto. There are no claims pending under any of
said policies or bonds or disputes with underwriters. There are no pending or
to the knowledge of Seller, threatened terminations of, or premium increases
with respect to, any of such policies and bonds and the Company is in compliance
with all conditions contained therein. The Company and Seller have no reason to
believe that the insurance carried by the Company is not, or since the date of
its inception has not been, adequate with respect to risks
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normally insured against by comparable companies similarly situated. The
Company has delivered true, complete and correct copies of all insurance
policies insuring the Company.
SECTION 2.22 Bank Accounts. Section 2.22 of the Disclosure
Schedule lists all of the (a) names of each bank, savings and loan, or other
financial institution in which the Company has an account, including cash
contribution accounts, and the account numbers and names of all persons
authorized to draw thereon or have access thereto, and (b) locations of all
lockboxes and safe deposit boxes of the Company and the names of all persons
authorized to draw thereon or have access thereto.
SECTION 2.23 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated under this Agreement.
SECTION 2.24 Governmental Authorization. The execution, delivery
and performance by the Company and Seller of this Agreement requires no action
by or in respect of, or filing with, any Governmental Authority.
SECTION 2.25 Amounts Owing. On or prior to the Closing Date, the
Company will have collected any amounts loaned or advanced to, or receivable
from, the Seller or the Company's directors, officers or consultants.
SECTION 2.26 Employees; Immigration.
(a) Listed in Section 2.26(a) of the Disclosure Schedule
are all of the Company's managers and employees and any and all compensation,
pension or benefit arrangements, whether written or oral, between the Company
and said managers and employees.
(b) With respect to all employees (as defined in Section
274a.1(g) of Title 8, Code of Federal Regulations) of Company, Company has
complied with the Immigration Reform and Control Act of 1986 and all
regulations promulgated thereunder ("IRCA") with respect to the completion,
maintenance and other documentary requirements of Forms I-9 (Employment
Eligibility Verification Forms) for all current and former employees and the
reverification of the employment status of any and all employees whose
employment authorization documents indicated a limited period of employment
authorization.
(c) Section 2.26(c) of the Disclosure Schedule contains
a true and complete list of all employees of Company who are not citizens of
the United States of America and who are not permanent residents of the United
States of America, together with a true and complete list of the visa status
and visa expiration dates of each such employee.
(d) Company has only employed individuals authorized to
work in the United States. Company has not received any written notice of any
inspection or investigation relating
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to its alleged noncompliance with or violation of IRCA, nor has it been warned,
fined or otherwise penalized by reason of any failure to comply with IRCA.
(e) The consummation of the transactions contemplated by
this Agreement will not (i) give rise to any liability for the failure to
properly complete and update Forms I-9, (ii) give rise to any liability for the
employment of individuals not authorized to work in the United States and (iii)
or cause any current employee to become unauthorized to work in the United
States.
SECTION 2.27 No Undisclosed Liabilities. There are no
liabilities of the Company required to be recorded or disclosed under generally
accepted accounting principles, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in any such liability, other than liabilities under this Agreement or reflected
in the Disclosure Schedule or any other document delivered in connection with
this Agreement.
SECTION 2.28 Real Property. (a) The Company does not hold
any interest in real property (including, but not limited to, any interest as a
fee owner or any interest as lessor, lessee, sublessor, sublessee, assignor,
assignee or guarantor or other surety).
SECTION 2.29 Certain Interests. No manager, member or employee
of the Company, nor any relative of any such manager, member or employee, nor
any enterprise, firm, partnership, association, corporation or trust of which
any such officer, director, shareholder or relative is an officer, trustee,
director, partner, employee, agent, stockholder, owner or beneficiary, is a
party to or has an interest with respect to any Contract or Lease which relates
to or affects the business of the Company or has any interest in any property,
real or personal, tangible or intangible, used in or pertaining to the business
of the Company. For purposes of this Section 2.29, a relative of any person
means any person who is related by consanguinity, marriage or adoption to such
first person as a second cousin or closer relative or is a spouse of any such
relative.
SECTION 2.30 Powers of Attorney. Neither the Company nor the
Seller have any outstanding powers of attorney or comparable delegations of
authority in connection with the Company, its business or assets.
SECTION 2.31 Other Information. No document or item referred to
in any schedule (including, without limitation, the Disclosure Schedule) or
exhibit hereto contains, and no information set forth in any such schedule,
exhibit, document or item contains, any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements of the
Company and/or Seller contained therein not misleading.
SECTION 2.32 Environmental Compliance. Except as disclosed in
Section 2.32 of the Disclosure Schedule:
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(a) No notice, notification, demand, request for
information, citation, summons, complaint or order has been issued or filed, no
penalty has been assessed and no investigation or review is pending, or to the
best knowledge of Seller or the Company, threatened by any governmental or
other entity and, and to Seller knows of no facts that reasonably cause it to
be that any of the foregoing are reasonably likely to occur in the future, (i)
with respect to any alleged violation of any law, ordinance, rule, regulation
or order of any governmental entity in connection with the conduct of the
business of the Company and relating to a Hazardous Substance (as hereinafter
defined) or (ii) with respect to any alleged failure to have any permit,
certificate, license, approval, registration or authorization required in
connection with the conduct of the business of the Company relating to a
Hazardous Substance, or (iii) with respect to any generation, treatment,
storage, recycling, transportation, disposal or release (including a release as
defined in 42 USC 9601) ("Hazardous Release") of any toxic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and
other hydrocarbons, as defined in or regulated under applicable Federal, state
or local environmental statutes, ordinances, rules, regulations or orders
("Hazardous Substance") used in connection with the business or assets of the
Company.
(b)(i) The Company has not, handled any Hazardous
Substance, on any property now or previously owned or leased by the Company
(the "Properties"); (ii) no polychlorinated biphenyls ("PCBs") or urea
formaldehyde was or has become present at any of the Properties as a result of
any activity which is or was, directly or indirectly, within the control of the
Company and no PCBs or urea formaldehyde is or has been present at any of the
Properties that Seller or the Company knows of or of which they could
reasonably be expected to know; (iii) no friable asbestos was or has become
present at any of the Properties as a result of any activity which is or was,
directly or indirectly, within the control of the Company and no friable
asbestos is or has been present at any such property that Seller or the Company
knows of or of which it could reasonably be expected to know; (iv) there has
been no Hazardous Release of a Hazardous Substance at, on or under any of the
Properties that Seller or the Company knows of or of which they could
reasonably be expected to know; and (v) no Hazardous Substance is present in a
reportable or threshold planning quantity, where such a quantity has been
established by statute, ordinance, rule, regulation or order, at, on or under
any of the Properties as a result of any activity which is or was, directly or
indirectly, within the control of the Company and no such Hazardous Substance
in such quantity was or has become present at any of the Properties that Seller
or the Company knows of or of which they could reasonably be expected to know
of. Transaction triggers no environmental law that requires notice or approval
of government agency which notice or approval has not been previously obtained.
(c) The Company has not transported or arranged for the
transportation (directly or indirectly) of any Hazardous Substance to any
location which is listed or proposed for listing on the National Priorities
List under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS") or on any similar
state list or, to the best knowledge of Seller or the Company, which is the
subject of any federal, state or local enforcement action or other
investigation which may lead to claims
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for clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
(d) No oral or written notification of a Hazardous
Release of a Hazardous Substance has been filed by or, on behalf of, the
Company and, to the best knowledge of Seller or the Company, none of the
Properties is, based on any act or omission directly or indirectly within the
control of the Company during the period of ownership or lease by the Company,
listed or proposed for listing on the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS or on any similar state list of sites requiring
investigation or clean-up.
(e) There are no environmental Encumbrances on any asset
owned or leased by the Company, no government actions have been taken for, to
the best knowledge of Seller or the Company are in process which could subject
any of such assets to such Encumbrances and no notice or restriction relating
to the presence of a Hazardous Substance is required to be placed in any deed
to such of said assets title to which would be conveyed by use of a deed.
(f) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or which are in
the possession of the Company in relation to any of the Properties.
(g) Section 2.32(g) of the Disclosure Schedule is a
true, accurate and complete list of all environmental reports prepared for any
of the Properties (i) at the request of Seller or the Company or (ii) to the
best knowledge of Seller or the Company, at the request of any other person.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
As an inducement to Seller to enter into this Agreement, Purchaser
represents and warrants to Seller (which representations and warranties are
material to and relied upon by Seller) as follows:
SECTION 3.1 Organization and Authority of Purchaser. Purchaser
is a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary partnership power
and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by Purchaser, and
(assuming due authorization, execution and delivery by Seller and the Company)
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against Purchaser in accordance with its terms, subject to the effect, if any,
of bankruptcy, insolvency, reorganization, moratorium and
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other similar laws affecting the rights of creditors generally and the effect,
if any, of general principles of equity.
SECTION 3.2 No Conflicts. The execution, delivery and
performance of this Agreement by Purchaser does not and will not (i) violate or
conflict with the limited partnership agreement or other organizational
documents of Purchaser; (ii) conflict with or violate any law, rule or
regulation of, or any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any Governmental Authority
applicable to Purchaser; or (iii) conflict with, result in any breach of,
constitute a default (or constitute an event which with the giving of notice or
lapse of time, or both, would become or result in a conflict, breach or
default) under, any agreement or obligation to which Purchaser is a party or
subject and which would affect Purchaser's ability or authority to consummate
the transactions contemplated hereby.
SECTION 3.3 Investment Purpose. Purchaser is acquiring the
Units solely for the purpose of investment and not with a view to, or for offer
of sale in connection with, any distribution thereof. Purchaser acknowledges
that the Units have not been registered pursuant to the Securities Act of 1933,
as amended.
SECTION 3.4 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transaction contemplated hereby based upon arrangements made by or on
behalf of the Purchaser.
ARTICLE IV.
ADDITIONAL COVENANTS
SECTION 4.1 Conduct of Business Prior to the Closing. (a) From
the date hereof through the Closing Date, Seller and the Company hereby
covenant and agree that the Company shall conduct its business in the ordinary
course consistent with past practice and shall use its best efforts to preserve
intact its business organizations and relationships with third parties and to
keep available the services of its present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the
Closing Date, the Company and Seller will not (i) issue any shares of the
stock, warrants, options, or stock equivalents or declare or make any payment on
account of the purchase, redemption, retirement or acquisition or any shares of
the, (ii) declare any dividends or make any distributions to Seller (iii) take
any action that would have a Material Adverse Effect on the Company, (iv) incur
any indebtedness for borrowed money, (v) subject the assets of the Company to
any additional liens or encumbrances or mortgages, (vi) adopt or propose any
change in its Articles of Organization or Operating Agreement of the Company,
(vii) merge or consolidate with any other Person, acquire a material amount of
assets of any other Person, (viii) sell, lease, license or otherwise dispose of
any assets or property of the Company, (ix) enter into or renew (whether by
exercise of option or
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otherwise) or amend in any material respect any Contract or any Lease without
the prior written consent of Purchaser, other than for Management Agreements or
Site Agreements executed in the ordinary course of business and consistent with
past practices (x) take or agree or commit to take any action that would make
any representation or warranty of the Company or Seller inaccurate in any
respect at, or as of any time prior to, the Closing Date or omit or agree or
commit to omit to take any action necessary to prevent any such representation
or warranty from being inaccurate in any respect at any such time; or (xi)
permit the Company to agree or commit to do any of the foregoing.
SECTION 4.2 Confidentiality and Public Announcements. The
parties hereto agree to announce the consummation of this Agreement
simultaneously at a mutually agreeable time and the content of all
announcements and publicity relating to the subject matter of this Agreement
will be subject to the mutual approval of Seller and Purchaser, such consent
not to be unreasonably withheld, delayed or conditioned (except as otherwise
required by law). After the Closing Date, Seller shall, and shall cause its
representatives to, maintain the confidentiality of all non-public information
concerning the Purchaser and the terms of the transaction set forth in this
Agreement.
SECTION 4.3 COBRA Compliance. From and after the Closing Date,
Seller shall make available "Continuation Coverage" ((within the meaning of
Section 4980B of the Internal Revenue Code of 1986, as amended (the "Code") and
Part 6 of Subtitle B of Title I of ERISA) (such statutory provisions are
referred to herein collectively as "COBRA"), to all current or former employees
(and their eligible dependents) who either (A) have experienced a "qualifying
event" (within the meaning of COBRA) prior to the Closing Date and for whom the
period of Continuation Coverage required by COBRA has not, as of the Closing
Date, expired (such persons are hereinafter referred to as "Pre-Closing
Qualified Beneficiaries"), and (B) are employees of Seller as of the Closing
Date but do not become employees of Purchaser as of the Closing Date or do not
otherwise receive group health coverage from Purchaser as of the Closing Date
(such persons are hereinafter referred to as "Closing Date Qualified
Beneficiaries"). In addition, Seller shall provide group health coverage to
employees of Seller (and their eligible dependents) who are, as of the Closing
Date, on a leave of absence governed by the Family and Medical Leave Act of
1993, as amended ("FMLA") (such persons are hereinafter referred to as "FMLA
Persons"), in accordance with the requirements of FMLA and COBRA. Schedule 4.3
contains the name of each Pre-Closing Qualified Beneficiary and each FMLA
Person. In no event, however, shall the provisions of this paragraph affect
Seller's liability for any violations of COBRA occurring prior to the Closing
Date with respect to any Seller employees or their eligible dependents.
SECTION 4.4 Inconsistent Activities. From the date hereof until
the Closing Date hereof, neither the Company nor any of its managers, members,
employees or agents will, directly or indirectly, (a) take any action to
entertain, accept, solicit, initiate or encourage any acquisition proposal or
(b) engage in negotiations with, disclose any non-public information relating
to the Company or afford access to the properties, books or records of the
Company to,
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or enter into any agreement or option with respect to the acquisition of the
Company with, any Person that may be considering making, or has made, an
acquisition proposal.
SECTION 4.5 Amounts Owing. The Company has, prior to the
Closing Date, collected all amounts loaned or advanced by it to, or otherwise
receivable by it from Seller or from its directors, its officers, any other
employee or consultant.
SECTION 4.6 Governmental Filings, Section 338(h)(10). Seller
and the Company will cooperate in preparing and, if necessary, executing all
documents and governmental filings necessary to the transactions contemplated
hereby. Seller shall cooperate in making any filings, and executing any
documents or instruments reasonably necessary to have this transaction treated
as an asset purchase and sale pursuant to Section 338(h)(10) of the Code.
SECTION 4.7 Prepayment of Debts. Seller hereby agrees that it
shall reimburse Purchaser and the Company, as the case may be, for any cost,
expense or liability for prepayment penalties, fees or breakage costs incurred
by any of them in connection with any termination by any of them of any loan
agreement, note or other debt arrangement, prior to any date on which the
obligations and rights of the parties thereto shall, by the terms hereof,
expire.
SECTION 4.8 Certain Taxes Arising in Connection with this
Agreement. All transfer, documentary, sales, use, stamp, registration, value
added and other such Taxes and fees (including any penalties and interest)
incurred in connection with this Agreement, if any, shall be borne and paid by
Seller when due.
SECTION 4.9 Apportionment of Taxes. For purposes hereof, in
order appropriately to apportion any taxes for any period that begins on or
before, and ends after, the Closing Date, the parties hereto shall, to the
extent permitted by applicable law, elect with the relevant Taxing Authority to
treat for all purposes the Closing Date as the end of a Taxable Period of the
Company. In any case where applicable law does not permit the Company to treat
the Closing Date as the end of a Taxable period of the Company, then the
portion of each such Tax that is attributable to the Pre-Closing Tax Period
shall be (a) in the case of a Tax that is not based on gross or net income, the
total amount of such Tax for the relevant period multiplied by a fraction, the
numerator of which is the number of days in the portion of the period ending
with the Closing Date and the denominator of which is the total number of days
in such period,and (b) in the case of a tax that is based on gross or net
income, the Tax that would be due with respect to the portion of the period
ending with the Closing Date, if such portion were a short Taxable period.
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ARTICLE V.
CLOSING DELIVERIES
SECTION 5.1 Purchaser's Closing Deliveries. At Closing,
Purchaser shall cause the following items to be delivered to Seller:
(a) Officer's Certificate. A certificate signed by a
duly authorized officer of Purchaser certifying that, as of the Closing Date,
the representations and warranties of Purchaser contained in this Agreement are
true and correct in all material respects and all of the covenants contained in
this Agreement have been complied with in all material respects.
(b) Cash Payments. Seller shall have received
Purchaser's payment (i) of the Purchase Price for the Units in the amount of
Two Hundred and Eighty-Eight Thousand Five Hundred Seventy-Five and No/100
Dollars ($288,575.00) , (ii) for the Non-Compete Agreement in the amount of
$10,000.00.
(c) Certified Organizational Documents and Resolutions.
Seller shall have received a certificate duly executed and delivered by (i) a
general partner of Purchaser certifying as true, correct, complete and
unrevoked (x) the limited partnership agreement of Purchaser, (y) the
resolutions of the partners of Purchaser approving the execution and delivery
of this Agreement and the consummation of the transactions described herein,
and (z) the incumbency of the officers executing this Agreement and any
documents delivered at Closing.
SECTION 5.2 Seller's Closing Deliveries. At Closing, Seller
shall cause the following items to be delivered to Purchaser:
(a) Officer's Certificate. A certificate signed by a
duly authorized officer of Seller certifying that, as of the Closing Date, the
representations and warranties of Seller contained in this Agreement are true
and correct in all material respects and all of the covenants contained in this
Agreement have been complied with in all material respects.
(b) Certified Organizational Documents and Resolutions.
Purchaser shall have received a certificate duly executed and delivered by a
corporate secretary of the Company certifying as true, correct, complete and
unrevoked (x) the articles of incorporation and by-laws of the Company, (y) the
resolutions of the shareholders and board of directors of the Company approving
the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein, and (z) the incumbency of officers executing
this Agreement and any documents at Closing.
(c) Consents Obtained; Continued Operation; Certificate.
Purchaser shall have received all written consents to the transaction
contemplated herein from, and there shall have been given any required notices
of the transaction contemplated herein to, the appropriate party to, or issuer
of, each Contract, Lease, permit, license and other document or instrument
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specified in any Exhibit or Schedule hereto as requiring such consent or notice,
without change in the financial terms thereof or, in the aggregate, any material
cost to the Company incurred in connection with obtaining such consents or
giving such notices. No court, arbitrator or governmental body, agency or
official shall have issued any order or adopted any statute, rule or regulation,
which, in the reasonable opinion of Purchaser, would materially restrain the
operation by Purchaser of the business of the Company after the Closing Date.
Purchaser shall have received a certificate signed by the Seller stating that
the condition of the first sentence of this Section 5.2(c) has been satisfied.
(d) Units Certificates. Seller shall have executed and
delivered to Purchaser free and clear of all Units Encumbrances, a certificate
or certificates representing the Units to be sold by Seller to Purchaser
hereunder, duly endorsed for transfer to Purchaser.
(e) Non-Competition Agreement. For the consideration
referred to therein, Seller shall have executed and delivered to Purchaser the
Non-Competition Agreement.
(f) Certificates of Good Standing. Purchaser shall have
received certificates of good standing from the Secretaries of State for the
State in which the Seller and Company are organized and from each state in
which the Company conducts its business.
(g) Disclosure Schedule. Purchaser shall have received
from Seller an original Disclosure Schedule executed by Seller.
(h) Resignation Letters. Original letters addressed to
the Company and executed by each manager, officer and director of the Company
(other than those employees hired at Closing by Purchaser) in which such
individuals resign their respective positions with the Company.
(i) Side Letter Agreement. Purchaser shall have
received from Seller a side letter agreement which provides for the Company to
use certain office space within the Seller's office located in Little Rock,
Arkansas, the exact form of said side letter agreement to be mutually
agreed-upon by Seller and Purchaser at Closing.
SECTION 5.3 Employees. Purchaser hereby agrees to offer
employment at Closing to the employees set forth on Section 2.26 of the
Disclosure Schedule for a period of not less than ninety (90) days; provided,
however, Purchaser shall have the right to terminate any of said employees
prior to the expiration of said ninety day period for "cause" as said term is
defined either under the laws of the State of Arkansas or as defined in
Purchaser's employee handbook.
SECTION 5.4 Allocation Schedule. At Closing, Seller and
Purchaser shall execute and deliver a schedule allocating the Purchase Price
(as adjusted) amongst the assets of the Company and the Non-Compete Agreement,
the form and content of said schedule to be mutually agreed upon by Seller and
Purchaser. Seller and Purchaser agree that they will
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prepare and file any notice or other filings required pursuant to Section 1060
of the Code, and that any such notices or filings will be prepared based on such
tax allocation of the Purchase Price.
SECTION 5.5 Further Assurances. At any time on or after the
Closing Date, each party will execute and deliver any further assignments,
conveyances and other assurances, documents and instruments of transfer
reasonably requested by another party to consummate the transaction
contemplated hereby.
ARTICLE VI.
INDEMNIFICATION; LIABILITY
SECTION 6.1 Survival of Representations and Warranties. The
representations and warranties of Seller set forth in this Agreement shall
survive the Closing through and expire on the close of business of the second
anniversary date of the Closing Date; provided, however, the representations
and warranties dealing with Tax matters shall survive through the tenth day
following the running of the applicable statute of limitations after given
effect to any extensions or waiver and the representations and warranties
dealing with the Management Agreements shall survive through the end of the
initial term of the Management Agreement in question as so provided therein.
If written notice of a claim has been given prior to, but not after, the
expiration of the applicable representations and warranties by party in whose
favor such representations and warranties have been made to the party that made
such representations and warranties, then the relevant representations and
warranties shall survive as to such claim, until the claim has been finally
resolved. The representations and warranties of the Company set forth in
Article II shall expire at Closing, and upon Closing, shall be of no further
force and effect.
SECTION 6.2 Indemnification by Seller. Except as otherwise
limited by this Article, Purchaser and its officers, directors, employees,
agents, successors and assigns shall be indemnified and held harmless by
Seller, for any and all liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable legal costs and expenses) arising out of or resulting
from (a) the breach of any representation or warranty by Seller or the Company
contained herein or in any document delivered hereunder at the Closing; or (b)
the breach of any covenant or agreement contained herein to be performed by
Seller or the Company or (c) any act or omission of Sellers with respect to, or
any event or circumstance related to, the ownership or operation of the assets
or the conduct of the business of the Company, which act, omission, event or
circumstance occurred or existed prior to or on the Closing Date, without
regard to whether a claim with respect to such matter is asserted before or
after the Closing Date.
SECTION 6.3 Indemnification by Purchaser. Except as otherwise
limited by this Article VI, Seller shall be indemnified and held harmless by
Purchaser for any and all liabilities,
23
<PAGE> 28
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, reasonable legal costs and expenses)
arising out of or resulting from (a) the breach of any representation or
warranty by the Purchaser contained herein or in any document delivered
hereunder at the Closing; or (b) the breach of any covenant or agreement by the
Purchaser contained herein.
SECTION 6.4 General Indemnification Provisions. (a) The
indemnified party shall promptly notify the indemnifying party of any claim,
demand, action or proceeding for which indemnification is sought under Section
6.2 or 6.3 of this Agreement and, if such claim, demand, action or proceeding
is a third party claim, demand, action or proceeding, the indemnifying party
will have the right, at its own expense, to assume the defense thereof using
counsel reasonably acceptable to the indemnified party, except in the case of a
claim that relates to Taxes, as to which Purchaser shall assume the defense,
and Seller may, at their sole expense, participate in such defense. The
indemnified party shall have the right to participate, at its own expense, with
respect to any such third party claim, demand, action or proceeding. In
connection with any such third party claim, demand, action or proceeding, the
parties thereto shall cooperate with each other and provide each other with
access to relevant books and records in their possession. No such third party
claim, demand, action or proceeding shall be settled without prior written
consent of the indemnified party, provided, however, that if a firm, written
offer is made to settle any such third party claim, demand, action or
proceeding and the indemnifying party proposes to accept such settlement and
the indemnified party refuses to consent to such settlement, then: (i) the
indemnifying party shall pay such amount to the indemnified party; (ii) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding; and (iii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action, or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
indemnified party on such third party claim, demand, action or proceeding is
greater that the amount of the proposed settlement.
(b) Any payment made to or on behalf of any indemnified
party shall be increased to such amount as will, after taking into account all
Taxes imposed with respect to the accrual or receipt of such payment (as the
same may be increased pursuant this sentence), equal the amount of the payment
otherwise due without considering the taxes payable by such party as a result
of the accrual or receipt of such payment.
(c) Upon payment by an indemnified party to a third
party of an amount subject to indemnification, the indemnifying party shall
discharge its indemnification obligation by paying to the indemnified party an
amount equal to the amount paid by the indemnified party to the third party.
(d) Unless disputed by the indemnifying parts, any
payment pursuant to this Article VI shall be made not later than thirty (30)
days after receipt by the indemnifying party of written notice from the
indemnified party stating that an indemnifiable amount has been paid
24
<PAGE> 29
to a third party, and specifying the amount thereof and the amount of the
indemnity payment requested.
(e) Notwithstanding the terms of this Article VI, Seller
shall have no liability for indemnification under Sections 6.2 and 6.4 unless
and until the aggregate amount of claims for indemnification hereunder equals
or exceeds Ten Thousand and No/100 Dollars ($10,000.00) (the "Threshold
Amount"). Once the aggregate amount of the claims hereunder equal or exceed
the Threshold Amount, Seller shall be liable for the full amount of all such
claim amounts, including the Threshold Amount. Purchaser shall not be
entitled to recover from Seller, under any circumastances whatsoever, an amount
in excess of the sum of (i) the Cash Portion of Purchase Price plus (ii) the
Royalties paid during the term set forth in Section 1.2(b)(E) of this
Agreement.
SECTION 6.5 Limits on Indemnification and Liability. The
amounts for which the indemnifying party shall be liable under of this
agreement shall be net of (i) any insurance proceeds received by the
indemnified party and (ii) any tax benefits to the indemnified party, arising
from the facts giving rise to the liability or right of indemnification.
SECTION 6.6 Right of Offset. Pursuant to Section 1.2(b)(F) of
this Agreement, Purchaser shall have the right to offset against the Royalty
otherwise payable to Seller pursuant to the indemnification provisions in this
Article 6. Said right of offset, however, shall not be exclusive of any other
right or remedy Purchaser may have with respect to the Section 6.1 Indemnified
Claims, whether under this Agreement, at law or in equity.
ARTICLE VII.
Intentionally Deleted.
ARTICLE VIII.
GENERAL PROVISIONS
SECTION 8.1 Notices. All notices, request, demands, consents or
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given upon delivery in person or upon the
expiration of three days after the date of posting, if mailed by registered or
certified air mail, postage prepaid, to the parties at the following addresses
(or at such other address for a party and shall be specified by a notice,
provided that notice of change of address shall be effective only upon
receipt):
25
<PAGE> 30
(a) if to Seller or the Company:
Mr. David P. Tomick
Chief Financial Officer
Spectrasite Holdings, Inc.
800 Regency Parkway, Suite 570
Cary, North Carolina 27511
with a copy to:
Hutchison & Mason, PLLC
4011 Westchase Boulevard, Suite 400
Raleigh, North Carolina 27607
Attention: J. Robert Tyler, III, Esq.
(b) if to Purchaser:
Mr. Jeffrey E. Ginsberg
Apex Site Management
555 North Lane
Suite 6138
Conshohocken, PA 19428
with a copy to:
Arnall Golden & Gregory, LLP
1201 W. Peachtree St.; Suite 2800
Atlanta, GA 30309-3400
Attn: Michael D. Golden, Esq.
SECTION 8.2 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.3 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate n good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner so that transactions contemplated hereby are fulfilled to the
greatest extent possible.
26
<PAGE> 31
SECTION 8.4 Entire Agreement. This Agreement constitutes the
entire agreement among the parties and supersedes all prior agreements and
undertakings with respect to the subject matter hereof, except that the
Confidentiality Agreement between Purchaser and the Company shall remain in
full force and effect.
SECTION 8.5 Assignment. Purchaser may not assign to a third
party its obligations to pay the Royalty without the consent of Seller;
provided, such consent shall not be unreasonably withheld, delayed or
conditioned; provided, further, Seller shall consent to an assignment by
Purchaser of its obligation to pay the Royalty if the proposed assignee has at
least the same financial strength and marketing expertise as Purchaser has on
the Closing Date.
SECTION 8.6 No Third-Party Beneficiaries. This Agreement is for
the sole benefit of the parties hereto and nothing herein expressed or implied
shall give or be construed to give to any person or entity, other than the
parties hereto and such assigns, any legal or equitable rights hereunder.
SECTION 8.7 Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by the parties hereto.
SECTION 8.8 Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED UNDER AND IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA.
SECTION 8.10 Jurisdiction. Jurisdiction to resolve any controversy,
claim, dispute or litigation between the parties hereto arising out of this
Agreement or the transactions contemplated herein shall vest exclusively with a
court of competent jurisdiction in Philadelphia, Pennsylvania.
SECTION 8.11 Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns.
27
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal as of the date first written above.
PURCHASER
APEX SITE MANAGEMENT, L.P.
By: G2 Ventures, Inc., its general partner
By: /s/ Jeffrey E. Ginsberg
----------------------------------
Jeffrey E. Ginsberg
President
SELLER
SPECTRASITE HOLDINGS, INC.
By: /s/ David P. Tomick
----------------------------------
David P. Tomick
Chief Financial Officer
COMPANY
METROSITE MANAGEMENT, LLC
By: /s/ Joe L. Finley, III
----------------------------------
Joe L. Finley, III
President
28
<PAGE> 1
EXHIBIT 10.15
[SpectraSite Communications Letterhead]
February 6, 1998
Mr. Kirk Delprete
V.P. Operations
Whalen & Company, Inc.
3675 Mt. Diablo Boulevard
Suite 360
Lafayette, CA 94549
RE: Tower Acquisition Opportunities
Dear Kirk:
This is to confirm our recent conversation regarding Whalen & Company and
SpectraSite Communications' agreement to address opportunities to acquire
towers.
SpectraSite Communications will compensate Whalen & Company for every tower
acquisition opportunity we close as follows:
1. $2,500 for each tower
2. An additional $1,000 for each tower where the purchase price,
as a multiple of cash flow, is 13 times or less
In addition, SpectraSite Communications agrees that Whalen & Company will
provide the Due Diligence work associated with these opportunities at the
previously agreed upon rates. Also, any multiple tenant leases initiated by
Whalen will be compensated under the agreement dated February 6, 1998.
This is the beginning of a long and mutually rewarding relationship.
Sincerely,
SPECTRASITE COMMUNICATIONS, INC.
/s/ ROBERT M. LONG
- -----------------------------------------------
By: Robert M. Long
Its: Vice President of Marketing
AGREED AND ACCEPTED BY:
WHALEN & COMPANY, INC.
/s/ KIRK DELPRETE Date: 2/12/98
- ---------------------------------------- ------------
By: Kirk Delprete
Its: Vice President of Operations
<PAGE> 1
EXHIBIT 10.16
SPECTRASITE HOLDINGS, INC.
STOCK OPTION PLAN
1. Purpose. The SpectraSite Holdings, Inc. Stock Option Plan (the
"Plan") is established to create an additional incentive for key
employees, directors, and consultants or advisors of SpectraSite
Holdings, Inc. and any successor corporations thereto (collectively
referred to as the "Company"), and any present or future parent
and/or subsidiary corporations of such corporation (all of whom along
with the Company being individually referred to as a "Participating
Company" and collectively referred to as the "Participating Company
Group"), to promote the financial success and progress of the
Participating Company Group. For purposes of the Plan, a parent
corporation and a subsidiary corporation shall be as defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board") and/or by a duly appointed
committee of the Board having such powers as shall be specified by
the Board. If the Company becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended,
thereafter, members of such committee shall consist only of
"non-employee" directors, as defined in Section 16 of the Securities
Act of 1933, as amended, who are "outside directors," as defined in
Section 162(m) of the Code. Any subsequent references herein to the
Board shall also mean the committee if such committee has been
appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of
the Board granted herein, other than power to terminate or amend the
Plan as provided in Paragraph 12 hereof, subject to the terms of the
Plan and any applicable limitations imposed by law. All questions of
interpretation of the Plan or of any option granted under the Plan
(an "Option") shall be determined by the Board, and such
determinations shall be final and binding upon all persons having an
interest in the Plan and/or any Option. Options may be either
incentive stock options as defined in Section 422 of the Code
("Incentive Stock Options") or nonqualified stock options. Any
officer of a Participating Company shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation,
or election which is the responsibility of or which is allocated to
the Company herein, provided the officer has apparent authority with
respect to such matter, right, obligation, or election.
3. Eligibility. The Options may be granted only to employees (including
officers) and directors of the Participating Company Group or to
individuals who are rendering services as consultants, advisors, or
other independent contractors to the Participating Company Group. The
Board, in its sole discretion, shall determine which persons shall be
granted Options (an "Optionee"). A director of the Company shall be
eligible to be granted only a nonqualified stock option unless the
director is also an employee of the Company. An individual who is
rendering services as a consultant, advisor, or other
<PAGE> 2
independent contractor shall be eligible to be granted only a
nonqualified stock option. An Optionee may, if otherwise eligible, be
granted additional Options.
4. Shares Subject to Option. Options shall be options for the purchase
of the authorized but unissued common stock of the Company (the
"Stock"), subject to adjustment as provided in Paragraph 10 below.
The maximum number of shares of Stock which may be issued under the
Plan shall be One Million Eight Hundred Seventeen Thousand Seven
Hundred (1,817,700) shares. In the event that any outstanding Option
for any reason expires or is terminated or cancelled and/or shares of
Stock subject to repurchase are repurchased by the Company, the
shares allocable to the unexercised portion of such Option, or such
repurchased shares, may again be subject to an Option grant. It is
intended that the Plan shall constitute a written compensatory
benefit plan within the meaning of Rule 701 promulgated under the
Securities Act of 1933, as amended ("Rule 701"), and that the Plan
shall otherwise be administered in compliance with the requirements
of Rule 701. To ensure such compliance, the Board shall maintain a
record of shares subject to outstanding Options under the Plan and
the exercise price of such Options, plus a record of all shares of
Common Stock issued upon the exercise of such Options and the
exercise price of such Options.
5. Time for Granting Options. All Options shall be granted, if at all,
within ten (10) years from the earlier of the date the Plan is
adopted by the Board or the date the Plan is duly approved by the
shareholders of the Company.
6. Terms, Conditions and Form of Options. Subject to the provisions of
the Plan, the Board shall determine for each Option (which need not
be identical) the number of shares of Stock for which the Option is
granted, whether the Option is to be treated as an Incentive Stock
Option or as a nonqualified stock option and all other terms and
conditions of the Option not inconsistent with the Plan. Options
granted pursuant to the Plan shall comply with and be subject to the
following terms and conditions:
(a) Option Price. The option price for each Option shall be
established in the sole discretion of the Board; provided,
however, that (i) the option price per share for an
Incentive Stock Option shall be not less than the fair
market value of a share of Stock on the date of the
granting of the Incentive Stock Option and (ii) the option
price per share of an Incentive Stock Option granted to an
Optionee who at the time the Incentive Stock Option is
granted owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock
of a Participating Company within the meaning of section
422(b)(6) of the Code (a "Ten Percent Owner Optionee")
shall be not less than one hundred ten percent (110%) of
the fair market value of a share of Stock on the date the
Option is granted. For this purpose, "fair market value"
means the value assigned to the stock for a given day by
the Board, as determined pursuant to a reasonable method
established by the Board that is consistent with the
requirements of Sections 422 and 424 of the Code and the
regulations thereunder (which method may be changed from
time to time). Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a nonqualified stock
option) may be
2
<PAGE> 3
granted by the Board in its discretion with an exercise
price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption
or substitution for another option in a manner qualifying
with the provisions of Section 424(a) of the Code. Nothing
hereinabove shall require that any such assumption or
modification will result in the Option having the same
characteristics, attributes or tax treatment as the Option
for which it is substituted.
(b) Exercise Period of Options. The Board shall have the
power to set the time or times within which each Option
shall be exercisable or the event or events upon the
occurrence of which all or a portion of each Option
shall be exercisable and the term of each Option;
provided, however, that (i) no Incentive Stock Option
shall be exercisable after the expiration of ten (10)
years after the date such Incentive Stock Option is
granted, (ii) no Incentive Stock Option granted to a
Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the date such
Incentive Stock Option is granted, and (iii) no
Incentive Stock Option shall be exercisable after the
date the Optionee's employment with the Participating
Company Group is terminated for cause (as determined in
the sole discretion of the Board); and provided, further,
an Option shall terminate and cease to be exercisable no
later than three (3) months after the date on which the
Optionee terminates employment with the Participating
Company Group, unless the Optionee's employment with
the Participating Company Group shall have terminated as
a result of the Optionee's death or disability (within
the meaning of Section 22(e)(3) of the Code), in which
event the Option shall terminate and cease to be
exercisable no later than twelve (12) months from the
date on which the Optionee's employment terminated. For
this purpose, an Optionee's employment shall be deemed
to have terminated on account of death if the Optionee
dies within three (3) months following the Optionee's
termination of employment.
(c) Payment of Option Price. Payment of the option price for
the number of shares of Stock being purchased pursuant
to any Option shall be made in cash, by check or cash
equivalent.
(d) $100,000 Limitation. The aggregate fair market value,
determined as of the date on which an Incentive Stock
Option is granted, of the shares of Stock with respect
to which incentive stock options (determined without
regard to this subsection) are first exercisable during
any calendar year (under this Plan or under any other
plan of the Participating Company Group) by any Optionee
shall not exceed $100,000. If such limitation would be
exceeded with respect to an Optionee for a calendar year,
the Incentive Stock Option shall be deemed a nonqualified
stock option to the extent of such excess.
7. Standard Form of Stock Option Agreements. Subject to the provisions
of Paragraph 9 below, all Options shall be evidenced by a written
award agreement in substantially the forms attached hereto as Exhibit
A-1 (Nonqualified Stock Option Agreement: Time-Based Without
Performance Acceleration), Exhibit A-2 (Nonqualified Stock Option
Agreement: Time-Based With Performance Acceleration), Exhibit B-1
(Incentive Stock
3
<PAGE> 4
Option Agreement: Time-Based Without Performance Acceleration), and
Exhibit B-2 (Incentive Stock Option Agreement: Time-Based With
Performance Acceleration), each of which is incorporated herein by
reference (the "Standard Option Agreements").
8. Transfer of Control. Except as otherwise provided in the Standard
Option Agreement evidencing the Option, upon a merger, consolidation,
corporate reorganization, or any transaction in which all or
substantially all of the assets of the Company are sold, leased,
transferred, or otherwise disposed of (other than a mere
reincorporation transaction or one in which the holders of capital
stock of the Company immediately prior to such merger or
consolidation continue to hold at least a majority of the voting
power of the surviving corporation) (a "Transfer of Control"), then
any unexercisable portion of an outstanding Option shall become
immediately exercisable as of a date prior to the Transfer of
Control, which date shall be determined by the Board. The exercise of
any Option that was permissible solely by reason of this Paragraph 8
shall be conditioned upon the consummation of the Transfer of
Control.
9. Authority to Vary Terms. The Board shall have the authority from time
to time to vary the terms of the Standard Option Agreements either in
connection with the grant of an individual Option or in connection
with the authorization of a new standard form or forms; provided,
however, that the terms and conditions of such revised or amended
standard form or forms of stock option agreement shall be in
accordance with the terms of the Plan. Such authority shall include,
but not by way of limitation, the authority to grant Options which
are not immediately exercisable or which are subject to the Optionee
meeting performance standards.
10. Effect of Change in Stock Subject to Plan. The Board shall make
appropriate adjustments in the number and class of shares of Stock
subject to the Plan and to any outstanding Options and in the option
price of any outstanding Options in the event of a stock dividend,
stock split, reverse stock split, combination, reclassification, or
like change in the capital structure of the Company. Notwithstanding
the foregoing, such adjustments shall be made only to prevent the
dilution or enlargement of the rights granted under the options as a
result of any of the foregoing events.
11. Options Non-Transferable. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be
assignable or transferable by the Optionee, except by will or by the
laws of descent and distribution.
12. Termination or Amendment of Plan. The Board may terminate or amend
the Plan at any time; provided however, that without the approval of
the Company's shareholders, there shall be (a) no increase in the
total number of shares of Stock covered by the Plan (except by
operation of the provisions of Paragraph 10 above), (b) no change in
the class of persons eligible to receive Incentive Stock Options, and
(c) no extension of the period during which Incentive Stock Options
may be granted beyond the date which is ten (10) years following the
date the Plan is adopted by the Company or the date the Plan is
approved by the shareholders of the Company. In any event, no
amendment may adversely affect any then outstanding Option or any
unexercised portion thereof, without
4
<PAGE> 5
the consent of the Optionee, unless such amendment is required to
enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option.
13. Miscellaneous
(a) Nothing in this Plan or any Option granted hereunder shall
confer upon any Optionee any right to continue in the
employment of the Participating Company Group, or to serve
as a director or consultant thereof, or interfere in any
way with the right of a Participating Company to terminate
his or her employment, directorship, or consulting
relationship at any time. Unless specifically provided
otherwise, no grant of an Option shall be deemed salary or
compensation for the purpose of computing benefits under
any employee benefit plan or other arrangement of a
Participating Company for the benefit of its employees
unless the Participating Company shall determine
otherwise. No Optionee shall have any claim to an Option
until it is actually granted under the Plan. To the extent
that any person acquires a right to receive payments from
the Company under the Plan, such right shall, except as
otherwise provided by the Board, be no greater than the
right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the
general funds of the Company, and no special or separate
fund shall be established and no segregation of assets
shall be made to assure payment of such amounts, except as
otherwise provided by the Committee.
(b) The Plan and the grant of Options hereunder shall be
subject to all applicable federal and state laws, rules,
and regulations and to such approvals by any United States
government or regulatory agency as may be required.
(c) The terms of the Plan shall be binding upon the Company,
and its successors and assigns.
(d) This Plan and all actions taken hereunder shall be
governed by the laws of the State of North Carolina.
(e) If any provision of this Plan or a Standard Option
Agreement is or becomes or is deemed invalid, illegal, or
unenforceable in any jurisdiction, or would disqualify the
Plan or any Standard Option Agreement under any law deemed
applicable by the Board, such provision shall be construed
or deemed amended to conform to applicable laws or if it
cannot be construed or deemed amended without, in the
determination of the Board, materially altering the intent
of the Plan or the Standard Option Agreement, it shall be
stricken and the remainder of the Plan or the Standard
Option Agreement shall remain in full force and effect.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the foregoing Plan was duly adopted by the Board of Directors of
the Company as of the 24th day of June, 1997.
SPECTRASITE HOLDINGS, INC.
By: /s/ David P. Tomick
----------------------------
David P. Tomick, Secretary
6
<PAGE> 1
EXHIBIT 10.17
SPECTRASITE HOLDINGS, INC.
Suite 570, 8000 Regency Parkway
Cary, North Carolina 27511
March 23, 1998
W. Chris Hegele
Kitty Hawk Capital
2700 Coltsgate Rd., Suite 202
Charlotte, NC 28211
Attention: Chris Hegele
Re: Management Rights
Dear Chris:
This letter will confirm our agreement that in connection with the
purchase by Kitty Hawk Capital Limited Partnership, IV ("Kitty Hawk IV") of
307,216 shares of Series B Cumulative Convertible Redeemable Preferred Stock of
SpectraSite Holdings, Inc. (the "Company"), you will be entitled to the
following contractual management rights, in addition to rights to certain
non-public financial information, inspection rights and other rights
specifically provided to you under the Stock Purchase Agreement of even date
herewith by and among the Company, Kitty Hawk IV and certain other investors.
(1) If and for so long as you do not have a representative on the
Company's Board of Directors ("Unrepresented Party"), you shall be permitted to
select one representative ("Representative") to consult with and advise
management of the Company on significant business issues, including management's
proposed annual operating plans, and management will make itself available to
meet with your Representative regularly during each year at the Company's
facilities at mutually agreeable times for such consultation and advice and to
review progress in achieving said plans.
(2) If and for so long as you are an Unrepresented Party, your
Representative may examine the books and records of the Company and inspect its
facilities and may request information at reasonable times and intervals
concerning the general status of the Company's financial condition and
operations, provided that access to highly confidential proprietary information
and facilities need not be provided.
(3) If and for so long as you are an Unrepresented Party, the
Company shall invite you to send your Representative to attend in a nonvoting
observer capacity all meetings of its Board of Directors and, in this respect,
shall give your Representative copies of all notices, minutes, consents and
other material that it provides to its Directors; provided, however, that the
<PAGE> 2
Company reserves the right to exclude your Representative from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential proprietary
information or for other similar reasons. Your Representative may participate in
discussions of matters brought to the Board.
The rights described herein shall terminate and be of no further
force or effect upon the earliest to occur of (a) the closing of a public
offering of shares of the Company's capital stock pursuant to a registration
statement filed by the Company under the Securities Act of 1933 which has become
effective thereunder (other than a registration statement relating solely to
employee benefit plans or transaction covered by Rule 145), (b) such time as the
Company becomes required to file reports with the Securities and Exchange
Commission under Sections 12(g) or15(d) of the Securities Exchange Act of 1934,
or (c) such time as you hold, in the aggregate, less than 20% of the Series A
Convertible Preferred Stock purchased by you on the date hereof.
Very truly yours,
SpectraSite Holdings, Inc.
By: /s/ Stephen H. Clark
-----------------------
Stephen H. Clark, President
2
<PAGE> 1
EXHIBIT 10.18
ESCROW AGREEMENT
This AGREEMENT (the "Agreement"), dated as of May 12, 1997, by
and among INTEGRATED SITE DEVELOPMENT, INC. (the "Company"), a Delaware
corporation, FINLEY FAMILY LIMITED PARTNERSHIP (the "Stockholder"), an Arkansas
limited partnership, and MORRISON COHEN SINGER & WEINSTEIN, LLP (the "Escrow
Agent"), as escrow agent hereunder. Any capitalized terms used herein and not
otherwise defined herein, shall have the meanings assigned to them in the Stock
Restriction Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Company and the Stockholder are parties to a
Stock Restriction Agreement (the "Stock Restriction Agreement"), dated as of
May 12, 1997;
WHEREAS, pursuant to the Stock Restriction Agreement, the
Company and the Stockholder have agreed that 408,764 of his shares of Common
Stock, par value $0.001, per share of the Company, shall be deposited with the
Escrow Agent to be held in escrow (the "Escrowed Shares") for the purpose of
facilitating the repurchase by the Company of the Escrowed Shares under the
circumstances set forth in the Stock Restriction Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants contained herein, the parties hereto agree as follows:
1. ESCROW.
(a) The Company and the Stockholder hereby
establish this escrow by designating the Escrow Agent as their escrow agent for
the purposes set forth herein, and the Escrow Agent hereby agrees to act as
said escrow agent.
(b) The Stockholder is herewith assigning and
delivering to the Escrow Agent, and the Escrow Agent hereby acknowledges
receipt of, the Escrowed Shares, duly endorsed in blank or accompanied by stock
powers duly executed in blank. The term "Escrowed Shares" as used herein shall
include such securities of the Company distributed with respect to the Escrowed
Shares then in escrow, together with any proceeds thereof. Upon receipt of any
securities distributed to the Stockholder with respect to the Escrowed Shares
or any proceeds with respect to any Escrowed Shares, the Stockholder agrees to
promptly deliver such distributed securities or proceeds, as the case may be,
directly to the Escrow Agent, to be held in escrow in accordance with the terms
hereof.
<PAGE> 2
(c) The Escrow Agent shall hold and release the
Escrowed Shares in accordance with the terms and conditions of this Agreement.
2. DISPOSITION OF ESCROWED SHARES.
(a) At such times as the Company exercises the
Purchase Option pursuant to the terms of the Stock Restriction Agreement, it
shall provide the Escrow Agent with a copy of the notice (the "Exercise
Notice") delivered pursuant to Section 3(a) of the Stock Restriction Agreement,
together with a check in the amount of the Option Price payable to the order of
the Stockholder (the "Company Check"). The copy of the Exercise Notice shall be
accompanied by a certification by the Company that it was contemporaneously
delivered to the Stockholder. Promptly following ten (10) days after its
receipt of the Exercise Notice, the Escrow Agent shall deliver to (i) the
Company the number of Escrowed Shares specified in the Exercise Notice and (ii)
the Stockholder the Company Check; provided, however, that no such delivery of
the Escrowed Shares or the Company Check shall be made if the Escrow Agent
shall have received from the Stockholder a notice (the "Stockholder Counter
Notice") stating that the Company is not entitled to the Escrowed Shares
pursuant to the terms of the Stock Restriction Agreement. The Stockholder
Counter Notice shall be accompanied by a certification by the Stockholder that
a copy of the Stockholder Counter Notice was contemporaneously delivered to the
Company.
(b) In the event the Purchase Option has expired
as to any of the Escrowed Shares, the Stockholder may provide written notice
(the "Release Notice") to the Escrow Agent setting forth the number of Escrowed
Shares that are no longer subject to the Purchase Option. The Release Notice
shall be accompanied by a certification by the Company that a copy of the
Release Notice was contemporaneously delivered to the Company. Promptly
following ten (10) days after its receipt of the Release Notice, the Escrow
Agent shall deliver to the Stockholder the number of Escrowed Shares specified
in the Release Notice; provided, however, that no such delivery of the Escrowed
Shares shall be made if the Escrow Agent shall have received from the Company a
notice (the "Company Counter Notice") stating that the Stockholder is not
entitled to the Escrowed Shares pursuant to the terms of the Stock Restriction
Agreement. The Company Counter Notice shall be accompanied by a certification
by the Stockholder that a copy of the Company Counter Notice was
contemporaneously delivered to the Company.
(c) On July 1, 1999, the Escrow Agent shall
deliver to the Stockholder all of the Escrowed Shares, if any, then remaining
in escrow. Notwithstanding the foregoing, the Escrowed Shares shall not be
released pursuant to this Section 2(c) if an Exercise Notice or Company Counter
Notice was received by the Escrow Agent before July 1, 1999. The Escrowed
Shares shall be released in accordance with the provisions of Section 4(g)
hereof.
3. DIVIDENDS AND VOTING POWER.
While the Escrowed Shares are being held in escrow, the
Stockholder shall be entitled to all rights (other than the right to dispose of
the Escrowed Shares) with respect to the Escrowed
2
<PAGE> 3
Shares, including without limitation, the right to exercise all voting power
and to receive and retain any and all dividends (other than stock or
liquidating dividends, which shall be deposited into escrow in accordance with
the terms and conditions of paragraph 1(b) hereof) declared or paid on the
Escrowed Shares being held in escrow.
4. NO LIABILITY OF ESCROW AGENT.
(a) The duties and obligations of the Escrow
Agent shall be determined solely by the express provisions of this Agreement,
and the Escrow Agent shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement.
(b) The Escrow Agent shall not be responsible in
any manner whatsoever for any failure or inability of the Company or the
Stockholder to perform or comply with any of the provisions of this Agreement
or the Stock Restriction Agreement.
(c) In the performance of its duties hereunder,
the Escrow Agent shall be entitled to rely upon any document, instrument or
signature believed by it to be genuine and signed by the Company or the
Stockholder. The Escrow Agent may assume that any person purporting to give
any notice in accordance with the provisions hereof has been duly authorized to
do so.
(d) The Escrow Agent shall not be bound by any
modification, cancellation or rescission of this Agreement unless in writing
and signed by it, the Company and the Stockholder.
(e) The Escrow Agent shall not be liable for any
error of judgment, or any action taken or omitted to be taken hereunder, except
in the case of its willful misconduct or gross negligence. The Escrow Agent
shall be entitled to consult with counsel of its choosing and shall not be
liable for any action taken or omitted by it in accordance with the advice of
such counsel.
(f) The Escrow Agent shall have no responsibility
as to the validity or value of the Escrowed Shares held in escrow hereunder.
Furthermore, the Escrow Agent shall have no duty as to the collection or
protection of the Escrowed Shares (including the proceeds thereof) income
thereon, nor as to the preservation of any rights pertaining thereto, beyond
the safe custody of any such Escrowed Shares (including the proceeds thereof)
or income thereon actually in its possession.
(g) In the event that the Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive instructions
from any party hereto with respect to any or all of the Escrowed Shares
(including the proceeds thereof) or income thereon which, in its reasonable
opinion, are in conflict with any of the provisions of this Agreement or any
instructions received from one of the other parties to this Agreement, the
Escrow Agent shall be entitled to (i) refrain from taking any action other than
to keep the Escrowed Shares (including the proceeds thereof) or income thereon
in question until such time as there has been a "final determination" of the
rights of the
3
<PAGE> 4
applicable parties with respect to such Escrowed Shares (including the proceeds
thereof) or income thereon or (ii) deposit at any time the Escrowed Shares,
together with any proceeds received by it, into any court with competent
jurisdiction and to commence an action in the nature of interpleader to
adjudicate the parties' rights thereto and thereafter shall have no further
obligations or liabilities to anyone under this Agreement. For purposes of
this subparagraph 4(g), there shall be deemed to have been a "final
determination" of the rights of the applicable parties with respect to such
Escrowed Shares in question (including the proceeds thereof) or income thereon
at such time as any of the applicable parties shall file with the Escrow Agent
(i) an official certified copy of a court order, together with an opinion of
counsel of the party filing the foregoing, in form and substance acceptable to
the Escrow Agent and its counsel, stating that the court order is a final
determination of the rights of the parties hereto with respect to the Escrowed
Shares in question, that the time to appeal from said court order has expired,
and that said court order is binding upon the applicable parties, or (ii) a
fully executed agreement or consent by and among the applicable parties, which
provides for disposition of the Escrowed Shares in question (including the
proceeds thereof) or income thereon.
(h) The Escrow Agent or any successor to it as
escrow agent hereafter appointed may at any time resign and be discharged of
the duties imposed hereunder by giving notice to each of the parties hereto,
such resignation to take effect upon a successor escrow agent's acceptance of
appointment.
(i) The parties hereto acknowledges that the
Escrow Agent is counsel to an affiliate of the Company and consents that the
Escrow Agent may represent the Company, any of its affiliates and any entities
in which Company or its affiliates own any securities, equity, debt or
otherwise, in any dispute, controversy, action or legal proceeding (including,
without limitation, against the Stock Holder or involving this Agreement or the
Stock Restriction Agreement).
5. EXPENSES AND INDEMNIFICATION OF ESCROW AGENT.
The Company and the Stockholder shall jointly and severally
reimburse and indemnify the Escrow Agent for, and hold it harmless against, any
and all loss, liability, costs or expenses in connection herewith (including
reasonable fees, disbursements and other charges of counsel incurred by the
Escrow Agent in any dispute, controversy, action or legal proceeding between it
and one of the other parties hereto, or between it and a third party), incurred
by the Escrow Agent arising out of or in connection with its acceptance of, or
the performance of its duties and obligations under this Agreement (except
those arising out of or in connection with Escrow Agent's willful misconduct or
gross negligence) as well as the reasonable costs and expenses of defending
against any claim or liability arising out of or relating to this Agreement. As
between themselves, the Company and the Stockholder each agrees to bear fifty
percent (50%) of all amounts paid or reimbursed to the Escrow Agent pursuant to
this Section 5.
6. TERMINATION.
4
<PAGE> 5
This Agreement, and the obligations of the Escrow Agent
hereunder, shall terminate upon the release and delivery by the Escrow Agent of
all Escrowed Shares (including the proceeds thereof) and stock powers relating
thereto, if any, in accordance with the provisions of Section 2 hereof.
7. NOTICE.
All notices, instructions and other communications required or
permitted to be given, forwarded or transmitted hereunder or necessary or
convenient in connection herewith shall be in writing and shall be deemed to
have been duly given if delivered by facsimile transmission with a copy
delivered by personal service or sent by United States first class registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows, or to such other address as a party shall have given notice of
pursuant hereto:
In the case of the Company:
Integrated Site Development, Inc.
1135 Kildaire Farm Road
Cary, North Carolina 27511
Telecopier: (919) 481-9255
Attention: Mr. Stephen H. Clark
Mr. Joe. Finley, III
with a copy to:
Hutchison & Mason PLLC
4011 Westchase Blvd
Suite 400
Raleigh, North Carolina 27607
Telecopier: (919) 829-9696
Attention: Fred D Hutchison, Esq.
In the case of the Stockholder
c/o Joe L. Finley, III
10770 Samples Road
Alexander, Arkansas 72002
Telecopier: (501) 316-1451
with a copy to:
Friday, Eldridge & Clark
400 West Capitol
5
<PAGE> 6
Suite 2000
Carry, North Carolina 27511
Attention: Price C. Gardner, Esq.
Telecopier: (501) 376-2147
In the case of the Escrow Agent:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Telefacsimile: (212) 735-8708
Attention: David A. Scherl, Esq.
8. GOVERNING LAW.
This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without regard
to the conflicts of law principles thereof.
9. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto.
10. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement contains the entire agreement among the parties
hereto with respect to the subject matter hereof. This Agreement may be
amended only by a written instrument signed by all the parties hereto.
11. WAIVERS.
No waiver by any party of any breach of any term contained in
this Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach or a waiver of
any breach of any other term contained in this Agreement.
12. PARAGRAPH HEADINGS.
The paragraph headings contained in this Agreement are for
convenience of reference only and shall not limit or define the text thereof.
13. COUNTERPARTS.
Telefacsimile transmissions of any executed original document
and/or retransmission of any executed telefacsimile transmission shall be
deemed to be the same as the delivery of an executed original. At the request
of any party hereto, the other parties hereto shall confirm
6
<PAGE> 7
telefacsimile transmissions by executing duplicate original documents and
delivering the same to the requesting party or parties. This Agreement may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first above written.
INTEGRATED SITE DEVELOPMENT, INC.
By: /s/ MICHAEL R. STONE
------------------------------------
General Partner
FINLEY FAMILY LIMITED PARTNERSHIP
By: /s/ W. CHRIS HEGELE
------------------------------------
Name: W. Chris Hegele
Title: General Partner
MORRISON COHEN SINGER & WEINSTEIN, LLP
By: /s/ MORRISON COHEN SINGER &
WEINSTEIN, LLP
------------------------------------
[SIGNATURE PAGE TO ESCROW AGREEMENT]
<PAGE> 1
EXHIBIT 10.19
OPTION ESCROW AGREEMENT
This AGREEMENT (the "Agreement"), dated as of May 12, 1997, by
and among WHITNEY EQUITY PARTNERS, L.P. ("WEP"), a Delaware limited
partnership, KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III ("Kitty Hawk"), a
Delaware limited partnership, and MORRISON COHEN SINGER & WEINSTEIN, LLP (the
"Escrow Agent"), as escrow agent hereunder. Any capitalized terms used herein
and not otherwise defined herein, shall have the meanings assigned to them in
the Stock Purchase Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, WEP, Kitty Hawk, Integrated Site Development, Inc.
(the "Company"), a Delaware corporation, U.S. Towers, Inc., a Delaware
corporation, Telesite Services, LLC, an Arkansas limited liability company, and
Metrosite Management, LLC, an Arkansas limited liability company, are parties
to a Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of May
12, 1997;
WHEREAS, pursuant to the Stock Purchase Agreement, WEP has
purchased from the Company 3,203,118 shares of 8% Series A Cumulative
Convertible Redeemable Preferred Stock, $0.001 par value per share, of the
Company (the "Series A Preferred Stock") and has the right to purchase up to
2,236,959 shares (the "Option Shares") of 8% Series B Cumulative Convertible
Redeemable Preferred Stock, $0.001 par value per share, of the Company (the
"Series B Preferred Stock,"), and (B) Kitty Hawk has purchased 259,712 shares
(the "Kitty Hawk Shares") of Series A Preferred Stock and, if WEP exercises the
WEP Option, shall purchase the lesser of (i) 7.5% of the Option Shares and (ii)
that number of Option Shares having an aggregate purchase price of $1,500,000
(the "Kitty Hawk Option Shares");
WHEREAS, pursuant to the Stock Purchase Agreement, WEP and
Kitty Hawk have agreed that 129,856 of the Kitty Hawk Shares shall be deposited
with the Escrow Agent to be held in escrow (the "Escrowed Shares") for the
purpose of indemnifying Whitney in the event Kitty Hawk fails to fulfill its
obligation to purchase the Kitty Hawk Option Shares in accordance with the
terms of the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants contained herein, the parties hereto agree as follows:
<PAGE> 2
1. ESCROW.
(a) WEP and Kitty Hawk hereby establish this
escrow by designating the Escrow Agent as their escrow agent for the purposes
set forth herein, and the Escrow Agent hereby agrees to act as said escrow
agent.
(b) Kitty Hawk is herewith assigning and
delivering to the Escrow Agent, and the Escrow Agent hereby acknowledges
receipt of, the Escrowed Shares, duly endorsed in blank or accompanied by stock
powers duly executed in blank. The term "Escrowed Shares" as used herein shall
include such securities of the Company distributed with respect to the Escrowed
Shares then in escrow, together with any proceeds thereof. Upon receipt of any
securities distributed to Kitty Hawk with respect to the Escrowed Shares or any
proceeds with respect to any Escrowed Shares, Kitty Hawk agrees to promptly
deliver such distributed securities or proceeds, as the case may be, directly
to the Escrow Agent, to be held in escrow in accordance with the terms hereof.
(c) The Escrow Agent shall hold and release the
Escrowed Shares in accordance with the terms and conditions of this Agreement.
2. DISPOSITION OF ESCROWED SHARES.
(a) If WEP (or its successors or assigns)
exercises the WEP Option and purchases the WEP Option Shares, and Kitty Hawk
fails to purchase the Kitty Hawk Option Shares on the Second Closing Date in
accordance with the terms of the Stock Purchase Agreement, then WEP may provide
written notice (the "Default Notice") to the Escrow Agent stating that Kitty
Hawk failed to fulfill its obligation to purchase the Kitty Hawk Option Shares
in accordance with the terms of the Stock Purchase Agreement. The Default
Notice shall be accompanied by a certification by WEP that a copy of the
Default Notice was contemporaneously delivered to Kitty Hawk. Promptly
following twenty (20) days after its receipt of the Default Notice, the Escrow
Agent shall deliver the Escrowed Shares to WEP, provided, however, that no such
delivery of the Escrowed Shares shall be made if the Escrow Agent shall have
received from Kitty Hawk a notice (the "Kitty Hawk Counter Notice") stating
that WEP is not entitled to the Escrowed Shares pursuant to the terms of the
Stock Purchase Agreement. The Kitty Hawk Counter Notice shall be accompanied
by a certification by Kitty Hawk that a copy of the Kitty Hawk Counter Notice
was contemporaneously delivered to WEP.
(b) If WEP (or its successors or assigns)
exercises the WEP Option and purchases the WEP Option Shares, and Kitty Hawk
purchases the Kitty Hawk Option Shares on the Second Closing Date in accordance
with the terms and of the Stock Purchase Agreement, then Kitty Hawk may provide
written notice (the "Compliance Notice") to the Escrow Agent stating that Kitty
Hawk fulfilled its obligation to purchase the Kitty Hawk Option Shares in
accordance with the terms of the Stock Purchase Agreement. The Kitty Hawk
Compliance Notice shall be accompanied by a certification by Kitty Hawk that a
copy of the Compliance Notice was contemporaneously delivered to WEP. Promptly
following twenty (20) days after its receipt of the Compliance Notice, the
Escrow
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<PAGE> 3
Agent shall deliver the Escrowed Shares to Kitty Hawk, provided, however, that
no such delivery of the Escrowed Shares shall be made if the Escrow Agent shall
have received from WEP a notice (the "WEP Counter Notice") stating that Kitty
Hawk is not entitled to the Escrowed Shares pursuant to the terms of the Stock
Purchase Agreement. The WEP Counter Notice shall be accompanied by a
certification by WEP that a copy of the WEP Counter Notice was
contemporaneously delivered to Kitty Hawk.
(c) On December 1, 1997, the Escrow Agent shall
deliver to Kitty Hawk all of the Escrowed Shares, if any, then remaining in
escrow. Notwithstanding the foregoing, the Escrowed Shares shall not be
released pursuant to this Section 2(c) if a Default Notice or WEP Counter
Notice was received by the Escrow Agent before December 1, 1997. The Escrowed
Shares shall be released in accordance with the provisions of Section 4(g)
hereof.
3. DIVIDENDS AND VOTING POWER.
While the Escrowed Shares are being held in escrow, Kitty Hawk
shall be entitled to all rights (other than the right to dispose of the
Escrowed Shares) with respect to the Escrowed Shares, including without
limitation, the right to exercise all voting power and to receive and retain
any and all dividends (other than stock or liquidating dividends, which shall
be deposited into escrow in accordance with the terms and conditions of
paragraph 1(b) hereof) declared or paid on the Escrowed Shares being held in
escrow.
4. NO LIABILITY OF ESCROW AGENT.
(a) The duties and obligations of the Escrow
Agent shall be determined solely by the express provisions of this Agreement,
and the Escrow Agent shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement.
(b) The Escrow Agent shall not be responsible in
any manner whatsoever for any failure or inability of WEP or Kitty Hawk to
perform or comply with any of the provisions of this Agreement or the Stock
Purchase Agreement.
(c) In the performance of its duties hereunder,
the Escrow Agent shall be entitled to rely upon any document, instrument or
signature believed by it to be genuine and signed by WEP or Kitty Hawk. The
Escrow Agent may assume that any person purporting to give any notice in
accordance with the provisions hereof has been duly authorized to do so.
(d) The Escrow Agent shall not be bound by any
modification, cancellation or rescission of this Agreement unless in writing
and signed by it, WEP and Kitty Hawk.
(e) The Escrow Agent shall not be liable for any
error of judgment, or any action taken or omitted to be taken hereunder, except
in the case of its willful misconduct or gross
3
<PAGE> 4
negligence. The Escrow Agent shall be entitled to consult with counsel of its
choosing and shall not be liable for any action taken or omitted by it in
accordance with the advice of such counsel.
(f) The Escrow Agent shall have no responsibility
as to the validity or value of the Escrowed Shares held in escrow hereunder.
Furthermore, the Escrow Agent shall have no duty as to the collection or
protection of the Escrowed Shares (including the proceeds thereof) income
thereon, nor as to the preservation of any rights pertaining thereto, beyond
the safe custody of any such Escrowed Shares (including the proceeds thereof)
or income thereon actually in its possession.
(g) In the event that the Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive instructions
from any party hereto with respect to any or all of the Escrowed Shares
(including the proceeds thereof) or income thereon which, in its reasonable
opinion, are in conflict with any of the provisions of this Agreement or any
instructions received from one of the other parties to this Agreement, the
Escrow Agent shall be entitled to (i) refrain from taking any action other than
to keep the Escrowed Shares (including the proceeds thereof) or income thereon
in question until such time as there has been a "final determination" of the
rights of the applicable parties with respect to such Escrowed Shares
(including the proceeds thereof) or income thereon or (ii) deposit at any time
the Escrowed Shares, together with any proceeds received by it, into any court
with competent jurisdiction and to commence an action in the nature of
interpleader to adjudicate the parties' rights thereto and thereafter shall
have no further obligations or liabilities to anyone under this Agreement. For
purposes of this subparagraph 4(g), there shall be deemed to have been a "final
determination" of the rights of the applicable parties with respect to such
Escrowed Shares in question (including the proceeds thereof) or income thereon
at such time as any of the applicable parties shall file with the Escrow Agent
(i) an official certified copy of a court order, together with an opinion of
counsel of the party filing the foregoing, in form and substance acceptable to
the Escrow Agent and its counsel, stating that the court order is a final
determination of the rights of the parties hereto with respect to the Escrowed
Shares in question, that the time to appeal from said court order has expired,
and that said court order is binding upon the applicable parties, or (ii) a
fully executed agreement or consent by and among the applicable parties, which
provides for disposition of the Escrowed Shares in question (including the
proceeds thereof) or income thereon.
(h) The Escrow Agent or any successor to it as
escrow agent hereafter appointed may at any time resign and be discharged of
the duties imposed hereunder by giving notice to each of the parties hereto,
such resignation to take effect upon a successor escrow agent's acceptance of
appointment.
(i) The parties hereto acknowledge that the
Escrow Agent is counsel to WEP and consent that the Escrow Agent may represent
WEP, any of its affiliates and any entities in which WEP or its affiliates own
any securities, equity, debt or otherwise, in any dispute, controversy, action
or legal proceeding (including, without limitation, against Kitty Hawk or
involving this Agreement or the Stock Purchase Agreement).
4
<PAGE> 5
5. EXPENSES AND INDEMNIFICATION OF ESCROW AGENT.
WEP and Kitty Hawk shall jointly and severally reimburse and
indemnify the Escrow Agent for, and hold it harmless against, any and all loss,
liability, costs or expenses in connection herewith (including reasonable fees,
disbursements and other charges of counsel incurred by the Escrow Agent in any
dispute, controversy, action or legal proceeding between it and one of the
other parties hereto, or between it and a third party), incurred by the Escrow
Agent arising out of or in connection with its acceptance of, or the
performance of its duties and obligations under this Agreement (except those
arising out of or in connection with Escrow Agent's willful misconduct or gross
negligence) as well as the reasonable costs and expenses of defending against
any claim or liability arising out of or relating to this Agreement. As
between themselves, WEP and Kitty Hawk each agrees to bear fifty percent (50%)
of all amounts paid or reimbursed to the Escrow Agent pursuant to this Section
5.
6. TERMINATION.
This Agreement, and the obligations of the Escrow Agent
hereunder, shall terminate upon the release and delivery by the Escrow Agent of
all Escrowed Shares (including the proceeds thereof) and stock powers relating
thereto, if any, in accordance with the provisions of Section 2 hereof.
7. NOTICE.
All notices, instructions and other communications required or
permitted to be given, forwarded or transmitted hereunder or necessary or
convenient in connection herewith shall be in writing and shall be deemed to
have been duly given if delivered by facsimile transmission with a copy
delivered by personal service or sent by United States first class registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows, or to such other address as a party shall have given notice of
pursuant hereto:
In the case of WEP:
Whitney Equity Partners, L.P.
177 Broad Street
Stamford, Connecticut 06901
Telefacsimile Number: (203) 973-1422
Attention: Mr. Michael R. Stone
Mr. Daniel J. O'Brien
5
<PAGE> 6
With a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Telefacsimile Number: (212) 735-8708
Attention: David A. Scherl, Esq.
In the case of Kitty Hawk
Kitty Hawk Capital Limited Partnership, III
2700 Coltsgate Road, Suite 202
Charlotte, North Carolina 28211
Telefacsimile Number: (704) 362-2774
Attention: W. Chris Hegele
With a copy to
Smith Helms Mulliss & Moore, LLP
214 North Church Street
Charlotte, North Carolina 28202
Telefacsimile Number: (704) 334-8467
Attention: Harrison Marshall, Esq.
In the case of the Escrow Agent:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Telefacsimile Number: (212) 735-8708
Attention: David A. Scherl, Esq.
8. GOVERNING LAW.
This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without regard
to the conflicts of law principles thereof.
9. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto.
6
<PAGE> 7
10. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement contains the entire agreement among the parties
hereto with respect to the subject matter hereof. This Agreement may be
amended only by a written instrument signed by all the parties hereto.
11. WAIVERS.
No waiver by any party of any breach of any term contained in
this Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach or a waiver of
any breach of any other term contained in this Agreement.
12. PARAGRAPH HEADINGS.
The paragraph headings contained in this Agreement are for
convenience of reference only and shall not limit or define the text thereof.
13. COUNTERPARTS.
Telefacsimile transmissions of any executed original document
and/or retransmission of any executed telefacsimile transmission shall be
deemed to be the same as the delivery of an executed original. At the request
of any party hereto, the other parties hereto shall confirm telefacsimile
transmissions by executing duplicate original documents and delivering the same
to the requesting party or parties. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
[INTENTIONALLY LEFT BLANK]
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first above written.
WHITNEY EQUITY PARTNERS, L.P.
By: J.H. Whitney Equity Partners, LLC,
Its General Partner
By: /s/ MICHAEL R. STONE
-------------------------------------------
Name: Michael R. Stone
Title:
KITTY HAWK CAPITAL LIMITED PARTNERSHIP, III
By: Kitty Hawk Partner Limited Partnership, III
Its General Partner
By: /s/ W. CHRIS HEGELE
-------------------------------------------
Name: W. Chris Hegele
General Partner
MORRISON COHEN SINGER & WEINSTEIN, LLP
By: /s/MORRISON COHEN SINGER & WEINSTEIN, LLP
--------------------------------------------
SIGNATURE PAGE TO OPTION ESCROW AGREEMENT
<PAGE> 1
Exhibit 10.20
RELEASE AND SETTLEMENT AGREEMENT
This Release and Settlement Agreement (the "Agreement") is entered into
as of May 12, 1997 by and between PCX Corporation, a Delaware corporation
("PCX"), and The North Carolina Enterprise Fund Limited Partnership, a North
Carolina limited partnership, Kitty Hawk Capital Limited Partnership, III, a
Delaware limited partnership, Alton D. Eckert, William R. Gupton, Jack W.
Jackman, and Edward J. Lutkewich (collectively, the "PCX Shareholders"), US
Towers, Inc., a Delaware corporation ("Towers"), Robert M. Long ("Long"), and
Stephen H. Clark ("Clark").
WHEREAS, Clark and the PCX Shareholders are the owners, of record and
beneficially, of all of the issued and outstanding shares of the capital stock
of PCX;
WHEREAS, Clark is a shareholder, director, officer, and employee of PCX;
WHEREAS, Long is an employee of PCX;
WHEREAS, Clark and Long are the owners, of record and beneficially, of
all of the issued and outstanding shares of the capital stock of Towers;
WHEREAS, Long, with significant assistance from Clark and other
employees of PCX, developed a corporate opportunity that would allow PCX to
enter into the business of the construction and leasing of towers used to hold
the antennas required in the wireless communications industry (the "tower
business");
WHEREAS, the Board of Directors of PCX determined that it would be
willing to exchange its corporate opportunity in the tower business for a
warrant to acquire shares of the common stock of Towers and the other agreements
and covenants set forth herein;
WHEREAS, Towers has entered into a Letter of Intent, dated March 19,
1997, to acquire Telesite Services, LLC, an Arkansas limited liability company
("Telesite"), and its majority-owned subsidiary Metrosite, LLC, an Arkansas
limited liability company ("Metrosite");
WHEREAS, Telesite and Metrosite are engaged in all aspects of the tower
business, including wireless communications site acquisition, tower development
and ownership, site management, co-location marketing, project management, and
site maintenance; and
WHEREAS, the parties now desire to fully and finally settle and resolve
all matters related to, and arising, directly or indirectly, out of, the PCX
tower business corporate opportunity.
NOW, THEREFORE, the parties agree as follows:
1. In consideration of the issuance by Towers to PCX of the "Warrant,"
as defined herein, the agreements and covenants set forth in this Agreement, and
other good and valuable
<PAGE> 2
consideration, the receipt and sufficiency of which are hereby acknowledged, PCX
and the PCX Shareholders, jointly and severally, hereby release, and forever
irrevocably discharge Towers (its past, present, and future officers, directors,
agents, shareholders, employees, and representatives and its parents,
subsidiaries, affiliates, and its and their successors and assigns) and Long and
Clark and their heirs, executors, personal representatives, administrators, and
assigns, jointly and severally, from any and all claims, demands, charges,
lawsuits, debts, defenses, actions or causes of action, obligations, damages,
sums of money, loss of services, compensation, attorneys' fees, costs and
expenses of suit, and liabilities whatsoever, which PCX and the PCX
Shareholders, derivatively or otherwise, had, now have, or may have, whether the
same be at law, in equity, or mixed, upon or by reason of any action or event
occurring prior to, on, or after the date hereof and related to the PCX tower
business corporate opportunity and the acquisition by Towers (or any of its
affiliates, successors, or assigns) of Telesite and Metrosite.
2. Simultaneously with the execution and delivery of this Agreement by
the parties, Towers shall issue, execute, and deliver to PCX a Warrant, in the
form attached hereto as an Exhibit (the "Warrant"), to acquire shares of the
Common Stock, par value $0.001 per share, of Towers upon the terms and
conditions set forth therein.
3. PCX and the PCX Shareholders, jointly and severally acknowledge and
agree that, other than the Warrant, and the other agreements and covenants set
forth herein, they are not entitled to any other compensation, monies, or
benefits from Towers (or any of its affiliates, successors, or assigns), Long,
and Clark in connection with the release set forth herein.
4. After the date hereof and until the earlier of January 1, 1998 or
such time as PCX is sold, Clark shall devote at least twenty percent (20%) of
his business time to PCX and PCX shall pay Clark twenty percent (20%) of his
current salary. After January 1, 1998, Clark shall, upon the election by the
shareholders of PCX, continue to serve as a member of PCX' Board of Directors,
but Clark shall not serve in an executive position with PCX. After January 1,
1998, Clark shall serve as a consultant to PCX until such time as PCX is
dissolved. As consideration for such consulting services, PCX shall pay Clark an
annual consulting fee of $1,000. Clark shall continue to be eligible to exercise
his PCX stock options, in accordance with the terms and conditions thereof,
until ninety (90) days after Clark ceases to be a consultant to PCX. Without the
prior consent of PCX, until two (2) months after such time as PCX is sold,
Towers shall not employ, and neither Clark nor Long shall employ on behalf of
Towers (or any of its affiliates, successors, or assigns), any employee of PCX
other than Long.
5. Each of the parties shall keep the terms of this Agreement strictly
confidential and shall not disclose any information concerning the terms of this
Agreement or provide a copy of the same to anyone, except the parties'
respective directors, advisory board members, limited partners, equity
investors, legal counsel or financial advisors, and Towers' affiliates,
successors, or assigns, Towers' equity investors, and Telesite and Metrosite,
and their respective legal counsel and financial advisors all of whom shall be
bound to maintain the confidence of the terms of this Agreement, unless
otherwise required by a court of competent jurisdiction. If required by law to
produce a copy or to make such disclosure, such party shall give the other
parties notice to the extent reasonably possible prior to such production or
disclosure.
2
<PAGE> 3
6. PCX represents and warrants to Towers, Long, and Clark that the PCX
Shareholders and Clark are the owners, of record and beneficially, of all of the
issued and outstanding shares of the capital stock of PCX. The foregoing
representation and warranty shall survive the execution and delivery of this
Agreement.
7. Except as required or permitted by law, each of the parties shall
keep strictly confidential and shall not use for its benefit or disclose to
others, except to the parties' respective directors, advisory board members,
limited partners, equity investors, legal counsel, or financial advisors (all of
whom shall be bound to maintain the confidence of such information), any
confidential business information or financial information or trade secrets of
the other parties, or other technical, business, or financial information, the
use or disclosure of which may be contrary to such parties' interests. If
required by law to produce a copy or to make such disclosure, such party shall
give the other parties notice to the extent reasonably possible prior to such
production or disclosure. This obligation shall remain in effect as to any
confidential business or financial information or trade secrets of each party
for the shorter of (a) three years from the date hereof or (b) so long as such
confidential business or financial information or such trade secrets shall
remain confidential and protectable information of such party under applicable
law. Such confidential information shall not include any information that may be
independently obtained from or developed by third party sources who are not
under an obligation of confidentiality with respect to such information.
8. PCX and the PCX Shareholders hereby assign to Towers (and its
affiliates, successors and assigns) all of their right, title, and interest in
and to all business, financial, technical, proprietary, and other information,
trade secrets, and all other intellectual property rights related to the PCX
tower business (the "Tower Business Information"). The provisions of Paragraph 7
of this Agreement shall not apply to the use or disclosure of the Tower Business
Information by Towers (and its affiliates, successors, or assigns), Clark, or
Long.
9. Each of the parties acknowledges that it or he fully and completely
understands the terms and conditions of this Agreement and has voluntarily and
knowingly agreed to said terms and conditions, including all releases of claims
PCX, and the PCX Shareholders may have against Towers (its past, present, and
future officers, directors, agents, shareholders, employees, and representatives
and its parents, subsidiaries and affiliates and its and their successors and
assigns) and Long and Clark and their heirs, executors, personal
representatives, administrators and assigns, in exchange for a valuable
consideration to PCX, and the PCX Shareholders.
10. With respect to the negotiation and execution of this Agreement and
the Warrant, no party shall be regarded as a prevailing party for any purpose,
including, but not limited to, determining responsibility for or entitlement to
attorneys' fees under any statute or otherwise. Each of the parties expressly
waives, as to each of the other parties, any and all claims for attorneys' fee,
in connection with the negotiation and execution of this Agreement and the
Warrant.
11. This Agreement shall not be used or construed by any person or
entity as an admission of liability or finding or admission that PCX' and the
PCX Shareholders' rights were in any way violated by Towers, Long, or Clark, and
this Agreement may not be offered or received in
3
<PAGE> 4
evidence in any action or proceeding as an admission or concession of liability
or wrongdoing on the part of Towers, Long, or Clark.
12. This Agreement shall be binding upon and inure to the benefit of
PCX, and each of the PCX Shareholders, and their respective successors, assigns,
heirs, executors, representatives, and administrators and Long and Clark and
their respective heirs, executors, representatives, administrators, and assigns.
13. Each of the parties acknowledges and agrees that this Agreement
contains and comprises the entire agreement and understanding of the parties
with respect to the subject matter hereof and that there are no agreements or
understandings other than those contained herein. Further, each of the parties
acknowledges and agrees that this Agreement is intended to be a binding contract
between them and shall not be amended or modified, except by writing executed
and delivered by all of the parties.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina.
4
<PAGE> 5
SEPARATE SIGNATURE PAGE
FOR RELEASE AND SETTLEMENT AGREEMENT
BY AND BETWEEN PCX CORPORATION, THE NORTH CAROLINA
ENTERPRISE FUND LIMITED PARTNERSHIP, KITTY HAWK
CAPITAL LIMITED PARTNERSHIP, III, ALTON D. ECKERT,
WILLIAM R. GUPTON, JACK W. JACKMAN, EDWARD J. LUTKEWICH,
US TOWERS, INC., ROBERT M. LONG, AND STEPHEN H. CLARK
MAY 12, 1997
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this RELEASE AND SETTLEMENT AGREEMENT as of the date first
written above.
<TABLE>
<S> <C>
PCX CORPORATION (SEAL)
By: /s/ William R. Gupton
---------------------------------
Title: C.F.O.
THE NORTH CAROLINA ENTERPRISE FUND
LIMITED PARTNERSHIP (SEAL)
By: /s/ Joseph A. Velk
---------------------------------
Title: Vice President
KITTY HAWK CAPITAL LIMITED
PARTNERSHIP, III (SEAL)
By: Kitty Hawk Partners Limited Partnership III,
General Partner
By: /s/ W. Chris Hegele
---------------------------------
Title: General Partner
/s/ Alton D. Eckert
---------------------------------
Alton D. Eckert (SEAL)
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
/s/ William R. Gupton
-------------------------------------
William R. Gupton (SEAL)
/s/ Jack W. Jackman
-------------------------------------
Jack W. Jackman (SEAL)
/s/ Edward J. Lutkewich
-------------------------------------
Edward J. Lutkewich (SEAL)
US TOWERS, INC. (SEAL)
By: /s/ Stephen H. Clark
----------------------------------
Title: President
/s/ Robert M. Long
--------------------------------------
Robert M. Long (SEAL)
/s/ Stephen H. Clark
--------------------------------------
Stephen H. Clark (SEAL)
</TABLE>
6
<PAGE> 1
Exhibit 10.21
STOCK RESTRICTION AGREEMENT
This Agreement is made as of May 12, 1997, between Integrated Site
Development, Inc., a Delaware corporation (the "Company"), and Finley Family
Limited Partnership, an Arkansas limited partnership (the "Stockholder").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Shares Subject to Agreement.
(a) In connection with the Membership Interests Contribution
Agreement, dated May 12, 1997, by and among the Company and Joe L. Finley, III
("Finley"), Caroline M. Finley, the Stockholder, The Central Arkansas
Opportunity Foundation, Telesite Services, LLC ("Telesite"), and Metrosite
Management, LLC ("Metrosite") (the "Contribution Agreement"), the Company has
issued to the Stockholder 490,517 shares of the Common Stock, par value $0.001
per share, of the Company (the "Common Stock"), of which 408,764 shares of the
Common Stock (the "Shares") were issued subject to the terms and conditions set
forth in this Agreement. The Company and the Stockholder agree that the Shares
shall be subject to the Purchase Option set forth in Section 2 of this
Agreement and the Put Option set forth in Section 4 of this Agreement.
(b) In order to facilitate any repurchase of the Shares by the
Company under this Agreement, the stock certificates representing the Shares
shall, for so long as such Shares are subject to repurchase under any of the
provisions of this Agreement, remain in the custody of Morrison Cohen Singer &
Weinstein, LLP (the "Escrow Agent") acting as escrow agent pursuant to an
Escrow Agreement in the form attached as an Exhibit between the Company, the
Stockholder, and the Escrow Agent. The Stockholders agree to provide the Escrow
Agent, with a stock power or other instrument of transfer, appropriately
endorsed in blank, in respect of the Shares. If there is a dispute,
controversy, action, or legal proceeding between the Company and the
Stockholder pursuant to the Escrow Agreement, the court shall award costs and
expenses to the prevailing party in such dispute, controversy, action, or legal
proceeding.
2. Purchase Option.
For purposes of this Agreement, the term "1997 Revenues" shall mean the
aggregate consolidated gross revenues of the Company (including US Towers, Inc.,
Telesite and Metrosite) determined as of the end of the 1997 fiscal year of the
Company. For purposes of this Agreement, the term "1998 Revenues" shall mean the
aggregate consolidated gross revenues of the Company (including US Towers, Inc.,
Telesite and Metrosite) determined as of the end of the 1998 fiscal year of the
Company. Such determinations shall be made within 120 days of the end of the
applicable fiscal year of the Company by the Company's independent certified
public accountant in accordance with generally accepted accounting principles,
consistently applied.
If Telesite provides services to US Towers at rates or compensation less
than the rates or fees then in effect for similar services rendered to other
customers of similar location and
<PAGE> 2
quantity, then for purposes of determining 1997 Revenues or 1998 Revenues, as
the case may be, the gross revenues shall be increased to reflect the fair
market value of such services. Fair market value shall mean the then current
rates charged by Telesite for such services.
In the event that the 1997 Revenues or 1998 Revenues are within certain
amounts as set forth below, the Company shall have the right and option (the
"Purchase Option") to purchase from the Stockholder for the amount of $0.001 per
share (the "Option Price"), up to that percentage of the Shares subject to the
Purchase Option as set forth below.
<TABLE>
<S> <C>
Percentage of Shares
1997 Revenues Subject to Purchase Option
Less Than or Equal to $10 Million 50%
Greater Than $10 Million and Less Than $16 .000833% for each $100 by which 1997
Million Revenues are Less Than $16 Million up to a
Maximum of 50%
Greater Than or Equal to $16 Million - 0 -
Percentage of Shares
1998 Revenues Subject to Purchase Option
Less Than or Equal to $10 Million 50%
Greater Than $10 Million and Less Than $16 .000833% for each $100 by which 1998
Million Revenues are Less Than $16 Million up to a
Maximum of 50%
Greater Than or Equal to $16 Million - 0 -
</TABLE>
3. Exercise of Purchase Option and Closing.
(a) The Company may exercise the Purchase Option by delivering or
mailing to the Stockholder, in accordance with Section 14, written notice of
exercise within 60 days after the delivery to the Company of a written report of
its independent certified public accountant as to the 1997 Revenues or the 1998
Revenues, as the case may be. Such notice shall specify the number of Shares to
be purchased. If and to the extent the Purchase Option is not so exercised
within such 60-day period, the Purchase Option shall automatically expire and
terminate effective upon the expiration of such 60-day period.
(b) After the time at which any Shares are required to be delivered
to the Company for transfer to the Company pursuant to Section 3(b) above, the
Company shall not pay any dividend to the Stockholder on account of such Shares
or permit the Stockholder to exercise
2
<PAGE> 3
any of the privileges or rights of a stockholder with respect to such Shares,
but shall, in so far as permitted by law, treat the Company as the owner of such
Shares.
(c) The Company shall not purchase any fraction of a Share upon
exercise of the Purchase Option, and any fraction of a Share resulting from a
computation made pursuant to Section 2 of this Agreement shall be rounded to the
nearest whole Share (with any one-half Share being rounded upward).
4. Put Option.
(a) If the Executive Employment Agreement, of even date herewith (the
"Finley Employment Agreement"), by and between the Company and Finley is not
renewed by the Company or Finley at the end of the initial term (unless such
non-renewal is a result of an involuntary termination pursuant to Section 6(b)
of the Finley Employment Agreement), the Company hereby irrevocably grants and
issues to Stockholder the right and option beginning on May 12, 1999 and ending
on August 12, 1999, to sell to the Company (hereinafter referred to as the
"Put") all, but not fewer than all, of the Shares at a purchase price per Share
of $2.89 (the "Put Price"). Stockholder shall exercise the Put by written notice
to the Company.
(b) The Company shall pay the Put Price of the Shares as determined
in Section 4(a) above to the Stockholder in accordance with Section 4(c) and
Section 4(d) in exchange for the delivery to the Company of a stock certificate
or certificates representing the Shares, duly endorsed in blank by the
Stockholder or having attached thereto a stock power executed by the Stockholder
in proper form for transfer.
(c) The Company shall pay the Put Price for the Shares by paying in
cash or by certified, cashier's or other check acceptable to the Stockholder or
by wire transfer per the Stockholder's instructions within thirty (30) days of
the notice from the Stockholder of its exercise of the Put such portion of the
Put Price as the Company may pay out of legally available funds provided that:
(i) the Company is solvent and would not be rendered insolvent by the payment
thereby and (ii) the payment thereof would not constitute a violation or breach
of, or a default under, any agreement, instrument, or other document relating to
indebtedness of the Company, including, without limitation any indebtedness of
the Company to J.H. Whitney & Co. or any of its affiliates, including, without
limitation, Whitney Subordinated Debt Fund, L.P. (collectively, "Affiliates"),
or any institutions that participate along with Whitney or any of its Affiliates
in any debt financing provided to the Company. The remainder of the Put Price
shall be paid pursuant to a promissory note executed by the Company and payable
to the Stockholder providing: (i) for the payment of interest at the rate of
seven percent (7%) per annum, payable in one installment, together with the
principal amount thereof, on the second anniversary of the notice date or (ii)
for the payment on such other terms as the Company determines, within its
reasonable discretion to be necessary so as to not render the Company insolvent
or result in a violation or breach of, or a default under, any agreement,
instrument, or other document relating to indebtedness of the Company.
Notwithstanding the foregoing, the Company hereby covenants and agrees that
until such time as the Put Price is paid in full, the Company shall not enter
into any agreement that contains a prohibition against stock redemptions that
would expressly prohibit the Company from
3
<PAGE> 4
redeeming the Shares and paying the Put Price if the Stockholder exercised the
Put in accordance with the provisions of this Agreement.
(d) In the event that any payment to be made by the Company is
prohibited by the provisions of the foregoing Section hereof, then such payment
shall be immediately made by the Company at the next earliest time, and to the
extent possible, when compliance with the foregoing Section may be effected, and
the Company agrees that it will execute all such documents and take all such
other steps as may be necessary to expedite and effectuate to the extent
possible such compliance.
5. Restrictive Legend. All certificates representing Shares shall have
affixed thereto a legend in substantially the following form, in addition to any
other legends that may be required under federal or state securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a
certain Stock Restriction Agreement between the corporation and the
registered owner of this certificate (or his or her predecessor in
interest), and such Agreement is available for inspection without
charge at the principal office of the corporation."
6. Investment Representations. The Stockholder represents, warrants and
covenants as follows:
(a) The Stockholder is acquiring the Shares for the Stockholder's own
account for investment only, and not with a view to, or for sale in connection
with, any distribution of the Shares in violation of the Securities Act, or any
rule or regulation under the Securities Act.
(b) The Stockholder has had such opportunity as the Stockholder has
deemed adequate to obtain from representatives of the Company such information
as is necessary to permit the Stockholder to evaluate the merits and risks of
the Stockholder's investment in the Company.
(c) The Stockholder has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the
acquisition of the Shares and to make an informed investment decision with
respect to such purchase.
(d) The Stockholder can afford a complete loss of the value of the
Shares and is able to bear the economic risk of holding such Shares for an
indefinite period.
(e) The Stockholder understands that (i) the Shares have not been
registered under the Securities Act and are "restricted securities' within the
meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(iii) in any event, the exemption from registration under Rule 144 will not be
available for at least two years and even then will not be available unless a
public market then exists for
4
<PAGE> 5
the Common Stock, adequate information concerning the Company is then available
to the public, and other terms and conditions of Rule 144 are complied with; and
(iv) there is now no registration statement on file with the Securities and
Exchange Commission with respect to any stock of the Company and the Company has
no obligation or current intention to register the Shares under the Securities
Act.
(f) A legend substantially in the following form will be placed on
the certificate representing the Shares:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws. Accordingly, the securities represented
by this certificate may not be sold, offered for sale, transferred,
pledged or hypothecated without an effective registration statement
for such securities under the Act or applicable state securities law
or an opinion of counsel satisfactory to the Corporation that
registration is not required under the Act or any applicable state
securities law. "
7. Adjustments for Stock Splits, Stock Dividends, etc.
(a) If from time to time during the terms of the Purchase Option
there is any stock split-up, stock dividend, stock distribution or other
reclassification of the Common Stock of the Company, any and all new,
substituted or additional securities to which the Stockholder are entitled by
reason of the Stockholder's ownership of the Shares shall be immediately subject
to the Purchase Option, and the Put Option in the same manner and to the same
extent as the Shares, and the Option Price and the Put Price shall be
approximately adjusted.
(b) If the Shares are converted into or exchanged for, or
stockholders of the Company receive by reason of any distribution in total or
partial liquidation, securities of another corporation (an "Acquiring
Corporation"), or other property (including cash), pursuant to any merger of the
Company or acquisition of its assets by an Acquiring Corporation, then the
rights of the Company under this Agreement shall inure to the benefit of the
Acquiring Corporation and this Agreement shall apply to the securities or other
property received from the Acquiring Corporation upon such conversion, exchange
or distribution in the same manner and to the same extent as the Shares.
8. Withholding Taxes. The Stockholder acknowledges and agrees that the
Company has the right to deduct from payments of any kind otherwise due to the
Stockholders any federal, state or local taxes of any kind required by law to be
withheld with respect to the acquisition of the Shares by the Stockholders.
9. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
5
<PAGE> 6
10. Waiver. Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Board of Directors of the
Company on behalf of the Company.
11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and the Stockholders and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 4 of this
Agreement.
12. Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath the
Stockholders' or the Company's respective signature to this Agreement, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 12.
13. Entire Agreement. This Agreement, the Stockholder's Agreement, of
even date herewith, by and among the Company, Whitney Equity Partners, L.P., a
Delaware limited partnership, Stephen H. Clark, Robert M. Long, and the
Partnership, the terms of which are incorporated herein by reference, and the
Finley Employment Agreement, the terms of which are incorporated herein by
reference, constitute the entire agreement between the parties, and supersedes
all prior agreements and understandings, relating to the subject matter of this
Agreement.
14. Amendment. This Agreement may be amended or modified only by a
written instrument executed by the Company and the Stockholders.
15. No Assignment. Neither this Agreement nor any interest herein may be
assigned by the Stockholder without the prior written consent of the Company.
16. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Delaware without regard to
its rules with respect to choice of laws.
[The remainder of this page is intentionally left blank.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INTEGRATED SITE DEVELOPMENT, INC.
By:/s/ Stephen H. Clark
----------------------------------
Stephen H. Clark
President
Address: 1135 Kildaire Farm Road
Suite 200
Cary, North Carolina 27511
FINLEY FAMILY LIMITED
PARTNERSHIP
By: /s/ Joe L. Finley, III
----------------------------------
Joe L. Finley, III
General Partner
7
<PAGE> 1
Exhibit 10.22
AGREEMENT
This Agreement (hereinafter "Agreement") is entered into this 15th day of
September, 1998, by and between Robert M. Long ("Long") and SpectraSite
Holdings, Inc., a Delaware corporation formerly known as Integrated Site
Development, Inc., (the "Company"), and SpectraSite Communications, Inc. a
Delaware corporation, ("SCI").
WHEREAS, Long voluntarily resigned as an employee of SCI effective as of
May 15, 1998; and
WHEREAS, the Company now desires to purchase from Long all of his capital
stock in the Company.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and the payment of the monies hereinafter recited, the receipt and adequacy of
which are hereby acknowledged, it is agreed among the parties that:
1. The Company hereby agrees to buy, and Long hereby agrees to sell,
125,000 shares of Common Stock, $0.001 par value per share, of the Company owned
by Long at a purchase price of $4.00 per share for a total aggregate purchase
price of $500,000.00. Long hereby grants to the shareholders of the Company the
option (the "Option") to purchase up to 37,605 of such shares of Common Stock
from Long at a purchase price of $4.00 per share. Such Option shall be exercised
by the Company's giving written notice to Long of the exercise of all or part of
such Option by its shareholders on or before November 15, 1998. Upon the
execution of this Agreement, Long shall deliver to the Company stock certificate
number 2 for the 162,605 shares of Common Stock endorsed in blank, and the
Company shall deliver to Long a check or checks totaling $500,000 (or shall wire
such funds to Long in immediately available funds) and a stock certificate for
37,605 shares of Common Stock of the Company. Upon the exercise of the Option,
Long shall deliver to the Company his stock certificate for 37,605 shares of
Common Stock endorsed in blank, and the Company shall deliver to Long, on behalf
of its shareholders exercising the Option, check or checks equal to the purchase
price for the number of shares for which the Option is exercised and a stock
certificate for any shares for which the Option is not exercised.
2. Long hereby fully releases, and forever irrevocably discharges the
Company, SCI and their subsidiaries, their past, present and future officers,
directors, agents, shareholders, employees, and representatives, jointly and
individually, from any and all claims, demands, charges, lawsuits, debts,
defenses, actions or causes of action, obligations, damages, sums of money, loss
of services, compensation, pain and suffering, attorneys' fees, cost and
expenses of suit, and liabilities whatsoever, which Long had, now has or may
have, whether known or unknown, whether the same be at law, in equity, or mixed,
upon or by reason of any matter or cause whatsoever, as of the date of execution
of this Agreement including, but not limited to, any claim arising under the Age
Discrimination in Employment Act, the Civil Rights Act of 1964 (Title VII) and
1991, the Employee Retirement Income Security Act, the Americans with
Disabilities Act, all federal, state and local civil rights statutes, and any
other statutory, equitable, or common law claims, including but not limited to
impairment of economic opportunity, wrongful discharge, or intentional or
<PAGE> 2
negligent infliction of emotional distress, but such release shall not apply to
the Company's and SCI's obligations under this Agreement.
3. (a) The Company and SCI hereby fully release, and forever
irrevocably discharge Long and his heirs, personal representatives, successors
and assigns, jointly and individually, from any and all claims, demands,
charges, lawsuits, debts, defenses, actions or causes of action, obligations,
damages, sums of money, loss of services, compensation, pain and suffering,
attorneys' fees, cost and expenses of suit, and liabilities whatsoever, which
the Company or SCI had, now has or may have, whether known or unknown, whether
the same be at law, in equity, or mixed, upon or by reason of any matter or
cause whatsoever, as of the date of execution of this Agreement, but such
release shall not apply to Long's obligations under this Agreement.
(b) SCI agrees to indemnify Long to the fullest extent permitted by law
for action taken by Long while serving as an officer, director or employee of
SCI.
4. Long acknowledges that, except as provided in Section 1 hereof, he
is not entitled to any compensation, monies, benefits, equity or options from
the Company, SCI or any of their subsidiaries, including but not limited to
compensation for accrued vacation, bonuses, commissions, expenses, or other
forms of compensation (whether cash or equity), and Long hereby waives all
rights to said payments.
5. Long will keep the terms of this Agreement strictly confidential and
shall not disclose any information concerning the terms of this Agreement or
provide a copy of the same to anyone, except Long's legal counsel or financial
consultants, who will be bound to maintain the confidence of the terms of this
Agreement, unless otherwise required by a court of competent jurisdiction. If
required by law to produce a copy or to make such disclosure, Long will give the
Company notice prior to such production or disclosure.
6. THE COMPANY AND SCI HEREBY ADVISE LONG TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTING THIS AGREEMENT.
7. Long acknowledges that he has read this Agreement, fully and
completely understands the terms and conditions of this Agreement and has
voluntarily and knowingly agreed to said terms and conditions without any
reservation whatsoever, including all releases of claims Long may have against
the Company, SCI or any of their subsidiaries.
8. Long hereby represents and warrants that:
(a) He has had an opportunity to review and have his questions answered
by the appropriate officers of the Company with respect to the Company and its
future plans, desires no further or additional information concerning the
Company or its operations and deems such information received and reviewed
adequate to evaluate the merits of selling his shares of Common Stock of the
Company.
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(b) He has sufficient experience in business, financial, and investment
matters to be able to evaluate the merits involved in the sale of the Common
Stock and to make an informed decision with respect to such sale.
(c) He has not and will not rely upon the Company for advice with
respect to any tax consequences related to the disposition of the Common Stock
and he assumes full responsibility for all such consequences as to the
preparation and filing of all tax returns and elections which may and must be
filed in connection with the sale of such Common Stock.
(d) Long hereby represents that the 162,605 shares of Common Stock that
he is selling pursuant hereto constitute all of the shares of capital stock and
options to acquire shares of capital stock of the Company owned by him.
(e) Long hereby acknowledges that he is aware that the Company is
discussing and is in negotiations with respect to acquisitions of towers and
tower sites and bids to construct towers for telecommunications companies and is
involved in seeking additional equity and debt financing, both private and
public (including discussions with potential underwriters for an initial public
offering of stock).
9. This Agreement will not be used or construed by any person or entity
as an admission of liability by either party and this Agreement may not be
offered or received in evidence in any action or proceeding as an admission or
concession of liability or wrongdoing on the part of either party.
10. Long covenants and agrees that, after the date of this Agreement, he
shall not, and will take reasonable steps to cause each of his affiliates not
to, take any action or make any statement, whether or not in writing, that
disparages or denigrates the Company, SCI or their subsidiaries, affiliates,
agents, employees, officers, directors or shareholders (including, without
limitation, by way of news interview or expression of personal views, opinions
or judgments to the news media).
11. This Agreement shall be binding upon and inure to the benefit of
Long, Long's assigns, heirs, executors, representatives and administrators, as
well as the predecessors, successors, purchasers and assigns of the Company and
SCI.
12. The Company, SCI and Long acknowledge that this Agreement contains
and comprises the entire agreement and understanding of the parties with respect
to the subject matter hereof, and that there are no agreements or understanding
with respect to the subject matter hereof other than those contained herein.
This Agreement is intended to be a binding contract between the parties hereto
and shall not be modified, except by writing signed by the Company, SCI and
Long.
13. This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina.
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14. Notice to Long of the exercise of the Option pursuant to Section 1
hereof shall be deemed duly given one business day after sent by overnight
courier, charges prepaid, at 103 Sycamore Springs Lane, Downingtown,
Pennsylvania 19335.
15. The shareholders of the Company shall be third party beneficiaries
of this Agreement with respect to the Option.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Agreement this the 15th day of September, 1998.
/s/ ROBERT M. LONG
--------------------------------------
Robert M. Long
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H. CLARK
-----------------------------------
Stephen H. Clark
President
SPECTRASITE COMMUNICATIONS, INC.
By: /s/ STEPHEN H. CLARK
-----------------------------------
Stephen H. Clark
President
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Exhibit 10.23
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 14th day of August,
1998 by and among AIRADIGM COMMUNICATIONS, INC., a Wisconsin corporation
("Airadigm") and SPECTRASITE COMMUNICATIONS, INC., a Delaware corporation
("SpectraSite").
WHEREAS, Airadigm is a wireless communications company which provides
PCS service;
WHEREAS, Airadigm leases real property ("Site" or collectively "Sites")
upon which Airadigm has constructed certain improvements including, but not
limited to towers and related facilities;
WHEREAS, Airadigm desires to assign, sell and convey to SpectraSite
certain leases, towers and related facilities in conjunction with the forty
seven (47) Sites;
WHEREAS, Airadigm desires to lease space on the Sites from SpectraSite
subsequent to the sale of the Sites to SpectraSite;
WHEREAS, SpectraSite desires to purchase, and Airadigm desires to sell
certain towers and related facilities, contract rights, property rights and
leasehold interests.
NOW THEREFORE, Airadigm and SpectraSite do hereby agree as follows:
1. ASSETS PURCHASED. Airadigm agrees to grant, bargain, sell, convey and
assign to SpectraSite and SpectraSite agrees to purchase from Airadigm, on the
terms and conditions set forth in this Agreement Airadigm's entire right, title
and interest in and to the following:
(a) those ground leases specified in Schedule I attached hereto
("Prime Leases") together with any and all easements for ingress, egress and
utilities which are attendant to the Prime Leases;
(b) those towers, tower foundations, utilities, fences, landscaping
and other improvements owned by Airadigm which are constructed upon the real
property described in the Prime Leases (collectively "Tower Facilities")
specified in Schedule III attached hereto;
(c) those subleases, licenses and other agreements which grant others
a right to use or occupy a portion of the real property described in the Prime
Leases or grant a right to use or occupy space on the Tower Facilities owned by
Airadigm which are located on the real property described in the Prime Leases
("Collocation Agreements"). Said Collocation Agreements are specified in
Schedule IV attached hereto;
(d) the following items for each Site (to the extent available and
assignable):
(i) the Federal Aviation Administration application,
responses, approvals and registration numbers submitted or received
by Airadigm;
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(ii) the zoning permits and approvals, variances, building
permits and such other federal, state or local governmental approvals
which have been gained or for which Airadigm has made application;
(iii) the construction, engineering and architectural drawings
and related site plan and surveys pertaining to the construction of
the Tower Facilities;
(iv) the geotechnical report which has been commissioned by
Airadigm;
(v) the title reports, commitments for title insurance,
ownership and encumbrance reports, title opinion letters, copies of
instruments in the chain of title or any other information which may
have been produced regarding title to the Site;
(vi) the environmental assessments including phase I reports
and any environmental reports involving contemporaneous or subsequent
intrusive testing, the "FCC Checklist" performed pursuant to NEPA
requirements and any other information which may have been produced
regarding the environmental condition of the Sites or neighboring
real property; and
(vii) any other information written or otherwise regarding the
due diligence investigation made by Airadigm or its agents,
independent contractors or employees regarding the Site.
The items described in paragraphs 1(d) may hereinafter be collectively referred
to as "Due Diligence Items" and shall be more particularly described in the
Assignment of Prime Lease for each Site, a copy of the prototype Assignment of
Prime Leases is attached hereto as Attachment A. The Prime Leases, Tower
Facilities, Collocation Agreements and Due Diligence Items may hereinafter be
collectively referred to in this Agreement as the "Assets". Between the date of
this Agreement and the Closing Date, Airadigm will promptly disclose to
SpectraSite in writing any information set forth in the representations,
warranties, covenants and Schedules herein that is no longer materially accurate
for any reason or any such information that would render such representations,
warranties, covenants or Schedules materially inaccurate if made or delivered on
any date between the date hereof and the Closing Date. On and after the Closing
Date Airadigm agrees to give such further assurances and to execute, acknowledge
and deliver such bills of sale, deeds, assignments, acknowledgements and other
instruments of conveyance and transfer and other documents and do such other
acts and things as in the judgment of SpectraSite shall be necessary and
reasonable to effectively vest in SpectraSite the full legal and equitable title
of the Assets that are transferred to SpectraSite under this Agreement, free and
clear of all liens and encumbrances.
2. LIABILITIES ASSUMED.
(a) Except as otherwise provided below, SpectraSite agrees at Closing to
assume and pay, discharge or perform, as appropriate, only the liabilities and
obligations of Airadigm specifically itemized on Schedule V hereto ("Assumed
Liabilities").
(b) SpectraSite shall not be obligated to assume, agree to pay,
discharge or perform, or incur, as the case may be, any liability other than the
Assumed Liabilities.
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3. PURCHASE PRICE.
(a) The purchase price for the Assets shall be Eleven Million Seven
Hundred Fifty Thousand and No/100 Dollars ($11,750,000.00) ("Purchase Price").
The purchase price for the Assets shall be paid by SpectraSite at Closing
subject to any sums placed in escrow for towers which remain uncompleted as of
the date of this Agreement as set forth below. The operation of Airadigm's Tower
Facilities, Prime Leases and Collocation Agreements to the close of business
through the Closing Date shall be for the account of Airadigm and thereafter for
the account of SpectraSite. Expenses, including but not limited to utilities,
personal property taxes, rents, and real property taxes, shall be prorated
between Airadigm and SpectraSite as of the close of business on the Closing
Date, the proration to be made and paid, insofar as reasonably possible, on the
Closing Date, with settlement of any remaining items to be made within sixty
(60) days following the Closing Date.
(b) At closing, Airadigm will identify in writing those Sites as to
which a Tower has not yet been completed. A portion of the purchase price shall
be deposited into escrow with U.S. Bank National Association, Milwaukee,
Wisconsin ("Bank"). The amount deposited shall equal the product of the number
of Sites so identified times $100,000. Airadigm shall be responsible at its own
cost for the completion of the Tower Facilities at each such Site on or before
September 30, 1998. At such time as SpectraSite certifies to the Bank that all
such Sites have been completed in accordance herewith, the Bank shall release
the escrow to Airadigm; if such certification has not been given before
September 30, 1998, SpectraSite will certify to the Bank the number and identity
of the Sites as to which the Tower Facilities have been completed in accordance
herewith, and the Bank shall release the portion of the escrow related to such
Sites to Airadigm, and shall return the remainder to SpectraSite, whereupon such
Sites shall be deemed removed from this Agreement, and the parties will execute
such documents as are reasonably required by counsel in order to remove such
incomplete Sites from this Agreement nunc pro tunc, with appropriate settlement
of accounts for amounts advanced during such interim period. Notices shall be in
writing and a copy shall simultaneously be given to Airadigm. If SpectraSite
fails to give any notice, all Sites deemed approved. The escrow shall be
deposited into an interest bearing account, and the interest with respect to
each $100,000 increment of the escrow shall be disbursed to the party receiving
such increment. The costs of the escrow shall be borne equally by the parties.
(c) Within 15 days following the closing, SpectraSite shall deliver
written notice to Airadigm identifying those sites which SpectraSite has
rejected pursuant to paragraph 9 hereof specifying the reasons for such
rejection. Airadigm shall then have a period of 60 days in which to take actions
to cure such defects. If and to the extent that Airadigm has not substantially
completed such cures with respect to any Site, Airadigm shall return to
SpectraSite the sum of $250,000 for each such Site, whereupon such Sites shall
be deemed removed from this Agreement, and the parties will execute such
documents as are reasonably required by counsel in order to remove such Sites
from this Agreement nunc pro tunc, with appropriate settlement of accounts for
amounts advanced during such interim period. If any such Site is also the
subject of the escrow described above, the portion of the purchase price related
thereto and held in escrow shall not be remitted until the escrow breaks as
above.
(d) Airadigm shall pay the August, 1998, rents under the Prime Leases,
and shall be entitled to reimbursement for the prorated amount thereof at the
time of closing.
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4. CLOSING.
(a) Time and Place. The closing ("Closing") of the sale and purchase of
the Assets shall take place on the ___the day of August, 1998 ("Closing Date"),
or at such other time as the parties may agree in writing. If Closing has not
occurred on or prior to the ____ day of August, 1998, then either party may
elect to terminate this Agreement within five (5) days after the Closing Date.
If no such election is tendered within said five (5) day period, the parties
will waive the right to thereafter terminate this Agreement. If, however, the
Closing has not occurred because of a breach of contract, the breaching party
shall remain liable for breach of contract.
(b) Obligations of Airadigm at the Closing. At the Closing, Airadigm
shall deliver to SpectraSite the following:
(i) one or more assignments of leases conveying all of the Prime
Leases to SpectraSite in substantially the same form as set forth in
Attachment A;
(ii) one or more bills of sale from Airadigm conveying all of the
Tower Facilities to SpectraSite, in substantially the same form as set
forth in Attachment B;
(iii) one or more assignments of leases conveying all of the
Collocation Agreements to SpectraSite in substantially the same form as
set forth in Attachment C;
(iv) a copy of the resolutions of Airadigm's board of directors and
shareholders, authorizing the execution, delivery and performance of
this Agreement and any other agreement to be entered into by Airadigm in
connection herewith, and the transactions contemplated hereby;
(v) all necessary consents of third parties, including without
limitation, the consent of the lessors under the Prime Leases to be
assigned to and assumed by SpectraSite hereunder; and
(vi) such other assignments, bills of sale, or instruments of
conveyance, certificates of officers, and other documents as reasonably
may be requested by SpectraSite prior to the Closing to consummate this
Agreement and the transactions contemplated hereby; and
(vii) releases in a form reasonably acceptable to SpectraSite from
all parties who hold liens encumbering the Assets.
(c) Obligations of SpectraSite at the Closing. At the Closing,
SpectraSite shall execute, or cause to be executed, and shall deliver to
Airadigm such certificates of officers and other documents as reasonably may be
requested by Airadigm prior to the Closing to consummate this Agreement and the
transactions contemplated hereby.
(d) upon Closing, Airadigm and SpectraSite shall execute the Master
Tower Attachment Lease Agreement in substantially the same form as is attached
hereto as Attachment D.
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5. AIRADIGM'S OPERATION OF BUSINESS PRIOR TO CLOSING. Between the date
of this Agreement and the Closing Date, Airadigm will:
(a) Continue to operate the business that is the subject of this
Agreement in the usual and ordinary course and in substantial conformity with
all applicable laws, ordinances, regulations, rules, or orders, and will use its
best efforts to preserve its business organization and preserve the continued
operation of its business with its customers, suppliers, and others having
business relations with Airadigm.
(b) Not assign, sell, sublease, lease, license or otherwise transfer or
dispose of any of the Assets, whether now owned or hereafter acquired.
(c) Maintain all of its Assets in their present condition, reasonable
wear and tear and ordinary usage excepted.
(d) Maintain all governmental permits and approvals affecting the Sites
or the operation of the Tower Facilities.
6. ACCESS TO SITE AND INFORMATION. At reasonable times prior to the
Closing Date, Airadigm will provide SpectraSite and its representatives with
reasonable access during business hours to the assets, titles, contracts, and
records of Airadigm relating solely to the Assets and furnish such additional
information concerning Airadigm's business as SpectraSite from time to time may
reasonably request relating solely to the Assets.
7. REPRESENTATIONS AND WARRANTIES OF AIRADIGM. Airadigm represents and
warrants to SpectraSite as follows:
(a) Corporate Existence. Airadigm is now, and on the Closing Date will
be, a corporation duly organized, validly existing and in good standing under
the laws of the State of Wisconsin, has all requisite corporate power and
authority to own its properties and assets and carry on its business and is good
standing in each jurisdiction in which such qualification is required.
(b) Corporation Power and Authorization. Airadigm has full corporate
authority to execute and deliver this Agreement and any other agreement to be
executed and delivered by Airadigm in connection herewith, and to carry out the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate and shareholder action. No other corporate
proceedings by Airadigm will be necessary to authorize this Agreement or the
carrying out of the transactions contemplated hereby. This Agreement constitutes
a valid and binding Agreement of Airadigm in accordance with its terms.
(c) Conflict with Other Agreements, Consents and Approvals. With respect
to (i) the articles of incorporation or bylaws of Airadigm, (ii) any applicable
law, statute, rule or regulation, (iii) any contract to which Airadigm is a
party or may be bound, or (iv) any judgment, order, injunction, decree or ruling
of any court or governmental authority to which Airadigm is a party or subject,
the execution and delivery by Airadigm of this Agreement and any other agreement
to be executed and delivered by Airadigm in connection herewith and the
consummation of the transactions contemplated hereby will not (a) result in any
violation, conflict or default, or give to others any interest or rights,
including rights of termination, cancellation or acceleration, (b) require any
authorization, consent, approval, exemption or other action by
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<PAGE> 6
any court or administrative or governmental body which has not been obtained, or
any notice to or filing with any court or administrative or governmental body
which has not been given or done, or (c) require the consent of any third party
except as may be disclosed by Airadigm in writing to SpectraSite within ten (10)
days of the execution of this Agreement.
(d) Compliance with Laws. Airadigm's use and occupancy of the Assets,
wherever located, has been in compliance with all applicable federal, state,
local or other governmental laws or ordinances, the non-compliance with which,
or the violation of which, might have a material adverse affect on the Assets,
the Assumed Liabilities, and Airadigm has received no claim or notice of
violation with respect thereto. Airadigm has obtained all material permits,
licenses, franchises and other authorizations necessary for the conduct of its
business.
(e) Litigation. Airadigm has no knowledge of any claim, litigation,
proceeding, or investigation pending or threatened against Airadigm that might
result in any material adverse change in the condition of Assets being conveyed
under this Agreement.
(f) Brokerage. Airadigm has not employed any broker, finder or similar
agent other than Daniels & Associates in connection with the transactions
contemplated by this Agreement, or taken action that would give rise to a valid
claim against any party for a brokerage commission, finder's fee, or similar
compensation. Airadigm shall indemnify and hold harmless SpectraSite from and
against any brokerage commission, finder's fee or similar compensation due
Daniels & Associates. Each party will indemnify the other from and against any
commissions or other such claims made by any persons claiming through or by such
party.
(g) Site Acquisition Airadigm has performed the following tasks or
obtained the following governmental approvals (or will perform or obtain the
same on or before September 30, 1998) as the case may be for each Site:
(i) filed and obtained from the Federal Aviation Administration
registration numbers for the tower;
(ii) filed and obtained or has otherwise complied with any and all
necessary federal, state and local governmental laws, regulations and
ordinances including but not limited to zoning permits and approvals,
variances, building permits and such other federal, state or local
governmental approvals which were required for the development of the
Tower Facilities;
(iii) engaged an engineer licensed in the state of Wisconsin to
prepare construction, engineering and architectural drawings and related
site plan and surveys pertaining to the construction of the Tower
Facilities;
(iv) obtained a geotechnical report;
(v) obtained title reports, commitments for title insurance,
ownership and encumbrance reports, title opinion letters, copies of
instruments in the chain of title or any other information
which may have been produced regarding title to the Property and the
Easements; and
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(vi) conducted environmental assessments including phase I reports
and any reports involving contemporaneous or subsequent intrusive
testing, the "FCC Checklist" performed pursuant to NEPA requirements and
any other information which may have been produced regarding the
environmental condition of the Site, any easements or neighboring real
property.
(h) Environmental Compliance. Airadigm warrants and represents that, to
the knowledge of Airadigm as knowledge is defined in the following sentence,
the Sites, the easements and the improvements on the Sites thereon are free of
contaminants, oils, asbestos, PCB's, hazardous substances or wastes as defined
by federal, state or local environmental laws, regulations or administrative
orders or other materials the removal of which is required or the maintenance of
which is prohibited, regulated or penalized by any federal, state or local
governmental authority based upon the quantity, quality or manner of presence as
of the date hereof ("Hazardous Materials"). Airadigm's knowledge is limited to
that disclosed in the Phase I and Phase II reports, if any, which were obtained
by Airadigm at the time of its acquisition of the Prime Lease for each Site.
(i) Title and No Defaults. Airadigm represents and warrants the
following with regard to each Site:
(i) it has a good, valid and enforceable leasehold interest in and
to the Sites which are the subject of the Prime Leases and the Prime
Leases are and remains valid and in full force and effect;
(ii) it has good, valid and enforceable title to the Tower
Facilities free and clear of any liens, encumbrances or mortgages;
(iii) that there have been no prior assignments of the Prime Leases;
(iv) the Prime Leases have not been amended or modified in any
manner other than as set forth in the Prime Leases;
(v) Airadigm has paid in full as of the date of this Agreement all
sums due and owing those vendors which have performed services or
provided materials in conjunction with each Site including but not
limited to the costs incurred in the preparation of the Due Diligence
Items except with respect to Sites as to which an escrow is established
where Airadigm shall make all such payments;
(vi) Airadigm is not in default under any of the terms of any of the
Prime Leases, and Airadigm has not received actual or constructive
notice of the existence of any event which, with the passage of time or
the giving of notice or both, would constitute a default by Airadigm
under any of the Prime Leases. All applicable rent and other charges and
payments due the lessor under the Prime Leases have been paid in full
through the date hereof (except reimbursements for real estate taxes,
insurance, utilities or other reimbursements, if any, due for fiscal
periods to the extent not yet payable) and shall continue to be paid
when due through the Closing Date;
(vii) Neither Airadigm nor the sublessee, licensee or occupant under
the Collocation Agreement are in default under any of the terms of the
Collocation Agreement, and Airadigm has not received actual or
constructive notice of the existence of any event which, with the
passage of time or the giving of notice or both, would constitute a
default under the Collocation Agreement.
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All applicable rent and other charges and payments due Airadigm from the
sublessee, lessee, licensee or occupant under the Collocation Agreements
have been paid in full through the date hereof (except reimbursements
for real estate taxes, insurance, utilities or other reimbursements, if
any, due for fiscal periods to the extent not yet payable), no rent has
been paid in advance on any Collocation Agreement, no Collocation
Agreement has been assigned or pledged as collateral by Airadigm and the
lessee, sublessee or licensee under all Collocation Agreements have no
defense, right to off-set against Airadigm.
(j) Accuracy of Representations and Warranties. None of the
representations or warranties of Airadigm contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make statements in this Agreement not misleading. Airadigm
knows of no fact that has resulted, or that in the reasonable judgment of
Airadigm will result in a material change in the business, operations, or assets
of Airadigm that has not been set forth in this Agreement or otherwise disclosed
to SpectraSite. No knowledge of independent contractors engaged by Airadigm
shall be imputed to Airadigm unless such information was disclosed by said
independent contractor to Airadigm prior to fifteen (15) days after the Closing
Date.
8. REPRESENTATIONS AND WARRANTIES OF SPECTRASITE. SpectraSite
represents and warrants as follows:
(a) Corporate Existence. SpectraSite is now, and on the Closing Date
will be, a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has all requisite corporate power and
authority to enter into this Agreement and perform its obligations hereunder.
(b) Authorization. SpectraSite has full corporate authority to execute
and deliver this Agreement and any other agreement to be executed and delivered
by SpectraSite in connection herewith, and to carry out the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate and shareholder action. No other corporate
proceedings by SpectraSite will be necessary to authorize this Agreement or the
carrying out of the transactions contemplated hereby. This Agreement constitutes
a valid and binding Agreement of SpectraSite in accordance with their terms.
(c) Conflict with Other Agreements, Consents and Approvals. With respect
to (i) the articles of incorporation or bylaws of SpectraSite, (ii) any
applicable law, statute, rule or regulation, (iii) any contract to which
SpectraSite is a party or may be bound, or (iv) any judgment, order, injunction,
decree or ruling of any court or governmental authority to which SpectraSite is
a party or subject, the execution and delivery by SpectraSite of this Agreement
and any other agreement to be executed and delivered by SpectraSite in
connection herewith and the consummation of the transactions contemplated hereby
will not (a) result in any violation, conflict or default, or give to others any
interest or rights, including rights of termination, cancellation or
acceleration, or (b) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been obtained, or any notice to or filing with any court or administrative or
governmental body which has not been given or done.
(d) Brokerage. SpectraSite has not employed any broker, finder or
similar agent in connection with the transactions contemplated by this
Agreement, or taken action that would give rise to a valid claim against any
party for a brokerage commission, finder's fee, or similar compensation.
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(e) Accuracy of Representations and Warranties. None of the
representations or warranties of SpectraSite contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make the statements contained herein not misleading.
9. CONDITIONS PRECEDENT TO SPECTRASITE'S OBLIGATIONS. SpectraSite shall
be entitled to reject any Site and require a prorata refund of the Purchase
Price in the event that SpectraSite is unable to satisfy each of the following
conditions pursuant to paragraph 3(c) of this Agreement pursuant to paragraph
3(c) of this Agreement, any one or portion of which may be waived in writing by
SpectraSite:
(a) Representations, Warranties and Covenants of Airadigm. The
representations and warranties of Airadigm contained herein and the information
contained in the Schedules and any other documents delivered by Airadigm in
connection with this Agreement shall be true and correct in all material
respects at the Closing; and Airadigm shall have performed all obligations and
complied with all agreements, undertakings, covenants and conditions required by
this Agreement to be performed or complied with by it or prior to the Closing.
Airadigm covenants that it shall negotiate in good faith to consummate and
execute a Master Design Build Lease Agreement to govern the acquisition, design,
construction and lease of prospective Sites by SpectraSite on behalf of
Airadigm.
(b) Licenses and Permits. SpectraSite shall have obtained all licenses
and permits from public authorities necessary to authorize the ownership and
operation of the Tower Facilities and the Assets.
(c) Consents. SpectraSite shall have obtained the consent of the lessor
under the Prime Leases (if required by the Prime Leases) to the assignments of
such agreements to SpectraSite.
(d) Conditions of the Business. There shall have been no material
adverse change in the manner of operation of the Assets prior to the Closing
Date.
(e) No Suits or Actions. At the Closing Date no suit, action, or other
proceeding shall have been threatened or instituted to restrain, enjoin, or
otherwise prevent the consummation of this Agreement or the contemplated
transaction.
(f) Ground Leases. SpectraSite shall have reviewed and found acceptable
in SpectraSite's sole discretion, the terms of the underlying ground leases
including, but not limited to, the amount of rent payable, the duration of the
lease, and the assignability of the lease.
(g) Governmental Approvals. SpectraSite securing appropriate approvals
for SpectraSite's intended use of the Property from the Federal Communications
Commission, the Federal Aviation Administration and any other federal, state or
local regulatory authority having jurisdiction over SpectraSite's proposed use
of each Site;
(h) Investigation of Title. SpectraSite shall have the right to obtain a
title report or commitment for a title policy from a title insurance company of
its choice for each Site or to rely upon any investigation of title made by or
on behalf of Airadigm. If, in the opinion of the SpectraSite, such title report
shows any defects of title or liens or encumbrances which adversely affect
SpectraSite's use of or SpectraSite's ability to obtain financing, SpectraSite
shall have the right to avoid the assignment of the Assets for that Site;
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<PAGE> 10
(i) Surveys. SpectraSite shall have the right to have each Site surveyed
and to have structural tower studies, radio frequency engineering and other
engineering analyses performed. In the event that any defects are shown by the
survey or the engineering analyses, which in the opinion of SpectraSite, may
adversely affect SpectraSite's use of a Site, SpectraSite shall have the right
to avoid the assignment of the Assets for that Site immediately upon written
notice to Lessor; and
(j) Environmental Assessments. SpectraSite shall have the right to have
an environmental assessment of the Site performed by an environmental consulting
firm of SpectraSite's choice. If the environmental audit reveals that a Site is
contaminated with Hazardous Materials, as that term is hereinafter defined,
SpectraSite shall have the right to avoid the assignment of the Assets for that
Site; and
SpectraSite's inability to successfully satisfy these conditions or the
occurrence of any other event which effectively prohibits SpectraSite's intended
use of a Site shall at the option of SpectraSite entitle SpectraSite to reject a
Site and to receive a refund of $250,000 per Site, as its exclusive remedy.
10. Conditions Precedent to Obligations of Airadigm and SpectraSite.
Both parties' obligation to close the transactions contemplated herein is
conditioned upon Airadigm obtaining, at its cost, approval by Ericsson, Inc.
("Ericsson") of the form of this Agreement and the transactions herein, and
releases by Ericsson and Oneida Enterprise Development Authority ("OEDA") of the
Assets to be purchased herein from the security interests held by them.
SpectraSite will cooperate in fulfilling this condition by executing and
delivering such consents and acknowledgments as Ericsson may reasonably request
concerning the new security interests to be granted by Airadigm to Ericsson in
the interests of Airadigm to be created under the Master Tower Attachment Lease
Agreement. Promptly after closing, Airadigm shall at its cost cause the releases
from Ericsson and OEDA to be filed or recorded as appropriate.
11. TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(a) By mutual consent of Airadigm and SpectraSite, without liability;
(b) By SpectraSite, upon written notice to Airadigm, given at any time
before the Closing Date if the representations and warranties of Airadigm
contained herein were materially incorrect when made or would be materially
incorrect on the Closing Date or, if Airadigm has materially violated any
covenants contained in Paragraph 8, or if any other material agreement contained
in this Agreement and required to be performed by Airadigm on or prior to the
Closing Date has not been performed and such breach, violation or
non-performance is not cured by Airadigm within fourteen (14) days of such
notification of intent to terminate;
(c) By Airadigm, upon written notice to SpectraSite, given at any time
before the Closing Date if the representations and warranties of SpectraSite
contained in this Agreement were materially incorrect when made or would be
materially incorrect on the Closing Date, or if any other material agreement
contained herein and required to be performed by SpectraSite on or prior to the
Closing Date has not been performed and such breach, violation or
non-performance is not cured within fourteen (14) days of such notification of
intent to terminate;
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<PAGE> 11
(d) By either Airadigm or SpectraSite in writing, without liability, if
any governmental or third party consent, authorization or approval has been
denied or refused or if there shall be any order, writ, injunction or decree of
any court or governmental or regulatory agency binding on SpectraSite or
Airadigm from consummating the transactions contemplated hereby, provided that
SpectraSite and Airadigm shall have used their best efforts to have any such
order, writ, injunction or decree lifted and the same shall not have been lifted
within thirty (30) days after entry, by any such court or governmental or
regulatory agency;
(e) By SpectraSite, without liability, upon written notice to Airadigm,
given at any time before the Closing Date, if any of the conditions precedent
set forth in Paragraph 9 hereof have not occurred and such failure to occur is
not cured within fourteen (14) days of such notification of intent to terminate.
12. RISK OF LOSS. The risk of loss, damage, or destruction to the Assets
including any of the equipment, inventory, or other personal property to be
conveyed to SpectraSite under this Agreement shall be borne by Airadigm to the
time of Closing. In the event of such loss, damage, or destruction, Airadigm, to
the extent reasonable, shall replace the lost property or repair or cause to
repair the damaged property to its condition prior to the damage. If
replacement, repairs, or restorations are not completed prior to Closing, then
the escrow under Paragraph 3(b) shall be increased with respect to each such
Site in accordance with Paragraph 3(b) of this Agreement. Airadigm shall
maintain fire and extended coverage casualty insurance through and including the
date of Closing covering all of the Tower Facilities in an amount not less than
the full replacement value of all of the Tower Facilities. Airadigm shall
receive all such insurance proceeds for any loss occurring prior to Closing and
such Site shall no longer be subject to this Agreement, and the Purchase Price
shall be reduced by $250,000 for each such site. Risk of loss shall be borne by
SpectraSite for those existing sites which are transferred to SpectraSite at
closing. Risk of loss for any sites which are not constructed as of the closing
date shall remain with Airadigm until the completion of construction.
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement shall survive the Closing of this Agreement,
except that any party to whom a representation or warranty has been made in this
Agreement shall be deemed to have waived any misrepresentation or breach of
representation or warranty of which such party had knowledge prior to Closing.
Any party learning of a misrepresentation or breach of representation or
warranty under this Agreement shall immediately give written notice thereof to
all other parties to this Agreement.
14. INDEMNIFICATION BY AIRADIGM.
(a) Airadigm hereby agrees to indemnify and hold SpectraSite, its
successors, and assigns harmless from and against:
(i) Any and all damages, losses, claims, liabilities,
deficiencies and obligations of every kind and description, contingent
or otherwise, arising out of or related to the operation of Airadigm's
business as it relates to Tower Assets and any acts or omissions of
Airadigm prior to Closing which materially impact SpectraSite, except
for damages, losses, claims, liabilities, deficiencies and obligations
of Airadigm expressly assumed by SpectraSite under this Agreement or
paid by insurance maintained by Airadigm,
(ii) any liability or obligation of Airadigm which is not an
Assumed Liability,
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<PAGE> 12
(iii) any and all damage or deficiency resulting from
any misrepresentation, breach of warranty or covenant, or
nonfulfillment of any agreement on the part of Airadigm under
this Agreement, and
(iv) any and all actions, suits, claims, proceedings,
investigation, audits, demands, assessments, fines, judgments,
costs and other expenses (including, without limitation,
reasonable audit and attorneys fees) incident to any of the
foregoing;
(v) any and all losses, damages, fines, penalties or
costs of any kind which may arise from the improper design,
maintenance or operation of the Tower Facilities or tower
lighting systems, or which may otherwise be imposed by the FAA,
FCC or any other federal, state or local agency arising from the
improper design, maintenance or operation of the Tower or tower
lighting systems unless such obligations arise solely as a
result of the installation of the Equipment on the Tower;
(vi) any and all environmental damages arising from the
presence of Hazardous Materials upon, about or beneath a Site or
migrating from a Site or arising in any manner whatsoever out of
Airadigm's operations or use which are in violation of any
environmental requirements pertaining to a Site and any
activities thereon, which conditions exist or exited prior to or
at the time of the execution of this Agreement or which
contamination occurred at any time prior to the Closing Date;
(b) Notwithstanding the obligation of Airadigm to
indemnify SpectraSite pursuant to subparagraph 13 (a)(vi) of
this Agreement, Airadigm shall, upon demand of SpectraSite, and
at Airadigm's sole cost and expense, promptly take all actions
to remediate a Site which are required by any federal, state or
local governmental agency or political subdivision or which are
reasonably necessary to mitigate environmental damages or to
allow full economic use of a Site, which remediation is
necessitated from the presence upon, about or beneath a Site of
a Hazardous Material prior to the Closing Date. Such actions
shall include but not be limited to the investigation of the
environmental condition of the Site, the preparation of any
feasibility studies, reports or remedial plans, and the
performance of any cleanup, remediation, containment, operation,
maintenance, monitoring or actions necessary to restore the Site
to the condition existing prior to the introduction of Hazardous
Materials upon, about or beneath the Site to the standards
required under applicable law or governmental policies.
(c) Airadigm's indemnity obligations under Section 13 shall be
subject to the following:
(i) If any claim is asserted against SpectraSite that
would give rise to a claim by SpectraSite against Airadigm for
indemnification under the provisions of this Section, then
SpectraSite shall promptly give written notice to Airadigm
concerning such claim and Airadigm shall, at no expense to
SpectraSite, defend the claim.
(ii) Airadigm shall not be required to indemnify
SpectraSite as to any Site for an amount that exceeds $250,000
per Site.
(d) Limitations on Idemnifiable Damages.
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<PAGE> 13
(i) Tax Provision. In computing the amount of
indemnifiable damages payable to SpectraSite, there shall be
deducted therefrom an amount equal to the income tax savings, if
any, to which SpectraSite becomes entitled from the income tax
deduction or deferral, if any, to which SpectraSite shall become
entitled as a consequence of any loss, claim, damage, liability,
cost, expense or deficiency giving rise to such indemnifiable
damages.
(ii) Insurance Proceeds; Claims Against Third Parties.
In computing the amount of indemnifiable damages payable to
SpectraSite, there shall be deducted therefrom an amount equal
to the sum of (i) insurance proceeds to which SpectraSite
becomes entitled as a consequence of any loss, claim, damage,
liability, cost, expense or deficiency giving rise to such
indemnifiable damages, or (ii) all claims against third parties
which would reduce the amount of such indemnifiable damages,
regardless of whether or not SpectraSite actually attempts to
collect such amounts. SpectraSite shall in good faith pursue and
attempt to collect all insurance proceeds and all claims against
third parties which would reduce indemnifiable damages.
(iii) Knowledge of SpectraSite. SpectraSite shall not
be entitled to recover indemnifiable damages with respect to any
matter (including any breach of this Agreement by Airadigm)
which was known by or disclosed to SpectraSite at or prior to
the date which is fifteen days after Closing. If Airadigm proves
by a preponderance of the evidence that, as of the date which is
fifteen days after Closing, SpectraSite had actual knowledge of
the matter which forms a basis for SpectraSite's claim for
indemnifiable damages and SpectraSite then elected not to reject
the Site within fifteen (15) days after closing the transactions
contemplated hereby, then SpectraSite shall be deemed to have
waived its claim for indemnifiable damages with respect to such
matter.
(e) Survival of Indemnification. Airadigm's obligation to pay
indemnifiable damages to SpectraSite shall survive the Closing Date, as follows:
(i) Fraudulent Breach of Representations. In the case of a claim
based upon the inaccuracy or breach of a representation or warranty which was
made fraudulently, indefinitely; and
(ii) All Other Claims. In the case of all other claims, for a
period commencing on the date hereof and ending two (2) years after the Closing
Date.
No claim for recovery of indemnifiable damages may be asserted
by SpectraSite after the expiration of the applicable time period described in
the foregoing Sections 13(f)(i)-(ii).
15. INDEMNIFICATION BY SPECTRASITE. SpectraSite agrees to defend,
indemnify, and hold harmless Airadigm from and against:
(a) any and all claims, liabilities, and obligations of every kind and
description arising out of or related to the operation of the business following
Closing or arising out of SpectraSite's failure to perform obligations of
Airadigm assumed by SpectraSite pursuant to this Agreement;
(b) after the Closing, any liability or obligation of Airadigm which is
an Assumed Liability,
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<PAGE> 14
(c) any and all damage or deficiency resulting from any material
misrepresentation, breach of warranty or covenant, or nonfulfillment of any
agreement on the part of SpectraSite under this Agreement, and
(d) any and all actions, suits, claims, proceedings, investigation,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and attorneys fees) incident to
any of the foregoing.
16. CONFIDENTIAL INFORMATION. If for any reason the sale of Assets is
not closed, SpectraSite will not disclose to third parties any confidential
information received from Airadigm in the course of investigating, negotiating,
and performing the transactions contemplated by this Agreement and will return
all such information on request.
17. MISCELLANEOUS PROVISIONS.
(a) Notices. Any notice under this Agreement shall be in writing and
shall be effective when actually delivered in person or reviewed by the party at
the address stated in this Agreement or such other address as either party may
designate by written notice to the other.
<TABLE>
<S> <C>
SpectraSite: SpectraSite Communications, Inc.
8000 Regency Park, Suite 570
Cary, NC 27511
Attention: Steve Clark
With a copy to: Lewellen & Frazier, PLC
Plaza West Building
415 North McKinley, Suite 1240
Little Rock, AR 72205
Attention: Todd A. Lewellen
Airadigm: Airadigm Communications, Inc.
2301 Kelbe Drive
Little Chute, WI 54140
Attn: Vice President, Finance
With a copy to: Airadigm Communications, Inc.
2301 Kelbe Drive
Little Chute, WI 54140
Attn: Central Administration
</TABLE>
or at any other address as any party may, from time to time, designate by notice
given in compliance with this section.
(b) Time. Time is of the essence of this Agreement.
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<PAGE> 15
(c) Survival. Any of the terms and covenants contained in this Agreement
which require the performance of either party after the Closing shall survive
the Closing.
(d) Waiver. Failure of either party at any time to require performance
of any provision of this Agreement shall not limit the party's right to enforce
the provision, nor shall any waiver of any breach of any provision be a waiver
of any succeeding breach of any provision or a waiver of the provision itself
for any other provision.
(e) Assignment. Except as otherwise provided within this Agreement,
neither party hereto may transfer or assign this Agreement without prior written
consent of the other party.
(f) Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
(g) Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
(h) Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
(i) Titles and Captions. All article, section and paragraph titles or
captions contained in this Agreement are for convenience only and shall not be
deemed part of the context nor affect the interpretation of this Agreement.
(j) Pronouns and Plurals. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the Person or Persons may require.
(k) Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
(l) Prior Agreements. This document is the entire, final and complete
agreement of the parties pertaining to the option to purchase of the Property,
and supersedes and replaces all prior or existing written and oral agreements
(including any earnest money agreement) between the parties or their
representatives relating to the Property.
(m) Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
(n) Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of this Agreement.
(o) Good Faith, Cooperation and Due Diligence. The parties hereto
covenant, warrant and represent to each other good faith, complete cooperation,
due diligence and honesty in fact in the
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<PAGE> 16
performance of all obligations of the parties pursuant to this Agreement. All
promises and covenants are mutual and dependent.
(p) Counterparts. This Agreement may be executed in several counterparts
and all so executed shall constitute one Agreement, binding on all the parties
hereto even though all the parties are not signatories to the original or the
same counterpart.
(q) Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
(r) Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
IN WITNESS WHEREOF, the SpectraSite and Airadigm have executed this
Asset Purchase Agreement as of the date and year first above written.
SPECTRASITE COMMUNICATIONS, INC.
By: /s/ Steven Clark
Name: Steven Clark
Title: CEO
(CORPORATE SEAL)
AIRADIGM COMMUNICATIONS, INC.
By: /s/Barry P. James
Name: Barry P. James
Title: Executive Vice President
(CORPORATE SEAL)
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<PAGE> 17
ATTACHMENT "A"
ASSIGNMENT OF PRIME LEASE
THIS ASSIGNMENT OF PRIME LEASE AGREEMENT ("Agreement") is made and
entered into as of the _____ day of ____________, 1998, by and between
SpectraSite Communications, Inc., a Delaware corporation ("SpectraSite"), and
Airadigm Communications, Inc., a Wisconsin corporation ("Airadigm").
WHEREAS, Airadigm has entered into a ground lease agreement, Lease
Agreement or other similar agreement (the "Prime Lease") for the lease of the
real property more particularly described in the Prime Lease which is attached
hereto as Exhibit "A" (the "Property") upon which Airadigm has constructed or
will construct a tower and related facilities;
WHEREAS, Airadigm desires to assign the Prime Lease for said site to
SpectraSite; and
WHEREAS, SpectraSite desires to develop the tower and certain facilities
on the Property and sublease a portion of the space upon the tower facilities to
Airadigm.
NOW THEREFORE, for and in consideration of the mutual promises outlined
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Airadigm and SpectraSite do hereby agree as
follows:
1. Assignment. Airadigm does hereby assign to SpectraSite and
SpectraSite shall assume and agree to be bound by the Prime Lease, or such other
contract through which Airadigm has acquired an interest in the real property
which is the subject of the Prime Lease together with any easements for ingress,
egress and utilities ("Easements") to the Property.
2. Covenants of Airadigm. Airadigm covenants that it:
(a) unconditionally and absolutely assigns, transfers, sets over and
conveys to SpectraSite, free and clear of all liens, claims and encumbrances,
all of Airadigm's right, title and interest in, to and under the Prime Lease
except as such rights may be limited or modified by any (if any) addenda
attached to the Prime Lease. Airadigm represents and warrants to SpectraSite
that all addenda to the Prime Lease are attached to this Agreement as part of
Exhibit "A";
(b) shall warrant, indemnify and defend the leasehold title assigned to
SpectraSite against the lawful claims of all persons provided that such claim
arises as a result of Airadigm's interest in the Prime Lease, but no further or
otherwise except as set forth in the Asset Purchase Agreement, and except to the
extent than an interest in real estate is subject to taxes, ordinances and other
matters of record;
(c) has no knowledge or notice of any default, defense, offset, claim,
demand, counterclaim or cause of action which may presently exist under the
Prime Lease; and
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<PAGE> 18
(d) irrevocably assigns, transfer, conveys and sets over to SpectraSite
without warranty or representation and SpectraSite accepts from Airadigm all of
the right, title and interest of Airadigm under each and all of the following
items (without warranty that any of the following may be assigned):
(i) the Federal Aviation Administration application, responses,
approvals and registration numbers submitted or received by Airadigm
with respect to the tower proposed to be constructed on the Property;
(ii) the zoning permits and approvals, variances, building
permits and such other federal, state or local governmental approvals
which have been gained or for which Airadigm has made application;
(iii) the construction, engineering and architectural drawings
and related site plan and surveys pertaining to the construction of the
Tower Facilities on the Property;
(iv) the geotechnical report for the Property which has been
commissioned by Airadigm;
(v) the title reports, commitments for title insurance,
ownership and encumbrance reports, title opinion letters, copies of
instruments in the chain of title or any other information which may
have been produced regarding title to the Property and the Easements;
(vi) the environmental assessments including phase I reports and
any reports relating contemporaneous or subsequent intrusive testing,
the "FCC Checklist" performed pursuant to NEPA requirements and any
other information which may have been produced regarding the
environmental condition of the Property, Easements or neighboring real
property; and
The items described in paragraphs 2.2(d) may hereinafter be collectively
referred to as "Site Acquisition Items"; and
(e) shall use diligent efforts to assist SpectraSite in obtaining an
estoppel certificate from the lessor in the Prime Lease in substantially the
same form as is attached hereto as Exhibit "B" ("Estoppel Certificate").
SpectraSite shall use diligent efforts to obtain such Estoppel Certificate from
each lessor.
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<PAGE> 19
IN WITNESS WHEREOF, SpectraSite and Airadigm have signed this Agreement
as of the date and year first above written.
AIRADIGM: SPECTRASITE:
AIRADIGM COMMUNICATIONS, INC. SPECTRASITE COMMUNICATIONS, INC.
By: By:
-------------------------- --------------------------
Name: Name:
Title: Title:
-----------------------
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<PAGE> 20
EXHIBIT "A"
PRIME LEASE AGREEMENT
20
<PAGE> 21
EXHIBIT "B"
ESTOPPEL CERTIFICATE
THIS INSTRUMENT is given as of this ____ day of _____________________,
1998, by __________________________ ("Lessor") to SpectraSite Communications,
Inc. ("Assignee").
RECITALS
A. Lessor entered into a Lease Agreement or similar agreement (the
"Prime Lease") dated as of the _______ day of ___________, 1998 with Airadigm
Communications, Inc., a Wisconsin corporation ("Lessee").
B. Lessee desires to assign to Assignee its interest in the Prime Lease.
C. Assignee seeks Lessor's acknowledgment, as of the date of execution
of this Instrument, of certain matters affecting the Prime Lease.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, intending to be legally bound:
1. Lessor's Estoppel Certificate. Lessor hereby certifies, with the
understanding that Assignee is relying upon the statements made herein, the
following:
a. The Prime Lease constitutes the entire agreement between the parties
with respect to the Premises. The Prime Lease has not been amended and there are
no other agreements between Lessor and Lessee with respect to the property or
the easements which are described in the Prime Lease.
b. The Prime Lease is in full force and effect in accordance with its
terms. To the best of Lessor's knowledge, neither Lessee nor Lessor is in
default under any of the terms of the Prime Lease, and Lessor has not received
actual or constructive notice of the existence of any event which, with the
passage of time or the giving of notice or both, would constitute a default
under the Prime Lease.
c. All applicable Prime Lease fees (if any) and other charges and
payments due Lessor from Lessee under the Prime Lease have been paid in full
through the date hereof (except reimbursements for real estate taxes, insurance,
utilities or other reimbursements, if any, due for fiscal periods to the extent
not yet payable).
2. Consent. Lessor hereby acknowledges the right of Lessee to assign the
Lease to Assignee and agrees that all terms of the Prime Lease shall be in full
force and effect between Lessor and Assignee as if Lessor and Assignee were the
original parties to the Prime Lease and that such assignment shall not violate
the terms of the Prime Lease, will not create or cause the Assignee to be liable
for any rent in excess of $__________ per month during the Initial Term or be
considered a sublease under the terms of the Prime Lease or any addenda thereto.
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<PAGE> 22
3. Reliance. Lessor understands that Assignee is relying on the
information contained in this Instrument, and agrees that Assignee may rely on
this information, for purposes of determining whether to consummate their
transaction. Further, Assignee's subsidiaries, affiliates, legal representatives
and successor and assigns may rely on the contents of this Instrument. A
facsimile of this instrument delivered to Assignee by telecopier shall be deemed
an original for all purposes.
4. Notice; Non-Disturbance. Assignee intends to grant a sub-leasehold
interest to Lessee. Lessor shall give notice to Lessee at the same time that
Lessor gives notice to Assignee of any default under the Prime Lease, and Lessor
shall accept a cure of any such default from Lessee on Assignee's behalf. In
such case, Lessee shall be entitled to reimbursement from Assignee of any amount
paid or obligation incurred in respect thereof. If any mortgagee of Assignee
forecloses on Assignee's interest therein, such mortgagees or other purchasers
at foreclosure sale or in lieu thereof shall agree not to foreclose Lessee's
interests under the Prime Lease or its sublease with Assignee or otherwise
disturb the occupancy by Lessee, provided that Lessee pays all amounts required
to be paid under the Prime Lease or the Sublease, as the case may be.
5. Notices. Any Notices to be received by Assignee under the Prime Lease
shall be deemed properly given if marked to Assignee with proper postage or sent
via a reputable overnight carrier to the following address:
SpectraSite:
SpectraSite Communications, Inc.
8000 Regency Park, Suite 570
Cary, NC 27511
Attention: Steve Clark
With a copy to:
Lewellen & Frazier, PLC
Plaza West Building
415 North McKinley, Suite 1240
Little Rock, AR 72205
Attention: Todd A. Lewellen
IN WITNESS WHEREOF, Lessor has executed this Instrument as of the date
set forth above.
LESSOR:
By:
-------------------------
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<PAGE> 23
ATTACHMENT B
BILL OF SALE FOR THE TOWER FACILITIES
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<PAGE> 24
ATTACHMENT C
ASSIGNMENT OF COLLOCATION AGREEMENTS
THIS ASSIGNMENT OF COLLOCATION AGREEMENT ("Agreement") is made and
entered into as of the _____ day of ____________, 1998, by and between
SpectraSite Communications, Inc., a Delaware corporation ("SpectraSite"), and
Airadigm Communications, Inc., a Wisconsin corporation ("Airadigm").
WHEREAS, SpectraSite and Airadigm have entered into that certain Asset
Purchase Agreement ("Purchase Agreement") dated the ____ day of
_________________, 1998 in which Airadigm conveyed to SpectraSite certain
communications towers and related facilities ("Tower Facilities");
WHEREAS, Airadigm has entered into a lease agreement or other similar
agreement with ______________________ ("____________") which grants
_______________ the right to install certain communications antennas and other
equipment on a tower and on the ground in the vicinity of the tower (the
"Collocation Agreement") for the lease of space on the tower;
WHEREAS, Airadigm desires to assign the Collocation Agreement to
SpectraSite.
NOW THEREFORE, for and in consideration of the mutual promises outlined
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Airadigm and SpectraSite do hereby agree as
follows:
1. Assignment. Airadigm does hereby assign to SpectraSite and
SpectraSite shall assume and agree to be bound by the Collocation Agreement.
2. Covenants of Airadigm. Airadigm covenants that it:
(a) unconditionally and absolutely assigns, transfers, sets over and
conveys to SpectraSite, free and clear of all liens, claims and encumbrances,
all of Airadigm's right, title and interest in, to and under the Collocation
Agreement except as such rights may be limited or modified by any (if any)
addenda attached to the Collocation Agreement. Airadigm represents and warrants
to SpectraSite that all addenda to the Collocation Agreement are attached to
this Agreement as part of Exhibit "A";
(b) shall warrant, indemnify and defend the leasehold title assigned to
SpectraSite against the lawful claims of all persons provided that such claim
arises as a result of Airadigm's interest in the Collocation Agreement, but no
further or otherwise;
(c) has no knowledge or notice of any default, defense, offset, claim,
demand, counterclaim or cause of action which may presently exist under the
Collocation Agreement; and
(d) shall use diligent efforts to assist SpectraSite in obtaining an
estoppel certificate from the lessor in the Collocation Agreement in
substantially the same form as is attached hereto as Exhibit "B" ("Estoppel
Certificate") and shall notify _______________ that all rent due Airadigm under
the
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Collocation Agreement shall be due and payable to SpectraSite after the date
of this Agreement and in the event that rents which are due and accruing after
the date of this Agreement are paid to Airadigm, then in such an event Airadigm
shall promptly tender said sums to SpectraSite.
3. Representations and Warranties of Airadigm. By executing a Site
Agreement, Airadigm represents and warrants to SpectraSite that:
(a) the Collocation Agreement has not been amended, modified or assigned
in any manner other than as set forth in the Collocation Agreement and that the
Collocation Agreement is and remains valid and in full force and effect; and
(b) Airadigm has the full right and authority to assign the Collocation
Agreement.
(c) Neither Airadigm nor the sublessee, licensee or occupant under the
Collocation Agreement are in default under any of the terms of the Collocation
Agreement, and Airadigm has not received actual or constructive notice of the
existence of any event which, with the passage of time or the giving of notice
or both, would constitute a default under the Collocation Agreement. All
applicable rent and other charges and payments due Airadigm from the sublessee,
lessee, licensee or occupant under the Collocation Agreements have been paid in
full through the date hereof (except reimbursements for real estate taxes,
insurance, utilities or other reimbursements, if any, due for fiscal periods to
the extent not yet payable), that no rent has been paid in advance on any
Collocation Agreement, that no Collocation Agreement has been assigned or
pledged as collateral by Airadigm and that the lessee, sublessee or licensee
under all Collocation Agreements have no defense, right to off-set against
Airadigm
IN WITNESS WHEREOF, SpectraSite and Airadigm have signed this Agreement
as of the date and year first above written.
AIRADIGM: SPECTRASITE:
AIRADIGM COMMUNICATIONS, INC. SPECTRASITE COMMUNICATIONS,
INC.
By: ` By:
-------------------------- ------------------------
Name: Name:
Title: Title:
----------------------
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EXHIBIT "A"
COLLOCATION AGREEMENT
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<PAGE> 1
EXHIBIT 10.24
MASTER TOWER ATTACHMENT LEASE AGREEMENT
THIS MASTER TOWER ATTACHMENT LEASE AGREEMENT ("Master Lease") is executed
this _______ day of August, 1998, by and between SpectraSite Communications,
Inc., ("SpectraSite"), and Airadigm Communications, Inc. ("Airadigm").
WHEREAS, SpectraSite and Airadigm entered into that certain Asset
Purchase Agreement ("Purchase Agreement") dated the 14th day of August, 1998 in
which Airadigm conveyed to SpectraSite certain communications towers and related
facilities ("Tower Facilities");
WHEREAS, Airadigm also assigned to SpectraSite the entire right, title
and leasehold interest of Airadigm in and to the real property leased by
Airadigm upon which the Tower Facilities were constructed ("Prime Lease"); and
WHEREAS, as part of the Purchase Agreement SpectraSite agree to enter
into this Master Lease to define the terms by which Airadigm will continue to
have the right to use and occupy space on the Tower Facilities and on the ground
in the vicinity of the Tower Facilities.
NOW THEREFORE, for and in consideration of the terms and mutual promises
herein contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, SpectraSite and Airadigm agree as
follows:
1. PREMISES. SpectraSite hereby leases to and grants Airadigm the
right to maintain, operate and remove wireless communications equipment and
appurtenances on towers owned by SpectraSite which are located on certain
property owned or leased by SpectraSite and to install equipment on the ground
in the vicinity of the Tower Facilities. Each individual tower upon which
Airadigm has attached equipment and each Property upon which Airadigm has
constructed installed equipment and other improvements pursuant to this Master
Lease between SpectraSite and Airadigm shall each be considered and referred to
as a separate site for purposes of this Master Lease ("Site"). Each Site
conveyed by Airadigm to SpectraSite pursuant to this asset Purchase Agreement
executed contemporaneously with this Master Lease or otherwise occupied by
Airadigm pursuant to this Master Lease shall be identified by separate site
lease agreements ("SLAs") which shall be executed by Airadigm and SpectraSite
incorporated by reference into the terms of this Master Lease, a prototype of
which is attached hereto as Exhibit "A", each of which is a separate leasehold
on the terms and conditions set forth herein. Each SLA shall include a legal
description of the real property upon which the Tower is situated (the real
property described in the various SLAs as Property may hereinafter be
individually or collectively referred to as the "Property or Properties"), a
legal description of any easements for ingress, egress and utilities (the real
property described in the various SLAs as Easement may hereinafter be
individually or collectively referred to as the "Easement or Easements"), and
description of Airadigm's equipment which will be located on the Site
("Equipment"). SpectraSite hereby grants to Airadigm the right to install,
maintain and operate Airadigm's wireless communications equipment and
appurtenances on a tower owned by SpectraSite ("Tower"), and to install,
maintain, operate and remove Airadigm's equipment cabinet or compound and
related devices owned by Airadigm on a portion of the Property at a location to
be depicted on plans provided by Airadigm and approved by SpectraSite (the space
occupied by
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Airadigm on the Property and the Tower hereinafter shall be referred to
collectively as the "Premises"). SpectraSite also grants Airadigm rights of
ingress, egress and utilities to the Premises twenty-four (24) hours per day,
seven (7) days per week during the Initial Term and any Renewal Term (as
hereinafter defined in paragraphs 3 and 4) of this Master Lease) over that real
property described in Exhibit "B" attached to the SLA.
2. USE. Airadigm may use the Premises for the receipt and transmission
of wireless communications signals. The use granted Airadigm by this Master
Lease shall be non-exclusive and limited in strict accordance with the terms of
this Master Lease. SpectraSite shall have the right to continue to occupy the
Property and to enter into lease, sublease, license and other agreements with
others for the Property and the Tower in the sole discretion of SpectraSite.
Each SLA shall also be subject to the terms and continued existence of the Prime
Lease for the Site. SpectraSite shall give Airadigm written notice of such
termination or expiration of the Prime Lease as provided herein or as soon as
practicable but no later than sixty (60) days prior to the date of an
anticipated termination or expiration.
SpectraSite shall give Airadigm advance written notice of any sublease,
license or other agreement granting a third party right to occupy space on a
tower which is the subject of this Master Lease which notice shall specify the
proposed location of the antennas or other equipment on the tower, the frequency
of operation of the equipment and copies of engineering plans depicted the
location and method of installation of the equipment.
SpectraSite shall give notice to Airadigm at the same time that
SpectraSite receives notice of any default under any Prime Lese, and SpectraSite
shall allow Airadigm to cure any non-monetary default on SpectraSite's behalf.
In such case, Airadigm shall be entitled to reimbursement from SpectraSite of
any amount paid or obligation incurred in respect thereof; provided, however,
that in the event that SpectraSite disputes such alleged default in good faith,
SpectraSite shall have no duty to reimburse Airadigm for any amount paid or
obligation incurred in respect of such alleged default unless Airadigm obtains
SpectraSite's consent to Airadigm's cure of any such default.
3. INITIAL TERM. The Initial Term of the Master Lease shall be a
period of seven (7) years from the date of this Master Lease. The Initial Term
of the SLA for each Site shall be for a period of seven (7) years commencing on
the Closing date as that term is defined by the Asset Purchase Agreement
executed between Airadigm and SpectraSite contemporaneously with the execution
of this Master Lease ("Commencement Date") and expiring on the seventh (7th)
anniversary of the Commencement Date ("Initial Term").
4. RENEWAL TERMS. This Master Lease and each SLA shall be deemed
extended for each of four (4) additional five (5) year terms (each a "Renewal
Term") unless Airadigm gives advance written notice to SpectraSite which notice
shall be tendered by Airadigm not less than six (6) months prior to the end of
the then existing term of this Master Lease. Each Renewal Term shall be on the
same terms and conditions as set forth in this Master Lease except that
consideration for this Master Lease shall increase as provided in paragraph
5(b).
5. CONSIDERATION.
(a) Initial Term. During the Initial Term, Airadigm shall pay monthly
to SpectraSite on the first day of each calendar month for the first twenty four
(24) months of this Master Lease as consideration for each SLA the sum of One
Thousand Five Hundred and No/100 Dollars ($1,500.00) ("Rent"). In the event that
the Commencement Date is other than the first day of the
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calendar month, Rent shall be prorated for that month for the number of days
remaining in that month. The Rent paid by Airadigm to SpectraSite shall be due
without set-off notice or demand. Any Rent or other sum not received by
SpectraSite within ten (10) days of the date when due shall be subject to a late
penalty of five percent (5%) of the amount which is overdue. Beginning on the
twenty-fifth month of the Initial Term Rent shall be increased to One Thousand
Eight Hundred and No/100 Dollars ($1,800.00) per month.
(b) Renewal Term. The Rent applicable to such Renewal Term shall be
paid monthly in advance beginning on the first day of the respective Renewal
Term in accordance with the following schedule:
<TABLE>
<S> <C>
First Renewal Term $2070.00 per month
Second Renewal Term $2380.50 per month
Third Renewal Term $2737.58 per month
Fourth Renewal Term $3148.21 per month
</TABLE>
6. WARRANTY OF TITLE AND QUIET ENJOYMENT. SpectraSite warrants that
(i) SpectraSite leases the Property and operates the Tower; and (ii) SpectraSite
has full right to make and perform this Master Lease subject to the terms,
covenants and conditions of the Master Lease. This Master Lease shall be
subordinate and inferior to the Prime Lease and any mortgage, lien or other
encumbrance or agreement of record which currently or hereafter encumbers the
Property, the Easement or the Tower.
7. IMPROVEMENTS BY AIRADIGM.
(a) Plans, Structural Analysis and RF Analysis. Prior to the
commencement of any construction or installation by Airadigm of any original,
additional or replacement of any Equipment on the Premises, Airadigm shall
furnish, for review and approval by SpectraSite, which approval may be withheld
in SpectraSite's reasonable discretion, plans and specifications which may be
required by SpectraSite for such construction or installation of the
improvements and Airadigm shall not commence the construction or installation on
the Premises until such time as Airadigm has received written approval of the
plans and specifications from SpectraSite. Airadigm shall be responsible for
paying in advance to SpectraSite the cost of any structural enhancements to be
made to the Tower to accommodate the Equipment. Upon completion of and payment
by Airadigm for the structural enhancement, such structural enhancements shall
become the property of SpectraSite, and upon request, Airadigm shall promptly
provide to SpectraSite any bills of sale or documentation evidencing Airadigm's
ownership of said enhancements. Airadigm shall use a construction firm
reasonably acceptable to SpectraSite for any construction activities to be
conducted by Airadigm on the Property and the Easement and the installation of
Airadigm's equipment on the Tower. Airadigm shall upon the written request of
SpectraSite conduct at Airadigm's sole cost and expense a structural analysis
and wind load analysis of the Tower which includes any existing loads and the
load of Airadigm's antennas, cabling and appurtenances. Upon the written request
of SpectraSite, Airadigm shall conduct at Airadigm's sole cost and expense a
radio frequency interference analysis ("RF Analysis") of the Equipment with all
other equipment which is on the Tower as of the Commencement Date. Airadigm
shall use the company of SpectraSite's choice for structural analysis, RF
Analysis and the design and construction of platforms, antenna systems, cable
runs and any other modification of any type to the Premises and Airadigm shall
be solely responsible for and shall indemnify Airadigm from all costs and
expenses associated with these materials and services. Airadigm shall be
responsible for securing all building permits from any and all applicable
governmental authorities prior to the
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commencement of any construction or installation on the Premises by Airadigm.
Copies of the construction permit issued to Airadigm shall be provided to
SpectraSite.
(b) Equipment. A description of the Equipment owned or operated by
Airadigm which Airadigm may locate on the Premises will be attached to the SLA.
SpectraSite hereby grants Airadigm reasonable access to the Tower and the
Premises for the purpose of installing, upgrading, and maintaining the Equipment
and appurtenances. Airadigm shall be responsible for all work related to the
Equipment to be done on the Premises pursuant to this Master Lease. Airadigm
shall provide all materials and shall pay for all labor for the construction,
installation, operation, maintenance and repair of the Equipment. Airadigm shall
not construct or install any equipment or improvements on the Premises other
than which are described in Exhibit "C" of the SLA or alter the radio frequency
of operation of the Equipment (except for routine operational adjustments)
without first obtaining the prior consent of SpectraSite which consent may be
withheld by SpectraSite in SpectraSite's reasonable discretion which discretion
shall be reasonably withheld if no additional capacity exists on the Tower.
Airadigm shall pay SpectraSite fair market rental value as consideration for the
installation of any additional equipment. SpectraSite's determination of whether
additional capacity exists shall take into consideration the structural and
windloading capacity of the Tower, the potential for interference caused by the
operation of the additional Equipment with the equipment of other users or
occupants of the Tower and the size of the additional Equipment. The Equipment
shall remain Airadigm's exclusive personal property throughout the term and upon
termination of the SLA. Airadigm shall have the right to remove all Equipment at
Airadigm's sole expense on or before the expiration or earlier termination of
the Master Lease; provided, Airadigm repairs any damage to the Property or the
Tower caused by such removal. If Airadigm does not remove the Equipment on or
prior to the expiration or termination of this Master Lease, Airadigm shall
remove such Equipment within a reasonable period thereafter provided Airadigm
pays to SpectraSite 115% of the Rent in effect during such holdover period.
(c) Compliance with Governmental Rules. All work shall be performed by
Airadigm or Airadigm's employees, contractors or agents in a good and
workmanlike manner. SpectraSite shall be entitled to require compliance with the
plans and specifications approved by SpectraSite pursuant to paragraph 7(a),
including specifications for the grounding of Airadigm's equipment and antennas.
All construction, installations and operations in connection with this Master
Lease by Airadigm shall meet with all applicable Rules and Regulations of the
FCC, FAA and all applicable codes and regulations of the city, county, and state
concerned. SpectraSite assumes no responsibility for the licensing, operation
and maintenance of the Equipment. Airadigm has the responsibility of carrying
out the terms of Airadigm's FCC license with respect to tower light observation
and notification to the FAA if those requirements as imposed on Airadigm are in
excess of those required of SpectraSite. Subject to the terms hereof, Airadigm
covenants that the Equipment and the construction, installation, maintenance and
operation thereof shall not damage the Tower or improvements or interfere with
the use of the Tower by SpectraSite.
8. UTILITIES. All utility services installed on the Premises for the
use or benefit of Airadigm shall be made at the sole cost and expense of
Airadigm and shall be separately metered from SpectraSite's utilities. Airadigm
shall be solely responsible for the payment of utility charges including
connection charges and security deposits incurred by Airadigm.
9. TAXES. Except as provided immediately below, SpectraSite shall pay
all real property taxes SpectraSite is obligated to pay under the Master Lease.
Airadigm shall reimburse SpectraSite for any increases in real property taxes
which are assessed as a direct result of
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Airadigm's improvements to the Premises. As a condition of Airadigm's obligation
to pay such tax increases, SpectraSite shall provide to Airadigm the
documentation from the taxing authority, reasonably acceptable to Airadigm,
indicating the increase is due to Airadigm's improvements.
10. INTERFERENCE. Airadigm shall install equipment of types and radio
frequencies which will not cause interference to communications operations being
conducted from the Property or the Tower by other occupants of the Property or
the Tower which are in place as of the Commencement Date. Airadigm also
covenants that the Equipment installed by Airadigm shall comply with all
applicable laws, ordinances and regulations including but not limited to those
regulations promulgated by the FCC. In the event the Equipment causes such
interference, Airadigm will take all steps necessary to correct and eliminate
the interference. If such interference cannot be eliminated within forty-eight
(48) hours after receipt by Airadigm of notice from SpectraSite describing the
existence of the interference, Airadigm shall temporarily disconnect the
electric power and shut down Equipment (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) until such interference is corrected. If such interference is not
corrected within fifteen (15) days after receipt by Airadigm of such prior
written notice from SpectraSite of the existence of interference, this Master
Lease shall then terminate without further obligation on either part except as
may be specifically enumerated herein and Airadigm agrees to then remove the
Equipment from the Premises. SpectraSite shall incorporate a provision similar
to this paragraph 10 in all future licenses or leases of space upon the Tower to
ensure that subsequent tenants do not cause interference with Airadigm's
communications operations.
11. MAINTENANCE AND REPAIRS.
(a) Airadigm shall perform all repairs necessary or appropriate to the
Equipment on or about the Premises or located on any appurtenant rights-of-way
or access to the Premises in good and tenantable condition, reasonable wear and
tear excepted. Damage to the Equipment resulting from the acts or omissions of
SpectraSite shall be repaired by SpectraSite at SpectraSite's cost and expense,
or at the option of Airadigm, SpectraSite shall reimburse Airadigm for the
actual costs incurred as evidenced by adequate documentation by Airadigm in
repairing such damage or replacing such Equipment.
(b) SpectraSite, at SpectraSite's sole cost and expense, shall
maintain, repair and replace the Tower, and any other portions of the Property
and improvements thereto to the extent required to be maintained by SpectraSite
pursuant to the Master Lease, in good order and repair, wear and tear excepted
so that the Tower will support Airadigm's use thereof under this Master Lease.
Damage to the Tower or the equipment or improvements of SpectraSite or others
located on the Property or the Tower, which results from the acts or omissions
of Airadigm shall be repaired by Airadigm at Airadigm's cost and expense, or at
the option of SpectraSite, Airadigm shall reimburse SpectraSite for the actual
costs incurred as evidenced by adequate documentation by SpectraSite in
repairing such damage or replacing such equipment or improvements.
12. TOWER MARKING AND LIGHTING REQUIREMENTS. SpectraSite shall be
responsible for compliance with any applicable marking and lighting requirements
of the FAA and the FCC provided that if the requirement for compliance results
from the presence of the Equipment on the Tower, Airadigm shall pay the costs
and expenses therefor (including any lighting automated alarm system so
required). SpectraSite shall indemnify and hold Airadigm harmless from any and
all losses, damages, fines, penalties or costs of any kind which may arise from
the improper design, maintenance or operation of the Tower or tower lighting
systems, or which may be
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imposed by the FAA, FCC or any other federal, state or local agency arising from
the improper design, maintenance or operation of the Tower or tower lighting
systems unless such obligations arise solely as a result of the installation of
the Airadigm Equipment on the Tower. Should Airadigm be cited due to the
operation of Airadigm's Equipment or because the use of Premises by Airadigm are
not in compliance and, should Airadigm fail to cure the conditions of
noncompliance, SpectraSite may either terminate the Site Lease applicable to the
site which is not in compliance or, with prior notice from SpectraSite to
Airadigm and allowing Airadigm a reasonable opportunity to cure, proceed to cure
the conditions of noncompliance at Airadigm's expense. Amounts of all expenses
to cure such conditions of non-compliance, together with any such fine or
citation paid by Airadigm, may be deducted by Airadigm from the Rent.
13. MECHANICS' LIENS. Neither Airadigm nor SpectraSite shall permit any
mechanic's, materialmen's, contractors' or subcontractors' liens arising from
any construction work, repair, restoration or removal or any other claims or
demands against such party to be enforced against the Premises or any part
thereof. SpectraSite shall have the right at any time to post and maintain upon
the Premises such notices as may be necessary to protect SpectraSite against
liability for all such liens and encumbrances. Airadigm shall give SpectraSite
written notice prior to the commencement of any work or the delivery of any
materials connected with such work or construction, repair, restoration, or
removal of materials on the Premises (except routine maintenance). SpectraSite
shall assume no liability for the payment of materials or labor which accrue in
the installation of Airadigm's improvements upon the Premises and no mechanics'
or materialmen's liens for Airadigm's improvements shall attach to the interest
of SpectraSite in the Premises.
14. INDEMNIFICATION. Airadigm and SpectraSite shall each exonerate,
hold harmless, indemnify, and defend the other from any and all claims,
obligations, liabilities, costs, demands, damages, expenses, suits or causes of
action, including costs and reasonable attorneys' fees, which may arise out of
(i) any injury to or the death of any person; or (ii) any damage to property, if
such injury, death or damage arises out of or is attributable to or results from
the negligent or intentional acts or omissions of the indemnifying party or the
indemnifying party's principals, employees, agents or independent contractors
relating to or arising from out of the indemnifying party's use and operation of
the Premises. Airadigm's indemnity obligations under Section 14 shall be subject
to the following: (i) If any claim is asserted against SpectraSite that would
give rise to a claim by SpectraSite against Airadigm for indemnification under
the provisions of this Section, then SpectraSite shall promptly give written
notice to Airadigm concerning such claim and Airadigm shall, at no expense to
SpectraSite, defend the claim and (ii) Airadigm shall not be required to
indemnify SpectraSite as to any Site for an amount that exceeds $250,000 per
Site.
15. FINANCING AGREEMENTS. Airadigm may, upon written notice to
SpectraSite, mortgage or grant a security interest in and to the Equipment and
its interest in the SLA to any such mortgagees or holders of security interests
including their successors and assigns (hereinafter collectively referred to as
"Secured Parties").
16. DISCLAIMER OF WARRANTIES, INCIDENTAL AND CONSEQUENTIAL DAMAGES.
SPECTRASITE HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ASSOCIATED WITH THE PREMISES OR THE TOWER.
AIRADIGM ACCEPTS THE PREMISES "AS IS". SPECTRASITE SHALL NOT BE RESPONSIBLE FOR
ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES INCURRED RESULTING FROM (i) AIRADIGM'S
USE OR AIRADIGM'S INABILITY TO USE THE PREMISES; OR FROM (ii) DAMAGE TO
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AIRADIGM'S EQUIPMENT WHICH IS CAUSED BY THE NEGLIGENCE OF SPECTRASITE.
17. ENVIRONMENTAL INDEMNIFICATION.
(a) Airadigm, its heirs, grantees, successors, and assigns, shall
indemnify, defend, reimburse and hold harmless SpectraSite from and against any
and all environmental damages caused by activities conducted on the Premises by
Airadigm, and (i) arising from the presence of any substance, chemical or waste
identified as hazardous, toxic or dangerous in any applicable federal, state or
local law or regulation including petroleum or hydrocarbon based fuels such as
diesel, propane or natural gas (collectively, "Hazardous Materials") upon, about
or beneath the Premises or migrating from the Premises, or (ii) arising in any
manner whatsoever out of Airadigm's use or operations which are a violation of
any environmental requirements pertaining to the Premises and any activities
thereon. Airadigm shall not nor shall Airadigm allow its employees, agents or
independent contractors to treat, store or dispose of any Hazardous Materials on
the Premises or the Property except in compliance with law.
(b) SpectraSite, its heirs, grantees, successors, and assigns, shall
indemnify, defend, reimburse and hold harmless Airadigm from and against any and
all environmental damages caused by activities conducted on the Premises by
SpectraSite, and (i) arising from the presence of any substance, chemical or
waste identified as hazardous, toxic or dangerous in any applicable federal,
state or local law or regulation including petroleum or hydrocarbon based fuels
such as diesel, propane or natural gas (collectively, "Hazardous Materials")
upon, about or beneath the Premises or migrating from the Premises, or (ii)
arising in any manner whatsoever out of SpectraSite's use or operations which
are a violation of any environmental requirements pertaining to the Premises and
any activities thereon. SpectraSite shall not nor shall SpectraSite allow its
employees, agents or independent contractors to treat, store or dispose of any
Hazardous Materials on the Premises or the Property except in compliance with
law.
18. LIABILITY INSURANCE.
(a) Airadigm and SpectraSite shall each carry during the term of this
Master Lease, at each party's own cost and expense, respectively, the following
insurance: (i) "All Risk" property insurance which insures Airadigm's property
and the Tower respectively for eighty percent (80%) of such property's full
replacement cost; and (ii) comprehensive general liability insurance with a
commercial general liability endorsement having a minimum limit of liability of
$1,000,000, with a combined limit for bodily injury and/or property damage for
any one occurrence, and (iii) excess/umbrella coverage of $2,000,000.
(b) SpectraSite and Airadigm shall each name the other as an additional
insured under each party's own liability policy, respectively, and require each
party's own insurance company, respectively, to endeavor to give at least thirty
(30) days' written notice of termination or cancellation of the policy to the
additional insured. A certificate of such insurance, together with such
endorsement as to prior written notice of termination or cancellation, shall be
delivered to the additional insured within thirty (30) days from the execution
of this Master Lease and before the expiration of any term of such insurance
from an insurance company authorized to do business in the state in which the
Property is located.
19. SUBROGATION.
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(a) In General. All insurance policies required under this Master Lease
shall contain a waiver of subrogation provision under the terms of which the
insurance carrier waives all of such carrier's rights to proceed against the
other party.
(b) Mutual Release. SpectraSite and Airadigm each release the other and
their respective representatives from any claims by them or any one claiming
through or under them by way of subrogation or otherwise for damage to the
Premises and to the fixtures, personal property, improvements and alterations in
or on the Premises that are caused by or result from risks insured against under
any insurance policy carried by them and required by this Master Lease; provided
that such releases shall be effective only if and to the extent that the same do
not diminish or adversely affect the coverage under such insurance policies.
20. CONDEMNATION. If the whole or any substantial part of the Premises
shall be taken by any public authority under the power of eminent domain so as
to interfere with Airadigm's use and occupancy thereof, then the SLA applicable
to that particular Site shall cease on the part so taken on the date of
possession by such authority of that part, and any unearned Rent paid in advance
of such date shall be refunded by SpectraSite to Airadigm within thirty (30)
days of such possession, and Airadigm shall have the right to terminate the
applicable SLA upon written notice to SpectraSite, which notice shall be
delivered by Airadigm within thirty (30) days following the date notice is
received by Airadigm of such taking or possession. If Airadigm chooses not to
terminate the SLA, the Rent shall be reduced or abated in proportion to the
actual reduction or abatement of Airadigm's use of the Premises.
21. DEFAULT BY AIRADIGM. The occurrence of any of the following
instances shall be considered to be a default or a breach of this Master Lease
by Airadigm:
(a) any failure of Airadigm to pay the Rent or any other charge for
which Airadigm has the responsibility of payment under this Master Lease within
thirty (30) days of the date when due;
(b) any failure of Airadigm to perform or observe any term, covenant,
provision or conditions of this Master Lease which failure is not corrected or
cured by Airadigm within thirty (30) days of receipt by Airadigm of written
notice from SpectraSite of the existence of such a default; except such thirty
(30) day cure period shall be extended as reasonably necessary to permit
Airadigm to complete a cure so long as Airadigm commences the cure within such
thirty (30) day cure period and thereafter continuously and diligently pursues
and completes such cure:
(c) Airadigm shall become bankrupt, insolvent or file a voluntary
petition in bankruptcy, have an involuntary petition in bankruptcy filed against
Airadigm which cannot be dismissed by Airadigm within sixty (60) days of the
date of the filing of the involuntary petition, file for reorganization or
arrange for the appointment of a receiver or trustee in bankruptcy or
reorganization of all or a substantial portion of Airadigm's assets, or Airadigm
makes an assignment for such purposes for the benefit of creditors;
(d) a lien by way of attachment is imposed upon this Master Lease or
Airadigm's interest herein or Airadigm's interest in the Premises; or
(e) the imposition of any lien on the Equipment except as may be
expressly authorized by this Master Lease, or an attempt by Airadigm or anyone
claiming through Airadigm to encumber SpectraSite's interest in the Tower or the
Property unless such lien is released or insured over within thirty (30) days of
notice to Airadigm of the existence of such lien.
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22. REMEDIES. In the event of a default by Airadigm under the terms of
paragraph 21 of this Master Lease and after the Airadigm's failure to cure such
default within the time allowed the Airadigm to cure such default, then
SpectraSite may, in addition to all other rights or remedies SpectraSite may
have hereunder at law or in equity, terminate the SLA applicable to the Site on
which the default occurred by giving written notice to the Airadigm stating the
date upon which such termination shall be effective, accelerating and declaring
to be immediately due and payable all Rents which would have otherwise been due
SpectraSite absent a breach of the Master Lease by Airadigm for the balance of
the then existing term which rents shall be discounted to present value at the
rate of __ percent (__%). In addition, SpectraSite may upon obtaining an order
of a court of competent jurisdiction authorizing such action, terminate
electrical power to the Equipment, and remove the Equipment without being deemed
liable for trespass or conversion and store the same at Airadigm's sole cost and
expense. Airadigm and SpectraSite shall both use reasonable efforts to mitigate
the other's damages in the event of a default by the other party under this
Master Lease.
23. ENTIRE AGREEMENT. This Master Lease contains the entire agreement
between the parties hereto and supersedes all previous negotiations leading
thereto. This Master Lease may be modified only by an agreement in writing
executed by SpectraSite and Airadigm.
24. SUCCESSORS AND ASSIGNS. This Master Lease shall be binding upon and
inure to the benefit of the legal representatives, heirs, successors, and
assigns of SpectraSite and Airadigm.
25. SUBORDINATION. This Agreement and any option or right of first
refusal granted hereunder, at SpectraSite's option, shall be subordinate to any
ground lease, mortgage, deed of trust or other encumbrance now or hereafter
placed upon the Premises and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof. If any ground lessor, mortgagee, beneficiary or other
lienholder shall elect to have this Agreement and any such option or right of
first refusal prior to the lien of the ground lease, mortgage, deed of trust or
other encumbrance, and shall give written notice thereof to Airadigm, this lease
and such option or right of first refusal shall be deemed to be prior to such
ground lease, mortgage, deed of trust or other encumbrance, whether this
Agreement or such option or right of first refusal is dated prior or subsequent
to the date of such ground Agreement, mortgage, deed of trust or other
encumbrance or the date of the recording thereof. Airadigm agrees to execute any
documents required to effect an attornment or subordination or to make this
Agreement and such option or right of first refusal prior to the lien of any
ground Agreement, mortgage, deed of trust or other encumbrance. Airadigm's
failure to execute any such documents within ten (10) days after written demand
shall constitute a material default by Airadigm hereunder, or, at SpectraSite's
option, SpectraSite shall execute any such documents on behalf of Airadigm as
Airadigm's attorney-in-fact. Airadigm hereby makes, constitutes and irrevocably
appoints SpectraSite as Airadigm's attorney-in-fact to execute any such
documents in Airadigm's name, place and stead. SpectraSite shall use reasonable
efforts to obtain a non-disturbance and attornment agreement from the holder of
any such instrument which shall provide in pertinent part that said entity shall
agree to be bound by the terms of this Master Lease and Airadigm's use and
occupancy of the Premises shall not be disturbed unless Airadigm is then in
default under the terms, covenants and conditions of this Master Lease beyond
any applicable cure period.
26. ASSIGNMENTS AND SUBLEASES. Airadigm shall not voluntarily,
involuntarily or by operation of law assign, mortgage, sublet or otherwise
transfer or encumber all
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<PAGE> 10
or any part of Airadigm's interest in this Agreement, any SLA, or in the
Premises without SpectraSite's prior written consent which amount may be
withheld in the sole and absolute discretion of SpectraSite. Any attempted
assignment, mortgage, subletting or other transfer or encumbrance without the
consent of SpectraSite shall be void and shall, at SpectraSite's election,
constitute a breach of this Agreement without any need for notice thereof to
Airadigm. If Airadigm desires at any time to assign or otherwise transfer this
Agreement or to sublet the Premises or any portion thereof, it shall first
notify SpectraSite of its desire to do so and shall submit in writing to
SpectraSite (i) the name of the proposed sublessees or assignee; (ii) the, terms
and provisions of the proposed sublease or assignment; and (iii) such financial
and other information as SpectraSite may reasonably request concerning the
proposed sublessees or assignee. At any time within fifteen (15) days after
SpectraSite's receipt of the information specified, SpectraSite may by written
notice to Airadigm and SpectraSite's reasonable discretion (A) consent to the
subletting or assignment upon the terms and to the sublessees or assignee
proposed; (B) refuse to give its consent. Airadigm agrees that SpectraSite may
refuse to consent to any proposed assignment or subletting for any reason or
reasons deemed sufficient by SpectraSite without regard to any objective
standard of reasonableness and may consent to a proposed subletting or
assignment subject to such conditions as SpectraSite, in its sole discretion,
deems appropriate including, without limitation, the condition that the rent
under this Agreement be increased. If SpectraSite consents to such assignment or
subletting, Airadigm may, within ninety (90) days after the date of
SpectraSite's consent, enter into a valid assignment or sublease of the Premises
or portion thereof upon the terms and conditions described in the information
required above to be furnished by Airadigm to SpectraSite, or upon other terms
not more favorable to Airadigm; provided, however, that any material change in
such terms shall be subject to SpectraSite's consent. Notwithstanding the
foregoing, SpectraSite acknowledges and agrees that (i) Airadigm may grant a
conditional assignment of its interest in and to this Master Lease to Ericsson
Inc. as security for an existing financing relationship between Airadigm and
Ericsson Inc., (ii) Airadigm may sublease or assign this Master Lease to an
affiliate of Airadigm, and (iii) may assign this Master Lease to a purchaser of
substantially all of the assets of Airadigm provided that in each instance the
assignee or sublessee shall execute an instrument in a form which is reasonably
acceptable to SpectraSite in which the assignee ratifies and agrees to be bound
by the terms of this Master Lease and any other applicable agreement between the
parties. In no event shall any such assignment or sublease release Airadigm from
any liability under this Master Lease.
27. NOTICES. All notices or demands by or from SpectraSite to Airadigm,
or Airadigm to SpectraSite, shall be in writing. Such notices or demands shall
be mailed to the other party at the following address:
<TABLE>
<S> <C>
SpectraSite: SpectraSite Communications, Inc.
8000 Regency Park, Suite 570
Cary, NC 27511
Attention: Steve Clark
With a copy to: Lewellen & Frazier, PLC
Plaza West Building
415 North McKinley, Suite 1240
Little Rock, AR 72205
Attention.: Todd A. Lewellen
Airadigm: Airadigm Communications, Inc.
</TABLE>
10
<PAGE> 11
<TABLE>
<S> <C>
2301 Kelbe Drive
Little Chute, WI 54140
Attn: Vice President Finance
With a copy to: Airadigm Communications, Inc.
2301 Kelbe Drive
Little Chute, WI 54140
Attn: Central Administration
</TABLE>
28. SALE OF TOWER FACILITIES BY SPECTRASITE. SpectraSite may sell,
transfer or assign its interest in this Agreement or all or part of the Tower
Facilities governed by this Agreement upon notice to Airadigm provided that such
sale, transfer or assignment shall be subject to the terms, covenants and
conditions of this Agreement.
IN WITNESS WHEREOF, the SpectraSite and Airadigm have executed this Tower
Attachment Master Lease Agreement as of the date and year first above written.
SPECTRASITE:
SPECTRASITE COMMUNICATIONS, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
(CORPORATE SEAL)
AIRADIGM:
AIRADIGM COMMUNICATIONS, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
(CORPORATE SEAL)
11
<PAGE> 12
EXHIBIT "A"
SITE LEASE AGREEMENT
THIS SITE LEASE AGREEMENT ("SLA") is executed this _____ day of
____________, 1998, by and between SPECTRASITE COMMUNICATIONS, INC.
("SpectraSite") and AIRADIGM COMMUNICATIONS, INC. ("Airadigm").
WHEREAS, on the ____ day of ________________, 19__, SpectraSite and
Airadigm entered into that certain Master Tower Attachment Master Lease
Agreement ("Master Lease") which provides for the execution of individual SLAs
for each Site, as that term is defined in the Master Lease, owned by SpectraSite
upon which Airadigm desires to mount certain antenna, structures and other
equipment.
1. SITE. Subject to the terms of the Master Lease, SpectraSite hereby
leases unto grants to Carrier a License to install, maintain, operate, upgrade
and remove Carrier's wireless communications equipment and appurtenances on a
tower owned by SpectraSite ("Tower"), including antennas between the heights of
_________________________________ above ground level on the Tower, which is
located on certain real property leased by SpectraSite more particularly
described in Exhibit "A" attached hereto ("Property"); and to install, maintain,
operate and remove Carrier's equipment cabinet or compound and related devices
owned by Carrier on a _________________________portion of the Property at a
location to be agreed upon in writing between SpectraSite and Carrier (the space
occupied by Carrier on the Property and the Tower hereinafter shall be referred
to collectively as the "Premises"). Subject to the terms of the Master Lease
SpectraSite has leased to Airadigm the use of a tower or other structure owned
by SpectraSite and space on certain real property in the vicinity of the Tower
which real property is described in Exhibit "A" attached hereto ("Property").
SpectraSite has granted unto Airadigm for the Initial Term and any Renewal Term
an easement for ingress, egress and utilities during the term of the Master
Lease over the property described in Exhibit "B" attached hereto ("Easement").
(The Tower, Property and easement shall constitute and hereinafter be referred
to and known as the "Site"). The Site is more commonly known to SpectraSite as
the ____________ Site.
2. EQUIPMENT. A description of the equipment, antennae, mounting
height of the antenna and other personal property of Airadigm which Airadigm
intends to locate on the Site ("Equipment") is described in Exhibit "C" attached
hereto.
3. PRIME LEASE. A copy of the Prime Lease for this Site is attached
hereto as Exhibit "D" and is incorporated by reference herein. This SLA shall be
subject to the terms, covenants and conditions of the Prime Lease.
4 . EFFECT OF AGREEMENT. SpectraSite and Airadigm acknowledge that the
Master Lease is the controlling agreement between the parties with regard to
Airadigm's lease of the Site. This SLA is intended to supplement the Master
Lease and fulfill the requirements of paragraph 1 of the Master Lease.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
LESSOR:
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<PAGE> 13
SPECTRASITE COMMUNICATIONS, INC.
By:
---------------------------
Title:
-----------------------
LESSEE:
AIRADIGM COMMUNICATIONS, INC.
By:
---------------------------
Title:
-----------------------
13
<PAGE> 14
ACKNOWLEDGMENTS
14
<PAGE> 15
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
15
<PAGE> 16
EXHIBIT "B"
LEGAL DESCRIPTION OF EASEMENTS
16
<PAGE> 17
EXHIBIT "C"
EQUIPMENT LIST
17
<PAGE> 18
EXHIBIT "D"
PRIME LEASE
18
<PAGE> 1
EXHIBIT 10.25
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this ____ day of August,
1998 by and among AMICA WIRELESS PHONE SERVICE, INC., an Illinois_ corporation
("Amica"), and SPECTRASITE COMMUNICATIONS, INC., a Delaware corporation
("SpectraSite").
WHEREAS, Amica is a wireless communications company which provides PCS
service;
WHEREAS, Amica has leased real property upon which Amica has plans to
construct certain improvements including, but not limited to towers and related
facilities;
WHEREAS, Amica desires to assign, sell and convey to SpectraSite some or
all of its sites ("Site" or collectively "Sites") as well as certain towers and
related facilities in conjunction with the Sites (the "Tower Facilities") which
are more particularly described on Schedule II;
WHEREAS, Amica desires to lease space on the Sites from SpectraSite
subsequent to the sale of the Sites to SpectraSite;
WHEREAS, SpectraSite desires to purchase, and Amica desires to sell
certain towers and related facilities, contract rights, property rights and
leasehold interests.
NOW THEREFORE, Amica and SpectraSite do hereby agree as follows:
1. ASSETS PURCHASED. Amica agrees to grant, bargain, sell, convey and
assign to SpectraSite and SpectraSite agrees to purchase and accept from Amica,
on the terms and conditions set forth in this Agreement Amica's entire right,
title and interest in and to the following:
(a) those ground leases specified in Schedule I attached hereto ("Prime
Leases") together with any and all easements for ingress, egress and utilities
which are attendant to the Prime Leases;
(b) those towers, materials and other tangible property owned by Amica
which have been purchased for the Sites whether or not said assets have been
affixed to the Sites described in the Prime Leases (collectively "Personal
Property") specified in Schedule II attached hereto;
(c) the following items as the case may be for each Site:
(i) the Federal Aviation Administration application, responses,
approvals and registration numbers submitted or received by Amica;
(ii) the zoning permits and approvals, variances, building permits
and such other federal, state or local governmental approvals which have been
gained or for which Amica has made application;
(iii) the construction, engineering and architectural drawings and
related site plan and surveys pertaining to the construction of the Tower
Facilities;
(iv) the geotechnical report which has been commissioned by Amica;
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<PAGE> 2
(v) the title reports, commitments for title insurance, ownership
and encumbrance reports, title opinion letters, copies of instruments in the
chain of title or any other information which may have been produced regarding
title to the Site;
(vi) the environmental assessments including phase I reports and
any environmental reports involving contemporaneous or subsequent intrusive
testing and any other information which may have been produced regarding the
environmental condition of the Sites or neighboring real property; and
(vii) any other information written or otherwise regarding the due
diligence investigation made by Amica or its agents, independent contractors or
employees regarding the Site.
The items described in paragraphs 1(c) may hereinafter be collectively referred
to as "Due Diligence Items" and shall be more particularly described in the
Assignment of Prime Lease for each Site. A copy of the prototype Assignment of
Prime Leases is attached hereto as Attachment A. The Prime Leases, Personal
Property and Due Diligence Items may hereinafter be collectively referred to in
this Agreement as the "Assets". Between the date of this Agreement and the
Closing Date, Amica will promptly disclose to SpectraSite in writing any
information set forth in the representations, warranties, covenants and
Schedules herein that is no longer accurate for any reason or any such
information that would render such representations, warranties, covenants or
Schedules inaccurate if made or delivered on any date between the date hereof
and the Closing Date. On and after the Closing Date Amica agrees to execute,
acknowledge and deliver such bills of sale, assignments, acknowledgments and
other instruments of conveyance and transfer and other documents and do such
other acts and things as in the reasonable judgment of SpectraSite shall be
necessary to effectively vest in SpectraSite the full legal and/or equitable
title of the Assets that are transferred to SpectraSite under this Agreement,
free and clear of all liens and encumbrances.
2. LIABILITIES ASSUMED.
(a) Except as otherwise provided below, SpectraSite agrees at Closing
to assume and pay, discharge or perform, as appropriate, only the liabilities
and obligations of Amica specifically itemized on Schedule IV hereto ("Assumed
Liabilities").
(b) SpectraSite shall not be obligated to assume, agree to pay,
discharge or perform, or incur, as the case may be, any liability other than the
Assumed Liabilities.
3. PURCHASE PRICE. The purchase price for the Assets shall be Four
Hundred Seventy Three Thousand Nine Hundred Sixty Six Dollars and No/100
($473,966) ("Purchase Price'), allocated on the basis of Thirty Thousand and
No/100 Dollars ($30,000.00) per Site ("Allocated Purchase Price"). A description
of the individual Sites is set forth on Schedule I. The Purchase Price shall be
reduced by the Allocated Purchase Price for each Site that is rejected by
SpectraSite pursuant to paragraph 1.10 of this Agreement which is entitled
"Conditions Precedent to SpectraSite's Obligations". The purchase price for the
Assets shall be paid in full by SpectraSite at Closing. The operation of Amica's
Prime Leases to the close of business through the Closing Date shall be for the
account of Amica and thereafter for the account of SpectraSite. Expenses,
including but not limited to utilities, personal property taxes, rents and real
property taxes, shall be prorated between Amica and SpectraSite as of the close
of business on the Closing Date, the proration to be made and paid, insofar as
reasonably possible, on the Closing Date.
2
<PAGE> 3
4. CLOSING.
(a) Time and Place. The closing ("Closing") of the sale and purchase of
the Assets shall take place on the _____ day of August, 1998 ("Closing Date"),
or at such other time as the parties may agree in writing.
(b) Obligations of Amica at the Closing. At the Closing, Amica shall
deliver to SpectraSite the following:
(i) one or more assignments of leases conveying all of the Prime
Leases to SpectraSite in substantially the same form as set forth in Attachment
A;
(ii) one or more bills of sale from Amica conveying all of the
Personal Property to SpectraSite, in substantially the same the form as set
forth in Attachment B;
(iii) a copy of the resolutions of Amica's board of directors and
shareholders, authorizing the execution, delivery and performance of this
Agreement and any other agreement to be entered into by Amica in connection
herewith, and the transactions contemplated hereby;
(iv) the consents of the third parties listed on Schedule III
including where necessary the consents of the lessors under the Prime Leases.
The assets shall be conveyed free and clear of all liens and encumbrances and
lien releases from Fleet National Bank as agent; and
(v) such other assignments, bills of sale, or instruments of
conveyance, certificates of officers, and other documents as may be reasonably
requested by SpectraSite prior to the Closing to consummate this Agreement and
the transactions contemplated hereby.
5. AMICA'S OPERATION OF BUSINESS PRIOR TO CLOSING. Amica agrees that
between the date of this Agreement and the Closing Date, Amica will:
(a) Continue to operate the Assets in the usual and ordinary course and
in substantial conformity with all applicable laws, ordinances, regulations,
rules or orders, and will use its best efforts to preserve the Assets, including
the relationship with its customers, suppliers, and others having business
relations with Amica, with respect to the Assets.
(b) Not assign, sell, sublease, lease, license or otherwise transfer or
dispose of any of the Assets, whether now owned or acquired prior to the
Closing.
(c) Maintain all of its Assets in their present condition, reasonable
wear and tear and ordinary usage excepted.
(d) Maintain all governmental permits and approvals affecting the Sites
or the operation of the Tower Facilities.
6. ACCESS TO SITE AND INFORMATION. At reasonable times prior to the
Closing Date, Amica will provide SpectraSite and its representatives with
reasonable access during business hours to the assets, titles, contracts, and
records of Amica and furnish such additional information concerning Amica's
business as SpectraSite from time to time may reasonably request.
3
<PAGE> 4
7. BEST EFFORT.
(a) By Amica. Amica will use its best efforts to effectuate the
transactions contemplated by this Agreement and to fulfill all the conditions of
Amica's obligations under this Agreement, and will do all acts and things as may
be required to carry out Amica's obligations under this Agreement and to
consummate and complete this Agreement.
(b) By SpectraSite. SpectraSite will use its best efforts to effectuate
the transactions contemplated by this Agreement and to fulfill all the
conditions of SpectraSite's obligations under this Agreement, and will do all
acts and things as may be required to carry out SpectraSite's obligations under
this Agreement and to consummate and complete this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF AMICA. Amica represents and
warrants to SpectraSite as follows:
(a) Corporate Existence. Amica is now, and on the Closing Date will be,
a corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois, has all requisite corporate power and authority
to own or lease the Assets.
(b) Corporation Power and Authorization. Amica has full corporate
authority to execute and deliver this Agreement and any other agreement to be
executed and delivered by Amica in connection herewith, and to carry out the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate and shareholder action. No other corporate
proceedings by Amica will be necessary to authorize this Agreement or the
carrying out of the transactions contemplated hereby. This Agreement constitutes
a valid and binding agreement of Amica in accordance with its terms.
(c) Conflict with Other Agreements, Consents and Approvals. With
respect to (i) the articles of incorporation or bylaws of Amica, (ii) any
applicable law, statute, rule or regulation, (iii) any contract to which Amica
is a party or may be bound, or (iv) any judgment, order, injunction, decree or
ruling of any court or governmental authority to which Amica is a party or
subject, the execution of and delivery by Amica of this Agreement and any other
agreement to be executed and delivered by Amica in connection herewith and the
consummation of the transactions contemplated hereby will not (a) result in any
violation, conflict or default, or give to others any interest or rights,
including rights of termination, cancellation or acceleration, (b) require any
authorization, consent, approval, exemption or other action by any court or
administrative or governmental body which has not been obtained, or any notice
to or filing with any court or administrative or governmental body which has not
been given or done, or (c) require the consent of any third party except as may
be disclosed by Amica on Schedule III.
(d) Compliance with Laws. Amica's use and occupancy of the Assets,
wherever located, has been in compliance with all applicable federal, state,
local or other governmental laws or ordinances, the non-compliance with which,
or the violation of which, might have a material adverse affect on the Assets,
the Assumed Liabilities or the financial condition, results of operations or
anticipated business prospects of SpectraSite, and Amica has received no claim
or notice of violation with respect thereto. Without in any way limiting the
generality of the foregoing, Amica, and only respecting the Assets, is in
compliance with, and is subject to no liabilities under, any and all applicable
laws, governmental rules, ordinances, regulations and orders pertaining to the
presence, management, release, discharge, or disposal of toxic or
4
<PAGE> 5
hazardous waste material or substances, pollutants (including conventional
pollutants) and contaminants. Amica has obtained all material permits, licenses,
franchises and other authorizations necessary for the conduct of its business
with respect to the Assets. SpectraSite shall provide Amica notice and a
reasonable opportunity to cure any failure to comply with the covenants imposed
upon Amica by this paragraph.
(e) Litigation. Amica has no knowledge of any claim, litigation,
proceeding, or investigation pending or threatened against Amica that might
result in any material adverse change in the business or condition of Assets
being conveyed under this Agreement.
(f) Brokerage. Amica has not employed any broker, finder or similar
agent in connection with the transactions contemplated by this Agreement, or
taken action that would give rise to a valid claim against any party for a
brokerage commission, finder's fee, or similar compensation.
(g) Site Acquisition. Amica has performed the following tasks or
obtained the following governmental approvals as the case may be for each Site:
(i) filed and obtained from the Federal Aviation Administration
registration numbers for the tower;
(ii) filed and obtained or has otherwise complied, or will
promptly file, obtain or otherwise comply, with any and all necessary federal,
state and local governmental laws, regulations and ordinances including but not
limited to zoning permits and approvals, variances, building permits and such
other federal, state or local governmental approvals which were required for the
development of the Tower Facilities;
(iii) engaged an engineer licensed in the state of Illinois to
prepare construction, engineering and architectural drawings and related site
plan and surveys pertaining to the construction of the Tower Facilities;
(iv) obtained a geotechnical report;
(v) obtained title reports, commitments for title insurance,
ownership and encumbrance reports, title opinion letters, copies of instruments
in the chain of title or any other information which may have been produced
regarding title to the Site ; and
(vi) conducted environmental assessments including phase I reports
and any reports involving contemporaneous or subsequent intrusive testing and
any other information which may have been produced regarding the environmental
condition of the Site, any easements or neighboring real property.
(h) Environmental Compliance. Amica warrants and represents that the
sites, the easements and any improvements on the Sites thereon are free of
contaminants, oils, asbestos, PCB's, hazardous substances or wastes as defined
by federal, state or local environmental laws, regulations or administrative
orders or other materials the removal of which is required or the maintenance of
which is prohibited, regulated or penalized by any federal, state or local
governmental authority ("Hazardous Materials"). Amica's knowledge is limited to
that disclosed in the Phase I and Phase II reports, if any, which were obtained
by Amica at the time of its acquisition of the Prime Lease for each Site.
5
<PAGE> 6
(i) Title and No Defaults. Amica represents and warrants the following
with regard to each Site:
(i) it has a good and marketable leasehold interest in and to the
Sites which are the subject of the Prime Leases and the Prime Leases are and
remain valid and in full force and effect;
(ii) it has good and marketable title to the Personal Property and
Due Diligence Items free and clear of any liens, encumbrances or mortgages;
(iii) that there have been no prior assignments of the Prime
Leases;
(iv) the Prime Leases have not been amended, modified or assigned
in any manner other than as set forth in the Prime Leases;
(v) Amica has paid in full as of the date of this Agreement all
sums due and owing those vendors which have performed services or provided
materials in conjunction with each Site including but not limited to the costs
incurred in the preparation of the Due Diligence Items;
(vi) Amica is not in default under any of the terms of any of the
Prime Leases, and Amica has not received actual or constructive notice of the
existence of any event which, with the passage of time or the giving of notice
or both, would constitute a default by Amica under any of the Prime Leases. All
applicable rent and other charges and payments due the lessor under the Prime
Leases have been paid in full through the date hereof (except reimbursements for
real estate taxes, insurance, utilities or other reimbursements, if any, due for
fiscal periods to the extent not yet payable) and shall continue to be paid when
due through the Closing Date;
(j) Accuracy of Representations and Warranties. None of the
representations or warranties of Amica contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make statements in this Agreement not misleading. Amica
knows of no fact that has resulted, or that in the reasonable judgment of Amica
will result in a material change in the Assets that has not been set forth in
this Agreement or otherwise disclosed to SpectraSite.
9. REPRESENTATIONS AND WARRANTIES OF SPECTRASITE. SpectraSite
represents and warrants as follows:
(a) Corporate Existence. SpectraSite is now, and on the Closing Date
will be, a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has all requisite corporate power and
authority to enter into this Agreement and perform its obligations hereunder.
(b) Authorization. SpectraSite has full corporate authority to execute
and deliver this Agreement and any other agreement to be executed and delivered
by SpectraSite in connection herewith, and to carry out the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate and shareholder action. No other corporate
proceedings by SpectraSite will be necessary to authorize this Agreement or the
carrying out of the transactions
6
<PAGE> 7
contemplated hereby. This Agreement constitutes a valid and binding Agreement
of SpectraSite in accordance with its terms.
(c) Conflict with Other Agreements, Consents and Approvals. With
respect to (i) the articles of incorporation or bylaws of SpectraSite, (ii) any
applicable law, statute, rule or regulation, (iii) any contract to which
SpectraSite is a party or may be bound, or (iv) any judgment, order, injunction,
decree or ruling of any court or governmental authority to which SpectraSite is
a party or subject, the execution and delivery by SpectraSite of this Agreement
and any other agreement to be executed and delivered by SpectraSite in
connection herewith and the consummation of the transactions contemplated hereby
will not (a) result in any violation, conflict or default, or give to others any
interest or rights, including rights of termination, cancellation or
acceleration, or (b) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been obtained, or any notice to or filing with any court or administrative or
governmental body which has not been given or done.
(d) Brokerage. SpectraSite has not employed any broker, finder or
similar agent in connection with the transactions contemplated by this
Agreement, or taken action that would give rise to a valid claim against any
party for a brokerage commission, finder's fee, or similar compensation.
(e) Accuracy of Representations and Warranties. None of the
representations or warranties of SpectraSite contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make the statements contained herein not misleading.
10. CONDITIONS PRECEDENT TO SPECTRASITE'S OBLIGATIONS. The obligation
of SpectraSite to purchase the Assets is subject to the fulfillment, prior to or
at the Closing Date, of each of the following conditions, any one or portion of
which may be waived in writing by SpectraSite:
(a) Representations, Warranties and Covenants of Amica. The
representations and warranties of Amica contained herein and the information
contained in the Schedules and any other documents delivered by Amica in
connection with this Agreement shall be true and correct in all material
respects at the Closing; and Amica shall have performed all obligations and
complied with all agreements, undertakings, covenants and conditions required by
this Agreement to be performed or complied with by it or prior to the Closing.
(b) Conditions of the Assets. There shall have been no material adverse
change in the manner of operation of the Assets prior to the Closing Date.
(c) No Suit or Actions. At the Closing Date no suit, action, or other
proceeding shall have been threatened or instituted to restrain, enjoin, or
otherwise prevent the consummation of this Agreement or the contemplated
transactions.
(d) Surveys. SpectraSite shall have the right, at its cost, to have
each Site surveyed and to have radio frequency engineering and other engineering
analyses performed. SpectraSite covenants that said investigations shall be
performed by SpectraSite as soon as practicable after the execution of this
Agreement. In the event that any defects are shown by the survey or the
engineering analyses, which SpectraSite reasonably believes may adversely affect
SpectraSite's
7
<PAGE> 8
use of a Site, SpectraSite shall have the right to avoid the assignment of the
Assets for that Site upon written notice to Amica; and
(e) Environmental Assessments. SpectraSite shall have the right, at its
own cost, to have an environmental assessment of the Site performed by an
environmental consulting firm of SpectraSite's choice. If the environmental
audit reveals that a Site is contaminated with Hazardous Materials, as that term
is defined in the Master Design Build Lease Agreement, SpectraSite shall have
the right to avoid the assignment of the Assets for that Site; and
(f) Assignments of Prime Leases. SpectraSite shall have obtained
assignments of all Prime Leases conveying the Prime Leases in substantially the
same form as set forth in Attachment A.
11. Conditions Precedent to Amica's Obligations. The obligation of
Amica to grant, bargain, sell, convey and assign the Assets is subject to the
fulfillment, prior to or at the Closing Date, of each of the following
conditions, any one or portion of which may be waived in writing by Amica:
(a) Representations, Warranties and Covenants of SpectraSite. The
representations and warranties of SpectraSite contained herein and any other
documents delivered by SpectraSite in connection with this Agreement shall be
true and correct in all material respects at the Closing; and SpectraSite shall
have performed all obligations and complied with all agreements, undertakings,
covenants and conditions required by this Agreement to be performed or complied
with by it or prior to the Closing.
(b) No Suit or Actions. At the Closing Date no suit, action, or other
proceeding shall have been threatened or instituted to restrain, enjoin, or
otherwise prevent the consummation of this Agreement or the contemplated
transactions.
(c) The parties have negotiated and shall execute simultaneously
herewith a Master Design Build Lease Agreement. The use and occupancy of each
Site transferred by Amica pursuant to this Agreement shall be subject to and
governed by the terms, covenants and conditions of Article III of the Master
Design Build Lease.
12. TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(a) By mutual consent of Amica and SpectraSite, without liability;
(b) By SpectraSite, upon written notice to Amica, given at any time
before the Closing Date if the representations and warranties of Amica contained
herein were materially incorrect when made or would be materially incorrect on
the Closing Date or, if Amica has materially violated any covenants contained in
Paragraph 8, or if any other material agreement contained in this Agreement and
required to be performed by Amica on or prior to the Closing Date has not been
performed and such breach, violation or non-performance is not cured within
fourteen (14) days of such notification of intent to terminate unless the
nonperformance relates to an item to be accomplished at or before Closing and
the fourteen (14) day right to cure would lapse prior to Closing;
8
<PAGE> 9
(c) By Amica, upon written notice to SpectraSite, given at any time
before the Closing Date if the representations and warranties of SpectraSite
contained in this Agreement were materially incorrect when made or would be
materially incorrect on the Closing Date, or if SpectraSite has materially
violated any covenants contained in Paragraph 9, or if any other material
agreement contained herein and required to be performed by SpectraSite on or
prior to the Closing Date has not been performed and such breach, violation or
non-performance is not cured within fourteen (14) days of such notification of
intent to terminate;
(d) By either Amica or SpectraSite in writing, without liability, if
any governmental authorization or approval has been denied or refused or if
there shall be any order, writ, injunction or decree of any court or
governmental or regulatory agency binding on SpectraSite or Amica from
consummating the transactions contemplated hereby, provided that SpectraSite and
Amica shall have used their best efforts to have any such order, writ,
injunction or decree lifted and the same shall not have been lifted within
thirty (30) days after entry, by any such court or governmental or regulatory
agency; if any such denial or refusal applies only to a specific Site, this
Agreement shall remain in full force and effect with respect to the other Sites;
(e) By SpectraSite, without liability, upon written notice to Amica,
given at any time before the Closing Date, if any of the conditions precedent
set forth in Paragraph 10 hereof have not occurred and such failure to occur is
not cured within fourteen (14) days of such notification of intent to terminate
unless the nonperformance relates to an item to be accomplished at or before
Closing and the fourteen (14) day right to cure would lapse prior to Closing.
13. RISK OF LOSS. If, prior to Closing, any of the Tower Facilities are
materially damaged or destroyed, then SpectraSite may rescind this Agreement in
the manner provided above unless arrangements for repair satisfactory to all
parties involved are made prior to Closing. Amica agrees to maintain fire and
extended coverage casualty insurance through and including the date of Closing
covering all of the Tower Facilities in an amount not less than the full
replacement value of all of the Tower Facilities.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement shall survive the Closing of this Agreement,
except that any party to whom a representation or warranty has been made in this
Agreement shall be deemed to have waived any misrepresentation or breach of
representation or warranty of which such party had knowledge prior to Closing
and which written notice was provided to the other party. Any party learning of
a misrepresentation or breach of representation or warranty under this Agreement
shall immediately give written notice thereof to all other parties to this
Agreement. The representations and warranties in this Agreement shall survive
the Closing anticipated by this Agreement.
15. INDEMNIFICATION BY AMICA.
(a) Amica hereby agrees to indemnify and hold SpectraSite, its
successors, and assigns harmless from and against:
(i) Excepting Assumed Liabilities, any and all damages, losses,
claims, liabilities, deficiencies and obligations of every kind and description,
contingent or otherwise arising out of or related to the operation of Amica's
operation of the Assets prior to Closing, except for damages, losses, claims,
liabilities, deficiencies and obligations of Amica expressly assumed by
SpectraSite under this Agreement or paid by insurance maintained by Amica, (ii)
any liability or obligation of Amica which is not an Assumed Liability, (iii)
any and all damage or
9
<PAGE> 10
deficiency resulting from any material misrepresentation, breach of warranty or
covenant, or nonfulfillment of any agreement on the part of Amica under this
Agreement, and (iv) any and all actions, suits, claims, proceedings,
investigation, auditors, demands, assessments, fines, judgments, costs and other
expenses (including, without limitation, reasonable audit and attorney fees)
incident to any of the foregoing;
(ii) a breach of any representation or warranty made by Amica
pursuant to this Agreement;
(iii) any liabilities or obligations of Amica other than the
Assumed Liabilities;
(iv) any and all environmental damages arising from Amica's use of
the Sites during its leasehold interest;
(b) Amica's indemnity obligations under Section 14 shall be subject to
the following:
(i) If any claim is asserted against SpectraSite that would give
rise to a claim by SpectraSite against Amica for indemnification under the
provisions of this Section, then SpectraSite shall promptly give written notice
to Amica concerning such claim and Amica shall, at no expense to SpectraSite,
defend the claim. Amica shall, in its sole discretion, have the right to settle
any such claim, and SpectraSite shall execute any documents reasonably necessary
to effectuate such settlement.
(ii) Amica shall not be required to indemnify SpectraSite for an
amount that exceeds the total purchase price paid by SpectraSite under this
Agreement.
16. INDEMNIFICATION BY SPECTRASITE. SpectraSite agrees to defend,
indemnify, and hold harmless Amica from and against:
(a) any and all claims, liabilities, and obligations of every kind and
description arising out of or related to the operation of the Assets following
Closing or arising out of SpectraSite's failure to perform obligations of Amica
assumed by SpectraSite pursuant to this Agreement;
(b) after the Closing, any liability or obligation of Amica which is an
Assumed Liability;
(c) any and all damage or deficiency resulting from any material
misrepresentation, breach of warranty or covenant, or nonfulfillment of any
agreement on the part of SpectraSite under this Agreement, and
(d) any and all actions, suits, claims, proceedings, investigation,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and attorneys fees) incident to
any of the foregoing.
17. CONFIDENTIAL INFORMATION. If for any reason the sale of Assets is
not closed, SpectraSite will not disclose to third parties any confidential
information received from Amica in
10
<PAGE> 11
the course of investigating, negotiating, and performing the transactions
contemplated by this Agreement.
18. MISCELLANEOUS PROVISIONS.
(a) Notices. Any notice under this Agreement shall be in writing and
shall be effective when actually delivered in person or three days after being
deposited in the U.S. mail, registered or certified, postage prepaid and
addressed to the party at the address stated in this Agreement or such other
address as either party may designate by written notice to the other.
<TABLE>
<S> <C>
SpectraSite: SpectraSite Communications, Inc.
8000 Regency Park, Suite 570
Cary, NC 27511
Attention: Steve Clark
With a copy to: Lewellen & Frazier, PLC
Plaza West Building
415 North McKinley, Suite 1240
Little Rock, AR 72205
Attention: Todd A. Lewellen
Amica: Amica Wireless Phone Service, Inc.
327 E. College Street, Suite 381
Iowa City, IA 52240
Attention: Bob George
With a copy to: Meardon, Sueppel, Downer & Hayes, PLC
122 S. Linn Street
Iowa City, IA 52240
Attention: Tim Krumm
</TABLE>
or at any other address as any party may, from time to time, designate by notice
given in compliance with this section.
(b) Time. Time is of the essence of this Agreement.
(c) Survival. Any of the terms and covenants contained in this
Agreement which require the performance of either party after the Closing shall
survive the Closing.
(d) Waiver. Failure of either party at any time to require performance
of any provision of this Agreement shall not limit the party's right to enforce
the provision, nor shall any waiver of any breach of any provision be a waiver
of any succeeding breach of any provision or a waiver of the provision itself
for any other provision.
(e) Assignment. Except as otherwise provided within this Agreement,
neither party hereto may transfer or assign this Agreement without prior written
consent of the other party, such consent shall not be unreasonably withheld.
11
<PAGE> 12
(f) Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
(g) Attorney Fees. In the event an arbitration, suit or action is
brought by either party under this Agreement to enforce any of its terms, or in
any appeal therefrom, it is agreed that the prevailing party shall be entitled
to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
(h) Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
(i) Titles and Captions. All article, section and paragraph titles or
captions contained in this Agreement are for convenience only and shall not be
deemed part of the context nor affect the interpretation of this Agreement.
(j) Pronouns and Plurals. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
(k) Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
(l) Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
(m) Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of this Agreement.
(n) Good Faith, Cooperation and Due Diligence. The parties hereto
covenant, warrant and represent to each other good faith, complete cooperation,
due diligence and honesty in fact in the performance of all obligations of the
parties pursuant to this Agreement. All promises and covenants are mutual and
dependent.
(o) Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
(p) Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
(q) Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
IN WITNESS WHEREOF, the SpectraSite and Amica have executed this Asset
Purchase Agreement as of the date and year first above written.
12
<PAGE> 13
SPECTRASITE COMMUNICATIONS, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
(CORPORATE SEAL)
AMICA WIRELESS PHONE SERVICE,INC
By:
---------------------------
Name:
-------------------------
Title:
------------------------
(CORPORATE SEAL)
13
<PAGE> 14
SCHEDULE I
SCHEDULE OF PRIME LEASES
<TABLE>
<CAPTION>
SITE LANDLORD TOTAL
<S> <C> <C>
1 BLM-004 PERSCHALL 30,000
2 BLM-005 KINDRED 30,000
3 BLM-006 BROADWELL 30,000
4 BLM-007 LANDERS 30,000
5 BLM-008 ASHBROOK 30,000
6 CHP-016 CARROLL 30,000
7 CHP-022 FOWLER 30,000
8 DEC-033 ELKS LODGE 30,000
9 DEC-034 SLIFER 30,000
10 DEC-035 GINTZ 30,000
11 SPR-047 SCHUH 30,000
12 SPR-049 BYERS PRINTING 30,000
13 SPR-055 BEAM 30,000
14 CLN-001 RIDDLE 30,000
</TABLE>
THE COSTS FOR EACH SITE INCLUDE SITE ACQUISITION, AND CONSTRUCTION MANAGEMENT.
14
<PAGE> 15
SCHEDULE II
SCHEDULE OF PERSONAL PROPERTY
<TABLE>
<S> <C>
BLM-004 190' ROHN TOWER $26,998
BLM-008 190' ROHN TOWER $26,998
-------
$53,996
=======
</TABLE>
15
<PAGE> 16
SCHEDULE III
REQUIRED CONSENTS
FLEET NATIONAL BANK
16
<PAGE> 17
SCHEDULE IV
ASSUMED LIABILITIES
NO LIABILITIES OF AMICA ARE TO BE ASSUMED BY SPECTRASITE.
17
<PAGE> 18
ATTACHMENT "A"
ASSIGNMENT OF LEASE AGREEMENT
THIS ASSIGNMENT OF LEASE AGREEMENT ("Agreement") is made and entered into
as of the _____ day of _________________, 1998, by and between SpectraSite
Communications, Inc., a Delaware corporation ("SpectraSite"), J. Frank Wilhite
(the "Ground Lessor") and Amica Wireless Phone Service, Inc., an Illinois
corporation ("Amica").
WHEREAS, Amica has entered into a ground lease agreement dated February
9, 1998 (the "Wilhite Lease") for a parcel of real property located in Logan
County, Illinois with the Ground Lessor which is more particularly described in
the Lease attached hereto as Exhibit "A" (the "Property");
WHEREAS, Amica desires to assign the Wilhite Lease for said Property to
SpectraSite; and
WHEREAS, the Ground Lessor hereby consents to such assignment; and
WHEREAS, SpectraSite desires to accept an assignment of the Lease.
NOW, THEREFORE, for and in consideration of the mutual promises outlined
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Amica and SpectraSite do hereby agree as follows:
1. Assignment. Amica does hereby assign to SpectraSite the Lease
together with any easements for ingress, egress and utilities ("Easements") to
the Properties. SpectraSite shall assume and agree to be bound by the Lease.
2. Covenants of Amica. Amica covenants that it:
(a) unconditionally and absolutely assigns, transfers, sets over and
conveys to SpectraSite, free and clear of all liens, claims and encumbrances,
all of Amica's right, title and interest in, to and under the Lease except as
such rights may be limited or modified by any (if any) addenda attached to the
Lease. Amica represents and warrants to SpectraSite that any and all addenda to
the Lease are attached to this Agreement as part of Exhibit "A";
(b) shall warrant, indemnify and defend the leasehold title assigned to
SpectraSite against the lawful claims.
(c) has no knowledge or notice of any default, defense, offset, claim,
demand, counterclaim or cause of action which may presently exist or may
hereafter arise under the Lease; and
(d) irrevocably assigns, transfers, conveys and sets over to
SpectraSite all of the right, title and interest of Amica under each and all of
the following items:
(i) the Federal Aviation Administration application, responses,
approvals and registration numbers submitted or received by Amica with respect
to the tower proposed to be constructed on the Property;
18
<PAGE> 19
(ii) the zoning permits and approvals, variances, building permits
and such other federal, state or local governmental approvals which have been
gained or for which Amica has made application;
(iii) the construction, engineering and architectural drawings and
related site plan and surveys pertaining to the construction of the Tower
Facilities on the Property;
(iv) the geotechnical report for the Property which has been
commissioned by Amica;
(v) the title reports, commitments for title insurance, ownership
and encumbrance reports, title opinion letters, copies of instruments in the
chain of title or any other information which may have been produced regarding
title to the Property and the Easements;
(vi) the environmental assessments including phase I reports and
any reports relating contemporaneous or subsequent intrusive testing, the "FCC
Checklist" performed pursuant to NEPA requirements and any other information
which may have been produced regarding the environmental condition of the
Property, Easements or neighboring real property; and
(vii) any other information written or otherwise regarding the due
diligence investigation made by Amica or its agents, independent contractors or
employees regarding the Property or the Easement.
The items described in paragraphs 2.2(d) may hereinafter be collectively
referred to as "Site Acquisition Items"; and
3. Conditions Precedent. SpectraSite's obligation to assume and to
perform under the Lease shall be subject to and conditioned upon SpectraSite's
personal satisfaction with the review of the Lease and the Site Acquisition
Items. SpectraSite's lack of satisfaction with the Lease, the Site Acquisition
Items or the occurrence of any other event which effectively prohibits
SpectraSite's use of the Property for tower facilities shall relieve SpectraSite
from any obligation to accept an assignment of the Lease or to perform under the
Lease. The foregoing conditions precedent shall be deemed effectively waived by
SpectraSite if SpectraSite does not assert these conditions within sixty (60)
days of the date of this Agreement.
4. Representations and Warranties of Amica. Amica represents and
warrants to SpectraSite that:
(a) The Lease has not been amended, modified or assigned in any manner
other than as set forth in the Lease and that the Lease is and remains valid and
in full force and effect. Amica has not prepaid any rent or other monies due
under the Lease;
(b) Amica has the full right and authority to assign the Lease; and
(c) Amica has paid in full all sums due and owing those vendors which
have performed services or provided materials in conjunction with each Site
which is the subject of this Agreement prior to the date of the assignment
including but not limited to the costs incurred in the preparation of the Site
Acquisition Items.
19
<PAGE> 20
5. Representations and Warranties of Ground Lessor. The Ground Lessor
hereby certifies, with the understanding that SpectraSite is relying upon the
statements made herein, the following:
(a) The Lease constitutes the entire agreement between the parties with
respect to the leased property. The Lease has not been amended and there are no
other agreements between the Ground Lessor and Amica with respect to the
property or the easements which are described in the Lease.
(b) The Lease is in full force and effect in accordance with its terms.
To the best of the Ground Lessor's knowledge, neither party is in default under
any of the terms of the Lease, and the Ground Lessor has not received actual or
constructive notice of the existence of any event which, with the passage of
time or the giving of notice or both, would constitute a default under the
Lease.
(c) All applicable Lease fees (if any) and other charges and payments
due the Ground Lessor from Amica under the Lease have been paid in full through
the date hereof (except reimbursements for real estate taxes, insurance,
utilities or other reimbursements, if any, due for fiscal periods to the extent
not yet payable).
(d) Ground Lessor understands that SpectraSite is relying on the
information contained in this instrument, and agrees that SpectraSite may rely
on this information, for purposes of determining whether to consummate their
transaction. Further, SpectraSite's subsidiaries, affiliates, legal
representatives and successor and assigns may rely on the contents of this
Instrument. A facsimile of this instrument delivered to SpectraSite by
telecopier shall be deemed an original for all purposes.
(e) Any Notices to be received by SpectraSite Assignee under the Lease
shall be deemed properly given if marked to SpectraSite with proper postage or
sent via a reputable overnight carrier to the following address:
SpectraSite Communications, Inc.
8000 Regency Parkway, Suite 570
Cary, NC 27511
Attention: Legal Notices
With a copy to:
Lewellen & Frazier, PLC
Plaza West Building
415 North McKinley, Suite 1240
Little Rock, AR 72205
Attn.: Todd A. Lewellen
6. Covenants of SpectraSite. SpectraSite covenants that it shall
assume Amica's duties and obligations under the Wilhite Lease.
7. Consent of Ground Lessor. The Ground Lessor hereby acknowledges the
right of Amica to assign the Lease to SpectraSite and agrees that all terms of
the Lease shall be in full force and effect between the Ground Lessor and
SpectraSite as if Lessor and Assignee were the original parties to the Lease and
that such assignment shall not violate the terms of the Lease, will not create
20
<PAGE> 21
or cause the Assignee to be liable for any rent in excess of $450.00 per month
during the Initial Term or be considered a sublease under the terms of the Lease
or any addenda thereto.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, SpectraSite, the Ground Lessor and Amica have signed
this Agreement as of the date and year first above written.
SpectraSite Communications, Inc.,
a Delaware corporation
By:
-------------------------------
President
------------
ATTEST:
- ------------------------
Secretary
- -----------
[AFFIX CORPORATE SEAL]
Amica Wireless Phone Service, Inc.,
an Illinois corporation
By:
--------------------------------
President
-------------
ATTEST:
- -------------------------
Secretary
- -----------
[AFFIX CORPORATE SEAL]
-----------------------------------
J. Frank Wilhite
21
<PAGE> 22
EXHIBIT "A"
PRIME LEASE AGREEMENT
22
<PAGE> 23
ATTACHMENT B
BILL OF SALE FOR THE PERSONAL PROPERTY
BILL OF SALE
FOR GOOD AND VALUABLE CONSIDERATION PAID, Seller, Amica Wireless Phone Service,
Inc., an Illinois corporation, 327 E. College Street, Suite 381, Iowa City, Iowa
53340, does hereby sell, assign, transfer and set over unto Buyer, SpectraSite
Communications, Inc., a Delaware corporation, 8000 Regency Parkway, Suite 570,
Cary, North Carolina 27511, the following described personal property, to-wit
("Assets"):
1. BLM-004 190' Rohn Tower
2. BLM-008 190' Rohn Tower
which property is now located at St. Anne, Illinois in the possession of P & D
Antenna. The above named Buyer does hereby assent to becoming the owner of the
above described property.
All of these Assets are transferred to Buyer, its successors and assigns, to
have and to hold for Buyer's and their own proper right, use and benefit
forever. Seller covenants with Buyer, its successors and assigns, that Seller is
the lawful owner of the Assets and has good right to sell the Assets and that
the Assets are free from all liens and encumbrances. Seller will warrant and
defend title to the assets against any and all lawful claims and demands
whatsoever. Words and phrases herein, including acknowledgement hereof, shall be
construed as in the singular or plural number, and as the appropriate gender,
according to the context.
Signed this _____ day of ____________________, 1998.
AMICA WIRELESS PHONE SERVICE, INC. SPECTRASITE COMMUNICATIONS, INC.
By: By:
-------------------------------- -----------------------------
Clayton N. Bodnarek, General Manager
SELLER By:
----------------------------
BUYER
23
<PAGE> 24
STATE OF IOWA )
)SS
JOHNSON COUNTY )
On this _____ day of _____________________, 1998 before me, the
undersigned, a Notary Public in and for said County and said State, personally
appeared Clayton N. Bodnarek, to me personally known, who, being by me duly
sworn, did say that he is the General Manager of said corporation; that said
Instrument was signed on behalf of said corporation by authority of its Board of
Directors; and that the said General Manager as such officer, acknowledged the
execution of said instrument to be the voluntary act and deed of said
corporation, by it and by him voluntarily executed.
------------------------------------------
NOTARY PUBLIC IN AND FOR THE STATE OF IOWA
STATE OF __________)
)SS
____________ COUNTY)
On this _____ day of _______________, 1998 before me, the undersigned, a
Notary Public in and for said County and State, personally appeared
________________________________, and _____________________________________, to
me personally known, who, being by me duly sworn, did say that they are the
_________________________ and _______________________ (respectively, of said
corporation; that (no seal has been procured by the said) (the seal affixed
thereto is the seal of said) corporation; that said Instrument was signed (and
sealed) on behalf of said corporation by authority of its Board of Directors;
and that the ___________________________ and _______________________________ as
such officers, acknowledged the execution of said Instrument to be the voluntary
act and deed of said corporation, by it and by them voluntarily executed.
------------------------------------------
NOTARY PUBLIC FOR SAID STATE
24
<PAGE> 1
EXHIBIT 10.26
MASTER DESIGN BUILD LEASE AGREEMENT
THIS MASTER DESIGN BUILD LEASE AGREEMENT ("Agreement") is made and entered
into by and between Amica Wireless Phone Service, Inc., an Illinois corporation
("Amica") and SpectraSite Communications, Inc. ("SpectraSite").
WHEREAS, Amica is a wholly-owned subsidiary of BRK Wireless Company, Inc.,
an Illinois corporation, which corporation holds certain licenses granted by the
FCC to provide personal communications service ("PCS") pursuant to license
numbers CWB046F, CWB071F, CWB109F, and CWB426F License") in geographical areas
referred to in the License as BTAs Bloomington, Champaign-Urbana,
Decatur-Effingham, and Springfield which are located in the state of Illinois
WHEREAS, Amica requires that towers and related facilities be developed
for the installation by Amica of antennas, equipment cabinets, cabling and
related equipment;
WHEREAS, Amica has secured certain parcels of real estate within the BTAs
for the development of said towers and facilities, pursuant to various Site
Lease Agreements which have been made between Amica and the owners of the
various parcels of real estate and desires for SpectraSite to procure other
parcels of real estate for the development of towers and facilities ("Sites");
WHEREAS, Amica desires to assign the Sites to SpectraSite for construction
of towers and related facilities by SpectraSite, pursuant to this Agreement;
WHEREAS, Amica desires to lease space on the facilities from SpectraSite
for the installation and operation of tower facilities on the sites.
NOW THEREFORE, Amica and SpectraSite do hereby agree as follows:
I. SITE ACQUISITION
1.1 SEARCH AREAS. Amica may designate to SpectraSite during the Site
Acquisition Term, as that term is defined in section 1.2 of this Agreement, one
or more Search Areas for SpectraSite's performance pursuant to this Agreement of
Site Acquisition Services. A Search Area shall be deemed designated by
SpectraSite hereunder upon Amica's delivery to SpectraSite of a Search Area
package containing the following information: (i) a map, topographical drawing
or other rendering and general latitude and longitude information sufficiently
describing the geographic area constituting such Search Area; (ii) the
applicable number or other specified means of designation by which Amica
identifies such area (the "Search Area Number"); and (iii) the type and desired
number of Amica antennas intended to be installed, desired mounting height and
any other technical data necessary to the effective identification of Candidate
Sites therein.
1.2 TERM OF SITE ACQUISITION SERVICES AGREEMENT. The term of this
Agreement (the "Site Acquisition Term") shall commence on the date of this
Agreement and shall expire on the third (3rd) anniversary of the date of this
Agreement.
(a) This Agreement may be terminated upon written notice by either party
following the other party's breach of an obligation or covenant on such party's
part to be performed, which
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breach is not cured within thirty (30) days after the breaching party's receipt
of written notice thereof; and
(b) Neither a termination nor the expiration of this Agreement shall
affect:
(i) the term of any SLA, as that term is defined in section 3.3 of this
Agreement, which has been entered into by the parties prior to the date of
the termination of this Agreement, which shall continue in accordance with
its terms and conditions;
(ii) any duties or obligations for payment or performance that are or
become owing hereunder prior to the effective date of such termination; or
(iii) any other duties or obligations that expressly survive the
termination or expiration hereof.
1.3 SITE ACQUISITION SERVICES. SpectraSite shall provide the personnel and
facilities which are necessary to locate and acquire real estate ("Sites") and
to provide related services for the acquisition of sites to be used for the
construction and installation of a communications tower ("Tower") and related
facilities. The services are more particularly described in and shall be
performed by SpectraSite in accordance with the scope of work attached hereto as
Schedule "I" which is incorporated by reference herein ("Site Acquisition
Services").
1.4 PRIME LEASES. The acquisition of Sites by SpectraSite pursuant to this
Agreement shall be accomplished using a lease agreement in substantially the
same form as the Option and Lease Agreement which is attached hereto as Schedule
"II" subject to such revisions as SpectraSite may deem to be reasonable and
necessary ("Prime Lease"). SpectraSite and Amica acknowledge and agree that
privity of contract shall exist only between SpectraSite and the owner, lessor,
sublessor or licensor of a Site ("Prime Lessor").
1.5 DEFINITION OF DUE DILIGENCE ITEMS. As used herein, Due Diligence Items
shall include the Federal Aviation Administration application, responses,
approvals and registration numbers submitted or received by Amica; the zoning
permits and approvals, variances, building permits and such other federal, state
or local governmental approvals; the construction, engineering and architectural
drawings and related site plan and surveys pertaining to the construction of the
Tower Facilities; the geotechnical report; the title reports, commitments for
title insurance, ownership and encumbrance reports, title opinion letters,
copies of instruments in the chain of title or any other information which may
be produced regarding title to the Site; the environmental assessments including
phase I reports and any environmental reports involving contemporaneous or
subsequent intrusive testing, the "FCC Checklist" performed pursuant to NEPA
requirements and any other information which may have been produced regarding
the environmental condition of the Sites or neighboring real property; and any
other information written or otherwise regarding the due diligence investigation
to be made regarding the Site. The items described in this section 1.4 may
hereinafter be collectively referred to as "Due Diligence Items". SpectraSite
shall be responsible for all costs associated with the performance of the Due
Diligence Items. SpectraSite shall have no obligation to perform any Due
Diligence Items until such time as SpectraSite has received from Amica a written
notice to proceed ("Notice to Proceed") in the form attached hereto as Schedule
"III" which evidences Amica's approval and acceptance of the Site. The Notice to
Proceed or Amica's rejection of the Site shall be tendered to SpectraSite by
Amica not more than ten (10) business days after SpectraSite provides Amica
information relating to the Site. In the event that Amica tenders a Notice to
Proceed and SpectraSite determines from its due diligence investigation of the
Site that it is suitable for the
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construction of the Tower Facilities, SpectraSite shall construct the Tower
Facilities in accordance with this Agreement, the Site shall be governed by
Article III of this Agreement, and Amica shall execute an SLA for such Site as
provided in paragraph 3.1 hereof within ten (10) days following written notice
from SpectraSite that the Site is suitable for the construction of the Tower
Facilities and that it intends to construct the Tower Facilities. In the event
that Amica fails to execute an SLA for such Site, Amica will pay to SpectraSite
the sum of Thirty Thousand and No/100 Dollars ($30,000.00) as liquidated damages
for its failure to do so as reimbursement of the costs SpectraSite has incurred
during its site acquisition activities and due diligence investigation of the
Site.
1.6 INSURANCE. SpectraSite or contractors engaged by SpectraSite shall
procure and maintain the following types of insurance and coverage amounts in
conjunction with the Site Acquisition Services:
(a) Workers compensation insurance in accordance with the provisions
of the applicable workers compensation or similar law of the state applicable to
Contractor's personnel;
(b) Comprehensive general liability insurance with minimum limit of
liability coverage of $1,000,000, with a combined limit for bodily injury and/or
property damage for any one occurrence and excess/umbrella coverage of
$2,000,000;
(c) Automobile liability insurance insuring all owned, non-owned and
hired automotive equipment in minimum combined single limit amounts of $500,000;
(d) Umbrella coverage of not less than $2,000,000 combined single
limit in excess of the coverage required in subsections (b) and (c) above;
(e) Errors and omissions coverage of not less than $1,000,000 per
occurrence.
Amica shall be named as additional insured under the insurance required
under subsections (b), (c), (d) and (e). SpectraSite shall provide Amica with
certificates of insurance evidencing the coverage required above. Such insurance
will provide for 30 days prior written notice to Amica in event of cancellation,
non-renewal, or material changes in coverage.
1.7 COMPLIANCE WITH LAWS AND SAFETY STANDARDS. SpectraSite shall provide
Site Acquisition Services and otherwise discharge its duties under this
Agreement in accordance with all applicable local, state and federal laws,
rules, regulations, and ordinances, and in accordance with all applicable safety
standards.
1.8 CONFIDENTIALITY. SpectraSite shall not disclose Confidential
Information to others except as may be necessary to render the Site Acquisition
Services hereunder. The term "Confidential Information" means information,
except as may be in the public domain, about Amica's projects, processes,
management, operations, services, purchasing, accounting, marketing,
merchandising, selling, research and development, or any other information
designated by Amica in writing to SpectraSite to be of a proprietary or
competitively sensitive nature.
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1.9 INFORMATION AND COOPERATION. Amica shall provide such information,
assistance, cooperation and coordination as is necessary to enable SpectraSite
to timely perform the Site Acquisition Services hereunder.
1.10 ENVIRONMENTAL DISCLAIMER. Amica acknowledges and agrees that,
notwithstanding any other provision of this Agreement, in performing Services
hereunder SpectraSite shall have no liability or responsibility whatsoever to
Amica for, or arising from, any environmental audit, inspection or evaluation of
any property that is considered, proposed or accepted by Amica for the location
of antennas, towers, or any other facilities of Amica, nor shall SpectraSite
have any liability for any past, present, or future environmental condition at
any such property, specifically including but not limited to the presence of
hazardous wastes or hazardous substances, as those terms are defined by
applicable state and federal law except to the extent such environmental
condition is caused by SpectraSite.
II. DESIGN AND CONSTRUCTION OF TOWER FACILITIES
2.1 APPROVAL OF PLANS AND SPECIFICATIONS. SpectraSite shall be responsible
for the constructing the Tower, foundations, and related facilities including
concrete foundations, footings and slabs and fencing at SpectraSite's sole cost
and expense ("Tower Facilities"). SpectraSite shall prepare and deliver to Amica
for its approval by Amica three copies of prototype, standard plans ("Plans")
and construction specifications ("Specifications") for the construction of
prototype Tower Facilities. The Plans and Specifications shall be delivered to
Amica within thirty (30) days after the date of this Agreement. Within fifteen
(15) business days after receipt of the Plans and Specifications, Amica shall
approve such Plans and Specifications or deliver to SpectraSite detailed written
objections thereto. If Amica fails to either affirmatively approve or disapprove
the Plans and Specifications within said fifteen (15) day period, Amica shall be
deemed to have effectively approved the Plans and Specifications.
2.2 CONTRACTORS TO BE USED. SpectraSite acknowledges and agrees that Amica
has contracted with P&D Antenna (St. Anne, IL) for the construction of five (5)
sites. SpectraSite agrees to honor the existing contract between Amica and P&D
Antenna for the construction of site improvements on five (5) sites designated
by Amica.
2.3 CHANGE ORDERS. Amica shall have the right to issue reasonable change
orders to SpectraSite on any given Site provided that such changes are tendered
to SpectraSite in writing thirty (30) days prior to the construction of the
Tower Facilities which are affected by the change order.
2.4 DEFINITION OF CONSTRUCTION COSTS. As used herein, Construction Costs
shall include those costs which are the responsibility of SpectraSite under this
Agreement and which shall include the costs of materials and labor used in the
construction of the Tower Facilities, payments made to contractors and
subcontractors performing construction work in connection with the Tower
Facilities including but not limited to the cost of materials, labor, expenses
associated with the lease of equipment used in construction, the cost of any
tower lighting system, the cost of all site work required for the Property or
the Easement, the cost incurred in extending utilities to the Property including
the cost incurred in obtaining any grants of easements for ingress, egress or
utilities over real property owned by persons or entities other than the Prime
Lessor, supplies, reasonable travel expenses, cost of overhead incurred by
contractors in the performance of this Agreement, the reasonable cost of
reasonable change orders requested by
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Amica, fees for building permits, licenses and inspections, fees or assessments
imposed by local, state or federal governmental entities including but not
limited to the FCC and FAA, insurance premiums paid by SpectraSite during the
construction period, recording fees and filing fees, fees and payments on
construction, interim or permanent financing, mortgage brokerage fees, fees of
engineers, surveyors, architects, attorneys and others providing professional
services, brokerage commissions, and premiums for contractor's faithful
performance and or mechanic's lien bonds ("Construction Costs"). Construction
Costs shall not include the cost of Amica's Equipment or any costs associated
with the installation of Amica's Equipment. Amica shall be solely responsible
for purchasing Amica's Equipment, the installation of Amica's Equipment and the
costs associated with these goods and services.
2.5 COVENANT TO CONSTRUCT. SpectraSite shall act with due diligence to
construct the Tower Facilities in accordance with the Plans and Specifications.
SpectraSite shall use due diligence to obtain all necessary permits and approval
of the Plans from all applicable governmental agencies. Amica shall install
Amica's Equipment in accordance with the requirements of Article III of this
Agreement.
2.6 NO BOND REQUIRED. SpectraSite shall have no obligation to furnish a
performance bond or a labor and material payment bond in conjunction with the
work to be performed under this Agreement by SpectraSite.
2.7 COMMENCEMENT OF CONSTRUCTION. SpectraSite shall make reasonable and
diligent efforts to complete the construction of an individual Tower Facilities
within forty-five (45) days after Amica executes an SLA for the Site upon which
the Tower Facilities are to be constructed. SpectraSite shall have no obligation
to commence construction of the Tower Facilities at a Site unless and until a
SLA has been properly executed by Amica for that Site. The completion of
construction of each Tower Facilities shall be subject to delays from causes
beyond reasonable control of SpectraSite or SpectraSite's contractor or for time
needed to perform additional construction covered by any change order requested
by Amica.
2.8 MANNER OF CONSTRUCTION. SpectraSite represents, warrants and agrees
that the Tower Facilities shall be constructed in a good and workmanlike manner
and in accordance with the Plans and Specifications and all applicable federal,
state and local laws, ordinances, rules and regulations. SpectraSite warrants to
Amica that all materials furnished in connection with the construction of the
Tower Facilities will be new unless otherwise specified, and that such
construction will be of good quality in accordance with industry standards, free
from faults and patent defects.
2.9 NO LIENS. SpectraSite shall keep the Tower Facilities free of all
involuntary liens and claims arising out of or related to the performance of the
construction, all liens and claims of any contractor, subcontractor, laborer,
mechanic or materialman for labor performed or material furnished in connection
with the performance of the construction. Notwithstanding the foregoing,
SpectraSite may encumber the Tower Facilities with a lien or mortgage as surety
for construction or permanent financing.
2.10 NOTIFICATION OF COMPLETION. SpectraSite shall notify Amica of: (i)
the expected date for substantial completion of the Tower Facilities at least
fifteen (15) days before that date, and (ii) the date when the Tower Facilities
have been substantially completed by delivery of a notice in substantially the
same form attached hereto as Schedule "IV" ("Notice of Completion"). Within
fifteen (15) business days after the Notice of Completing, Amica shall deliver
to SpectraSite a list of items ("Punch List") that Amica reasonably deems
necessary that SpectraSite
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complete or correct in order for the Tower Facilities to be completed in
accordance with the Plans and Specifications. The Tower Facilities shall be
deemed accepted by Amica (i) if a Punch List is not received by SpectraSite
within fifteen (15) days of the date of Notice of Completion or (ii) upon the
commencement of the installation of Amica's Equipment, as that term is
hereinafter defined in paragraph 3.1, by Amica or by SpectraSite at the request
of Amica. SpectraSite shall complete the items on the Punch List within fifteen
(15) days from receipt of the Punch List from Amica.
III. LEASE OF THE PREMISES
3.1 PREMISES. SpectraSite hereby grants Amica the right to install,
maintain, operate and remove wireless communications equipment and appurtenances
on Tower Facilities owned by SpectraSite which are located on certain property
leased by SpectraSite (by virtue of the transfer of Prime Leases from Amica to
SpectraSite, pursuant to the Asset Purchase Agreement entered into between the
parties or by virtue of the site acquisition services performed by SpectraSite
on behalf of Amica pursuant to Article I of this Agreement) and to install
additional equipment on the ground in the vicinity of the Tower Facilities. Each
individual Tower upon which Amica has attached Equipment and each Property upon
which Amica has constructed installed equipment and other improvements pursuant
to this Master Lease between SpectraSite and Amica shall each be considered and
referred to as a separate site for purposes of this Master Lease ("Site"). Each
Site shall be identified by separate site lease agreements ("SLAs") which shall
be attached hereto when executed and incorporated by reference into the terms of
this Master Lease, a prototype of which is attached hereto as Schedule "V". Each
SLA shall include a legal description of the real property upon which the Tower
is situated (the real property described in the various SLAs as Property may
hereinafter be individually or collectively referred to as the "Property or
Properties"), a legal description of any easements for ingress, egress and
utilities (the real property described in the various SLAs as Easement may
hereinafter be individually or collectively referred to as the "Easement or
Easements"), and description of Amica's equipment which will be located on the
Site ("Equipment"). SpectraSite hereby grants to Amica the right to install,
maintain and operate Amica's wireless communications equipment and appurtenances
on a tower owned by SpectraSite ("Tower"), which is located on certain real
property leased by SpectraSite more particularly described in Exhibit "A"
attached hereto ("Property"); and to install, maintain, operate and remove
Amica's wireless communications equipment, antennas and related devices
(including, but not limited to emergency generators, equipment shelters,
equipment cabinets, all necessary test equipment and any temporary construction
materials) owned by Amica on a seven hundred (_700_) square foot portion of the
Property at a location to be agreed upon in writing between SpectraSite and
Amica (the space occupied by Amica on the Property and the Tower hereinafter
shall be referred to collectively as the "Premises"). SpectraSite also grants
Amica rights of ingress, egress and utilities to the Premises twenty-four (24)
hours per day, seven (7) days per week during the Initial Term and any Renewal
Term (as hereinafter defined in paragraphs 3 and 4) of this Master Lease over
that real property described in Exhibit "B" attached to the SLA ("Easement").
3.2 USE. Amica may use the Premises for the receipt and transmission of
wireless communications signals. The use granted Amica by this Master Lease
shall be non-exclusive and limited in strict accordance with the terms of this
Master Lease and the applicable SLA. SpectraSite shall have the right to
continue to occupy the Property and to enter into lease and license agreements
with others for the Property and the Tower in the sole discretion of
SpectraSite. Amica shall have no property rights or interest in the Premises or
the Easement by virtue of this Master Lease. This Master Lease shall also be
subject to the terms and continued
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existence of the various Prime Leases transferred by Amica to SpectraSite or
acquired by SpectraSite for the benefit of Amica pursuant to Article I of this
Agreement In the event that a Prime Lease expires or is terminated, the SLA for
that Site shall terminate as between SpectraSite and Amica on the effective date
of termination of the Prime Lease. SpectraSite shall give Amica written notice
of such termination or expiration of the Prime Lease as provided herein or as
soon as practicable but no later than sixty (60) days prior to the date of
anticipated termination or expiration.
3.3 INITIAL TERM. The Term of this Master Lease shall extend from the date
of this Agreement and extend until the expiration or earlier termination of the
last SLA governed hereby. The Initial Term of the SLA for each Site shall be for
a period of five (5) years commencing on the earlier of (i) the date that Amica
commences the installation of its Equipment on the Site or (ii) fifteen (15)
days after SpectraSite has forwarded to Amica the Notice of Completion for the
Site or, if a Punch List is forwarded to SpectraSite in accordance with
paragraph 2.10 hereof, fifteen (15) days after SpectraSite completes the items
on such Punch List ("Commencement Date") and expiring on the fifth (5th)
anniversary of the Commencement Date ("Initial Term"). In the event that Amica
reasonably disputes SpectraSite's assertion that all items on a Punch List have
been completed and the uncompleted item precludes Amica's installation or
operation of its equipment, the Commencement Date shall be the date on which
such item has been completed to the reasonable satisfaction of Amica. Prior to
installing the Equipment, Amica shall execute a letter agreement which shall be
attached to each SLA confirming the calendar date which the parties understand
to be the Commencement Date for each SLA.
3.4 RENEWAL TERMS. Each SLA shall be renewed, without the requirement of
notice, for four (4) additional five (5) year terms (each a "Renewal Term")
unless Amica shall serve written notice of non-renewal to SpectraSite which
notice shall be tendered by Amica not less than six (6) months prior to the end
of the then existing term of the SLA. Each Renewal Term shall be on the same
terms and conditions as set forth in this Master Lease except that consideration
for shall increase as provided in paragraph 3.5(b).
3.5 CONSIDERATION.
(a) Initial Term. During the Initial Term, Amica shall pay
monthly to SpectraSite as consideration for each SLA the sum of Five Hundred
Fifty and No/100 Dollars ($550.00) plus a share of SpectraSite's monthly rental
cost with respect to the Site, pursuant to the terms of respective Prime Leases
("Rent"). In addition, Rent shall include One Hundred Twenty-Five and No/100
Dollars ($125.00) per microwave dish installed and owned by Amica at a center
line height greater than 150 feet and One Hundred and No/100 Dollars ($100.00)
per microwave dish installed and owned by Amica at a center line height at or
below 150 feet. For the purpose of this Agreement, Amica's share of
SpectraSite's monthly rental cost for each SLA shall equal SpectraSite's monthly
rental cost divided by the total number of carriers at each site (including
Amica). In the event that the Commencement Date is other than the first day of
the calendar month, Rent shall be prorated for that month for the number of days
remaining in that month. The Rent shall be paid in advance. The first monthly
payment shall be due on the Commencement Date. In the event that the Rent paid
by Amica to SpectraSite shall be due without set-off notice or demand from
SpectraSite to Amica. Any Rent or other sum not received by SpectraSite within
ten (10) days of the date when due shall be subject to a late penalty of five
percent (5%) of the amount which is overdue.
(b) Renewal Term. In the event Amica exercises the option(s) to
renew this Master Lease as provided for in paragraph 3.4, the Rent applicable to
such Renewal Term shall be
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paid monthly in advance beginning on the first day of the respective Renewal
Term in accordance with the following schedule:
First Renewal Term Rent, plus 15%
Second Renewal Term First Renewal Term Rent, Plus 15%
Third Renewal Term Second Renewal Term Rent, Plus 15%
Fourth Renewal Term Third Renewal Term Rent, Plus 15%
3.6 WARRANTY OF TITLE AND QUIET ENJOYMENT. SpectraSite warrants that (i)
SpectraSite leases the Property and operates the Tower; and (ii) SpectraSite has
full right to make and perform this Master Lease subject to the terms, covenants
and conditions of the Master Lease. This Master Lease shall be subordinate and
inferior to the Prime Lease and any mortgage or lien which currently or
hereafter encumbers the Property or the Tower.
3.7 IMPROVEMENTS BY AMICA.
(a) Plans, Structural Analysis and RF Analysis. Prior to the
commencement of any construction or installation on the Premises by Amica, Amica
shall furnish, for review and approval by SpectraSite, which approval shall not
be unreasonably withheld, plans and specifications which may be required by
SpectraSite for such construction or installation of the improvements and the
Amica shall not commence the construction or installation on the Premises until
such time as Amica has received written approval of the plans and specifications
from SpectraSite; provided, however, that such approval shall be deemed given
unless denied, in writing, within thirty (30) days of the submission of Amica's
plans and specifications to SpectraSite. Amica shall use a construction firm
approved by SpectraSite, which approval shall not be unreasonably withheld, for
any construction activities to be conducted by Amica on the Property and the
Easement and the installation of Amica's equipment on the Tower. Amica shall
upon the written request of SpectraSite conduct at Amica's sole cost and expense
a structural analysis and wind load analysis of the Tower which includes any
existing loads and the load of Amica's antennas, cabling and appurtenances. Upon
the written request of SpectraSite, Amica shall conduct at Amica's sole cost and
expense a radio frequency interference analysis ("RF Analysis") of the Equipment
with all other equipment which is on the Tower as of the Commencement Date.
Amica shall use the company of SpectraSite's choice for structural analysis, RF
Analysis and the design and construction of platforms, antenna systems, cable
runs and any other modification of any type to the Premises and Amica shall be
solely responsible for and shall indemnify SpectraSite from all costs and
expenses associated with these materials and services. Amica shall be
responsible for securing all building permits from any and all applicable
governmental authorities prior to the commencement of any construction or
installation on the Premises. Copies of the construction permit issued to Amica
shall be provided to SpectraSite.
(b) Equipment. A description of the Equipment owned or operated by
Amica which Amica may locate on the Premises are attached to the SLA as Exhibit
"C". SpectraSite hereby grants Amica reasonable access to the Tower and the
Premises for the purpose of installing, upgrading, and maintaining the Equipment
and appurtenances. Amica shall be responsible for all site work to be done on
the Premises pursuant to this Master Lease. Amica shall provide all materials
and shall pay for all labor for the construction, installation, operation,
maintenance and repair of the Equipment. Amica shall not construct or install
any equipment or improvements on the Premises other than which are described in
Exhibit "C" or alter the radio frequency of operation of the Equipment without
first obtaining the prior consent of SpectraSite which consent shall not be
unreasonably withheld. In the event that the proposed installation does not
increase the area occupied on or in the Tower by the Equipment or increase the
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structural load or wind load of the Equipment on the Tower or cause Amica to
occupy any ground space outside its 700 square foot area, SpectraSite may not
condition such consent upon an increase in Rent. Otherwise, SpectraSite may
condition such consent upon an increase the Rent payable hereunder. The
Equipment shall remain Amica's exclusive personal property throughout the term
and upon termination of the the SLA for a particular Site. Amica shall have the
right to remove all Equipment at Amica's sole expense on or before the
expiration or earlier termination of the applicable SLA; provided, Amica repairs
any damage to the Property or the Tower caused by such removal. If Amica does
not remove the Equipment on or prior to the expiration or termination of the
applicable SLA, Amica shall remove such Equipment within a reasonable period
thereafter provided Amica pays to SpectraSite 150% of the Rent in effect during
such holdover period. In the event that Amica fails to remove the Equipment
within sixty (60) days following termination of the SLA attributable to the
particular Site, SpectraSite may remove such equipment at Amica's expense
without liability to Amica for any damage occasioned by such removal.
(c) Compliance with Governmental Rules. All work shall be performed
by Amica or Amica's employees, contractors or agents in a good and workmanlike
manner. SpectraSite shall be entitled to require strict compliance with the
plans and specifications approved by SpectraSite pursuant to paragraph 8(a),
including specifications for the grounding of Amica's equipment and antennas.
All construction, installations and operations in connection with this Master
Lease by Amica shall meet with all applicable Rules and Regulations of the FCC,
FAA and all applicable codes and regulations of the city, county, and state
concerned. SpectraSite assumes no responsibility for the licensing, operation
and maintenance of the Equipment. Amica has the responsibility of carrying out
the terms of Amica's FCC license with respect to tower light observation and
notification to the FAA if those requirements as imposed on Amica are in excess
of those required of SpectraSite. Amica covenants that the Equipment and the
construction, installation, maintenance and operation thereof shall not damage
the Tower or improvements or interfere with the use of the Tower by SpectraSite.
3.8 UTILITIES. All utility services installed on the Premises for the use
or benefit of Amica shall be made at the sole cost and expense of Amica and
shall be separately metered from SpectraSite's utilities. Amica shall be solely
responsible for the payment of utility charges including connection charges and
security deposits incurred by Amica.
3.9 TAXES. Except as provided immediately below, SpectraSite shall pay all
real property taxes SpectraSite is obligated to pay under the Master Lease.
Amica shall reimburse SpectraSite for any increases in real property taxes which
are paid by SpectraSite as a direct result of Amica's improvements to the
Premises within twenty (20) days after the receipt by Amica of a bill for such
taxes from SpectraSite. As a condition of Amica's obligation to pay such tax
increases, SpectraSite shall provide to Amica the documentation from the taxing
authority, reasonably acceptable to Amica, indicating the increase is due to
Amica's improvements.
3.10 INTERFERENCE.
(a) BY AMICA. Amica agrees to install equipment of types and radio
frequencies which will not cause interference which materially and adversely
affects communications operations being conducted from the Property or the Tower
or other occupants of the Property or the Tower which are in place as of the
Commencement Date. Amica further agrees to abide by any covenant regarding
interference which is contained in the Prime Lease. Amica also covenants that
the equipment installed by Amica shall comply with all applicable laws,
ordinances and regulations including but not limited to those regulations
promulgated by the
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FCC. In the event the Equipment causes such interference, Amica will take all
steps necessary to correct and eliminate such interference. If such interference
cannot be eliminated within forty-eight (48) hours after receipt by Amica of
notice from SpectraSite describing the existence of such interference, Amica
shall temporarily disconnect the electric power and shut down the Equipment
(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) until such interference is corrected.
If such interference is not corrected to the satisfaction of SpectraSite and the
other occupant which has experienced such interference within fifteen (15) days
after receipt by Amica of such prior written notice from SpectraSite of the
existence of interference, that SLA shall at the option of SpectraSite then
terminate without further obligation on either part except as may be
specifically enumerated herein and Amica agrees to then remove the Equipment
from the Premises.
(b) BY OTHER CARRIERS. SpectraSite agrees that it will obtain a
non-interference covenant from any other carriers or tenants substantially
similar to the covenant set forth in Paragraph 3.10(a) above and will take all
steps reasonably necessary to enforce said covenant.
(c) SpectraSite warrants to Amica the use and quiet enjoyment of each Site
subject to the terms, covenants and conditions of this Agreement, the Prime
Lease and any matters which are filed of public record affecting the Property.
3.11 MAINTENANCE AND REPAIRS.
(a) Amica shall perform all repairs necessary or appropriate to
maintain the Equipment on or about the Premises or located on any appurtenant
rights-of-way or access to the Premises in good and tenantable condition,
reasonable wear and tear, damage by fire, the elements or other casualty
excepted. In the event that Amica fails to do so, upon reasonable advance notice
to Amica, SpectraSite may take whatever action it deems reasonable and necessary
to prevent damage to property or person including, but not limited to,
disconnecting electrical service to the Equipment and removing the Equipment
from the Premises at Amica's expense. Damage to the Equipment resulting from the
acts or omissions of SpectraSite shall be repaired by SpectraSite at
SpectraSite's cost and expense, or at the option of Amica, SpectraSite shall
reimburse Amica for the actual costs incurred as evidenced by adequate
documentation by Amica in repairing such damage or replacing such Equipment.
(b) SpectraSite, at SpectraSite's sole cost and expense, shall
maintain the Tower, and any other portions of the Property and improvements
thereto to the extent required to be maintained by SpectraSite pursuant to the
Master Lease, in good order and repair, wear and tear, damage by fire, the
elements or other casualty excepted. Damage to the Tower or the equipment or
improvements of SpectraSite or others located on the Property or the Tower,
which results from the acts or omissions of Amica shall be repaired by Amica at
Amica's cost and expense, or at the option of SpectraSite, Amica shall reimburse
SpectraSite for the actual costs incurred as evidenced by adequate documentation
by SpectraSite in repairing such damage or replacing such equipment or
improvements.
3.12 TOWER MARKING AND LIGHTING REQUIREMENTS. SpectraSite shall be
responsible for compliance with any applicable marking and lighting requirements
of the FAA and the FCC provided that if the requirement for compliance results
from the presence of the Equipment on the Tower, Amica shall pay the costs and
expenses therefor (including any lighting automated alarm system so required).
SpectraSite does hereby agree to indemnify and hold Amica harmless from any and
all losses, damages, fines, penalties or costs of any kind which may arise from
the improper design, maintenance or operation of the Tower or tower lighting
systems, or which may be imposed by the FAA, FCC or any other federal, state or
local agency arising from the
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improper design, maintenance or operation of the Tower or tower lighting systems
unless such obligations arise as a result of the installation of the Equipment
on the Tower. Should Amica be cited because the Premises are not in compliance
and, should Amica fail to cure the conditions of noncompliance, SpectraSite may
either terminate the applicable SLA or, with prior notice from SpectraSite to
Amica and allowing Amica a reasonable opportunity to cure, proceed to cure the
conditions of noncompliance at Amica's expense. Amounts of all expenses to cure
such conditions of non-compliance, together with any such fine or citation paid
by Amica, may be deducted by Amica from the Rent.
3.13 MECHANICS' LIENS. Amica shall not permit any mechanics',
materialmen's, contractors' or subcontractors' liens arising from any
construction work, repair, restoration or removal or any other claims or demands
to be enforced against the Premises or any part thereof. SpectraSite shall have
the right at any time to post and maintain upon the Premises such notices as may
be necessary to protect SpectraSite against liability for all such liens and
encumbrances. Amica shall give SpectraSite written notice prior to the
commencement of any work or the delivery of any materials connected with such
work or construction, repair, restoration, or removal of materials on the
Premises. SpectraSite shall assume no liability for the payment of materials or
labor which accrue in the installation of Amica's improvements upon the Premises
and no mechanics' or materialmen's liens for Amica's improvements shall attach
to the interest of SpectraSite in the Premises.
3.14 INDEMNIFICATION. Amica shall exonerate, hold harmless, indemnify, and
defend SpectraSite from any and all claims, obligations, liabilities, costs,
demands, damages, expenses, suits or causes of action, including costs and
reasonable attorneys' fees, which may arise out of (i) any injury to or the
death of any person; or (ii) any damage to property, if such injury, death or
damage arises out of or is attributable to or results from the negligent or
intentional acts or omissions of Amica or Amica's principals, employees, agents
or independent contractors relating to or arising from our out of Amica's use
and operation of the Premises.
3.15 FINANCING AGREEMENTS. Amica may, upon written notice to SpectraSite,
mortgage or grant a security interest in and to the Equipment to any such
mortgagees or holders of security interests including their successors and
assigns (hereinafter collectively referred to as "Secured Parties").
3.16 ENVIRONMENTAL INDEMNIFICATION.
(a) Amica, its heirs, grantees, successors, and assigns shall
indemnify, defend, reimburse and hold harmless SpectraSite from and against any
and all environmental damages, caused by activities conducted on the Premises by
Amica, and (i) arising from the presence of any substance, chemical or waste
identified as hazardous, toxic or dangerous in any applicable federal, state or
local law or regulation including petroleum or hydrocarbon based fuels such as
diesel, propane or natural gas (collectively, "Hazardous Materials") upon, about
or beneath the Premises or migrating to or from the Premises, or (ii) arising in
any manner whatsoever out of the violation of any environmental requirements
pertaining to the Premises and any activities thereon. Amica covenants that it
shall not nor shall Amica allow its employees, agents or independent contractors
to treat, store or dispose of any Hazardous Materials on the Premises or the
Property.
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(b) SpectraSite, its heirs, grantees, successors, and assigns shall
indemnify, defend, reimburse and hold harmless Amica from and against any and
all environmental damages arising from (i) the presence of Hazardous Materials
upon, about or beneath the Premises or migrating to or from the Premises, or
(ii) arising in any manner whatsoever out of the violation of any environmental
requirements pertaining to the Premises and any activities thereon, either of
which conditions are solely attributable to activities conducted on the Property
by SpectraSite.
3.17 LIABILITY INSURANCE.
(a) Amica and SpectraSite shall each carry during the term of this
Master Lease, at their own cost and expense, respectively, the following
insurance: (i) "All Risk" property insurance which insures their respective
property for such property's full replacement cost; and (ii) Comprehensive
general liability insurance with a commercial general liability endorsement
having a minimum limit of liability of $2,000,000, with a combined limit for
bodily injury and/or property damage for any one occurrence which contains an
endorsement providing for contractual liabilities coverage, and (iii)
excess/umbrella coverage of $2,000,000.
(b) SpectraSite and Amica shall each name the other as an additional
insured under each party's own liability policy, respectively, and require each
party's own insurance company, respectively, to endeavor to give at least thirty
(30) days' written notice of any reduction in coverage or termination or
cancellation of the policy to the additional insured. A certificate of such
insurance, together with such endorsement as to prior written notice of
termination or cancellation, shall be delivered to the additional insured within
thirty (30) days from the execution of this Master Lease and before the
expiration of any term of such insurance from an insurance company authorized to
do business in the state in which the Property is located.
3.18 SUBROGATION.
(a) In General. All insurance policies required under this Master
Lease shall contain a waiver of subrogation provision.
(b) Mutual Release. SpectraSite and Amica each release the other and
their respective representatives from any claims by them or any one claiming
through or under them by way of subrogation or otherwise for damage to any
person or to the Premises and to the fixtures, personal property, improvements
and alterations in or on the Premises that are caused by or result from risks
insured against under any insurance policy carried by them and required by this
Master Lease; provided that such releases shall be effective only if and to the
extent that the same do not diminish or adversely affect the coverage under such
insurance policies. SpectraSite shall be named as an additional insured on any
insurance policy procured by Amica pursuant to this Master Lease and Amica shall
be named as an additional insured on any insurance policy procured by
SpectraSite pursuant to this Master Lease.
3.19 DESTRUCTION OR CONDEMNATION. If the whole or any substantial part of
the Premises shall be taken by any public authority under the power of eminent
domain so as to interfere with Amica's use and occupancy thereof, then the
applicable SLA shall cease on the part so taken on the date of possession by
such authority of that part, and any unearned Rent paid in advance of such date
shall be refunded by SpectraSite to Amica within thirty (30) days of such
possession, and Amica shall have the right to terminate the applicable SLA upon
written notice to SpectraSite, which notice shall be delivered by Amica within
thirty (30) days following the date notice is received by Amica of such taking
or possession. If Amica chooses not to terminate the
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applicable SLA, the Rent shall be reduced or abated in proportion to the actual
reduction or abatement of Amica's use of the Premises.
3.20 DEFAULT BY AMICA. The occurrence of any of the following instances
shall be considered to be a default or a breach of this Master Lease by Amica:
(i) any failure of Amica to pay the Rent or any other charge
for which Amica has the responsibility of payment under this Master Lease, which
failure is not cured within fifteen (15) days of receipt by Amica of written
notice from SpectraSite of the existence of such default;
(ii) any failure of Amica to perform or observe any term,
covenant, provision or conditions of this Master Lease which failure is not
corrected or cured by Amica within thirty (30) days of receipt by Amica of
written notice from SpectraSite of the existence of such a default; except such
thirty (30) day cure period shall be extended as reasonably necessary to permit
Amica to complete a cure so long as Amica commences the cure within such thirty
(30) day cure period and thereafter continuously and diligently pursues and
completes such cure;
(iii) Amica shall become bankrupt, insolvent or file a
voluntary petition in bankruptcy, have an involuntary petition in bankruptcy
filed against Amica which cannot be dismissed by Amica within sixty (60) days of
the date of the filing of the involuntary petition, file for reorganization or
arrange for the appointment of a receiver or trustee in bankruptcy or
reorganization of all or a substantial portion of Amica's assets, or Amica makes
an assignment for such purposes for the benefit of creditors;
(iv) this Master Lease or Amica's interest herein or Amica's
interest in the Premises are executed upon or attached; or
(v) an attempt by Amica or anyone claiming through Amica to
encumber SpectraSite's interest in the Tower or the Property.
3.21 REMEDIES. In the event of a default by Amica under the terms of
paragraph 3.20 of this Master Lease and after Amica's failure to cure such
default within the time allowed Amica to cure such default, then SpectraSite
may, in addition to all other rights or remedies SpectraSite may have hereunder
at law or in equity, terminate this Master Lease by giving written notice to
Amica stating the date upon which such termination shall be effective,
accelerating and declaring to be immediately due and payable all Rents which
would have otherwise been due SpectraSite absent a breach of the Master Lease by
Amica, terminate electrical power to the Equipment, and remove the Equipment
without being deemed liable for trespass or conversion or damage to the
Equipment occasioned by such removal and store the same at Amica's sole cost and
expense.
3.22 ENTIRE AGREEMENT. This Master Lease contains the entire agreement
between the parties hereto and supersedes all previous negotiations leading
thereto. This Master Lease may be modified only by an agreement in writing
executed by SpectraSite and Amica.
3.23 SUCCESSORS AND ASSIGNS. This Master Lease shall be binding upon and
inure to the benefit of the legal representatives, heirs, successors, and
assigns of SpectraSite and Amica.
3.24 SUBORDINATION. This Agreement and any option or right of first
refusal granted hereunder, at SpectraSite's option, shall be subordinate to any
ground lease, mortgage, deed of
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trust or other encumbrance now or hereafter placed upon the Premises and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof. If any
ground lessor, mortgagee, beneficiary or other lienholder shall elect to have
this Agreement and any such option or right of first refusal prior to the lien
of the ground lease, mortgage, deed of trust or other encumbrance, and shall
give written notice thereof to Amica, this lease and such option or right of
first refusal shall be deemed to be prior to such ground lease, mortgage, deed
of trust or other encumbrance, whether this Agreement or such option or right of
first refusal is dated prior or subsequent to the date of such ground Agreement,
mortgage, deed of trust or other encumbrance or the date of the recording
thereof. Amica agrees to execute any documents reasonably requested and required
to effect an attornment or subordination or to make this Agreement and such
option or right of first refusal prior to the lien of any ground Agreement,
mortgage, deed of trust or other encumbrance.
3.25 NOTICES. All notices or demands by or from SpectraSite to Amica, or
Amica to SpectraSite, shall be in writing. Such notices or demands shall be
mailed to the other party at the following address:
SpectraSite: SpectraSite Construction
8000 Regency Park, Suite 570
Cary, NC 27511
Attention: Steve Clark
with a copy to: Lewellen & Frazier, PLC
Plaza West Building
415 North McKinley, Suite 1240
Little Rock, Arkansas 72205
Attn: Todd A. Lewellen
Amica: Amica Wireless Phone Service, Inc.
Attn: Bob George
327 E. College Street, Suite 381
Iowa City, IA 52240
with a copy to: Timothy J. Krumm
Meardon, Sueppel, Downer & Hayes P.L.C.
122 South Linn Street
Iowa City, IA 52240
3.26 ASSIGNMENTS AND SLAS. Amica shall not voluntarily, involuntarily or
by operation of law assign, mortgage, sublet or otherwise transfer or encumber
all or any part of Amica's interest in this Agreement, any SLA, or in the
Premises without SpectraSite's prior written consent, which consent shall not be
unreasonably withheld. If Amica desires at any time to assign or otherwise
transfer this Agreement or to sublet the Premises or any portion thereof, it
shall first notify SpectraSite of its desire to do so and shall submit in
writing to SpectraSite (i) the name of the proposed sublessees or assignee; (ii)
the, terms and provisions of the proposed sublease or assignment; and (iii) such
financial and other information as SpectraSite may reasonably request concerning
the proposed sublessees or assignee. At any time within fifteen (15) days after
SpectraSite's receipt of the information specified, SpectraSite shall by written
notice to Amica consent or refuse to consent to the subletting or assignment
upon the terms and to the sublessees or assignee proposed by Amica: Amica may,
within ninety (90) days after the date
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of SpectraSite's consent, enter into a valid assignment or sublease of the
Premises or portion thereof upon the terms and conditions described in the
information required above to be furnished by Amica to SpectraSite, or upon
other terms not more favorable to Amica; provided, however, that any material
change in such terms shall be subject to SpectraSite's consent.
3.27 SALE OF TOWER FACILITIES BY SPECTRASITE. SpectraSite may sell,
transfer or assign its interest in this Agreement or all or part of the Tower
Facilities governed by this Agreement upon notice to Amica provided that such
sale, transfer or assignment shall be subject to the terms, covenants and
conditions of this Agreement.
IV. GENERAL PROVISIONS
4.1 REPRESENTATIONS AND WARRANTIES OF AMICA. Amica represents and warrants
to SpectraSite that:
(a) Organization, Good Standing and Authority. It is a corporation,
duly organized, validly existing and in good standing under the laws of and has
the requisite corporate power and authority to enter into and perform this
Agreement and Amica is duly qualified to do business in the state of Illinois.
(b) Authorization and Validity of Agreement. That Amica's execution
and delivery of this Agreement have been authorized by the Board of Directors of
Amica, and no further action on the part of Amica is necessary to authorize this
Agreement or the consummation of the transactions contemplated herein. This
Agreement constitutes the valid and binding obligation of Amica duly enforceable
in accordance with its terms.
(c) No Breach of Other Instruments. That there is no contract or
agreement or other instrument to which Amica is a party or by which Amica or its
assets are bound which prohibits the execution or delivery by Amica of this
Agreement or the performance or observance by Amica of any term or condition of
this Agreement and, subject to the fulfillment of all conditions set forth
therein, neither execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will violate any term or provision of
any such contract, agreement, or instrument.
(d) No Violation of Law or Order. That subject to the fulfillment of
all conditions set forth herein, neither the execution and delivery of this
Agreement nor transactions contemplated hereby, shall result in the violation by
Amica of any, law, regulation, judgment or order of any court or governmental
authority applicable to Amica or result in a breach of the terms of this or any
other agreement to which Amica is a party.
4.2 DELEGATION OF DUTIES BY SPECTRASITE. Amica agrees that any obligation
or duty required to be performed by SpectraSite by this Agreement may be
delegated by SpectraSite to independent contractors ("Subcontractor") and a
description of the services to be performed by the Subcontractor. SpectraSite
shall be responsible for the management of the various independent contractors
engaged by SpectraSite. Amica acknowledges that it has pre-approved certain
independent contractors to perform services under this Agreement including P & D
Antenna for the preparation of the Plans and Specifications, the management of
construction of the Tower Facilities, surveys, environmental assessment, and
geotechnical investigations and analyses.
4.3 MISCELLANEOUS.
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(a) Successors and Assigns. The terms, covenants and conditions
contained in this Agreement shall be binding upon and inure to the benefit of
the parties hereto, and also their respective heirs, executors, administrators,
personal representatives, successors and assigns subject to the provisions of
paragraph 3.26 of this Agreement relating to restrictions upon sale, assignment
or subletting of this Agreement.
(b) Integration. It is understood that there are no oral agreements
or representations between the parties hereto affecting this Agreement, and this
Agreement supersedes and cancels any and all previous negotiations,
arrangements, agreements or representations and understandings, if any, between
the parties hereto with respect to the subject matter thereof. There are no
other representations or warranties between the parties and all reliance with
respect to representations is solely upon the representations and agreements
contained in this document.
(c) Headings. The Headings and paragraph titles herein are for
convenience only and do not in any way define, limit or construe the contents of
such Paragraphs.
(d) Severability. It is agreed that if any provision of this
Agreement shall be determined to be void by any court of competent jurisdiction,
then such determination shall not affect any other provisions of this Agreement
and all such other provisions shall remain in full force and effect; and it is
the intention of the parties hereto that if any provision of this Agreement is
capable of two interpretations, one of which would render the provision void and
the other of which would render the provision valid then the provision shall
have the meaning which renders it valid.
(e) Force Majeure. Except as otherwise provided in this Agreement,
any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts
of God, inability to obtain labor or materials or reasonable substitutes
therefor governmental restrictions, governmental controls, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
beyond the reasonable control of the party obligated to perform, shall excuse
the performance by such or a period equal to any such delay or stoppage.
(f) Holding Over. If Amica remains in possession of the Premises
after the termination of this Agreement without the execution of a new
Agreement, Amica shall be deemed to be occupying the Premises as a tenant from
month-to-month at the last applicable monthly rental provided for herein,
subject to all the other conditions, provisions and obligations of this
Agreement insofar as the same are applicable to a month-to-month tenancy.
(g) Cessation of SpectraSite's Liability Upon Transfer. In the event
of any transfer of the Premises by SpectraSite, SpectraSite shall be relieved
from and after the date of such transfer of all liability with respect to
SpectraSite's obligations thereafter to be performed, provided that any funds in
the hands of SpectraSite (or such grantor) at the time of such transfer in which
Amica has an interest, shall be delivered to the grantee. Subject to the
foregoing, the obligations contained in the Agreement to be performed by
SpectraSite shall be binding upon SpectraSite's successor and assigns only
during their respective periods of ownership.
(h) Successor Liability. The liability of the mortgagee, trustee or
purchaser at such foreclosure sale or the liability of a subsequent owner
designated as SpectraSite under this
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Agreement shall exist only so long as such trustee, mortgagee, purchaser or
owner is the owner of the Premises and such liability shall not continue or
survive after further transfer of ownership.
(i) Attornment. Upon reasonable request of the mortgagee, Amica will
attorn, as lessee under this Agreement, to the purchaser at any foreclosure sale
thereunder, or if any ground or underlying Agreement be terminated for any
reason, Amica will attorn, as Amica under this Agreement, to the ground lessor
under the ground Agreement and will execute such instruments as may be necessary
or appropriate to evidence such attornment.
(j) Right of Approval by Secured Party. This Agreement may not be
modified or amended so as to reduce the Base Rent, as adjusted, or shorten the
Term or so as to adversely affect in any other respect to any material extent
the rights or obligations of SpectraSite, nor shall this Agreement be canceled
or surrendered, without the prior written consent, in each instance, of any
mortgagee or secured party having an interest in the Tower Facilities.
(k) Right to Modify. Should the ground lessor or the mortgagee
require a modification or modifications of this Agreement which will not bring
about any increase in the financial obligations of Amica under this Agreement or
in any other way substantially change the rights and obligations of Amica
hereunder, then and in such event, Amica shall execute such documents or
agreements as may be necessary to so modify the Agreement.
(l) Certain Rules of Construction. Notwithstanding the fact that
certain references elsewhere in this Agreement to acts required to be performed
by Amica hereunder, or to breaches or defaults of this Agreement by Amica, omit
to state that such acts shall be performed at Amica's sole cost and expense, or
omit to state that such breaches or defaults by Amica are material, unless the
context implies to the contrary, each and every act to be performed or
obligation to he fulfilled by Amica pursuant to this Agreement shall be
performed or fulfilled at Amica's sole cost and expense, and all breaches or
defaults by Amica hereunder shall be deemed material. Amica shall be fully
responsible and liable for the observance and compliance by concessionaires of
and with all the terms and conditions of this Agreement, which terms and
conditions shall be applicable to concessionaires as if they were the Amica
hereunder and failure by a concessionaire fully to observe and comply with the
terms and conditions of this Agreement shall constitute a default hereunder by
Amica.
(m) Counterparts. This Agreement may be executed in counterparts
with the same effect as if both parties hereto had signed the same document.
Both counterparts shall be construed together and shall constitute one (1)
Agreement.
(n) Interpretation. The parties acknowledge that the draftsmanship
of this Agreement was a collective effort by both parties who were each
represented by counsel in the negotiation hereof. This Agreement shall not be
construed either for or against SpectraSite or Amica, but this Agreement shall
be interpreted in accordance with the general tenor of the language in an effort
to reach an equitable result.
(o) Governing Law and Venue. This Agreement is to be governed by
and construed in accordance with the laws of the state in which the property is
situated. Any suit brought hereon shall be brought in the state or federal
courts sitting in Illinois the parties hereto hereby waiving any claim or
defense that such forum is not convenient or proper. Each party
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hereby agrees that any such court shall have in personam jurisdiction over it
and consents to service of process in any manner authorized by Illinois law.
(p) JURY TRIAL. EACH PARTY HEREBY WAIVES, AND COVENANTS THAT IT
SHALL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE RELATIONSHIP OF
SPECTRASITE AND AMICA, AMICA'S USE OR OCCUPANCY OF THE PREMISES OR ANY EMERGENCY
OR STATUTORY REMEDY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR
WHETHER IN CONTRACT OR IN TORT OR OTHERWISE.
(q) No Partnership. Amica and SpectraSite agree that their
relationship under this Agreement shall be that of Landlord and Tenant and that
no other relationship including that of a partnership is intended or shall be
created by this Agreement.
(r) Consent. SpectraSite and Amica covenant that whenever their
consent or approval is required under this Agreement said consent shall not be
conditioned or unreasonably withheld or delayed.
(s) Conflict with SLA. In the event of any conflict or inconsistency
between the terms of this Master Agreement and any SLA governing a particular
Site, the terms of the SLA shall govern the relationship of the parties for that
particular Site.
(t) Non-Waiver. Failure of either party to insist on strict
performance of any of the conditions, covenants, terms or provisions of this
Agreement, or to exercise any of its rights hereunder, shall not waive such
rights, but both parties shall have the right to enforce such rights at any time
and take such action as may be lawful or authorized hereunder, either in law or
in equity. The receipt of any sum paid after a breach of this Agreement shall
not be deemed a waiver of such breach unless expressly set forth in writing. Any
waiver of any breach of this Agreement must be specifically set forth in
writing.
IN WITNESS WHEREOF, the SpectraSite and Amica have executed this Tower
Attachment Agreement as of the date and year first above written.
AMICA WIRELESS PHONE SERVICES, INC.:
Amica Wireless Phone Services, Inc.,
an Illinois corporation
By:
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Title:
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Date:
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SPECTRASITE:
SpectraSite Communications, Inc.,
a Delaware corporation
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By:
----------------------------------------------
Title:
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Date:
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SCHEDULE "I"
SITE ACQUISITION SERVICES
SCOPE OF WORK
Following is the proposed Scope of Services for the build-out in the selected
BTA's. These outlined procedures are designed to reflect site acquisition from
delivery of search area by RF Engineering through delivery by SpectraSite of an
approved site to the construction group.
I. INITIAL SEARCH
Receive search area from Project Director or equivalent. Review with RF engineer
if appropriate.
- Review and identify zoning categories and boundaries within the
search area. Identify critical dates for zoning application
filings and hearing dates.
- Drive search area. Look for existing towers or other structures
of appropriate height in or around search area limits.
- Identify appropriate property owners within the search area
through research of tax maps.
- Contact any appropriate existing tower owners, or building top
owners first. Then contact remaining property owners.
- Investigate all appropriate lease or purchase option. Provide
copies of sample lease or purchase documents where appropriate.
II. SITE OPTION REPORT
Provide a Site Option Report to ______________ director or equivalent. This Memo
should include the following information on a minimum of two sites:
(See attached sample document)
- Regarding Zoning
Identify potential opposition issues
Identify required approvals and associated application and hearing
dates, etc.
- Establish potential lease/purchase price and terms
- Contact name, phone number
- Topographic map representing each potential site, preliminary GPS
coordinates and approximate elevation
- proposed tower height and recommended type
- Site address and directions to site
- Site address and directions to site
- Property size
- Photographs of site and easements
- Utility location information
- Signed Option if possible at this time (assuming ________ is
using the Option/Lease or Purchase method of securing prospective
properties)
Arrange visits as necessary for team decision making
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III. SITE SELECTION
- Project Director will select a primary and an alternate site to
be purchased (or leased).
- Proceed with negotiations for first and second site choices.
Consult with approved attorneys regarding nay legal changes to
document. Consult Project Director regarding significant deviations
from approved business terms.
- Request preliminary title review for primary site.
- Coordinate with construction group to confirm necessary access
easements for primary site.
- Submit lease/purchase contract package to Project Director for
review and signature. This package should include the following:
Lease/purchase contracts, and access.
- Obtain final copy of title report and insurance for primary site.
Coordinate any curative measures as needed.
- Environmental Phase I
- FAA consultant study and FAA application (if necessary)
- FCC tower regulations (if necessary)
ZONING
- Coordinate the completion and submission of appropriate
applications for zoning, special use permits, etc. for primary site.
- Coordinate the organization of neighborhood meetings for addressing
public opposition as needed.
- Coordinate preparation of appropriate presentation materials.
- Coordinate other professional presentations as needed.
- Coordinate attendance of necessary individuals at all zoning
meetings.
MONITORING TIMELINE
- At least one weekly contact should be made with RF engineer to
discuss the options until site is approved. SpectraSite designed
timeline will be used to establish coordinated flow of project
progress.
- Close purchase or lease as necessary.
- Notify Project Director (in written and in verbal form) when
project is complete and construction may begin.
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SITE INFORMATION PACKAGE
Prior to construction, provide ___________ with one copy of a Project
Completion File Including:
- Original lease/purchase agreement
- Original easement agreements
- All correspondence
- Site Option Report/photos, etc.
- Survey
- Geotechnical report
- Environmental report
- Title report and insurance policy
- FAA consultant study
- FAA approval
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SCHEDULE II
OPTION AND GROUND LEASE AGREEMENT
THIS OPTION AND GROUND LEASE AGREEMENT ("Agreement") is made this ________
day of ____________, 199___, by and between _______________________ ("OPTIONOR")
and SPECTRASITE COMMUNICATIONS, INC. ("OPTIONEE").
I. OPTION TO LEASE
1. GRANT OF OPTION. For good and valuable consideration and the mutual
promises herein set forth Optionor hereby gives and grants unto Optionee and its
assigns, an exclusive and irrevocable option to lease a certain parcel or
parcels of real property more particularly described on Exhibit "A" attached
hereto ("Property") together with an easement twenty-four (24) hours per day
seven days per week for ingress, egress and utilities for the duration of the
lease on the property which is more particularly described on Exhibit "B"
attached hereto ("Easement"). Optionor agrees and acknowledges that Optionee may
at Optionee's sole cost and expense have a metes and bounds survey prepared of
the Property and the Easement and that the legal description of the Property and
the Easement as shown on the survey shall thereafter become the legal
description of the Property and the Easement.
2. OPTION INITIAL TERM. The initial term of this Option shall be for six
(6) months from the date this Option is executed by Optionee ("Option Initial
Term").
3. CONSIDERATION FOR OPTION. Consideration for the Initial Term of the
Option granted hereunder shall be _________ and ___/100 Dollars ($__________)
("Option Consideration"). This payment by Optionee to Optionor shall be credited
in full to the first year's rental payment due Optionor if this Option is
exercised by Optionee.
4. EXTENSION OF OPTION. This Option can be extended at the discretion of
Optionee for ________ (______) additional period(s) of six (6) months each
("Option Renewal Term(s)") by Optionee paying to Optionor the additional
consideration of ________ and _____ /100 Dollars ($_________) prior to the
expiration of the then existing term of this Option. Any consideration paid by
Optionee to extend the term of this Option shall be credited in full to the
first year's rental due Optionor if this Option is exercised by Optionee.
5. OPTIONOR'S REPRESENTATIONS AND WARRANTIES. As an inducement for
Optionee to enter into and be bound by the terms of this Option, Optionor
represents and warrants to Optionee and Optionee's successors and assigns that:
(a) Optionor has good and marketable title to the Property and the
Easement free and clear of all liens and encumbrances other than those liens and
encumbrances shown on Exhibit "C" attached hereto. Optionee may at Optionee's
sole cost and expense procure an abstract of title or a commitment to issue a
policy of title insurance on the Property. In the event that Optionee objects to
any defect or cloud on title to the Property, Optionee may declare this Option
and any obligation of Optionee to lease the Property or acquire the Easement to
be void and of no further force or effect whereupon this Option shall become
null and void and there shall be no further liability of Optionee to Optionor;
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(b) Optionor has the authority to enter into and be bound by the
terms of this Option;
(c) There are no pending or threatened administrative actions
including bankruptcy or insolvency proceedings under state or federal law,
suits, claims or causes of action against Optionor or which may otherwise affect
the Property; and
(d) The Property is not presently subject to an option, lease or
other contract which may adversely affect Optionor's ability to fulfill its
obligations under this Option and Optionor covenants that it shall not grant an
option or enter into any contract which will affect the Property or the Easement
until this Option expires or is terminated by Optionee.
These representations and warranties of Optionor shall survive the
exercise of the Option and the closing anticipated by the exercise of this
Option.
6. TAXES. Any ad valorem taxes or other special assessment taxes
attributable to the Property and the Easement during the Initial Term and any
Renewal Term of the Option shall be paid by Optionor.
7. LIQUIDATED DAMAGES. In the event the closing does not occur due to a
default or breach of this Option by Optionee, Optionor's damages shall be fixed
and liquidated to the sums paid by Optionee to Optionor as consideration for
this Option. Optionor hereby expressly waives any other remedies it may have for
a breach of this Option by Optionee including specific performance and damages
for breach of contract.
8. INSPECTIONS AND INVESTIGATIONS. Optionor hereby grants to Optionee, its
officers, agents, employees and independent contractors the right and privilege
to enter upon the Property and the Easement at any time after the date of this
Option, to perform or cause to be performed test borings of the soil,
environmental audits, engineering studies and to conduct a survey of the
Property and the Easement. Optionor shall provide Optionee with any necessary
keys or access codes to the Property if needed for ingress and egress, Optionee
shall not unreasonably interfere with Optionor's use of the Property or the
Easement in conducting these activities.
9. FURTHER ACTS. Optionor shall cooperate with Optionee in executing any
documents necessary to protect Optionee's rights under this Option or Optionee's
use of the Property and the Easements and to take such action as Optionee may
reasonably require to effect the intent of this Option. Optionor hereby
irrevocably appoints Optionee or Optionee's agent as Optionor's agent to file
applications on behalf of Optionor with federal, state and local governmental
authorities which applications relate to Optionee's intended use of the Property
including but not limited to land use and zoning applications.
LEASE AGREEMENT
10. EXERCISE OF OPTION. Upon the tender of written notice of Optionee's
intent to exercise the Option, the terms of this Agreement applying to the lease
of the Property and grant of the Easements shall govern the relationship of the
parties and Optionor shall thereafter be referred to as Lessor and Optionee
shall thereafter be referred to as Lessee. The date of the written notice to
exercise the Option shall constitute the commencement date of the Lease
("Commencement
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Date").
11. USE. The Property may be used by Lessee for the transmission and
receipt of wireless communication signals in any and all frequencies and the
construction and maintenance of towers, antennas, or buildings, and related
facilities and activities. Lessor agrees to cooperate with Lessee in obtaining,
at Lessee's expense, all licenses and permits required for Lessee's use of the
Property (the "Governmental Approvals"). Lessee may construct additional
improvements, demolish and reconstruct improvements, or restore replace and
reconfigure improvements at any time during the Initial Term or any Renewal Term
of this Lease.
12. INITIAL TERM. The term of this Lease shall be five (5) years
commencing on the Commencement Date, as that term is defined in paragraph 10,
and terminating on the fifth anniversary of the Commencement Date ("Initial
Term").
13. RENEWAL TERMS. Lessee shall have the right to extend this Lease for
four (4) additional five (5) year terms ("Renewal Terms"). Each Renewal Term
shall be on the same terms and conditions as set forth in this Lease except that
Rent shall increase as provided in paragraph 14(c). This Lease shall
automatically be renewed for each successive Renewal Term unless Lessee notifies
Lessor of Lessee's intention not to renew the Lease at least 30 days prior to
the expiration of the Initial Term or the Renewal Term which is then in effect.
14. CONSIDERATION.
(a) During the Initial Term, Lessee shall pay Lessor the sum of
___________________________ and ___ /100 Dollars ($_______) per annum to be paid
an equal monthly installments of _____________________ and ___/100 ($_______) as
rental ("Rent"). Rent shall be payable on the first day of each month in advance
to Lessor at Lessor's address as specified in Paragraph 27 below;
(b) If this Lease is terminated at a time other than on the
anniversary of the Commencement Date, Rent shall be prorated as of the date of
termination ("Termination Date"), and in the event of termination for any reason
other than nonpayment of Rent, all Rents paid in advance of the Termination Date
for that period after the Termination Date shall be refunded to Lessee; and
(c) In the event that Lessee elects to renew this Lease as provided
in paragraph 13, Rent shall accrue during the Renewal Terms in accordance with
the following schedule:
First Renewal Term ______ per annum
Second Renewal Term ______ per annum
Third Renewal Term ______ per annum
Fourth Renewal Term ______ per annum
15. LESSOR'S REPRESENTATIONS AND WARRANTIES. Lessor represents and
warrants that Lessee's intended use of the Property as a site for the
transmission and receipt of wireless communication signals; for the construction
and maintenance of towers, antennas or buildings; and related facilities
("Intended Use") is not prohibited by any covenants, restrictions, reciprocal
easements, servitudes, subdivision rules or regulations. Lessor further
represents and warrants that there are no easements, licenses, rights of use or
other encumbrances on the Property which will interfere with or constructively
prohibit Lessee's Intended Use of the Property. Lessor further
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<PAGE> 26
represents and warrants that the execution of this Lease by Lessor will not
cause a breach or an event of default of any other agreement to which Lessor is
a party.
16. CONDITIONS SUBSEQUENT. In the event that Lessee's Intended Use of the
Property is actually or constructively prohibited through no fault of Lessee or
the Property is, in Lessee's opinion, unacceptable to Lessee then this Lease
shall terminate and be of no further force or effect and Lessee shall be
entitled to a refund from Lessor of any deposits or Rent paid in advance to
Lessor which sums were paid prior to the date upon which Lessee gives Lessor
notice of its intent to terminate this Lease pursuant to this paragraph.
17. INTERFERENCE. Lessor shall not use, nor shall Lessor permit its
lessees, licensees, invitees or agents to use any portion of adjacent real
property owned by Lessor in any way which interferes with the wireless
communications operations of Lessee. Such interference shall be deemed a
material breach of this Lease by Lessor and Lessor shall have the responsibility
to terminate said interference. In the event any such interference does not
cease or is not promptly rectified, Lessor acknowledges that continuing
interference will cause irreparable injury to Lessee, and Lessee shall have the
right, in addition to any other rights that it may have at law or in equity, to
bring action to enjoin such interference or to terminate this Lease immediately
upon notice to Lessor.
18. IMPROVEMENTS; UTILITIES; ACCESS.
(a) Lessee shall have the right, at Lessee's sole cost and expense,
to erect and maintain on the Property improvements, personal property and
facilities, including without limitation, towers, a structural tower base, radio
transmitting and receiving antennas, communications equipment, an equipment
cabinet or shelter and related facilities (collectively the "Tower Facilities").
The Tower Facilities shall remain the exclusive property of the Lessee
throughout the term and upon termination of this Lease. Lessee shall have the
obligation to remove all of the above ground portions of the Tower Facilities
following any termination of this Lease. Lessor grants Lessee the right to clear
all trees, undergrowth, or other obstructions and to trim, cut, and keep trimmed
and cut all tree limbs which may interfere with or fall upon Lessee's tower or
Lessee's other improvements, communications equipment or Easement rights. Lessor
grants Lessee a non-exclusive easement in, over, across and through other real
property owned by Lessor as reasonably required for construction, installation,
maintenance, and operation of the Tower Facilities. In the event that the tower
to be constructed by Lessee on the Property is a guyed tower, Lessor also grants
Lessee an easement over Lessor's real property during the Initial Term and any
Renewal Term of this Lease for any guy wires and guy wire anchors.
(b) Lessee shall have the right to install utilities, at Lessee's
expense, and to improve present utilities on the Property (including but not
limited to the installation of emergency power generators). Lessee shall have
the right to permanently place utilities on (or to bring utilities across or
under) the Easement to service the Property and the Tower Facilities. In the
event that utilities necessary to serve the equipment of Lessee or the equipment
of Lessee's licensee(s) or sublessee(s) cannot be located within the Easement
for ingress and egress, Lessor agrees to cooperate with Lessee and to act
reasonably in allowing the location of utilities on other real property owned by
Lessor without requiring additional compensation from Lessee or Lessee's
licensee(s) or sublessee(s). Lessor shall, upon Lessee's request, execute a
separate written easement to the utility company providing the service or Lessee
in a form which may be filed of record evidencing this right.
(c) Lessor represents and warrants to Lessee that Lessee shall at
all times
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during this Lease enjoy ingress, egress, and access from the Property to an open
and improved public road which presently exists and which Easement shall be
adequate to service the Property and the Tower Facilities. If no such public
road exists or ceases to exist in the future, Lessor will grant an appropriate
easement to Lessee, Lessee's sublessees and assigns so that Lessee may, at its
own expense, construct a suitable private access drive to the Property and the
Tower Facilities. To the degree such access is across other property owned by
Lessor, Lessor shall execute an easement evidencing this right and Lessor shall
maintain access to the Easement in a free and open condition so that no
interference is caused to Lessee by other lessees, licensees, invitees or agents
of the Lessor which may utilize the Easement.
19. TERMINATION. Except as otherwise provided herein, this Lease may be
terminated, without any penalty or further liability upon written notice as
follows:
(a) By either party upon a default of any covenant or term hereof by
the other party which default is not cured within 60 days of receipt of written
notice of default (without, however, limiting any other rights available to the
parties pursuant to any other provisions hereof); provided, that if the
defaulting party commences efforts to cure the default within such period the
non-defaulting party shall no longer be entitled to declare a default;
(b) Upon 30 days' written notice by Lessee to Lessor if Lessee is
unable to obtain or maintain through no fault of Lessee any license, permit or
other Governmental Approval necessary to the construction and operation of the
Tower Facilities or Lessee's business; or
(c) By Lessee for any reason or no reason at all upon six (6) months
advance written notice from Lessee to Lessor.
20. SUBLEASES. Lessee at its sole discretion shall have the right without
any need to obtain the consent of Lessor to license or sublease all or a portion
of the Property and the Tower Facilities to others whose business includes the
provision of wireless communication services. Lessee's licensee(s) and
sublessee(s) shall be entitled to modify the Tower and to erect additional
improvements on the Property including but not limited to antennas, dishes,
cabling, additional storage buildings or equipment shelters on the Property as
are reasonably required for the operation and maintenance of the communications
equipment to be installed on the Property by said licensee(s) and sublessee(s)
together with rights of ingress and egress to the Property and the right to
install utilities on the Property as if said licensee or sublessee were the
Lessee under this Lease.
21. TAXES. Lessee shall pay any personal property taxes assessed on, or
any portion of such taxes attributable to, the Tower Facilities. Lessor shall
pay when due all real property taxes and all other fees and assessments
attributable to the Property. Lessee shall pay as additional Rent any increase
in real property taxes levied against Property which are directly attributable
to Lessee's use of the Property and Lessor agrees to furnish proof of such
increase to Lessee. In the event that Lessor fails to pay when due any taxes
affecting the Property or the Easement, Lessee shall have the right but not the
obligation to pay such taxes and deduct the full amount of the taxes paid by
Lessee on Lessor's behalf from future installments of Rent.
22. DESTRUCTION OF PREMISES. If the Property or the Tower Facilities are
destroyed or damaged so as to hinder the effective use of the Tower Facilities
in Lessee's judgment, Lessee may elect to terminate this Lease as of the date of
the damage or destruction by so notifying the Lessor. In such event, all rights
and obligations of Lessee to Lessor shall cease as of the date of
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<PAGE> 28
the damage or destruction and Lessee shall be entitled to the reimbursement of
any Rent prepaid by Lessee.
23. CONDEMNATION. If a condemning authority takes all of the Property, or
a portion sufficient in Lessee's determination, to render the Property in the
opinion of Lessee unsuitable for the use which Lessee was then making of the
Property, this Lease shall terminate as of the date the title vests in the
condemning authority. Lessor and Lessee shall share in the condemnation proceeds
in proportion to the values of their respective interests in the Property (which
for Lessee shall include, where applicable, the value of its Tower Facilities,
moving expenses, prepaid rent and business dislocation expenses). A sale of all
or part of the Property to a purchaser with the power of eminent domain in the
face of the exercise of eminent domain power shall be treated as a taking by
condemnation for the purposes of this paragraph.
24. INSURANCE. Lessee shall purchase and maintain in full force and effect
throughout the Initial Term and any Renewal Term such public liability and
property damage policies as Lessee may deem necessary. Said policy of general
liability insurance shall provide a combined single limit of $1,000,000.
25. ENVIRONMENTAL COMPLIANCE. Lessor warrants and represents that the
Property, the Easement and the improvements thereon are free of contaminants,
oils, asbestos, PCB's, hazardous substances or wastes as defined by federal,
state or local environmental laws, regulations or administrative orders or other
materials the removal of which is required or the maintenance of which is
prohibited, regulated or penalized by any federal, state or local government
authority ("Hazardous Materials"). This Lease shall at the option of Lessee
terminate be void and of no further force or effect if Hazardous Materials are
discovered to exist on the Property through no fault of Lessee after Lessee
takes possession of the Property and Lessee shall be entitled to a refund of all
the consideration given Lessor under this Lease.
26. ENVIRONMENTAL INDEMNITIES.
(a) Lessor, its heirs, grantees, successors, and assigns shall
indemnify, defend, reimburse and hold harmless Lessee from and against any and
all environmental damages arising from the presence of Hazardous Materials upon,
about or beneath the Property or migrating to or from the Property or arising in
any manner whatsoever out of the violation of any environmental requirements
pertaining to the Property and any activities thereon, which conditions exist or
existed prior to or at the time of the execution of this Lease or which may
occur at any time in the future through no fault of Lessee.
(b) Notwithstanding the obligation of Lessor to indemnify Lessee
pursuant to this agreement, Lessor shall, upon demand of Lessee, and at Lessor's
sole cost and expense, promptly take all actions to remediate the Property which
are required by any federal, state or local governmental agency or political
subdivision or which are reasonably necessary to mitigate environmental damages
or to allow full economic use of the Property, which remediation is necessitated
from the presence upon, about or beneath the Property of a Hazardous Material.
Such actions shall include but not be limited to the investigation of the
environmental condition of the Property, the preparation of any feasibility
studies, reports or remedial plans, and the performance of any cleanup,
remediation, containment, operation, maintenance, monitoring or actions
necessary to restore the Property to the condition existing prior to the
introduction of Hazardous Material upon, about or beneath the Property
notwithstanding any lesser standard of remediation allowable under applicable
law or governmental policies.
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27. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given if personally delivered
or mailed, certified mail, return receipt requested, to the following addresses
or to such other addresses as may be specified in writing at any time during the
term of this Agreement:
If to Lessor, to:
Name: ___________________
Address: ___________________
Attention: ___________________
Phone: (____) _____-_______
Federal I.D. or Social Security No.: ________________________
If to Lessee, to:
SpectraSite Communications, Inc.
8000 Regency Parkway, Suite 570
Cary, NC 27511
Attention: Contracts Manager
(919) 468-0112
With a copy to:
Lewellen & Frazier, PLC
415 North McKinley, Suite 1240
Little Rock, AR 72205
Attention: Todd A. Lewellen, Esq.
28. TITLE AND QUIET ENJOYMENT. Lessor warrants and represents that (i) it
has the full right, power, and authority to execute this Lease; (ii) it has good
and marketable fee simple title to the Property and the Easement free and clear
of any liens, encumbrances or mortgages except those liens and encumbrances
disclosed in Exhibit "C" attached hereto; and (iii) the Property constitutes a
legal lot that may be leased without the need for any subdivision or platting
approval. Lessor covenants that Lessee shall have the quiet enjoyment of the
Property during the term of this Lease. Lessor shall indemnify Lessee from and
against any loss, cost, expense or damage including attorneys fees associated
with a breach of the foregoing covenant of quiet enjoyment.
29. ASSIGNMENT. Lessee may assign this Lease without the consent of
Lessor. Any sublease, license or assignment of this Lease that is entered into
by Lessor or Lessee shall be subject to the provisions of this Lease.
Additionally, Lessee may, upon notice to Lessor, mortgage or grant a security
interest in this Lease and the Tower Facilities, and may assign this Lease and
the Tower Facilities to any such mortgagees or holders of security interests
including their successors and assigns (hereinafter collectively referred to as
"Secured Parties"). In such event, Lessor shall execute such consent to
leasehold financing as may reasonably be required by Secured Parties. Lessor
agrees to notify Lessee and Lessee's Secured Parties simultaneously of any
default by Lessee and to give Secured Parties the same right to cure any default
as Lessee except that the cure period for any Secured Party shall not be less
than 10 days after the receipt of the default notice. If a termination,
disaffirmance or rejection of the Lease pursuant to any laws
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<PAGE> 30
(including any bankruptcy or insolvency laws) by Lessee shall occur, or if
Lessor shall terminate this Lease for any reason, Lessor will give to the
Secured Parties prompt notice thereof and Lessor will give the Secured Parties
the right to enter upon the Property during a 30-day period commencing upon the
Secured Party's receipt of such notice for the purpose of removing any Tower
Facilities. Lessor acknowledges that the Secured Parties shall be third-party
beneficiaries of this Lease.
30. SUCCESSORS AND ASSIGNS. This Lease shall run with the Property
described on Exhibit "A" and shall be binding upon and inure to the benefit of
the parties, their respective heirs, successors, personal representatives and
assigns.
31. WAIVER OF LESSOR'S LIEN. Lessor hereby waives any and all lien rights
it may have, statutory or otherwise, in and to the Tower Facilities or any
portion thereof, regardless of whether or not same is deemed real or personal
property under applicable laws.
32. WAIVER OF INCIDENTAL AND CONSEQUENTIAL DAMAGES. Lessor will not assert
any claim whatsoever against Lessee for loss of anticipatory profits or any
other indirect, special, incidental or consequential damages incurred by Lessor
as a result of the construction, maintenance, operation or use of the Property
or the Easement by Lessee.
33. MISCELLANEOUS.
(a) The substantially prevailing party in any litigation arising
hereunder shall be entitled to its reasonable attorney's fees and court costs,
including appeals, if any.
(b) Each party agrees to furnish to the other, within 10 days after
request, such truthful estoppel information as the other may reasonably request.
(c) This Lease constitutes the entire agreement and understanding of
Lessor and Lessee with respect to the subject matter of this Lease, and
supersedes all offers, negotiations and other agreements. There are no
representations or understandings of any kind not set forth herein. Any
amendments to said Lease must be in writing and executed by Lessor and Lessee.
(d) If either Lessor or Lessee is represented by a real estate
broker in this transaction, that party shall be fully responsible for any fees
due such broker and shall hold the other party harmless from any claims for
commission by such broker.
(e) Lessor agrees to cooperate with Lessee in executing any
documents necessary to protect Lessee's rights under this Lease or Lessee's use
of the Property and to take any further action which Lessee may reasonably
require as to effect the intent of this Lease.
(f) This Lease shall be construed in accordance with the laws of the
state in which the Property is situated.
(g) If any term of this Lease is found to be void or invalid, such
invalidity shall not affect the remaining terms of this Lease, which shall
continue in full force and effect.
(h) Lessee may file of record in the property records in the county
in which the Property and Easement(s) are located a Memorandum of Lease which
sets forth the names and addresses of Lessor and Lessee, the legal description
of the Property and the Easement(s), the duration of the Initial Term and the
quantity and duration of the Renewal Terms.
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<PAGE> 31
(i) Lessor shall cooperate with Lessee in executing any documents
necessary to protect Lessee's rights under this Lease or Lessee's use of the
Property and the Easements and to take such action as Lessee may reasonably
require to effect the intent of this Lease. Lessor hereby irrevocably appoints
Lessee or Lessee's agent as Lessor's agent to file applications on behalf of
Lessor with federal, state and local governmental authorities which applications
relate to Lessee's intended use of the Property including but not limited to
land use and zoning applications.
(j) This Lease may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by the each of the parties, it
being understood that all parties need not sign the same counterpart.
IN WITNESS WHEREOF, Optionor and Optionee have executed this Option and
Lease as of the date first written above.
OPTIONOR/LESSOR:
[CORPORATION, PARTNERSHIP, LLC OR LLP]
------------------------------,
A
-----------------------------
BY:
------------------------
TITLE:
------------------------
------------------------------
[INDIVIDUAL]
------------------------------
[INDIVIDUAL]
OPTIONEE/LESSEE:
SPECTRASITE COMMUNICATIONS, INC.,
A DELAWARE CORPORATION
BY:
------------------------
TITLE:
------------------------
31
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ACKNOWLEDGMENTS
32
<PAGE> 33
EXHIBIT "A"
LEGAL DESCRIPTION OF
PROPERTY
33
<PAGE> 34
EXHIBIT "B"
LEGAL DESCRIPTION OF
EASEMENT(S)
34
<PAGE> 35
EXHIBIT "C"
LIENS AND ENCUMBRANCES
35
<PAGE> 36
SCHEDULE "III"
NOTICE TO PROCEED WITH CONSTRUCTION
SpectraSite Communications, Inc.
8000 Regency Park, Suite 570
Cary, NC 27511
Attention: Steve Clark
Re: Notice to Proceed with Construction of Site #_________;
("_____________ Site")
Dear Mr. ________________:
SpectraSite may commence due diligence procedures and if those
procedures are acceptable to SpectraSite may construct of the Tower Facilities
on the ___________ Site at the earliest possible time.
Sincerely,
Amica
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<PAGE> 37
SCHEDULE "IV"
NOTICE OF COMPLETION OF ANTENNA FACILITIES
Amica
- --------------------------
- --------------------------
- -------------------------- -------------
Re: Notice of Completion of Tower Facilities ("Notice") for
Site #______ ("_________ Site")
Dear ___________:
On the _____ day of ______________, 199__ the Tower Facilities at the
________ Site were completed in accordance with paragraph 2.10 of the Master
Agreement between SpectraSite and Amica. Amica has a period of fifteen (15) days
after the date of this Notice to provide a Punch List of items to be completed
by SpectraSite in order to render the Tower Facilities completed in accordance
with the Plans and Specifications in the opinion of Amica.
Please contact us in writing upon receipt of the equipment owned by Amica
to be installed at the _______ Site so that SpectraSite may arrange for the
installation of this equipment.
Sincerely,
-------------------------
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SCHEDULE "V"
SITE LEASE AGREEMENT
THIS SITE LEASE AGREEMENT ("SLA") is executed this _____ day of
________________, 1998, by and between SPECTRASITE COMMUNICATIONS, INC.
("SpectraSite") and AMICA WIRELESS PHONE SERVICE, INC. ("Carrier").
WHEREAS, on the ____ day of ________________, 19__, SpectraSite and
Carrier entered into that certain Master Tower Attachment Master Lease Agreement
("Master Lease") which provides for the execution of individual SLAs for each
Site, as that term is defined in the Master Lease, owned by SpectraSite upon
which Amica desires to mount certain antenna, structures and other equipment.
1. SITE. Subject to the terms of the Master Lease, SpectraSite hereby
leases and grants to Carrier a License to install, maintain, operate, upgrade
and remove Carrier's wireless communications equipment and appurtenances on a
tower owned by SpectraSite ("Tower"), including antennas and microwave dishes
between the heights of _________________________________ above ground level on
the Tower, which is located on certain real property leased by SpectraSite more
particularly described in Exhibit "A" attached hereto ("Property"); and to
install, maintain, operate and remove Carrier's compound and related devices
(including, but not limited to emergency generators, equipment shelters,
equipment cabinets, all necessary test equipment and any temporary construction
materials) owned by Carrier on a seven hundred (700)square foot portion of the
Property at a location to be agreed upon in writing between SpectraSite and
Carrier (the space occupied by Carrier on the Property and the Tower hereinafter
shall be referred to collectively as the "Premises"). Subject to the terms of
the Master Lease SpectraSite has leased to Amica the use of a tower or other
structure owned by SpectraSite and space on certain real property in the
vicinity of the Tower which real property is described in Exhibit "A" attached
hereto ("Property"). SpectraSite has granted unto Amica for the Initial Term and
any Renewal Term an easement for ingress, egress and utilities during the term
of the Master Lease over the property described in Exhibit "B" attached hereto
("Easement"). (The Tower, Property and easement shall constitute and hereinafter
be referred to and known as the "Site"). The Site is more commonly known to
SpectraSite as the ____________ Site.
2. COMMENCEMENT DATE. The Commencement Date of this SLA shall be the
earlier of (i) the date that Amica commences the installation of its Equipment
on the Site or (ii) fifteen (15) days after SpectraSite has forwarded to Amica
the Notice of Completion for the Site or, if a Punch List is forwarded to
SpectraSite in accordance with paragraph 2.10 hereof, fifteen (15) days after
SpectraSite completes the items on such Punch List. Prior to installing the
Equipment, Amica shall execute a letter agreement which shall be attached to
each SLA confirming the calendar date which the parties understand to be the
Commencement Date for each SLA.
3. EQUIPMENT. A description of the equipment, antennae, mounting height of
the antenna and other personal property of Amica which Amica intends to locate
on the Site ("Equipment") is described in Exhibit "C" attached hereto. Amica
will not install any equipment on the Site which is not described in Exhibit "C"
without SpectraSite's prior, written consent.
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<PAGE> 39
4. PRIME LEASE. A copy of the Prime Lease for this Site is attached hereto
as Exhibit "D" and is incorporated by reference herein. This SLA shall be
subject to the terms, covenants and conditions of the Prime Lease.
5. EFFECT OF AGREEMENT. SpectraSite and Amica acknowledge that the Master
Lease is the controlling agreement between the parties with regard to Amica's
lease of the Site. This SLA is intended to supplement the Master Lease and
fulfill the requirements of paragraph 1 of the Master Lease.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
LESSOR:
SPECTRASITE COMMUNICATIONS, INC.
By:
--------------------------
Title:
--------------------------
LESSEE:
AMICA WIRELESS PHONE SERVICE, INC.
By:
--------------------------
Title:
--------------------------
39
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ACKNOWLEDGMENTS
40
<PAGE> 41
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
41
<PAGE> 42
EXHIBIT "B"
LEGAL DESCRIPTION OF EASEMENTS
42
<PAGE> 43
EXHIBIT "C"
EQUIPMENT LIST
43
<PAGE> 44
EXHIBIT "D"
PRIME LEASE
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Exhibit 10.27
STOCK CONTRIBUTION AGREEMENT
BY AND AMONG
INTEGRATED SITE DEVELOPMENT, INC.
AND
STEPHEN H. CLARK, ROBERT M. LONG AND US TOWERS, INC.
DATED
MAY 12, 1997
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STOCK CONTRIBUTION AGREEMENT
THIS STOCK CONTRIBUTION AGREEMENT (together with the Schedules and
Exhibits hereto, the "Agreement"), dated May 12, 1997, is entered into by and
among Integrated Site Development, Inc., a Delaware corporation ("ISD"), and
Stephen H. Clark ("Clark"), Robert M. Long ("Long") (Clark and Long are jointly
referred to as the "Stockholders") and US Towers, Inc., a Delaware corporation
("UST").
WHEREAS, the Stockholders are the owners of all of the issued and
outstanding shares of the capital stock of UST (the "UST Stock");
WHEREAS, UST is engaged in the wireless communications business (the
"UST Business");
WHEREAS, pursuant to Section 351 of the Internal Revenue Code of 1986,
as amended (the "Code"), the Stockholders desire to contribute and transfer all
of their shares of UST Stock to ISD in exchange for shares of the Common Stock,
par value $0.001 per share, of ISD (the "ISD Common Stock");
WHEREAS, the foregoing contributions and transfers are part of a
single plan pursuant to Section 351 of the Code in which: (i) the foregoing
contributions and transfers will be made; (ii) Joe L. Finley, III, Finley
Family Limited Partnership, an Arkansas limited partnership, The Central
Arkansas Opportunity Foundation, a charitable trust organized under the laws of
the State of Arkansas ("the Finley Group") will contribute and transfer all of
their membership interests in Telesite Services, LLC, an Arkansas limited
liability company ("Telesite") and Joe L. Finley, III, and Telesite will
contribute and transfer all of their membership interests in Metrosite
Mangement, LLC, an Arkansas limited liability company ("Metrosite") to ISD in
exchange for 490,517 shares of ISD Common Stock and other consideration; (iii)
Whitney Equity Partners, L.P., a Delaware limited partnership ("Whitney"),
Kitty Hawk Capital Limited Partnership, III, a Delaware limited partnership
("Kitty Hawk") will contribute and transfer cash to ISD in exchange for
3,462,830 shares of 8% Series A Cumulative Convertible Redeemable Preferred
Stock, par value $0.001 per share, of ISD; and (iv) PCX Corporation, a Delaware
corporation ("PCX"), will contribute its warrant to purchase 1,500 shares of
UST Stock (the "UST Warrant") to ISD in exchange for a warrant to purchase
150,000 shares of ISD Common Stock (the "ISD Warrant").
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations, and warranties set forth herein, the parties agree as follows:
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ARTICLE I
DEFINITIONS
In addition to the other terms defined herein, the following
definitions will apply throughout this Agreement:
1.1 ACM's. The term "ACM's" has the meaning set forth in Section
5.19(b).
1.2 Affiliate. The term "Affiliate" has the meaning set forth in
Rule 405 of the Securities Act of 1933, as amended.
1.3 Claims. The term "Claims" has the meaning set forth in
Section 5.15.
1.4 Closing. The term "Closing" has the meaning set forth in
Section 11.1.
1.5 Closing Date. The term "Closing Date" has the meaning set
forth in Section 11.1.
1.7 Effective Time. The term "Effective Time" has the meaning set
forth in Section 11.1.
1.8 Environmental Laws. The term "Environmental Laws" has the
meaning set forth in Section 5.19.
1.9 ERISA. The term "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
1.10 Hazardous Materials. The term "Hazardous Materials" has the
meaning set forth in Section 5.19(b).
1.11 Indemnified Party. The term "Indemnified Party" has the
meaning set forth in Section 12.3.
1.12 Indemnity Obligor. The term "Indemnity Obligor" has the
meaning set forth in Section 12.3.
1.13 ISD Agreements. The term "ISD Agreements" means all
agreements, documents and other instruments executed and delivered by ISD in
connection with the consummation of the transaction contemplated by this
Agreement.
1.14 Loss. The term "Loss" has the meaning set forth in Section
12.1.
1.15 PBGC. The term "PBGC" means the Pension Benefit Guaranty
Corporation.
1.16 PCBs. The term "PCBs" has the meaning set forth in Section
5.19(e).
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1.17 Person. The term "person" means any individual, firm,
corporation, limited liability company, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, governmental
authority or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity.
1.18 Plans. The term "Plans" has the meaning set forth in Section
5.22(b)(i).
1.19 Representatives. The term "Representatives" has the meaning
set forth in Section 7.3.
1.20 Rules. The term "Rules" has the meaning set forth in Section
5.16.
1.21 Stockholder Agreements. The term "Stockholder Agreements"
means all agreements, documents and other instruments executed and delivered by
the Stockholders in connection with the consummation of the transactions
contemplated by this Agreement.
1.22 Stockholders' Agreement. The term "Stockholders' Agreement"
means the Stockholders' Agreement, dated as of the Closing Date, between ISD,
The Finley Group, the Stockholders, PCX and Whitney in substantially the form
attached as Exhibit A.
1.23 Tax Returns. The term "Tax Returns" has the meaning set forth
in Section 5.18.
1.24 Taxes. The term "Taxes" has the meaning set forth in Section
5.18.
1.25 UST Agreements. The term "UST Agreements" means all
agreements, documents and other instruments executed and delivered by UST in
connection with the consummation of the transactions contemplated by this
Agreement.
1.26 [Intentionally Omitted].
1.27 UST Assets. The term "UST Assets" means all of the properties
and assets of UST, including, without limitation, the UST Intellectual
Property, the UST Inventory, the UST Receivables, the UST Tangible Personal
Property, the UST Contracts, the UST Leased Real Property, and the UST Real
Property Leases.
1.28 UST Contracts. The term "UST Contracts" has the meaning set
forth in Section 5.11.
1.29 [Intentionally Omitted].
1.30 UST Intellectual Property. The term "UST Intellectual
Property" has the meaning set forth in Section 5.13.
1.31 UST Inventory. The term "UST Inventory" has the meaning set
forth in Section 5.10.
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1.32 UST Leased Real Property. The term "UST Leased Real Property"
has the meaning set forth in Section 5.8.
1.33 UST Liens. The Term "UST Liens" has the meaning set forth in
Section 5.7.
1.34 UST Marks. The term "UST Marks" has the meaning set forth in
Section 5.13.
1.35 UST Permits. The term "UST Permits" has the meaning set forth
in Section 5.17.
1.36 UST Real Property Leases. The term "UST Real Property Leases"
has the meaning set forth in Section 5.8.
1.37 UST Receivables. The term "UST Receivables" has the meaning
set forth in Section 5.12.
1.38 UST Required Consents. The term "UST Required Consents" has
the meaning set forth in Section 5.4.
1.39 UST Tangible Personal Property. The term "UST Tangible
Personal Property" has the meaning set forth in Section 5.9.
1.40 UST Tax Returns. The term "UST Tax Returns" has the meaning
set forth in Section 5.18.
1.41 Whitney Letter of Intent. The term "Whitney Letter of Intent"
means the Letter of Intent, dated March 27, 1997, between Whitney and UST, a
copy of which is attached as Exhibit B.
ARTICLE II
CONTRIBUTION OF UST STOCK
2.1 Contribution of UST Interests. The Stockholders agree to
contribute, transfer and deliver to ISD, at the Closing, all of the UST Stock
owned by them in exchange for the 850,000 shares of ISD Common Stock.
2.2 Intent of Contributions. The parties agree that the intent of
the contributions and transfers of the shares of UST Stock to ISD pursuant to
this Agreement will constitute a transfer of property to a controlled
corporation in accordance with the provisions of Section 351 of the Code.
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ARTICLE III
CONSIDERATION
3.1 Consideration. The aggregate consideration for the shares of
UST Stock will be 850,000 shares of ISD Common Stock.
3.2 Payment of Consideration. At the Closing, the Consideration
will be satisfied and paid by ISD issuing to Clark a certificate or
certificates evidencing 687,395 shares of the ISD Common Stock and by issuing
to Long a certificate or certificates evidencing 162, 605 shares of the ISD
Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING STOCKHOLDERS
The Stockholders jointly and severally represent and warrant to ISD as
follows:
4.1 Authority. Each of the Stockholders has all requisite power
and authority to execute and deliver this Agreement and the Stockholder
Agreements and to perform the transactions contemplated hereby and thereby.
This Agreement and the Stockholder Agreements have been, or with respect to the
Member Agreement to be executed at the Closing, will be duly executed and
delivered by the Stockholders and each constitutes, or will constitute when
executed and delivered, a valid and binding obligation of the Stockholders,
enforceable against the Stockholders in accordance with its terms.
4.2 UST Stock. Clark is the sole owner, of record and
beneficially, of 6,874 shares of the Common Stock, par value $0.001 per share,
of UST and Long is the sole owner, of record and beneficially, of 1,626 shares
of the Common Stock, par value $0.001 per share of UST, free and clear of all
liens, encumbrances, claims, security interests, mortgages, restrictions or
pledges of any nature. Except as set forth on Schedule 4.2, there are no
outstanding subscriptions, options, warrants, calls, puts or other agreements
or instruments which may entitle or obligate UST or any other person to acquire
any shares of the capital stock of UST.
4.3 Securities Matters. The Stockholders seek to acquire the
shares of ISD Common Stock issued to them for their own account and beneficial
interest for investment purpose only and not with the view to the resale,
assignment, transfer or distribution thereof, except in accordance with
applicable federal and state securities laws. The Stockholders acknowledge and
agree that, as the owner of the shares of ISD Common Stock, they must bear the
economic risks of investment in ISD for an indefinite period of time, as the
securities have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or the securities laws of any state, and
therefore cannot be sold unless registered thereunder or unless, in the opinion
of counsel satisfactory to ISD, an exemption from registration is available.
The Stockholders acknowledge and agree that the shares of ISD Common Stock
issued to them will be subject to certain restrictions on transfer as set forth
in the Stockholders' Agreement and that the certificates evidencing such shares
will bear legends referring to such restrictions. The
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Stockholders have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of an
investment in the ISD and that they are able to bear the economic risks for
such investment. The Stockholders are sophisticated and knowledgable
investors, as well as accredited investors (as such term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act. The Stockholders
acknowledge that they and their representatives (a) have had adequate
opportunity to ask for and receive any information from ISD and its officers
that the Stockholders believe to be material or relevant to their investment
hereunder and (b) have had a due diligence investigation conducted by their
legal counsel and other professional advisors.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING UST
The Stockholders and UST jointly and severally represent and
warrant to ISD as follows:
5.1 Organization and Good Standing: Governing Documents. UST is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. UST has all requisite power and authority to
own, operate and lease the UST Assets and to conduct the operations of the UST
Business as presently conducted. UST is duly qualified to conduct business as
a foreign corporation and is in good standing in all jurisdictions in which the
character of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, and such
jurisdictions are listed on Schedule 5.1. UST has previously delivered to ISD
true and complete copies of its Certificate of Incorporation and Bylaws,
including all amendments thereto. Except as set forth on Schedule 5.1, UST
does not, directly or indirectly, own or control or have any capital, equity,
partnership, participation or other interest in any corporation, partnership,
limited liability company, joint venture or other business association or
entity.
5.2 Authority. UST has all requisite power and authority to
execute and deliver this Agreement and the UST Agreements and to perform the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the UST Agreements have been duly and validly
authorized by all necessary action on the part of UST, its directors and
officers and the Stockholders. This Agreement has been and the UST Agreements
have been, or, with respect to the UST Agreements to be executed at the
Closing, will be duly executed and delivered by UST and each constitutes or
will constitute when executed and delivered a valid and binding obligation of
UST, enforceable against UST in accordance with its terms.
5.3 No Conflict or Breach. The execution, delivery and
performance of this Agreement does not and will not:
(a) conflict with the Certificate of Incorporation or
Bylaws of UST;
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(b) violate any law, statute, judgment, order, decree or
regulation of any legislative body, court, administrative agency, governmental
authority or arbitrator applicable to or relating to UST or the UST Assets;
(c) conflict with, constitute a default under, result in
a breach or acceleration of or, except as set forth on Schedule 5.3, require
notice to or the consent of any third party under any contract, agreement,
commitment, mortgage, note, license or other instrument or obligation to which
UST is party or by which it is bound or by which the UST Assets are affected;
or
(d) result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever on any of the UST Assets.
5.4 Consents and Approvals. Schedule 5.4 describes (a) each
consent, approval, authorization, registration or filing with any federal,
state or local judicial or governmental authority or administrative agency and
(b) each consent, approval, authorization of or notice to any other third
party, which is required in connection with the valid execution and delivery of
this Agreement or the consummation of the transactions contemplated herein or
therein (the items described in clauses (a) and (b), collectively, the "UST
Required Consents").
5.5 Financial Statements. UST does not have any financial
statements.
5.6 Books and Records. The books and records of UST relating to
the UST Business and the UST Assets are true, accurate and complete in all
material respects.
5.7 Title to and Sufficiency of Assets. UST has good and
marketable title to all of the UST Assets, free and clear of any liens,
encumbrances, claims, security interests, mortgages, restrictions or pledges of
any nature (collectively, "UST Liens"), other than the UST Liens described on
Schedule 5.7, all of which will be removed at or prior to Closing. The UST
Assets constitute all of the assets, tangible and intangible, of any nature
whatsoever, required to operate the UST Business in the manner presently
operated by UST.
5.8 Leased Real Property. Schedule 5.8 contains a true and
correct description of all real property leased by UST and used or useful in
connection with the UST Business (the "UST Leased Real Property"). UST has
previously delivered to ISD true and complete copies of each of the leases,
including all amendments thereto, for such leased real property (the "UST Real
Property Leases"). Each of the UST Real Property Leases is valid, binding and
enforceable in accordance with its terms and is in full force and effect, and
there are no offsets or defenses by either landlord or tenant thereunder.
There are no existing defaults, and no events or circumstances have occurred
which, with or without notice of lapse of time or both, would constitute
defaults, under any of the UST Real Property Leases. The execution, delivery
and performance of this Agreement does not and will not, with respect to any
such UST Real Property Lease: (i) permit the landlord to accelerate the rent or
cause the lease terms to be renegotiated, (ii) constitute a default thereunder
or (iii) require the consent of the landlord or any third party.
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5.9 Tangible Personal Property. Set forth on Schedule 5.9 is a
list of all machinery, equipment, tools, furniture, office equipment, supplies,
materials, vehicles and other items of tangible personal property of every kind
owned by UST and used or useful in connection with the UST Business (wherever
located and whether or not carried on UST's books) (the "UST Tangible Personal
Property"). Each item of UST Tangible Personal Property, and each item of
tangible personal property leased under the UST Contracts, is in good operating
order, condition and ordinary wear and tear excepted, is suitable for immediate
use in the ordinary course of business of the UST Business, is free from
defects, is merchantable and is of a quality and quantity presently usable in
the ordinary course of business of the UST Business. No item of UST Tangible
Personal Property is in need of repair or replacement other than as part of
routine maintenance in the ordinary course of business.
5.10 Inventory. Set forth on Schedule 5.10 is a list and
approximation of, and the location of, all inventory of the UST Business as of
the date hereof, including without limitation, all finished goods, work in
process, raw materials, spare parts and all other materials and supplies to be
used or consumed in the production of finished goods (the "UST Inventory").
All items included in the UST Inventory; (i) are in good condition, not
obsolete and nondefective, (ii) are useable or saleable in the ordinary course
of business of the UST Business and at the current operating profit margins of
UST, (iii) are located at the locations listed on Schedule 5.10 and (iv) have
been acquired by UST only in bona fide transactions entered into in the
ordinary course of business.
5.11 Contracts. Schedule 5.11 lists all contracts, commitments,
agreements (including, without limitation, agreements for the borrowing of
money or the extension of credit, licenses, understandings and obligations)
whether written or oral, to which UST is party or by which UST or the UST
Assets are bound or affected, other than purchase orders in the ordinary course
of business and any other contracts agreements and commitments that do not
extend beyond one (1) year and involve the receipt of payment of not more than
$25,000 (the "UST Contracts"). UST has delivered to ISD true and complete
copies of all written UST Contracts and true and complete memoranda of all oral
UST Contracts, including any and all amendments and other modifications
thereto. Each of the UST Contracts is valid, binding and enforceable in
accordance with its terms and is in full force and effect. No UST Contract
will result in a loss upon completion of performance. There are no existing
defaults, and no events or circumstances have occurred which, with or without
notice or lapse of time or both, would constitute defaults, under any of the
UST Contracts. The execution, delivery and performance of this Agreement and
the Stockholder Agreements does not and will not, with respect to any UST
Contract: (i) constitute a default thereunder, (ii) require the consent of any
person or party, except for the Required UST Consents or (iii) affect the
continuation, validity and effectiveness thereof or the terms thereof.
5.12 Receivables. UST does not have any accounts receivable.
5.13 Intellectual Property. Set forth on Schedule 5.13 is a list
of all of the intellectual property rights that are owned or used by UST in
connection with the UST Business, including the following: (i) all trademarks,
service marks, trade names, logos and other designations and all
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registrations (the "UST Marks"), including the date of first use of each such
UST Mark, all United States, foreign and state registrations relating thereto,
and a list of all of the goods and services with respect to which each such UST
Mark is used, (ii) all copyrighted works and registrations therefor, (iii) all
inventions that are the subject of letters patent or applications therefor and
(iv) all confidential or proprietary processes, formulas, technical data and
other information that is of commercial value to the UST Business (collectively
the "UST Intellectual Property"). Each of the UST Marks has been in continuous
use since the date of first use set forth in Schedule 5.13, and each of the UST
Marks is now in use in interstate or intrastate commerce as specified on said
Schedule. UST is the record owner of each of the trademark registrations,
copyright registrations and patents listed on such Schedule, and all required
maintenance filings, tax payments, annuities and maintenance fee payments have
been timely completed with respect to each. Schedule 5.13 sets forth the
patent number, application number, application date and issue date with respect
to each payment and patent application. UST has not licensed any of the UST
Intellectual Property to any third party, and no third party has any right to
use any of the UST Intellectual Property. There are no claims or suits
challenging UST's ownership or right to use any of the UST Intellectual
Property, or alleging that any of the UST Intellectual Property infringes any
rights of any third parties, nor does there exist any basis therefor.
5.14 Major Suppliers and Customers. Each supplier of goods or
services to the UST Business to whom UST paid more than $100,000, in the
aggregate, during the 12 months ended on April 30, 1997, and each customer of
the UST Business who paid UST more than $100,000, in the aggregate, during such
period, is listed on Schedule 5.14, which Schedule reflects in each case the
amounts so paid. There exists no actual or threatened termination,
cancellation or limitation of, or any adverse modification or change in, the
business relationship of UST or its business with any customer or any group of
customers whose purchases are individually in the aggregate material to the
business of UST, or with any material supplier, and there exists no present
condition or state of facts or circumstances that would materially adversely
affect the assets, business, properties, operations or financial condition of
UST or prevent UST from conducting the UST Business after the consummation of
the transactions contemplated by this Agreement, in substantially the same
manner in which it has heretofore been conducted. UST has no reason to believe
that the execution, delivery and performance of this Agreement will have any
adverse effect on the business relationship of any such suppliers or customers
with the UST Business.
5.15 Litigation. There are no claims, actions, suits, arbitration
proceedings, inquiries, hearings, injunctions or investigations ("Claims")
pending, or to the best knowledge of UST, threatened, against UST, its
operations or the UST Business. No Claims have been brought within the last
two years against UST or the UST Business, or affecting the UST Assets, or
relating to UST's ownership, use or operation of the UST Assets. There are no
facts or circumstances which could serve as the basis for any Claim against UST
involving the UST Business or the UST Assets, or, by virtue of the execution,
delivery and performance of this Agreement, against ISD.
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5.16 Compliance with Decrees and Laws. There is no outstanding or,
to the best knowledge of UST, threatened, any order, writ, injunction or decree
of any court, governmental agency or arbitration tribunal against or involving
UST, the UST Business or the UST Assets. UST is currently, and has been at all
times in full compliance with all laws, statutes (including, without
limitation, the Federal Communications Act of 1934, as amended, and the rules
and regulations promulgated pursuant thereto), rules, regulations, orders and
licensing requirements ("Rules") of federal, state, local and foreign agencies
and authorities applicable to the business, properties and operations of the
UST Business (including, without limitation, those relating to antitrust and
trade regulation, civil rights, labor and discrimination, safety and health).
To the best knowledge of UST, there has been no allegation of any violation of
any such Rules, and no investigation or review by any federal, state or local
body or agency is pending, threatened or planned with respect to UST, the UST
Business or the UST Assets.
5.17 Permits. UST has obtained all permits, authorizations,
certificates, approvals, licenses, exemptions and classifications required for
the conduct of the UST Business and the ownership and operation of the UST
Assets, all of which are described on Schedule 5.17 (the "UST Permits"). UST
is not in violation of any of the UST Permits, and no proceedings are pending
or, to the best knowledge of UST, threatened, to revoke or limit any UST
Permit.
5.18 Taxes. UST has properly completed, duly and timely filed in
correct form with the appropriate United States, state and local governmental
agencies and with the appropriate foreign countries and political subdivisions
thereof, all tax returns, reports and declarations of estimated tax (the "UST
Tax Returns") required to be filed before the Effective Time. All UST Tax
Returns are accurate, complete and correct as filed, and UST has paid in full
or made adequate provision in its financial statements for all amounts shown to
be due thereon. All United States, state and local income, profits, franchise,
sales, use, occupancy, property, severance, excise, value added, withholding
and other taxes, and all taxes owing to any foreign countries and political
subdivisions thereof (including, without limitation, interest, penalties and
any additions to tax) ("Taxes") due from or claimed to be due by each taxing
authority in respect of UST, the UST Business or the UST Assets, for all
periods through the date of this Agreement, have been, and for all periods
through the Effective Time will be, fully paid or adequately provided for in
the financial statements of UST. UST has timely made and will timely make all
withholdings of tax required to be made under all applicable United States,
state and local tax regulations, and such withholdings have either been paid or
will be paid to the respective governmental agencies or set aside in accounts
for such purpose or accrued, reserved against and entered upon the books of
UST. Estimated income taxes which are not yet due to be paid to the Internal
Revenue Service or any state or local taxing authoirty have been accrued,
reserved against and entered upon the books of UST. All UST Tax Returns
required to be filed after the date hereof by UST, shall, in each case, be
prepared and filed by UST in a manner consistent in all respects (including,
without limitation, elections and accounting methods and conventions) with such
UST Tax Return most recently filed by UST, in the relevant jurisdiction prior
to the date hereof, except as otherwise required by law or regulation or agreed
to by ISD. If any such UST Tax Return required to be filed after the date
hereof shall reflect any new elections or the adoption of any new accounting
methods or conventions or other similar items, the reflection or adoption of
any such items shall, except to the extent such particular reflection or
adoption is
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required to comply with any law or regulation, be subject to the prior written
approval of ISD. All deficiencies asserted as a result of any examinations of
the UST Tax Returns have been paid or adequately provided for in the UST
Financial Statements, and no issue has been raised by a taxing authority in any
such examination which, if raised with regard to any other period not so
examined, would be expected to result in a proposed deficiency for any other
period not so examined. UST will not have any liability, either in its own
right or as a transferee, for Taxes in excess of the amount paid or reserved
for any period prior to the Closing. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any UST Tax
Return, or the period for assessment or collection of any Taxes. UST is not a
party to any pending action or proceeding, nor to the best knowledge of UST, is
there threatened any action or proceeding, by any governmental authority for
assessment or collection of taxes, and UST has not been notified by any
governmental authority that an audit or review of any tax matter is
contemplated. There are no tax liens (other than liens for taxes for current
and subsequent years which are not yet due and payable) upon any of the UST
Assets. UST has not ever been a member of any affiliated group of corporations
filing a consolidated federal or state income tax return. UST has not agreed,
nor is it required, to make any adjustment under Section 481(a) of the Code, by
reason of a change in accounting method or otherwise. UST has not consented to
the application to it of Section 341 (f)(2) of the Code.
5.19 Environmental Protection. The existing and prior uses of the
UST Assets and the operation of the UST Business comply with, and at all times
have complied with, and UST is not in violation of, and have not violated, in
connection with the ownership, use, maintenance or operation of the UST Assets
and the operation of the UST Business, any applicable federal, state, county or
local statues, laws, regulations, rules, ordinances, codes, licenses or permits
of any governmental authorities relating to environmental matters, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act as amended, the Resource Conservation Recovery Act as amended,
the Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act,
the Toxic Substances Control Act, and "Superfund" or "Superlien" law, the North
Carolina Oil Pollution and Hazardous Substances Control Act of 1978, or any
other federal, state or local statue, law, ordinance, code, rule, regulation,
order, decree or guideline (whether published or unpublished) regulating,
relating to or imposing liability or standards of conduct concerning any
petroleum, petroleum by-product (including but not limited to crude oil, diesel
oil, fuel oil, gasoline, lubrication oil, oil refuse, oil mixed with other
waste, oil sludge, and all other liquid hydrocarbons, regardless of specific
gravity), natural or synthetic gas, hazardous substance or materials, toxic or
dangerous waste, substance or material, pollutant or contaminant (collectively
"Environmental Laws"). Specifically, but not in limitation of the foregoing:
(a) UST has obtained and is in full compliance with the
terms and provisions of all licenses and permits necessary for
compliance with the Environmental Laws with respect to the UST
Business, all of which are listed on Schedule 5.17;
(b) The UST Assets are free of asbestos containing
materials ("ACM's"), and are free of Hazardous Materials except for
current inventories of gasoline, diesel fuel, fuel oil greases, motor
oils and other lubricants. As used in this Agreement, "Hazardous
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Material" means and includes asbestos, ACM's, polychlorinated
biphenyls, lead-based paints, any petroleum product, petroleum
by-products (including but not limited to crude oil or any fraction of
it, diesel oil, fuel oil, gasoline, lubrication oil, oil refuse, oil
mixed with other wastes, oil sludge and all other liquid hydrocarbons,
regardless of specific gravity), natural or synthetic gas products
and/or hazardous substance or materials, waste, pollutant or
contaminant, and all other material defined as such in (or for the
purposes of) the Environmental Laws.
(c) UST and its predecessors in interest have operated
the UST Assets and have at all times received, handled, used, stored,
treated and disposed of all Hazardous Materials, in strict compliance
with all Environmental Laws. UST has not transported or arranged for
the transport of any Hazardous Materials to or from any real property
included in the UST Leased Real Property.
(d) No Hazardous Material has been released, deposited,
discharged, placed, disposed of or originated on or under the UST
Assets, nor has any real estate included in the UST Leased Real
Property been used at any time by any person as a landfill or a waste
disposal site.
(e) There is no electrical equipment, including
transformers, containing polychlorinated biphenyls ("PCBs") included
in the UST Assets.
(f) There are no monitoring wells on any real property
included in the Leased Real Property for monitoring any Hazardous
Materials.
(g) There are no underground or above-ground tanks
situated on the real property included in the UST Leased Real
Property.
(h) There are no liens on any of the UST Assets resulting
from any cleanup or proposed cleanup under the Environmental Laws.
(i) No part of the real estate included in the UST Leased
Real Property constitutes "wetlands" as defined under any
Environmental Law or other law or regulation.
(j) No Environmental Law, and to the best of UST's
knowledge, no proposed Environmental Law, imposes standards or
requirements, or will impose standards or requirements, which will
require the owner or operator of the UST Business to engage in any
work, repairs, construction or capital expenditures in excess of
$5,000 in the aggregate in order to comply with such Environmental Law
or such proposed Environmental Law.
(k) No notices of any violation, inquiries or requests
for information relating to any of the matters referred to in
Subsections (a) through (k) above relating to the UST Assets, the UST
Leased Real Property or their use have been received by UST.
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5.20 Insurance. Schedule 5.20 describes all insurance policies
maintained by UST with respect to the UST Business and the UST Assets. Such
policies are valid, binding and enforceable in accordance with their terms, are
in full force and effect, and all premiums due thereon have been paid and will
be paid through the Effective Time. Such policies provide adequate coverage for
all risks customarily insured against by insured of similar size and in similar
business. UST has not been refused any insurance by any insurance carrier
during the past two years.
5.21 Labor and Employment Matters. With respect to employment
matters:
(a) No employees of UST who work in the UST Business are
or have been represented by a union or other labor organization or covered by
any collective bargaining agreement, and to the best knowledge of UST, no union
is attempting to organize any such employees.
(b) There is no labor strike, dispute, slowdown, stoppage
or similar labor difficulty pending or, to the best knowledge of UST,
threatened against or affecting UST or the UST Business, nor have there been
any such events pending or threatened since December 31, 1996.
(c) UST is in compliance with all federal, state and
local laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours, and there is no unfair
labor practice complaint against UST pending or, to the best knowledge of UST,
threatened.
(d) No representations have been made by UST or its
employees or agents to employees of Seller with respect to ISD's intentions to
employ, or not to employ, UST's employees or with respect to the conditions of
any such employment.
5.22 Employees; Compensation; Benefit Plans.
(a) Compensation. UST has previously given to ISD a
complete and correct list of the name, age, position, rate of compensation and
any incentive compensation arrangements, bonuses or commissions or fringe or
other benefits, whether payable in cash or in kind, of each current employee,
director, independent contractor, consultant and agent of UST who is associated
with the UST Business and each other person to whom UST pays or provides, or
has an obligation, agreement (written or unwritten), policy or practice of
paying or providing, retirement, health, welfare or other benefits of any kind
or description whatsoever.
(b) Employee Benefit Plans.
(i) Schedule 5.22 contains an accurate and
complete list of all Plans contributed to, maintained or sponsored by UST, to
which UST is obligated to contribute or with respect to which UST has any
liability or potential liability, whether direct or indirect, including,
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without limitation, all Plans contributed to, maintained or sponsored by each
member of the controlled group of companies, within the meaning of Sections
414(b), 414(c), and 414(m) of the Code, of which UST is a member to the extent
UST has any potential liability with respect to such Plans. For purposes of
this Agreement, the term "Plans" shall mean: (A) employee benefit plans as
defined in Section 3(3) of the ERISA, whether or not funded and whether or not
terminated, (B) employment agreements, and (C) personnel policies or fringe
benefit plans, policies, programs and arrangements, whether or not subject to
ERISA, whether or not funded, and whether or not terminated, including without
limitation, stock bonus, deferred compensation, pension, severance, bonus,
vacation, travel, incentive, and health, disability and welfare plans.
(ii) Except as disclosed in Schedule 5.22, UST
does not contribute to, has no obligation to contribute to or otherwise has no
liability or potential liability with respect to (A) any Multiemployer Plan (as
such term is defined in Section 3(37) of ERISA), (B) any Plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413 of the Code (and
regulations promulgated thereunder), or (C) any plan which provides health,
life insurance, accident or other "welfare-type" benefits to current or future
retirees or current former employees, their spouses or dependents, other than
in accordance with Section 4980B of the Code or applicable state continuation
coverage law.
(iii) Except as disclosed in Schedule 5.22, none of
the Plans obligates UST to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by
this Agreement or solely as a result of a "change in control," as such term is
used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan and all related trusts, insurance
contracts, and funds have been maintained, funded and administered in
compliance in all respects with all applicable laws and regulations, including
but not limited to ERISA and the Code. None of UST, any trustee or
administrator of any Plan, or any other person has engaged in any transaction
with respect to any Plan which could subject UST, or any trustee or
administrator of any Plan, or any party dealing with any Plan, or ISD to any
tax or penalty imposed by ERISA or the Code. No actions, suits, claims,
complaints, charges, proceedings, hearings, investigations, or demands with
respect to the Plans (other than routine claims for benefits) are pending or
threatened, and UST has no knowledge of any facts which could give rise to or
be expected to give rise to any actions, suits, claims, complaints, charges,
proceedings, hearings, investigations, or demands. No Plan that is subject to
the funding requirements of Section 412 of the Code or Section 302 of ERISA has
incurred any "accumulated funding deficiency" as such term is defined in such
Sections of ERISA and the Code, whether or not waived. No liability to PBGC
(except for routine payment of premiums) has been or is expected to be incurred
with respect to any Plan that is subject to Title IV of ERISA, no reportable
event (as such term is defined in Section 4043 of ERISA) has occurred with
respect to any such Plan, and the PBGC has not commenced or threatened the
termination of any Plan. None of the assets of UST is the subject of any lien
arising under Section 302(f) or ERISA or Section 412(n) of the Code, UST has
not been required to post any security pursuant to Section 307 of ERISA or
Section 401 (a)(29) of the Code, and UST has no knowledge of any facts which
could be expected to give rise to such lien or such posting of security.
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(v) Each Plan that is intended to be qualified
under Section 401(a) of the Code, and each trust (if any) forming a part
thereof, has received a favorable determination letter from the Internal
Revenue Service as to the qualification under the Code of such Plan and the tax
exempt status of such related trust, and nothing has occurred since the date of
such determination letter that could adversely affect the qualification of such
Plan or the tax exempt status of such related trust.
(vi) No underfunded "defined benefit plan" (as
such term is defined in Section 3(35) of ERISA) has been, during the five years
preceding the Closing Date, transferred out of the controlled group of
companies (within the meaning of Sections 414(b), (c) and (m) of the Code) of
which UST is a member or was a member during such five-year period.
(vii) As of the Closing Date, the fair market value
of the assets of each Plan that is a defined benefit pension plan equals or
exceeds the present value of all vested and non-vested liabilities thereunder
determined in accordance with applicable PBGC methods, factors and assumptions
applicable to a defined benefit pension plan terminating on such date. With
respect to each Plan that is subject to the funding requirements of Section 412
of the Code and Section 302 of ERISA, all required or recommended contributions
for all periods ending prior to or as of the Closing Date (including periods
from the first day of the then-current plan year to the Closing Date and
including all quarterly contributions required in accordance with Section
412(m) of the Code) shall have been made. With respect to each other Plan, all
required or recommended payments, premiums, contributions, reimbursements or
accruals for all periods ending prior to or as of the Closing Date shall have
been made. No Plan has any material unfunded liabilities.
(viii) With respect to each Plan, UST has provided
ISD with true, complete and correct copies, to the extent applicable, of (A)
all documents pursuant to which the Plans are maintained, funded and
administered, (B) the two most recent annual reports (Form 5500 series) filed
with the Internal Revenue Service (with attachments), (C) the two most recent
actuarial reports, (D) the two most recent financial statements, (E) all
governmental rulings, determinations, and opinions (and pending requests for
governmental rulings, determinations, and opinions), and (F) the most recent
valuation (but in any case at least one that has been completed within the last
calendar year) of the present and future obligations under each Plan that
provides post-retirement or post-employment health, life insurance, accident or
other "welfare-type" benefits.
5.23 Absence of Certain Changes. Except as described in Schedule
5.23, since April 30, 1997, UST has conducted the operations and business of
the UST Business only in the ordinary course, and has not:
(a) Suffered any damage, destruction or loss to any asset
of the UST Business, whether or not covered by insurance;
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(b) Sold, transferred, distributed or otherwise disposed
of any assets used in the operation of the UST Business;
(c) Made or entered into any general wage or salary
increase for its employees as a group;
(d) Declared, made or paid any distribution or dividend
to the Stockholders;
(e) Amended or terminated any contract, lease, license or
commitment relating to the conduct of the UST Business or the UST Assets;
(f) Incurred any obligation or liability (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
except normal trade or business obligations incurred in the ordinary course of
business;
(g) Introduced any new method of management, operations
or accounting;
(h) Suffered any adverse change in the condition
(financial or otherwise), results of operations or business of the UST Business
or the UST Assets, or any other event or condition of any character that might
reasonably be expected to have an adverse effect on the UST Business or the UST
Assets; or
(i) Agreed, whether in writing or otherwise, to take any
action described in this Section.
5.24 Product Warranties. There are no continuing or outstanding
warranties applicable to goods or products manufactured or sold by UST except
for warranties implied by law, with which all such products are in conformity.
5.25 Brokers. No finder, broker, agent or other intermediary has
acted for or on behalf of UST in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from UST.
5.26 Disclosure. No representation, warranty or statement made by
UST in this Agreement, or any document furnished or to be furnished to ISD
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary to
make the statements contained herein or therein not misleading. The fact that
UST has delivered copies of certain documents to ISD shall not alone constitute
disclosure of facts required to be disclosed on any Schedule to this Agreement,
unless such document is expressly referenced in such Schedule. Receipt by ISD
of such documents and notice of their contents (other than by reference on a
Schedule) shall in no way limit UST's other obligations or ISD's other rights
under this Agreement.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ISD
ISD represents and warrants to the Stockholders, and UST as follows:
6.1 Organization and Good Standing. ISD is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Prior to the Effective date, ISD has not, and will not, conduct any
significant activities other than those incident to its formation and the
consummation of the transactions contemplated by this Agreement.
6.2 Authority. ISD has all requisite power and authority to
execute, deliver and perform this Agreement and the ISD Agreements and
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the ISD Agreements, and the consummation of
the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of ISD. This Agreement
and the ISD Agreements, have been, or, with respect to ISD Agreements to be
executed at the Closing, will be duly executed and delivered by ISD and each
constitutes, or will constitute when executed and delivered, a valid and
binding obligation of ISD, enforceable against ISD in accordance with its
terms.
6.3 Capital Stock and Shares of ISD Stock. The shares of ISD
Common Stock to be issued to the Stockholders at the Closing will, upon
issuance, be duly authorized and validly issued, fully paid and nonassessable.
Except as provided in the Stockholders' Agreement, the shares of ISD Common
Stock to be issued to the Stockholders at the Closing will, upon issuance, be
free and clear of any liens, encumbrances, claims, security interests,
restrictions or pledges of any nature.
The authorized capital stock of ISD (which has the rights and
preferences set forth in the Certificate of Amendment to the Certificate of
Incorporation of ISD which will be filed with the Delaware Secretary of State
at the Closing, a true and correct copy of which is attached as Schedule 6.3(a)
(the "Certificate of Amendment")), after giving effect to the issuance of the
shares of ISD Common Stock to the Members and the transactions contemplated by
the Whitney and Kitty Hawk contributions and transfers and the US Towers
contribution and transfer, consists of 12,000,000 shares of ISD Common Stock,
of which 1,340,517 shares are issued and outstanding, and 5,680,000 shares of
preferred stock, par value $0.001, of ISD (the "Preferred Stock"), 5,680,000
shares of which have been designated as 8% Series A Cumulative Convertible
Redeemable Preferred Stock, par value $0.001 per share (the "Series A Stock"),
of which 3,462,830 shares (the "Shares") are issued and outstanding. After
giving effect to the issuance of the shares of ISD Common Stock to the Members
and the transactions contemplated by the Whitney and Kitty Hawk contributions
and transfers and the US Towers contribution and transfer, (a) 3,462,830 shares
of Common Stock have been reserved by appropriate corporate action for issuance
upon conversion of the Shares, (b) 2,217,170 shares of Series A Stock have been
reserved for issuance, which shares may be issued by ISD, at its election, as
payment-in-kind dividends on the Series A Stock, in accordance with the terms
of the Certificate of Amendment, (c) 2,217,170 shares of Common Stock have been
reserved for issuance upon
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conversion of the Series A Stock described in clause (b) hereof, (d) 967,700
shares of Common Stock have been reserved for issuance upon the exercise of
stock options issuable under one or more stock option plans of ISD, which plans
shall have been approved by the Board of Directors of ISD, and (e) 150,000
shares of Common Stock have been reserved for issuance upon the exercise of the
ISD Warrant.
6.4 No Conflict or Breach. The execution, delivery and
performance of this Agreement and the ISD Agreements do not and will not: (a)
conflict with or constitute a violation of the Certificate of Incorporation or
Bylaws of ISD or (b) conflict with or constitute a violation of any statute,
judgment, order, decree or regulation of any court, administrative agency,
governmental authority or arbitrator applicable to or relating to ISD.
6.5 Governmental Approvals. No consent, approval, authorization,
registration or filing with any federal, state or local judicial or
governmental authority or administrative agency is required in connection with
the valid execution and delivery by ISD of this Agreement and the ISD
Agreements or the consummation by ISD of the transactions contemplated herein
or therein.
6.6 Brokers. No finder, broker, agent or other intermediary has
acted for or on behalf of ISD in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from ISD.
ARTICLE VII
COVENANTS OF STOCKHOLDERS AND UST
The Stockholders and UST covenant and agree with ISD as follows:
7.1 Conduct of Business. Between the date of this Agreement and
the Effective Time, the Stockholders and UST shall except as otherwise
specifically consented to in writing by ISD:
(a) Conduct the operations of the UST Business in the
normal and customary manner in the ordinary course of business;
(b) Maintain and keep the tangible UST Assets, and any
tangible assets leased under leases by UST, in good operating order, repair and
condition ordinary wear and tear excepted;
(c) Keep in full force and effect the insurance described
in Sections 5.20;
(d) Perform all of its obligations under all UST
Contracts and UST Real Property Leases, and not amend, alter or modify any
provision thereof;
(e) Use its best efforts to preserve UST's organization
intact and maintain their relationships with their employees, suppliers and
customers;
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(f) Promptly advise ISD of any adverse change in the
condition (financial or otherwise) of the UST Business and the UST Assets;
(g) Promptly advise ISD of the occurrence of any event or
circumstance which affects the consummation of the transactions contemplated by
this Agreement or which, if in existence on the date of this Agreement, would
have been required to have been disclosed in a Schedule to this Agreement;
(h) Not create or permit to exist any security interest,
mortgage, pledge, lien, charge, encumbrance or adverse claim of any kind or
nature with respect to any of the UST Assets, except for the UST Liens, all of
which will be removed at or prior to the Closing;
(i) Not sell or dispose of any UST Assets, except in the
ordinary course of business;
(j) Promptly advise ISD of any change in the list of
employees referred to in Sections 5.21(a) or in the compensation payable to any
such employee;
(k) Not declare, make or pay any distribution or dividend
to the Stockholders; and
(l) Not make any capital improvement or expenditure.
7.2 Intellectual Property. Except as provided in Section 7.3
hereof, the Stockholders and UST and their consultants, professional
representatives and agents will not disclose to any Person the UST Intellectual
Property.
7.3 Access and Information. The Stockholders and UST will permit
ISD and its shareholders, partners, members, directors, managers, officers,
employees, consultants, professional representatives and agents (collectively,
"Representatives") full access during normal business hours to all the
properties, assets, books, records, agreements and other documents of UST. The
Stockholders and UST will furnish to ISD and its Representatives all
information concerning UST as ISD may request. The Stockholders and UST will
permit and facilitate communications between ISD and UST's suppliers,
customers, and other persons having relationships with the UST Business.
7.4 No Other Solicitations. Until the earlier of the Closing Date
or the termination of this Agreement, the Stockholders and UST and their
respective Representatives will not directly or indirectly initiate contact
with or solicit or encourage any inquiries or proposal from, or solicit,
initiate, encourage or participate in any discussion or negotiations with, or
provide any confidential information to, any corporation, partnership, person
or other entity or group (other than ISD and Whitney and their Representatives)
in connection with any possible proposal regarding a sale of the UST Stock, or
a sale of all or a substantial portion of the assets of UST, a
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merger of UST with or into any other corporation, or any equity transaction
similar to any of the foregoing.
ARTICLE VIII
MUTUAL COVENANTS
Each of ISD, the Stockholders and UST covenants and agrees with the
other as follows:
8.1 Best Efforts. Each of ISD, the Stockholders and UST will use
its best efforts to make or obtain all consents, approvals, authorizations,
registrations and filings with all federal, state or local judicial or
governmental authorities or administrative agencies as are required in
connection with the consummation of the transactions contemplated by this
Agreement In addition, each of the Stockholders and UST will use its best
efforts to obtain as promptly as possible all other UST Required Consents.
8.2 Confidentiality. In recognition of the confidential nature of
certain of the information which will be provided to any party by the other
parties, each of ISD, the Stockholders, and UST agrees to retain in confidence,
and to require its Representatives to retain in confidence all information
transmitted or disclosed to it by any other party, and further agrees that it
will not use for its own benefit and will not use or disclose to any third
party, or permit the use or disclosure to any third party of, any information
obtained from or revealed by any other party, except that each of ISD, the
Stockholders, and UST may disclose the information to those of its
Representatives who need the information for the proper performance of their
assigned duties with respect to the consummation of the transactions
contemplated hereby. In making such information available to its
Representatives, each of ISD, the Stockholders, and UST will take any and all
precautions necessary to ensure that its Representatives use the information
only as permitted hereby. Notwithstanding anything to the contrary in the
foregoing provisions, such information may be disclosed: (a) where it is
necessary to any regulatory authorities or governmental agencies, (b) if it is
required by court order or decree or applicable law, (c) if it is ascertainable
or obtained from public or published information, (d) if it is received from a
third party not known to the recipient to be under an obligation to keep such
information confidential or (e) if the recipient can demonstrate that such
information was in its possession prior to disclosure thereof in connection
with this Agreement. If any party is required to make disclosure of any such
information by operation of law, such disclosing party will give the other
parties prior notice of the making of such disclosure and will use all
reasonable efforts to afford such other parties an opportunity to contest the
making of such disclosure. In the event that the Closing does not occur, each
of ISD, the Stockholders, and UST will immediately deliver, or cause to be
delivered, to the other (without retaining any copies thereof) any and all
documents, statements or other written information obtained from the other that
contain confidential information.
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ARTICLE IX
CONDITIONS PRECEDENT TO ISD's OBLIGATIONS
The obligations of ISD to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of the following conditions on
or before the Closing Date, unless specifically waived in writing by ISD prior
to the Closing Date:
9.1 Representations and Warranties. The representations and
warranties of each of the Stockholders and UST contained in this Agreement
shall have been true and correct on the date of this Agreement and shall be
true and correct on the Closing Date as though made on and as of the Closing
Date.
9.2 Compliance with Covenants. Each of the Stockholders, and UST
shall have duly performed and complied with all covenants, agreements and
obligations required by this Agreement to be performed or complied with by it
on or prior to the Closing.
9.3 Absence of Litigation. No action or proceeding shall be
pending or, in the reasonable opinion of ISD, threatened by or before any court
or other governmental body or agency seeking to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which would
adversely affect the right of ISD to operate or control the UST Business after
the Closing Date.
9.4 Absence of Changes. Between the date of this Agreement and
the Closing, no material adverse change shall have occurred in the business,
operations or financial or other condition of the UST Business or the UST
Assets, nor shall there have occurred any casualty loss or destruction of, or
damage to, any of the UST Assets.
9.5 Consents and Approvals. All: (a) UST Consents, (b) licenses,
(c) other orders or notifications of, or registrations, declarations or filings
with, or expiration of waiting periods imposed by, any applicable governmental
or judicial authority and (d) consents, approvals, authorizations or
notifications of any other third parties, all as required in connection with
consummation of the transactions contemplated by this Agreement, shall have
been made or obtained or shall have occurred.
9.6 Removal of Liens. All UST Liens shall have been removed, and
the Stockholders, and UST shall have provided evidence satisfactory to ISD of
such removal.
9.7 Whitney and Kitty Hawk Contribution and Transfer. ISD,
Whitney and Kitty Hawk shall have simultaneously consummated Tranche A of
Whitney's contribution and transfer to ISD pursuant to Section 351 of the Code
and in accordance with the Whitney Letter of Intent and such other agreements
between Whitney and Kitty Hawk.
9.8 Telesite and Metrosite Contribution and Transfer. The Finley
Group shall have contributed their membership interests of Telesite and
Metrosite to ISD in exchange for shares of
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ISD Common Stock and other consideration pursuant to Section 351 of the Code
and upon such terms and conditions as may be acceptable to The Finley Group and
ISD in their sole discretion.
9.9 Stockholders' Agreement. Each of the Stockholders shall have
executed and delivered the Stockholders' Agreement.
9.10 PCX Settlement and Release. The Stockholders, UST, PCX and
its stockholders shall have executed and delivered the Release and Settlement
Agreement in substantially the form attached hereto as Exhibit D.
9.11 Exchange of UST Warrant. PCX shall have simultaneously
exchanged the UST Warrant for the ISD Warrant.
ARTICLE X
CONDITIONS PRECEDENT TO STOCKHOLDERS' AND UST'S OBLIGATIONS
The obligations of the Stockholders and UST to consummate the
transaction contemplated by this Agreement are subject to the satisfaction of
each of the following conditions on or before the Closing Date, unless
specifically waived in writing by the Stockholders and UST prior to the
Closing:
10.1 Representations and Warranties. The representations and
warranties of ISD contained in this Agreement shall have been true and correct
on the date of this Agreement, and shall be true and correct on the Closing
Date as through made on and as of the Closing Date.
10.2 Compliance with Covenants. ISD shall have duly performed and
complied with all covenants, agreements and obligations required by this
Agreement to be performed or complied with by it on or before the Closing Date.
10.3 Absence of Litigation. No action or proceeding shall be
pending by or before any court or other governmental body or agency seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
10.4 Consents and Approvals. All UST Required Consents shall have
been obtained prior to or at the Closing.
10.5 Whitney and Kitty Hawk Contribution and Transfer. ISD,
Whitney and Kitty Hawk shall have simultaneously consummated Tranche A of
Whitney's contribution and transfer to ISD pursuant to Section 351 of the Code
and in accordance with the Whitney Letter of Intent and such other agreements
between Whitney and Kitty Hawk.
10.6 Telesite and Metrosite Contribution and Transfer. The Finley
Group shall have contributed their membership interests of Telesite and
Metrosite to ISD in exchange for shares of
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ISD Common Stock and other consideration pursuant to Section 351 of the Code
and upon such terms and conditions as may be acceptable to The Finley Group and
ISD in their sole discretion.
10.7 PCX Settlement and Release The Stockholders, UST, PCX and its
stockholders shall have executed and delivered the Release and Settlement
Agreement in substantially the form attached hereto as Exhibit D.
10.8 Exchange of UST Warrant. PCX shall have simultaneously
exchanged the UST Warrant for the ISD Warrant.
ARTICLE XI
CLOSING
11.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Hutchison & Mason
PLLC, in Raleigh, North Carolina at 10:00 am., local time, on May 12, 1997, or
such other date as may be mutually agreed upon by the parties hereto; provided,
however, as follows: (a) if one or more conditions to this Agreement is not
satisfied by such date, the party benefiting from such condition may elect, in
its sole discretion, one or more postponements of the Closing for the purpose
of enabling such condition to be satisfied and (b) notwithstanding the
provisions of the preceding clause (a), in no event may the Closing be
postponed beyond May 31, 1997. The date of the Closing is referred to as the
"Closing Date." For the purposes of passage of title and risk of loss,
allocation of expenses, adjustments and other economic or financial effects of
the transactions contemplated hereby, the Closing when completed shall be
deemed to have occurred at 12:01 am., local time, on the Closing Date (the
"Effective Time").
11.2 Deliveries by Stockholders and UST. At the Closing, the
Stockholders and UST shall deliver or cause to be delivered to ISD the
following:
(a) A certificate of the President of UST confirming the
satisfaction of the conditions set forth in Sections 9.1 and 9.2 hereof as to
representations, warranties and covenants of the Stockholders and UST and
Section 9.4 hereof as to absence of changes.
(b) A copy of all resolutions of UST authorizing the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated herein, accompanied by the certification of the
Secretary of UST to the effect that such resolutions are in full force and
effect and have not been amended, modified or rescinded.
(c) A Good Standing Certificate from the Secretary of
State of Delaware for UST.
(d) Evidence of the removal of UST Liens, as described in
Section 9.6.
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(e) Evidence of that all UST Required Consents have been
obtained or satisfied.
(f) Certificates, duly endorsed for transfer evidencing
the UST Stock;
(g) Such other documents and instruments as ISD may
reasonably request to effect and evidence the consummation of the transaction
contemplated by this Agreement.
11.3 Deliveries by ISD. At the Closing, ISD will deliver or cause
to be delivered the Stockholders the following:
(a) A certificate of the President of ISD confirming the
satisfaction of the conditions set forth in Sections 10.1 and 10.2 as to
representations, warranties and covenants of ISD.
(b) A copy of all corporate resolutions authorizing the
execution, delivery and performance of this, and the consummation of the
transactions contemplated herein, accompanied by the certification of the
Secretary of ISD to the effect that such resolutions are in full force and
effect and have not been amended, modified or rescinded.
(c) Certificates evidencing the shares of ISD Common
Stock to be issued to the Stockholders pursuant to this Agreement.
(d) Such other documents and instruments as any of the
Stockholders or UST may reasonably request to effect and evidence the
consummation of the transactions contemplated by this Agreement.
11.4 Further Assurances. The Stockholders will, at any time on or
after the Closing Date, take all actions requested by ISD effect and evidence
the transfer to and reduction to possession of Buyer, or its successors or
assigns, of the UST Interests.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification by Stockholders and UST.
(a) In addition to all other sums due hereunder or
provided for in this Agreement, the Stockholders and UST jointly and severally
agree to indemnify and hold harmless ISD and its Affiliates and each of their
respective officers, directors, agents, employees, subsidiaries, partners,
attorneys, accountants and controlling persons (each, an "ISD Indemnified
Party") to the fullest extent permitted by law from and against any and all
losses, claims, damages, expenses (including, without limitation, reasonable
fees, disbursements and other charges of counsel incurred by an ISD Indemnified
Party in any action or proceeding between either of the Stockholders or UST and
such ISD Indemnified Party (or ISD Indemnified Parties)
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<PAGE> 26
or between an ISD Indemnified Party (or ISD Indemnified Parties) and any third
party or otherwise) or other liabilities, losses, or diminution in value
(collectively, "Loss") resulting from or arising out of any breach of any
representation or warranty, covenant or agreement of any of the Stockholders or
UST in this Agreement or in any Stockholder Agreement, including, without
limitation, the failure to make payment when due of amounts owing pursuant to
this Agreement or any Stockholder Agreement, on the due date thereof (whether
at the scheduled maturity, by acceleration or otherwise) or any legal,
administrative or other actions (including actions brought by ISD or UST or any
equity holders of UST or derivative actions brought by any Person claiming
through or in UST's name), proceedings or investigations (whether formal or
informal), or written threats thereof, based upon, relating to or arising out
of this Agreement or any Member Agreement, the transactions contemplated hereby
or thereby, or any ISD Indemnified Party's role therein or in the transactions
contemplated thereby any and all liabilities and obligations of the
Stockholders, and UST, of any kind or nature whatsoever, whether accrued,
absolute, contingent or otherwise, known or unknown, that are not set forth on
the UST Financial Statements; or the Stockholder's ownership and operation of
the UST Business prior to the Closing Date; provided, however, that none of the
Stockholders or UST shall be liable under this Section 12.1 to an ISD
Indemnified Party: (a) for any amount paid by the ISD Indemnified Party in
settlement of claims by the ISD Indemnified Party without the consent of the
Stockholders (which consent shall not be unreasonably withheld), (b) to the
extent that it is finally judicially determined that such Loss resulted
primarily from the willful misconduct or gross negligence of such ISD
Indemnified Party or (c) to the extent that it is finally judicially determined
that such Loss resulted primarily from the breach by such ISD Indemnified Party
of any representation, warranty, covenant or other agreement of such ISD
Indemnified Party contained in this Agreement or any ISD Agreement; provided,
further, that if and to the extent that such indemnification is unenforceable
for any reason, the Stockholders and UST will make the maximum contribution to
the payment and satisfaction of such Loss which shall be permissible under
applicable laws. In connection with the obligation of the Stockholders and UST
to indemnify for expenses as set forth above, the Stockholders and UST further
jointly and severally agree, upon presentation of appropriate invoices
containing reasonable detail, to reimburse each ISD Indemnified Party for all
such expenses (including, without limitation, fees, disbursements and other
charges of counsel incurred by an ISD Indemnified Party in any action or
proceeding between ISD and such ISD Indemnified Party (or ISD Indemnified
Parties) or between an ISD Indemnified Party (or ISD Indemnified Parties) and
any third party or otherwise) as they are incurred by such ISD Indemnified
Party; provided, however, that if an ISD Indemnified Party is reimbursed
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is finally judicially determined that the Loss in question
resulted primarily from (i) the willful misconduct or gross negligence of such
ISD Indemnified party or (ii) the breach by such ISD Indemnified Party of any
representation, warranty, covenant or other agreement of such ISD Indemnified
Party contained in this Agreement or any ISD Agreement.
(b) Notwithstanding the foregoing, from and after the
Closing Date, the Stockholders will be primarily responsible for the
obligations under this Article XII and will have no right of contribution or
other rights against UST with respect to such obligations.
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12.2 Indemnification by ISD. In addition to all other sums due
hereunder or provided for in this Agreement, ISD agrees to indemnify and hold
harmless the Stockholders to the fullest extent permitted by law from and
against any and all losses, claims, damages, expenses (including, without
limitation, reasonable fees, disbursements and other charges of counsel
incurred by the Stockholders in any action or proceeding between ISD and the
Stockholders or between the Stockholders and any third party or otherwise) or
other liabilities, losses, or diminution in value (collectively, "Loss")
resulting from or arising out of any breach of any representation or warranty,
covenant or agreement of ISD in this Agreement or in any ISD Agreement,
including, without limitation, the failure to make payment when due of amounts
owing pursuant to this Agreement or any ISD Agreement, on the due date thereof
(whether at the scheduled maturity, by acceleration or otherwise) or any legal,
administrative or other actions (including actions brought by ISD, or any
equity holders of ISD or derivative actions brought by any Person claiming
through or in ISD's name), proceedings or investigations (whether formal or
informal), or written threats thereof, based upon, relating to or arising out
of this Agreement or any ISD Agreement, the transactions contemplated hereby or
thereby, or any Stockholder's role therein or in the transactions contemplated
thereby; provided, however, that ISD shall be liable under this Section 12.2 to
the Stockholders: (a) for any amount paid by the Stockholders in settlement of
claims by the Stockholders without the consent of ISD (which consent shall not
be unreasonably withheld), (b) to the extent that it is finally judicially
determined that such Loss resulted primarily from the willful misconduct or
gross negligence of the Stockholders or (c) to the extent that it is finally
judicially determined that such Loss resulted primarily from the breach by the
Stockholders of any representation, warranty, covenant or other agreement of
the Stockholders contained in this Agreement or any Stockholder Agreement;
provided, further, that if and to the extent that such indemnification is
unenforceable for any reason, ISD will make the maximum contribution to the
payment and satisfaction of such Loss which shall be permissible under
applicable laws. In connection with the obligation of ISD to indemnify for
expenses as set forth above, ISD further agrees, upon presentation of
appropriate invoices containing reasonable detail, to reimburse the
Stockholders for all such expenses (including, without limitation, fees,
disbursements and other charges of counsel incurred by the Stockholders in any
action or proceeding between ISD and the Stockholders or between the
Stockholders and any third party or otherwise) as they are incurred by the
Stockholders; provided, however, that if the Stockholders is reimbursed
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is finally judicially determined that the Loss in question
resulted primarily from (i) the willful misconduct or gross negligence of the
Stockholders or (ii) the breach by the Stockholders of any representation,
warranty, covenant or other agreement of the Stockholders contained in this
Agreement or any Stockholder Agreement.
12.3 Notification. Each party entitled to indemnification under
this Article XIII (an "Indemnified Party") will, promptly after the receipt of
notice of the commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of which indemnity may be
sought from any other party under this Article XIII (the "Indemnity Obligor"),
notify the Indemnity Obligor in writing of the commencement thereof. The
omission of any Indemnified Party so to notify the Indemnity Obligor of any
such action shall not relieve any Indemnity Obligor from any liability which it
may have to such Indemnified Party only to the extent that, such omission
results in the Indemnity Obligor's forfeiture of substantive rights
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<PAGE> 28
or defenses. In case any such action, claim or other proceeding shall be
brought against any Indemnified Party and it shall notify the Indemnity Obligor
of the commencement thereof, the Indemnity Obligor shall be entitled to assume
the defense thereof at their own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action,
claim or proceeding in which any Indemnity Obligor, on the one hand, and an
Indemnified Party, on the other hand, is, or is reasonably likely to become, a
part, such Indemnified Party shall have the right to employ separate counsel at
the Indemnity Obligor's expense and to control its own defense of such action,
claim or proceeding; if, in the reasonable opinion of counsel to such
Indemnified Party, a conflict or potential conflict exists between any
Indemnity Obligor, on the one hand, and such Indemnified Party, on the other
hand, that would make such separate representation advisable; provided,
however, that in no event shall the Indemnity Obligors be required to pay fees
and expenses under this Article XIII for more than one firm of attorneys in any
jurisdiction in any one legal action or group of related legal actions. The
Indemnity Obligors jointly and severally agree that they will not, without the
prior written consent of the Indemnified Parties, settle, compromise or consent
to the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated hereby (if any Indemnified
Party is a party thereto or has been actually threatened to be made a party
thereto) unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Party and each other Indemnified Party
from all liability arising or that may arise out of such claim, action or
proceeding. No Indemnity Obligor shall be liable for any settlement of any
claim, action or proceeding effected against an Indemnified Party without its
written consent, which consent shall not be unreasonably withheld. The rights
accorded to Indemnified Parties hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate agreement or
otherwise.
12.4 Other Remedies. The foregoing indemnification provisions are
in addition to, and not in derogation of, any statutory, equitable or common
law remedy any party may have as a result of a Loss.
ARTICLE XIII
TERMINATION
13.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of all of the parties
to this Agreement;
(b) By the Stockholders and UST (if they are not then in
breach of any term of this Agreement), if ISD: (i) fails to perform in any
material respect its agreements contained herein required to be performed on or
prior to the Closing Date or (ii) materially breaches any of its
representations or warranties contained herein, which failure or breach is not
cured within ten days after the Stockholders and UST have notified ISD of their
intent to terminate this Agreement pursuant to this subparagraph;
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<PAGE> 29
(c) By ISD (if ISD is not then in breach of any term of
this Agreement), if the Stockholders and UST (i) fail to perform in any
material respect its agreements contained herein required to be performed on or
prior to the Closing Date, or (ii) materially breaches any of its
representations or warranties contained herein , which failure or breach is not
cured within ten days after ISD has notified them of its intent to terminate
this Agreement pursuant to this subparagraph;
(d) By any of the parties, if there is any order, writ,
injunction or decree of any court or governmental or regulatory agency binding
on such party which prohibits or restrains such party from consummating the
transactions contemplated hereby; or
(e) By any of the parties, if the Closing has not
occurred by May 31, 1997, for any reason other than delay or nonperformance of
the party seeking such termination.
13.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligation of the parties hereunder, except
for the obligations under Sections 14.3 (with respect to expenses), 14.4 (with
respect to publicity) and 8.2 (with respect to confidentiality); provided,
however, that termination pursuant to subparagraphs (b) or (c) of Section 13.1
will not relieve the defaulting or breaching party from any liability to the
other party hereto. In the event of termination under subsection (c), ISD will
have the rights and remedies with respect to specific performance as set forth
in Section 14.15 hereof, in addition to any other remedies that may be
available at law or in equity.
ARTICLE XIV
MISCELLANEOUS
14.1 Survival of Representations. All representations and
warranties of the parties hereto contained in this Agreement or otherwise made
in writing in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the Closing hereunder.
14.2 Risk of Loss. The risk of loss, damage or condemnation of any
of the UST Assets from any cause whatsoever will be borne by the Stockholders
and UST at all times prior to the completion of the Closing. In the event of
any loss, damage or condemnation of any of the UST Assets prior to completion
of the Closing, ISD shall have the option, in its sole discretion, to:
(a) terminate this Agreement by written notice to the
Stockholders and UST;
(b) postpone the Closing for a period of up to five (5)
days to permit the Stockholders and UST to repair, replace or restore such UST
Assets to their prior condition; or
(c) proceed to close this Agreement and complete the
restoration and replacement of such damaged UST Assets after the Closing Date,
in which event the
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Stockholders and UST shall assign to ISD the right to receive all insurance
proceeds payable in connection with such damage.
14.3 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, whether or not the transactions contemplated by
this Agreement are consummated.
14.4 Publicity. Each of the parties agrees it will not make any
press releases or other announcements prior to the Closing with respect to the
transactions contemplated hereby, except as required by applicable law, without
the prior approval of the other parties.
14.5 Best Efforts. Each party hereto agrees to use its best
efforts to satisfy the conditions to the Closing set forth in this Agreement
and otherwise to consummate the transactions contemplated by this Agreement.
14.6 Notices. All notices, demands and other communications made
hereunder will be in writing and shall be given either by personal delivery, by
nationally recognized overnight courier (with charges prepaid) or by telecopy
(with telephone confirmation), and will be deemed to have been given or made
when personally delivered, the day following the date deposited with such
overnight courier service or when transmitted to telecopy machine and confirmed
by telephone, addressed to the respective parties at the following addresses
(or such other address for a party as shall be specified by like notice):
If to the Stockholders or UST:
US Towers, Inc.
Attention: Stephen H. Clark
1135 Kildaire Farm Road
Suite 200
Cary, North Carolina 27511
Telephone: (919) 550-2800
Telecopy: (919) 481-9255
With a copy (which shall not constitute notice) to:
Hutchison & Mason PLLC
Attention: Fred D. Hutchison, Esq.
4011 Westchase Boulevard, Suite 400
Raleigh, North Carolina 27607
Telephone: (919) 829-9600
Telecopy: (919) 829-9696
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If to ISD:
Integrated Site Development, Inc.
Attention: Stephen H. Clark
1135 Kildaire Farm Road
Suite 200
Cary, North Carolina 27511
Telephone: (919) 550-2800
Telecopy: (919) 481-9255
With a copy (which shall not constitute notice) to:
Hutchison & Mason PLLC
Attention: Fred D. Hutchison, Esq.
4011 Westchase Boulevard, Suite 400
Raleigh, North Carolina 27607
Telephone: (919) 829-9600
Telecopy: (919) 829-9696
14.7 Obligations of the Parties. All obligations of the
Stockholders and UST hereunder shall be joint and several.
14.8 Knowledge. All references to the knowledge of a party or to
facts known by a party means the actual knowledge of such party, if such party
is a natural person, and the actual knowledge of the Chairman, Chief Executive
Officer, President or Chief Financial Officer of such party, if such party is
not a natural person.
14.9 Governing Law. This agreement will be governed by the laws of
the State of Delaware without regard to its rules regarding choice of law.
14.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
14.11 Assignment. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interest or obligations
hereunder may be assigned by any of the parties hereto without the prior
written consent of all other parties hereto, and any purported assignment
without such consent shall be void.
14.12 Third Party Beneficiaries. None of the provisions of this
Agreement or any document contemplated hereby is intended to grant any right or
benefit to any person or entity which is not a party to this Agreement.
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14.13 Headings. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement.
14.14 Amendments. Any waiver, amendment, modification or supplement
of or to any term or condition of this Agreement will be effective only if in
writing and signed by all parties hereto, and the parties hereto waive the
right to amend the provisions of this Section orally.
14.15 Specific Performance. The Stockholders and UST acknowledge
that the UST Stock is unique and that if the Stockholders and UST fail to
consummate the transactions contemplated by this Agreement such failure will
cause irreparable harm to ISD for which there will be no adequate remedy at
law. Buyer shall be entitled, in addition to its other remedies at law or at
equity, to specific performance of this Agreement if the Stockholders and UST
will, without cause, refuse to consummate the transactions contemplated by this
Agreement.
14.16 Severability. In the event that any provision in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect, the remaining provisions of this Agreement will not be in any way
impaired, and the illegal, invalid or unenforceable provision shall be fully
severed from this Agreement and there will be automatically added in lieu
thereof a provision as similar in terms and intent to such severed provision as
may be legal, valid and enforceable.
14.17 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings between the parties with respect
to such subject matter.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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<PAGE> 33
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its duly authorized officer as of the date first
above written.
INTEGRATED SITE DEVELOPMENT, INC.
By: /s/ STEPHEN H. CLARK
----------------------------------
Stephen H. Clark
President
/s/ STEPHEN H. CLARK
--------------------------------------
Stephen H. Clark
/s/ ROBERT M. LONG
--------------------------------------
Robert M. Long
US TOWERS, INC.
By: /s/ STEPHEN H. CLARK
----------------------------------
President
32
<PAGE> 1
Exhibit 10.28
MEMBERSHIP INTERESTS CONTRIBUTION AGREEMENT
BY AND AMONG
INTEGRATED SITE DEVELOPMENT, INC.
AND
JOE L. FINLEY, III, CAROLINE M. FINLEY, FINLEY FAMILY LIMITED PARTNERSHIP,
THE CENTRAL ARKANSAS OPPORTUNITY FOUNDATION, TELESITE SERVICES, LLC AND
METROSITE MANAGEMENT, LLC
DATED
MAY 12, 1997
<PAGE> 2
MEMBERSHIP INTERESTS CONTRIBUTION AGREEMENT
THIS MEMBERSHIP INTERESTS CONTRIBUTION AGREEMENT (together with the
Schedules and Exhibits hereto, the "Agreement"), dated May 12, 1997, is
entered into by and among Integrated Site Development, Inc., a Delaware
corporation ("ISD"), and Joe L. Finley, III ("Finley"), Caroline M. Finley
("Caroline Finley") Finley Family Limited Partnership, an Arkansas limited
partnership (the "Partnership"), The Central Arkansas Opportunity
Foundation, a charitable trust organized under the laws of the State of
Arkansas ("CAOF") (Finely, the Partnership, and CAOF are collectively
referred to as, the "Members") and Telesite Services, LLC, an Arkansas
limited liability company ("Telesite"), and Metrosite Management, LLC, an
Arkansas limited liability company ("Metrosite").
WHEREAS, the Partnership and CAOF are the owners of all of the
membership interests, and are the sole members, of Telesite;
WHEREAS, Telesite is engaged in site acquisition, marketing, and
consulting for the telecommunications industry (the "Telesite Business");
WHEREAS, Telesite and Finley are the owners of all of the membership
interests, and are the sole members, of Metrosite;
WHEREAS, Metrosite is engaged in marketing and management of
governmental and public properties of the telecommunications industry (the
"Metrosite Business");
WHEREAS, Finley and Caroline Finley are husband and wife;
WHEREAS, pursuant to Section 351 of the Internal Revenue Code of 1986,
as amended (the "Code"), the Members desire to contribute and transfer all
of their membership interests in Telesite (the "Telesite Interests") to ISD
in exchange for shares of the Common Stock, par value $0.001 per share, of
ISD (the "ISD Common Stock") and certain other consideration as provided
herein;
WHEREAS, pursuant to Section 351 of the Code, the Members desire to
cause Telesite to, and Finley desires to, contribute and transfer all of
their and his, as the case may be, membership interests in Metrosite (the
"Metrosite Interests") to ISD in exchange for shares of ISD Common Stock and
certain other consideration as provided herein; and
WHEREAS, the foregoing contributions and transfers are part of a
single plan pursuant to Section 351 of the Code in which: (i) the foregoing
contributions and transfers will be made; (ii) Stephen H. Clark ("Clark")
and Robert M. Long ("Long") will contribute and transfer all of the shares
of the capital stock of US Towers, Inc., a Delaware corporation ("US
Towers") to ISD in exchange for shares of ISD Common Stock; (iii) Whitney
Equity Partners, L.P., a Delaware limited partnership ("Whitney"), Kitty
Hawk Capital Limited Partnership, III, a Delaware limited partnership
("Kitty Hawk") will contribute and transfer cash to ISD in exchange for
shares of 8% Series A Cumulative Convertible Redeemable Preferred Stock, par
<PAGE> 3
value $0.001 per share, of ISD; and (iv) PCX Corporation, a Delaware
corporation ("PCX"), has agreed to contribute its warrant to purchase 1,500
shares of the Common Stock, par value $0.001 per share, of US Towers (the
"PCX Warrant") to ISD in exchange for a warrant to purchase 150,000 shares
of ISD Common Stock (the "ISD Warrant").
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations, and warranties set forth herein, the parties agree as
follows:
ARTICLE I
DEFINITIONS
In addition to the other terms defined herein, the following
definitions will apply throughout this Agreement:
1.1 ACM's. The term "ACM's" has the meaning set forth in Section
5.19(b).
1.2 Affiliate. The term "Affiliate" has the meaning set forth in
Rule 405 of the Securities Act of 1933, as amended.
1.3 Claims. The term "Claims" has the meaning set forth in Section
5.15.
1.4 Closing. The term "Closing" has the meaning set forth in Section
12.1.
1.5 Closing Date. The term "Closing Date" has the meaning set forth
in Section 12.1.
1.6 Consideration. The term "Consideration" has the meaning set
forth in Section 3.1.
1.7 Effective Time. The term "Effective Time" has the meaning set
forth in Section 12.1.
1.8 Environmental Laws. The term "Environmental Laws" has the
meaning set forth in Section 5.19.
1.9 ERISA. The term "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
1.10 Hazardous Materials. The term "Hazardous Materials" has the
meaning set forth in Section 5.19(b).
1.11 Indemnified Party. The term "Indemnified Party" has the meaning
set forth in Section 13.3.
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1.12 Indemnity Obligor. The term "Indemnity Obligor" has the meaning
set forth in Section 13.3.
1.13 ISD Agreements. The term "ISD Agreements" means all agreements,
documents and other instruments executed and delivered by ISD in connection
with the consummation of the transaction contemplated by this Agreement.
1.14 Loss. The term "Loss" has the meaning set forth in Section 13.1.
1.15 Member Agreements. The term "Member Agreements" means all
agreements, documents and other instruments executed and delivered by the
Members in connection with the consummation of the transactions contemplated
by this Agreement.
1.16 Metrosite Assets. The term "Metrosite Assets" means all of the
properties and assets of Metrosite, including, without limitation, the
Metrosite Intellectual Property, the Metrosite Inventory, the Metrosite
Receivables, and the Metrosite Tangible Personal Property.
1.17 Metrosite Contracts. The term "Metrosite Contracts" has the
meaning set forth in Section 6.11.
1.18 [Intentionally Omitted]
1.19 Metrosite Intellectual Property. The term "Metrosite
Intellectual Property" has the meaning set forth in Section 6.13.
1.20 Metrosite Inventory. The term "Metrosite Inventory" has the
meaning set forth in Section 6.10.
1.21 Metrosite Leased Real Property. The term "Metrosite Leased Real
Property" has the meaning set forth in Section 6.8.
1.22 Metrosite Liens. The term "Metrosite Liens" has the meaning set
forth in Section 6.7.
1.23 [Intentionally Omitted]
1.24 Metrosite Marks. The term "Metrosite Marks" has the meaning set
forth in Section 6.13.
1.25 Metrosite Permits. The term "Metrosite Permits" has the meaning
set forth in Section 6.17.
1.26 Metrosite Real Property Leases. The term "Metrosite Real
Property Leases" has the meaning set forth in Section 6.8.
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<PAGE> 5
1.27 Metrosite Receivables. The term "Metrosite Receivables" has the
meaning set forth in Section 6.12.
1.28 Metrosite Required Consents. The term "Metrosite Required
Consents" has the meaning set forth in Section 6.4.
1.29 Metrosite Tangible Personal Property. The term "Metrosite
Tangible Personal Property" has the meaning set forth in Section 6.9.
1.30 Metrosite Tax Returns. The term "Metrosite Tax Returns" has the
meaning set forth in Section 6.18.
1.31 [Intentionally Omitted]
1.32 PBGC. The term "PBGC" means the Pension Benefit Guaranty
Corporation.
1.33 Person. The term "person" means any individual, firm,
corporation, limited liability company, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, governmental
authority or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity.
1.34 Plans. The term "Plans" has the meaning set forth in Section
5.22(b)(i).
1.35 Promissory Note. The term "Promissory Note" has the meaning set
forth in Section 3.2.
1.36 Real Estate Lease. The term "Real Estate Lease" means the Real
Estate Lease, dated as of the Closing Date, between Telesite and the
Partnership in substantially the form attached as Exhibit A.
1.37 Representatives. The term "Representatives" has the meaning set
forth in Section 8.2.
1.38 Rules. The term "Rules" has the meaning set forth in Section
5.16.
1.39 Stockholders' Agreement. The term "Stockholders' Agreement"
means the Stockholders' Agreement, dated as of the Closing Date, between ISD,
Clark, Long, the Partnership, PCX and Whitney in substantially the form
attached as Exhibit B.
1.40 Stock Restriction Agreement. The term "Stock Restriction
Agreement" means the Stock Restriction Agreement, dated as of the Closing
Date, between ISD and the Partnership in substantially the form attached as
Exhibit C.
1.41 Taxes. The term "Taxes" has the meaning set forth in Section
5.18.
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1.42 Telesite Agreements. The term "Telesite Agreements" means all
agreements, documents and other instruments executed and delivered by
Telesite in connection with the consummation of the transactions contemplated
by this Agreement.
1.43 Telesite Assets. The term "Telesite Assets" means all of the
properties and assets of Telesite, including, without limitation, the
Telesite Intellectual Property, the Telesite Inventory, the Telesite
Receivables, the Telesite Tangible Personal Property, the Telesite Contracts,
the Telesite Leased Real Property, and the Telesite Real Property Leases.
1.44 Telesite Contracts. The term "Telesite Contracts" has the
meaning set forth in Section 5.11.
1.45 Telesite Excluded Real Property. The term "Telesite Excluded
Real Property" means the real property owned by Telesite and described on
Exhibit D attached hereto.
1.46 Telesite Financial Statements. The term "Telesite Financial
Statements" has the meaning set forth in Section 5.5.
1.47 Telesite Intellectual Property. The term "Telesite Intellectual
Property" has the meaning set forth in Section 5.13.
1.48 Telesite Inventory. The term "Telesite Inventory" has the
meaning set forth in Section 5.10.
1.49 Telesite Leased Real Property. The term "Telesite Leased Real
Property" has the meaning set forth in Section 5.8.
1.50 Telesite Liens. The Term "Telesite Liens" has the meaning set
forth in Section 5.7.
1.51 Telesite March 1997 Balance Sheet. The term "Telesite March 1997
Balance Sheet" has the meaning set forth in Section 5.5.
1.52 Telesite Marks. The term "Telesite Marks" has the meaning set
forth in Section 5.13.
1.53 Telesite Permits. The term "Telesite Permits" has the meaning
set forth in Section 5.17.
1.54 Telesite Permitted Liens. The term "Telesite Permitted Liens"
has the meaning set forth in Section 5.7.
1.55 Telesite Real Property Leases. The term "Telesite Real Property
Leases" has the meaning set forth in Section 5.8.
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1.56 Telesite Receivables. The term "Telesite Receivables" has the
meaning set forth in Section 5.12.
1.57 Telesite Required Consents. The term "Telesite Required
Consents" has the meaning set forth in Section 5.4.
1.58 Telesite Tangible Personal Property. The term "Telesite Tangible
Personal Property" has the meaning set forth in Section 5.9.
1.59 Telesite Tax Returns. The term "Telesite Tax Returns" has the
meaning set forth in Section 5.18.
1.60 Whitney Letter of Intent. The term "Whitney Letter of Intent"
means the Letter of Intent, dated March 27, 1997, between Whitney and US
Towers, a copy of which is attached as Exhibit E.
ARTICLE II
CONTRIBUTION OF MEMBERSHIP INTERESTS
2.1 Contribution of Telesite Interests. The Members agree to
contribute, transfer and deliver to ISD, at the Closing, all of the Telesite
Interests owned by them in exchange for the Consideration.
2.2 Contribution of Metrosite Interests. The Members agree to cause
Telesite to, and Finley agrees to, contribute, transfer and deliver to ISD,
at the Closing, all of the Metrosite Interests owned by them or him, as the
case may be, in exchange for the Consideration.
2.3 Intent of Contributions. The parties agree that the intent of
the contributions and transfers of the Telesite Interests and the Metrosite
Interests to ISD pursuant to this Agreement will constitute a transfer of
property to a controlled corporation in accordance with the provisions of
Section 351 of the Code.
ARTICLE III
CONSIDERATION
3.1 Consideration. The aggregate consideration (the "Consideration")
for the Telesite Interests and the Metrosite Interests will be an amount
equal to an aggregate of $7,262,000 and 490,517 shares of ISD Common Stock.
3.2 Payment of Consideration. At the Closing, the Consideration will
be satisfied and paid by ISD as follows: (a) ISD will wire transfer
immediately available funds in the aggregate amount of $2,000,000.00 to the
bank account designated by CAOF and $2,850,000.00 to the bank account
designated by the Partnership, (b) ISD will make and deliver to the
Partnership a
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promissory note, payable to the Partnership, in the aggregate principal
amount of $2,412,000.00, which will bear interest at the rate of seven
percent (7%) per annum and will be in the form attached hereto as Exhibit F
(the "Promissory Note") and (c) subject to the terms and conditions of the
Stockholders' Agreement and the Stock Restriction Agreement, ISD will issue
to the Partnership a certificate or certificates evidencing 490,517 shares of
the ISD Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS
The Members and Caroline Finley jointly and severally represent and
warrant to ISD as follows:
4.1 Authority. Each of the Members and Caroline Finley has all
requisite power and authority to execute and deliver this Agreement and the
Member Agreements and to perform the transactions contemplated hereby and
thereby. The execution, delivery, and performance of this Agreement and the
Member Agreements by the Partnership has been duly and validly authorized by
all necessary partnership and partner action. The execution, delivery, and
performance of this Agreement and the Member Agreements by CAOF has been duly
and validly authorized by all necessary trust and trustee action. This
Agreement and the Member Agreements have been, or with respect to the Member
Agreement to be executed at the Closing, will be duly executed and delivered
by the Members and Caroline Finley and each constitutes, or will constitute
when executed and delivered, a valid and binding obligation of the Members
and Caroline Finley, enforceable against the Members and Caroline Finley, as
the case may be, in accordance with its terms.
4.2 Telesite Interests. The Partnership and CAOF are the sole
beneficial and record owners of the Telesite Interests in the percentages set
forth on Schedule 4.2, free and clear of all liens, encumbrances, claims,
security interests, mortgages, restrictions or pledges of any nature. There
are no outstanding subscriptions, options, warrants, calls, puts or other
agreements or instruments which may entitle or obligate Telesite or any other
person to acquire any membership interest in Telesite.
4.3 Metrosite Interests. Finley and Telsite are the sole beneficial
and record owners of the Metrosite Interests in the percentages set forth on
Schedule 4.3, free and clear of all liens, encumbrances, claims, security
interests, mortgages, restrictions or pledges of any nature. There are no
outstanding subscriptions, options, warrants, calls, puts or other agreements
or instruments which may entitle or obligate Metrosite or any other person to
acquire any membership interest in Metrosite.
4.4 Securities Matters. The Partnership seeks to acquire the shares
of ISD Common Stock issued to it for its own account and beneficial interest
for investment purpose only and not with the view to the resale, assignment,
transfer or distribution thereof, except in accordance with applicable
federal and state securities laws. The Partnership acknowledges and agrees
that, as the owner of the shares of ISD Common Stock, it must bear the
economic risks of investment in
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ISD for an indefinite period of time, as the securities have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), or the securities laws of any state, and therefore cannot be sold
unless registered thereunder or unless, in the opinion of counsel
satisfactory to ISD, an exemption from registration is available. The
Partnership acknowledges and agrees that the shares of ISD Common Stock
issued to it will be subject to certain restrictions on transfer as set forth
in the Stockholders' Agreement and that the certificates evidencing such
shares will bear legends referring to such restrictions. The Partnership has
such knowledge and experience in financial and business matters that they are
capable of evaluating the merits and risks of an investment in the ISD and
that they are able to bear the economic risks for such investment. The
Partnership is sophisticated and knowledgable investors, as well as
accredited investors (as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act). The Partnership acknowledges that it
and its representatives (a) has had adequate opportunity to ask for and
receive any information from ISD and its officers that the Partnership
believes to be material or relevant to their investment hereunder and (b) has
had a due diligence investigation conducted by its legal counsel and other
professional advisors.
4.5 Stock Purchase Agreement. The representations and warranties
made by Telesite and Metrosite in the Stock Purchase Agreement, dated as of
the Closing Date, by and among ISD, US Towers, Telesite, Metrosite and
Whitney are true and correct.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING TELESITE
The Members, Caroline Finley and Telesite jointly and severally
represent and warrant to ISD as follows:
5.1 Organization and Good Standing: Governing Documents. Telesite is
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Arkansas. Telesite has all requisite
power and authority to own, operate and lease the Telesite Assets and to
conduct the operations of the Telesite Business as presently conducted.
Telesite is duly qualified to conduct business as a foreign limited liability
company and is in good standing in all jurisdictions in which the character
of the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, and such jurisdictions
are listed on Schedule 5.1. Telesite has previously delivered to ISD true
and complete copies of its Articles of Organization and Operating Agreement,
including all amendments thereto. Except as set forth on Schedule 5.1,
Telesite does not, directly or indirectly, own or control or have any
capital, equity, partnership, participation or other interest in any
corporation, partnership, limited liability company, joint venture or other
business association or entity.
5.2 Authority. Telesite has all requisite power and authority to
execute and deliver this Agreement and the Telesite Agreements and to perform
the transactions contemplated hereby and thereby. The execution, delivery
and performance of this Agreement and the Telesite Agreements have been duly
and validly authorized by all necessary action on the part of Telesite,
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its managers and the Members. This Agreement has been and the Telesite
Agreements have been, or, with respect to the Telesite Agreements to be
executed at the Closing, will be duly executed and delivered by Telesite and
each constitutes or will constitute when executed and delivered a valid and
binding obligation of Telesite, enforceable against Telesite in accordance
with its terms.
5.3 No Conflict or Breach. The execution, delivery and performance
of this Agreement does not and will not:
(a) conflict with the Articles of Organization or Operating
Agreement of Telesite;
(b) violate any law, statute, judgment, order, decree or
regulation of any legislative body, court, administrative agency,
governmental authority or arbitrator applicable to or relating to Telesite or
the Telesite Assets;
(c) conflict with, constitute a default under, result in a
breach or acceleration of or, except as set forth on Schedule 5.3, require
notice to or the consent of any third party under any contract, agreement,
commitment, mortgage, note, license or other instrument or obligation to
which Telesite is party or by which it is bound or by which the Telesite
Assets are affected; or
(d) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever on any of the Telesite Assets.
5.4 Consents and Approvals. Schedule 5.4 describes (a) each consent,
approval, authorization, registration or filing with any federal, state or
local judicial or governmental authority or administrative agency and (b)
each consent, approval, authorization of or notice to any other third party,
which is required in connection with the valid execution and delivery of this
Agreement or the consummation of the transactions contemplated herein or
therein (the items described in clauses (a) and (b), collectively, the
"Telesite Required Consents").
5.5 Financial Statements. Telesite has previously delivered to ISD
true and complete copies of (a) its unaudited Consolidated Income Statement
for the fiscal year ended December 31, 1995, unauditied Consolidated Balance
Sheet as of December 31, 1995, audited Consolidated Income Statement for the
fiscal year ended December 31, 1996, and audited Consolidated Balance Sheet
as of December 31, 1996, and the related statement of operations, members'
equity and cash flows for such fiscal years then ended, including the
footnotes thereto, additional or supplemental information supplied therewith
and the report prepared in connection therewith by the independent certified
public accountants reviewing or auditing, as the case may be, such financial
statements and (b) the interim unaudited Consolidated Balance Sheet (the
"Telesite March 1997 Balance Sheet") and the related consolidated statement
of operations, member's equity and cash flows prepared for the quarter ended
March 31, 1997. The documents described in clauses (a), and (b),
collectively, the "Telesite Financial Statements":
(a) are true, complete and correct;
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(b) are in accordance with the books and records of Telesite;
(c) present fairly the assets, liabilities and financial
condition of Telesite as of the respective dates thereof, and the results of
operations for the periods then ending; and
(d) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
Telesite has no liability or obligation, whether accrued, absolute, or
contingent that is not reflected or reserved against in the Telesite March
1997 Balance Sheet, except for those that are not required by generally
accepted accounting principles to be included therein. Any items of income
or expense which are unusual or of a nonrecurring nature are separately
disclosed in the Telesite Financial Statements.
Telesite has not received from any of its certified public accountants
letters to the management of Telesite other than the auditors' opinion letter
accompanying the Telesite Financial Statements.
5.6 Books and Records. The books and records of Telesite relating to
the Telesite Business and the Telesite Assets are true, accurate and complete
in all material respects.
5.7 Title to and Sufficiency of Assets. Telesite has good and
marketable title to all of the Telesite Assets, free and clear of any liens,
encumbrances, claims, security interests, mortgages, restrictions or pledges
of any nature (collectively, "Telesite Liens"), other than the Telesite Liens
described on Schedule 5.7. All Telesite Liens that will not be removed at or
prior to the Closing are set forth on Schedule 5.7 (the "Telesite Permitted
Liens"). Except for the Telesite Excluded Real Property, the Telesite Assets
constitute all of the assets, tangible and intangible, of any nature
whatsoever, required to operate the Telesite Business in the manner presently
operated by Telesite.
5.8 Leased Real Property. Schedule 5.8 contains a true and correct
description of all real property leased by Telesite and used or useful in
connection with the Telesite Business (the "Telesite Leased Real Property").
Telesite has previously delivered to ISD true and complete copies of each of
the leases, including all amendments thereto, for such leased real property
(the "Telesite Real Property Leases"). Each of the Telesite Real Property
Leases is valid, binding and enforceable in accordance with its terms and is
in full force and effect, and there are no offsets or defenses by either
landlord or tenant thereunder. There are no existing defaults, and no events
or circumstances have occurred which, with or without notice of lapse of time
or both, would constitute defaults, under any of the Telesite Real Property
Leases. The execution, delivery and performance of this Agreement does not
and will not, with respect to any such Telesite Real Property Lease: (i)
permit the landlord to accelerate the rent or cause the lease terms to be
renegotiated, (ii) constitute a default thereunder or (iii) require the
consent of the landlord or any third party.
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5.9 Tangible Personal Property. Set forth on Schedule 5.9 is a list
of all machinery, equipment, tools, furniture, office equipment, supplies,
materials, vehicles and other items of tangible personal property of every
kind owned by Telesite and used or useful in connection with the Telesite
Business (wherever located and whether or not carried on Telesite's books)
(the "Telesite Tangible Personal Property"). Each item of Telesite Tangible
Personal Property, and each item of tangible personal property leased under
the Telesite Contracts, is in good operating order, condition and ordinary
wear and tear excepted, is suitable for immediate use in the ordinary course
of business of the Telesite Business, is free from defects, is merchantable
and is of a quality and quantity presently usable in the ordinary course of
business of the Telesite Business. No item of Telesite Tangible Personal
Property is in need of repair or replacement other than as part of routine
maintenance in the ordinary course of business.
5.10 Inventory. Set forth on Schedule 5.10 is a list and approximation
of, and the location of, all inventory of the Telesite Business as of the
date hereof, including without limitation, all finished goods, work in
process, raw materials, spare parts and all other materials and supplies to
be used or consumed in the production of finished goods (the "Telesite
Inventory"). All items included in the Telesite Inventory; (i) are in good
condition, not obsolete and nondefective, (ii) are useable or saleable in the
ordinary course of business of the Telesite Business and at the current
operating profit margins of Telesite, (iii) are located at the locations
listed on Schedule 5.10 and (iv) have been acquired by Telesite only in bona
fide transactions entered into in the ordinary course of business.
5.11 Contracts. Schedule 5.11 lists all contracts, commitments,
agreements (including, without limitation, agreements for the borrowing of
money or the extension of credit, licenses, understandings and obligations)
whether written or oral, to which Telesite is party or by which Telesite or
the Telesite Assets are bound or affected, other than purchase orders in the
ordinary course of business and any other contracts agreements and
commitments that do not extend beyond one (1) year or involve the receipt of
payment of not more than $25,000 (the "Telesite Contracts"). Telesite has
delivered to ISD true and complete copies of all written Telesite Contracts
and true and complete memoranda of all oral Telesite Contracts, including any
and all amendments and other modifications thereto. Each of the Telesite
Contracts is valid, binding and enforceable in accordance with its terms and
is in full force and effect. There are no existing defaults, and no events
or circumstances have occurred which, with or without notice or lapse of time
or both, would constitute defaults, under any of the Telesite Contracts. The
execution, delivery and performance of this Agreement and the Member
Agreements does not and will not, with respect to any Telesite Contract: (i)
constitute a default thereunder, (ii) require the consent of any person or
party, except for the Required Telesite Consents or (iii) affect the
continuation, validity and effectiveness thereof or the terms thereof.
5.12 Receivables. All accounts receivable and trade accounts due to
Telesite in connection with the Telesite Business (the "Telesite
Receivables") reflected on the Telesite March 1997 Balance Sheet (less any
such receivable collected since the date of such financial statement) and all
Telesite Receivables presently owing and to be owing at the Effective Time,
are, and at the Closing Date will be, legal, valid and binding obligations,
of the respective
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account debtors. All Telesite Receivables presently owing and to be owing at
the Effective Time are collectible in full at face value within ninety (90)
days, of the Closing Date (in the case of the accounts receivable due from
Sprint Spectrum, L.P. in connection with invoices dated prior to December 31,
1996 related to the Sprint Dallas project, net of a $450,000 allowance for
doubtful accounts established and reflected on the Telesite March 1997
Balance Sheet). All such Telesite Receivables were created in the ordinary
course of business of the Telesite Business. There are no set-offs,
counterclaims or disputes asserted with respect to any Telesite Receivable
(other than those of Sprint Spectrum, L.P. in connection with invoices dated
prior to December 31, 1996 related to the Sprint Dallas project which are
reflected in the $450,000 allowance for doubtful amounts established and
reflected on the Telesite 1997 Balance Sheet), and no discount or allowance
from any Telesite Receivable has been made or agreed to except discounts for
prompt payment granted in the ordinary course of business and reflected in
documents evidencing such account.
5.13 Intellectual Property. Set forth on Schedule 5.13 is a list of
all of the intellectual property rights that are owned or used by Telesite in
connection with the Telesite Business, including the following: (i) all
trademarks, service marks, trade names, logos and other designations and all
registrations (the "Telesite Marks"), including the date of first use of each
such Telesite Mark, all United States, foreign and state registrations
relating thereto, and a list of all of the goods and services with respect to
which each such Telesite Mark is used, (ii) all copyrighted works and
registrations therefor, (iii) all inventions that are the subject of letters
patent or applications therefor and (iv) all confidential or proprietary
processes, formulas, technical data and other information that is of
commercial value to the Telesite Business (collectively the "Telesite
Intellectual Property"). Each of the Telesite Marks has been in continuous
use since the date of first use set forth in Schedule 5.13, and each of the
Telesite Marks is now in use in interstate or intrastate commerce as
specified on said Schedule. Telesite is the record owner of each of the
trademark registrations, copyright registrations and patents listed on such
Schedule, and all required maintenance filings, tax payments, annuities and
maintenance fee payments have been timely completed with respect to each.
Schedule 5.13 sets forth the patent number, application number, application
date and issue date with respect to each payment and patent application.
Telesite has not licensed any of the Telesite Intellectual Property to any
third party, and no third party has any right to use any of the Telesite
Intellectual Property. There are no claims or suits challenging Telesite's
ownership or right to use any of the Telesite Intellectual Property, or
alleging that any of the Telesite Intellectual Property infringes any rights
of any third parties, nor does there exist any basis therefor.
5.14 Major Suppliers and Customers. Each supplier of goods or
services to the Telesite Business to whom Telesite paid more than $100,000,
in the aggregate, during the 12 months ended on March 31, 1997, and each
customer of the Telesite Business who paid Telesite more than $1,000,000, in
the aggregate, during such period, is listed on Schedule 5.14, which Schedule
reflects in each case the amounts so paid. Except as set forth on Schedule
5.14, there exists no actual or threatened termination, cancellation or
limitation of, or any adverse modification or change in, the business
relationship of Telesite or its business with any customer or any group of
customers whose purchases are individually in the aggregate material to the
business of Telesite, or with any material supplier, and there exists no
present condition or state
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of facts or circumstances that would materially adversely affect the assets,
business, properties, operations or financial condition of Telesite or
prevent Telesite from conducting the Telesite Business after the consummation
of the transactions contemplated by this Agreement, in substantially the same
manner in which it has heretofore been conducted. Telesite has no reason to
believe that the execution, delivery and performance of this Agreement will
have any adverse effect on the business relationship of any such suppliers or
customers with the Telesite Business.
5.15 Litigation. Except as set forth on Schedule 5.15, there are no
claims, actions, suits, arbitration proceedings, inquiries, hearings,
injunctions or investigations ("Claims") pending, or to the best knowledge of
Telesite, threatened, against Telesite, its operations or the Telesite
Business. No Claims have been brought within the last two years against
Telesite or the Telesite Business, or affecting the Telesite Assets, or
relating to Telesite's ownership, use or operation of the Telesite Assets.
There are no facts or circumstances which could serve as the basis for any
Claim against Telesite involving the Telesite Business or the Telesite
Assets, or, by virtue of the execution, delivery and performance of this
Agreement, against ISD.
5.16 Compliance with Decrees and Laws. There is no outstanding or, to
the best knowledge of Telesite, threatened, any order, writ, injunction or
decree of any court, governmental agency or arbitration tribunal against or
involving Telesite, the Telesite Business or the Telesite Assets. Telesite
is currently, and has been at all times in full compliance with all laws,
statutes (including, without limitation, the Federal Communications Act of
1934, as amended, and the rules and regulations promulgated pursuant
thereto), rules, regulations, orders and licensing requirements ("Rules") of
federal, state, local and foreign agencies and authorities applicable to the
business, properties and operations of the Telesite Business (including,
without limitation, those relating to antitrust and trade regulation, civil
rights, labor and discrimination, safety and health). To the best knowledge
of Telesite, there has been no allegation of any violation of any such Rules,
and no investigation or review by any federal, state or local body or agency
is pending, threatened or planned with respect to Telesite, the Telesite
Business or the Telesite Assets.
5.17 Permits. Telesite has obtained all permits, authorizations,
certificates, approvals, licenses, exemptions and classifications required
for the conduct of the Telesite Business and the ownership and operation of
the Telesite Assets (the "Telesite Permits"). Telesite is not in violation
of any of the Telesite Permits, and no proceedings are pending or, to the
best knowledge of Telesite, threatened, to revoke or limit any Telesite
Permit.
5.18 Taxes. Except as set forth in Schedule 5.18, Telesite has
properly completed, duly and timely filed in correct form with the
appropriate United States, state and local governmental agencies and with the
appropriate foreign countries and political subdivisions thereof, all tax
returns, reports and declarations of estimated tax (the "Telesite Tax
Returns") required to be filed before the Effective Time. All Telesite Tax
Returns are accurate, complete and correct as filed, and Telesite has paid in
full or made adequate provision in its financial statements for all amounts
shown to be due thereon. All United States, state and local income, profits,
franchise, sales, use, occupancy, property, severance, excise, value added,
withholding and other taxes, and all taxes owing to any foreign countries and
political subdivisions thereof
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(including, without limitation, interest, penalties and any additions to tax)
("Taxes") due from or claimed to be due by each taxing authority in respect
of Telesite, the Telesite Business or the Telesite Assets, for all periods
through the date of this Agreement, have been, and for all periods through
the Effective Time will be, fully paid or adequately provided for in the
financial statements of Telesite. Telesite has timely made and will timely
make all withholdings of Taxes required to be made under all applicable
United States, state and local tax regulations, and such withholdings have
either been paid or will be paid to the respective governmental agencies or
set aside in accounts for such purpose or accrued, reserved against and
entered upon the books of Telesite. Estimated income taxes which are not yet
due to be paid to the Internal Revenue Service or any state or local taxing
authoirty have been accrued, reserved against and entered upon the books of
Telesite. All Telesite Tax Returns required to be filed after the date
hereof by Telesite, shall, in each case, be prepared and filed by Telesite in
a manner consistent in all respects (including, without limitation, elections
and accounting methods and conventions) with such Telesite Tax Return most
recently filed by Telesite, in the relevant jurisdiction prior to the date
hereof, except as otherwise required by law or regulation or agreed to by
ISD. If any such Telesite Tax Return required to be filed after the date
hereof shall reflect any new elections or the adoption of any new accounting
methods or conventions or other similar items, the reflection or adoption of
any such items shall, except to the extent such particular reflection or
adoption is required to comply with any law or regulation, be subject to the
prior written approval of ISD. All deficiencies asserted as a result of any
examinations of the Telesite Tax Returns have been paid or adequately
provided for in the Telesite Financial Statements, and no issue has been
raised by a taxing authority in any such examination which, if raised with
regard to any other period not so examined, would be expected to result in a
proposed deficiency for any other period not so examined. Telesite will not
have any liability, either in its own right or as a transferee, for Taxes in
excess of the amount paid or reserved for any period prior to the Closing.
There are no outstanding agreements or waivers extending the statutory period
of limitation applicable to any Telesite Tax Return, or the period for
assessment or collection of any Taxes. Telesite is not a party to any
pending action or proceeding, nor to the best knowledge of Telesite, is there
threatened any action or proceeding, by any governmental authority for
assessment or collection of taxes, and Telesite is not currently under audit
or review and has not been notified by any governmental authority that an
audit or review of any tax matter is contemplated. There are no tax liens
(other than liens for taxes for current and subsequent years which are not
yet due and payable) upon any of the Telesite Assets. Telesite has not
agreed, nor is it required, to make any adjustment under Section 481(a) of
the Code, by reason of a change in accounting method or otherwise. Telesite
has not consented to the application to it of Section 341 (f)(2) of the
Code. Telesite is, and since its formation has been, properly classified as
a "partnership" for Federal income tax purposes rather than as an association
taxable as a corporation, and will maintain such classification through the
Effective Date.
5.19 Environmental Protection. The existing and prior uses of the
Telesite Assets and the Telesite Excluded Real Property and the operation of
the Telesite Business comply with, and at all times have complied with, and
Telesite is not in violation of, and have not violated, in connection with
the ownership, use, maintenance or operation of the Telesite Assets and the
Telesite Excluded Real Property and the operation of the Telesite Business,
any applicable federal, state, county or local statues, laws, regulations,
rules, ordinances, codes, licenses or
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permits of any governmental authorities relating to environmental matters,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act as amended, the Resource Conservation Recovery
Act as amended, the Clean Air Act, the Clean Water Act, the Occupational
Safety and Health Act, the Toxic Substances Control Act, and "Superfund" or
"Superlien" law, the North Carolina Oil Pollution and Hazardous Substances
Control Act of 1978, or any other federal, state or local statue, law,
ordinance, code, rule, regulation, order, decree or guideline (whether
published or unpublished) regulating, relating to or imposing liability or
standards of conduct concerning any petroleum, petroleum by-product
(including but not limited to crude oil, diesel oil, fuel oil, gasoline,
lubrication oil, oil refuse, oil mixed with other waste, oil sludge, and all
other liquid hydrocarbons, regardless of specific gravity), natural or
synthetic gas, hazardous substance or materials, toxic or dangerous waste,
substance or material, pollutant or contaminant (collectively "Environmental
Laws"). Specifically, but not in limitation of the foregoing:
(a) Telesite has obtained and is in full compliance with the
terms and provisions of all licenses and permits necessary for
compliance with the Environmental Laws with respect to the Telesite
Business, all of which are listed on Schedule 5.17;
(b) The Telesite Assets and the Telesite Excluded Real Property
are free of asbestos containing materials ("ACM's"), and are free of
Hazardous Materials except for current inventories of gasoline, diesel
fuel, fuel oil greases, motor oils and other lubricants. As used in
this Agreement, "Hazardous Material" means and includes asbestos,
ACM's, polychlorinated biphenyls, lead-based paints, any petroleum
product, petroleum by-products (including but not limited to crude oil
or any fraction of it, diesel oil, fuel oil, gasoline, lubrication oil,
oil refuse, oil mixed with other wastes, oil sludge and all other
liquid hydrocarbons, regardless of specific gravity), natural or
synthetic gas products and/or hazardous substance or materials, waste,
pollutant or contaminant, and all other material defined as such in (or
for the purposes of) the Environmental Laws.
(c) Telesite and its predecessors in interest have operated the
Telesite Assets and the Telesite Excluded Real Property, and have at
all times received, handled, used, stored, treated and disposed of all
Hazardous Materials, in strict compliance with all Environmental Laws.
Telesite has not transported or arranged for the transport of any
Hazardous Materials to or from any real property included in the
Telesite Leased Real Property or the Telesite Excluded Real Property.
(d) No Hazardous Material has been released, deposited,
discharged, placed, disposed of or originated on or under the Telesite
Assets, nor has any real estate included in the Telesite Leased Real
Property or the Telesite Excluded Real Property been used at any time
by any person as a landfill or a waste disposal site.
(e) There is no electrical equipment, including transformers,
containing polychlorinated biphenyls ("PCB's") included in the Telesite
Assets or the Telesite Excluded Real Property.
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(f) There are no monitoring wells on any real property included
in the Leased Real Property or the Telesite Excluded Real Property for
monitoring any Hazardous Materials.
(g) There are no underground or above-ground tanks situated on
the real property included in the Telesite Leased Real Property or the
Telesite Excluded Real Property.
(h) There are no liens on any of the Telesite Assets or the
Telesite Excluded Real Property resulting from any cleanup or proposed
cleanup under the Environmental Laws.
(i) No part of the real estate included in the Telesite Leased
Real Property or the Telesite Excluded Real Property constitutes
"wetlands" as defined under any Environmental Law or other law or
regulation.
(j) No Environmental Law, and to the best of Telesite's
knowledge, no proposed Environmental Law, imposes standards or
requirements, or will impose standards or requirements, which will
require the owner or operator of the Telesite Business to engage in any
work, repairs, construction or capital expenditures in excess of $5,000
in the aggregate in order to comply with such Environmental Law or such
proposed Environmental Law.
(k) No notices of any violation, inquiries or requests for
information relating to any of the matters referred to in Subsections
(a) through (k) above relating to the Telesite Assets, the Telesite
Leased Real Property or the Telesite Excluded Real Property or their
use have been received by Telesite or Metrosite.
5.20 Insurance. Schedule 5.20 describes all insurance policies
maintained by Telesite with respect to the Telesite Business and the Telesite
Assets. Such policies are valid, binding and enforceable in accordance with
their terms, are in full force and effect, and all premiums due thereon have
been paid and will be paid through the Effective Time. Such policies provide
adequate coverage for all risks customarily insured against by insured of
similar size and in similar business. Telesite has not been refused any
insurance by any insurance carrier during the past two years.
5.21 Labor and Employment Matters. With respect to employment matters:
(a) No employees of Telesite who work in the Telesite Business
are or have been represented by a union or other labor organization or
covered by any collective bargaining agreement, and to the best knowledge of
Telesite, no union is attempting to organize any such employees.
(b) There is no labor strike, dispute, slowdown, stoppage or
similar labor difficulty pending or, to the best knowledge of Telesite,
threatened against or affecting Telesite
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or the Telesite Business, nor have there been any such events pending or
threatened since December 31, 1996.
(c) Telesite is in compliance with all federal, state and local
laws and regulations respecting employment and employment practices, terms
and conditions of employment and wages and hours, and there is no unfair
labor practice complaint against Telesite pending or, to the best knowledge
of Telesite, threatened.
(d) No representations have been made by Telesite or its
employees or agents to employees of Seller with respect to ISD's intentions
to employ, or not to employ, Telesite's employees or with respect to the
conditions of any such employment.
5.22 Employees; Compensation; Benefit Plans.
(a) Compensation. Telesite has previously given to ISD a
complete and correct list of the name, age, position, rate of compensation
and any incentive compensation arrangements, bonuses or commissions or fringe
or other benefits, whether payable in cash or in kind, of each current
employee, director, independent contractor, consultant and agent of Telesite
who is associated with the Telesite Business and each other person to whom
Telesite pays or provides, or has an obligation, agreement (written or
unwritten), policy or practice of paying or providing, retirement, health,
welfare or other benefits of any kind or description whatsoever.
(b) Employee Benefit Plans.
(i) Schedule 5.22 contains an accurate and complete list
of all Plans contributed to, maintained or sponsored by Telesite, to which
Telesite is obligated to contribute or with respect to which Telesite has any
liability or potential liability, whether direct or indirect, including,
without limitation, all Plans contributed to, maintained or sponsored by each
member of the controlled group of companies, within the meaning of Sections
414(b), 414(c), and 414(m) of the Code, of which Telesite is a member to the
extent Telesite has any potential liability with respect to such Plans. For
purposes of this Agreement, the term "Plans" shall mean: (A) employee benefit
plans as defined in Section 3(3) of the ERISA, whether or not funded and
whether or not terminated, (B) employment agreements, and (C) personnel
policies or fringe benefit plans, policies, programs and arrangements,
whether or not subject to ERISA, whether or not funded, and whether or not
terminated, including without limitation, stock bonus, deferred compensation,
pension, severance, bonus, vacation, travel, incentive, and health,
disability and welfare plans.
(ii) Except as disclosed in Schedule 5.22, Telesite does
not contribute to, has no obligation to contribute to or otherwise has no
liability or potential liability with respect to (A) any Multiemployer Plan
(as such term is defined in Section 3(37) of ERISA), (B) any Plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413 of the Code
(and regulations promulgated thereunder), or (C) any plan which provides
health, life insurance, accident or other "welfare-type" benefits to current
or future retirees or current former
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employees, their spouses or dependents, other than in accordance with Section
4980B of the Code or applicable state continuation coverage law.
(iii) Except as disclosed in Schedule 5.22, none of the
Plans obligates Telesite to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by
this Agreement or solely as a result of a "change in control," as such term
is used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan and all related trusts, insurance
contracts, and funds have been maintained, funded and administered in
compliance in all respects with all applicable laws and regulations,
including but not limited to ERISA and the Code. None of Telesite, any
trustee or administrator of any Plan, or any other person has engaged in any
transaction with respect to any Plan which could subject Telesite, or any
trustee or administrator of any Plan, or any party dealing with any Plan, or
ISD to any tax or penalty imposed by ERISA or the Code. No actions, suits,
claims, complaints, charges, proceedings, hearings, investigations, or
demands with respect to the Plans (other than routine claims for benefits)
are pending or threatened, and Telesite has no knowledge of any facts which
could give rise to or be expected to give rise to any actions, suits, claims,
complaints, charges, proceedings, hearings, investigations, or demands. No
Plan that is subject to the funding requirements of Section 412 of the Code
or Section 302 of ERISA has incurred any "accumulated funding deficiency" as
such term is defined in such Sections of ERISA and the Code, whether or not
waived. No liability to PBGC (except for routine payment of premiums) has
been or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in Section
4043 of ERISA) has occurred with respect to any such Plan, and the PBGC has
not commenced or threatened the termination of any Plan. None of the assets
of Telesite is the subject of any lien arising under Section 302(f) or ERISA
or Section 412(n) of the Code, Telesite has not been required to post any
security pursuant to Section 307 of ERISA or Section 401 (a)(29) of the Code,
and Telesite has no knowledge of any facts which could be expected to give
rise to such lien or such posting of security.
(v) Each Plan that is intended to be qualified under
Section 401(a) of the Code, and each trust (if any) forming a part thereof,
has received a favorable determination letter from the Internal Revenue
Service as to the qualification under the Code of such Plan and the tax
exempt status of such related trust, and nothing has occurred since the date
of such determination letter that could adversely affect the qualification of
such Plan or the tax exempt status of such related trust.
(vi) No underfunded "defined benefit plan" (as such term
is defined in Section 3(35) of ERISA) has been, during the five years
preceding the Closing Date, transferred out of the controlled group of
companies (within the meaning of Sections 414(b), (c) and (m) of the Code) of
which Telesite is a member or was a member during such five-year period.
(vii) As of the Closing Date, the fair market value of the
assets of each Plan that is a defined benefit pension plan equals or exceeds
the present value of all vested and non-vested liabilities thereunder
determined in accordance with applicable PBGC methods,
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factors and assumptions applicable to a defined benefit pension plan
terminating on such date. With respect to each Plan that is subject to the
funding requirements of Section 412 of the Code and Section 302 of ERISA, all
required or recommended contributions for all periods ending prior to or as
of the Closing Date (including periods from the first day of the then-current
plan year to the Closing Date and including all quarterly contributions
required in accordance with Section 412(m) of the Code) shall have been
made. With respect to each other Plan, all required or recommended payments,
premiums, contributions, reimbursements or accruals for all periods ending
prior to or as of the Closing Date shall have been made. No Plan has any
material unfunded liabilities.
(viii) With respect to each Plan, Telesite has
provided ISD with true, complete and correct copies, to the extent
applicable, of (A) all documents pursuant to which the Plans are maintained,
funded and administered, (B) the 1996 annual report (Form 5500 series) filed
with the Internal Revenue Service (with attachments), (C) the 1996 financial
statements, (D) all governmental rulings, determinations, and opinions (and
pending requests for governmental rulings, determinations, and opinions), and
(E) the most recent valuation (but in any case at least one that has been
completed within the last calendar year) of the present and future
obligations under each Plan that provides post-retirement or post-employment
health, life insurance, accident or other "welfare-type" benefits.
5.23 Absence of Certain Changes. Except as described in Schedule
5.23, since March 31, 1997, Telesite has conducted the operations and
business of the Telesite Business only in the ordinary course, and has not:
(a) Suffered any damage, destruction or loss to any asset of
the Telesite Business, whether or not covered by insurance;
(b) Sold, transferred, distributed or otherwise disposed of any
assets used in the operation of the Telesite Business other than the Telesite
Excluded Real Property;
(c) Made or entered into any general wage or salary increase
for its employees as a group;
(d) Declared, made or paid any distribution or dividend to the
Members;
(e) Amended or terminated any contract, lease, license or
commitment relating to the conduct of the Telesite Business or the Telesite
Assets;
(f) Incurred any obligation or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become due) except
normal trade or business obligations incurred in the ordinary course of
business;
(g) Introduced any new method of management, operations or
accounting;
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(h) Suffered any adverse change in the condition (financial or
otherwise), results of operations or business of the Telesite Business or the
Telesite Assets, or any other event or condition of any character that might
reasonably be expected to have an adverse effect on the Telesite Business or
the Telesite Assets; or
(i) Agreed, whether in writing or otherwise, to take any action
described in this Section.
5.24 Product Warranties. There are no continuing or outstanding
warranties applicable to goods or products manufactured or sold by Telesite
except for warranties implied by law, with which all such products are in
conformity.
5.25 Brokers. No finder, broker, agent or other intermediary has
acted for or on behalf of Telesite in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from Telesite.
5.26 Disclosure. No representation, warranty or statement made by
Telesite in this Agreement, or any document furnished or to be furnished to
ISD pursuant to this Agreement, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact
necessary to make the statements contained herein or therein not misleading.
The fact that Telesite has delivered copies of certain documents to ISD shall
not alone constitute disclosure of facts required to be disclosed on any
Schedule to this Agreement, unless such document is expressly referenced in
such Schedule. Receipt by ISD of such documents and notice of their contents
(other than by reference on a Schedule) shall in no way limit Telesite's
other obligations or ISD's other rights under this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING METROSITE
The Members, Caroline Finley and Metrosite jointly and severally
represent and warrant to ISD as follows:
6.1 Organization and Good Standing: Governing Documents. Metrosite
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Arkansas. Metrosite has all
requisite power and authority to own, operate and lease the Metrosite Assets
and to conduct the operations of the Metrosite Business as presently
conducted. Metrosite is duly qualified to conduct business as a foreign
limited liability company and is in good standing in all jurisdictions in
which the character of the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
and such jurisdictions are listed on Schedule 6.1. Metrosite has previously
delivered to ISD true and complete copies of its Articles of Organization and
Operating Agreement, including all amendments thereto. Except as set forth
on Schedule 6.1, Metrosite does not, directly or indirectly, own or control
or have any capital, equity, partnership, participation or other interest
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in any corporation, partnership, limited liability company, joint venture or
other business association or entity.
6.2 Authority. Metrosite has all requisite power and authority to
execute and deliver this Agreement and the Metrosite Agreements and to
perform the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Metrosite Agreements have
been duly and validly authorized by all necessary action on the part of
Metrosite, its managers and the Members. This Agreement has been and the
Metrosite Agreements have been, or, with respect to the Metrosite Agreements
to be executed at the Closing, will be duly executed and delivered by
Metrosite and each constitutes or will constitute when executed and delivered
a valid and binding obligation of Metrosite, enforceable against Metrosite in
accordance with its terms.
6.3 No Conflict or Breach. The execution, delivery and performance
of this Agreement does not and will not:
(a) conflict with the Articles of Organization or Operating
Agreement of Metrosite;
(b) violate any law, statute, judgment, order, decree or
regulation of any legislative body, court, administrative agency,
governmental authority or arbitrator applicable to or relating to Metrosite
or the Metrosite Assets;
(c) conflict with, constitute a default under, result in a
breach or acceleration of or, except as set forth on Schedule 6.3, require
notice to or the consent of any third party under any contract, agreement,
commitment, mortgage, note, license or other instrument or obligation to
which Metrosite is party or by which it is bound or by which the Metrosite
Assets are affected; or
(d) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever on any of the Metrosite Assets.
6.4 Consents and Approvals. Schedule 6.4 describes (a) each consent,
approval, authorization, registration or filing with any federal, state or
local judicial or governmental authority or administrative agency and (b)
each consent, approval, authorization of or notice to any other third party,
which is required in connection with the valid execution and delivery of this
Agreement or the consummation of the transactions contemplated herein or
therein (the items described in clauses (a) and (b), collectively, the
"Metrosite Required Consents").
6.5 Financial Statements. Metrosite does not have separate financial
statements. The results of the operations of Metrosite are included in the
Telesite Financial Statements.
6.6 Books and Records. The books and records of Metrosite relating
to the Metrosite Business and the Metrosite Assets are true, accurate and
complete in all material respects.
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6.7 Title to and Sufficiency of Assets. Metrosite has good and
marketable title to all of the Metrosite Assets, free and clear of any liens,
encumbrances, claims, security interests, mortgages, restrictions or pledges
of any nature (collectively, "Metrosite Liens"), other than the Metrosite
Liens described on Schedule 6.7, all of which will be removed at or prior to
the Closing. The Metrosite Assets constitute all of the assets, tangible and
intangible, of any nature whatsoever, required to operate the Metrosite
Business in the manner presently operated by Metrosite.
6.8 Leased Real Property. Schedule 6.8 contains a true and correct
description of all real property leased by Metrosite and used or useful in
connection with the Metrosite Business (the "Metrosite Leased Real
Property"). Metrosite has previously delivered to ISD true and complete
copies of each of the leases, including all amendments thereto, for such
leased real property (the "Metrosite Real Property Leases"). Each of the
Metrosite Real Property Leases is valid, binding and enforceable in
accordance with its terms and is in full force and effect, and there are no
offsets or defenses by either landlord or tenant thereunder. There are no
existing defaults, and no events or circumstances have occurred which, with
or without notice of lapse of time or both, would constitute defaults, under
any of the Metrosite Real Property Leases. The execution, delivery and
performance of this Agreement does not and will not, with respect to any such
Metrosite Real Property Lease: (i) permit the landlord to accelerate the rent
or cause the lease terms to be renegotiated (ii) constitute a default
thereunder or (iii) require the consent of the landlord or any third party.
6.9 Tangible Personal Property. Set forth on Schedule 6.9 is a list
of all machinery, equipment, tools, furniture, office equipment, supplies,
materials, vehicles and other items of tangible personal property of every
kind owned by Metrosite and used or useful in connection with the Metrosite
Business (wherever located and whether or not carried on Metrosite's books)
(the "Metrosite Tangible Personal Property"). Each item of Metrosite
Tangible Personal Property, and each item of tangible personal property
leased under the Metrosite Contracts, is in good operating order, condition
and ordinary wear and tear excepted, is suitable for immediate use in the
ordinary course of business of the Metrosite Business, is free from defects,
is merchantable and is of a quality and quantity presently usable in the
ordinary course of business of the Metrosite Business. No item of Metrosite
Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the ordinary course of business.
6.10 Inventory. Set forth on Schedule 6.10 is a list and approximation
of, and the location of, all inventory of the Metrosite Business as of the
date hereof, including without limitation, all finished goods, work in
process, raw materials, spare parts and all other materials and supplies to
be used or consumed in the production of finished goods (the "Metrosite
Inventory"). All items included in the Metrosite Inventory: (i) are in good
condition, not obsolete and nondefective, (ii) are useable or saleable in the
ordinary course of business of the Metrosite Business and at the current
operating profit margins of Metrosite, (iii) are located at the locations
listed on Schedule 6.10 and (iv) have been acquired by Metrosite only in bona
fide transactions entered into in the ordinary course of business.
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6.11 Contracts. Schedule 6.11 lists all contracts, commitments,
agreements (including, without limitation, agreements for the borrowing of
money or the extension of credit, licenses, understandings and obligations)
whether written or oral, to which Metrosite is party or by which Metrosite or
the Metrosite Assets are bound or affected, other than purchase orders in the
ordinary course of business and any other contracts agreements and
commitments that do not extend beyond one (1) year or involve the receipt of
payment of not more than $25,000 (the "Metrosite Contracts"). Metrosite has
delivered to ISD true and complete copies of all written Metrosite Contracts
and true and complete memoranda of all oral Metrosite Contracts, including
any and all amendments and other modifications thereto. Each of the Metrosite
Contracts is valid, binding and enforceable in accordance with its terms and
is in full force and effect. There are no existing defaults, and no events
or circumstances have occurred which, with or without notice or lapse of time
or both, would constitute defaults, under any of the Metrosite Contracts.
The execution, delivery and performance of this Agreement and the Member
Agreements does not and will not, with respect to any Metrosite Contract: (i)
constitute a default thereunder, (ii) require the consent of any person or
party, except for the Required Metrosite Consents or (iii) affect the
continuation, validity and effectiveness thereof or the terms thereof.
6.12 Receivables. All accounts receivable and trade accounts due to
Metrosite in connection with the Metrosite Business (the "Metrosite
Receivables") reflected on the Telesite March 1997 Balance Sheet (less any
such receivable collected since the date of such financial statement) and all
Receivables presently owing and to be owing at the Effective Time, are, and
at the Closing Date will be, legal, valid and binding obligations, and are
collectible in full at face value. All such Metrosite Receivables were
created in the ordinary course of business of the Metrosite Business. There
are no set-offs, counterclaims or disputes asserted with respect to any
Metrosite Receivable, and no discount or allowance from any Metrosite
Receivable has been made or agreed to except discounts for prompt payment
granted in the ordinary course of business and reflected in documents
evidencing such account.
6.13 Intellectual Property. Set forth on Schedule 6.13 is a list of
all of the intellectual property rights that are owned or used by Metrosite
in connection with the Metrosite Business, including the following: (i) all
trademarks, service marks, trade names, logos and other designations and all
registrations (the "Metrosite Marks"), including the date of first use of
each such Metrosite Mark, all United States, foreign and state registrations
relating thereto, and a list of all of the goods and services with respect to
which each such Metrosite Mark is used, (ii) all copyrighted works and
registrations therefor, (iii) all inventions that are the subject of letters
patent or applications therefor and (iv) all confidential or proprietary
processes, formulas, technical data and other information that is of
commercial value to the Metrosite Business (collectively the "Metrosite
Intellectual Property"). Each of the Metrosite Marks has been in continuous
use since the date of first use set forth in Schedule 6.13, and each of the
Metrosite Marks is now in use in interstate or intrastate commerce as
specified on said Schedule. Metrosite is the record owner of each of the
trademark registrations, copyright registrations and patents listed on such
Schedule, and all required maintenance filings, tax payments, annuities and
maintenance fee payments have been timely completed with respect to each.
Schedule 6.13 sets
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forth the patent number, application number, application date and issue date
with respect to each payment and patent application. Metrosite has not
licensed any of the Metrosite Intellectual Property to any third party, and
no third party has any right to use any of the Metrosite Intellectual
Property. There are no claims or suits challenging Metrosite's ownership or
right to use any of the Metrosite Intellectual Property, or alleging that any
of the Metrosite Intellectual Property infringes any rights of any third
parties, nor does there exist any basis therefor.
6.14 Major Suppliers and Customers. Each supplier of goods or
services to the Metrosite Business to whom Metrosite paid more than $100,000,
in the aggregate, during the 12 months ended on March 31, 1997, and each
customer of the Metrosite Business who paid Metrosite more than $1,000,000,
in the aggregate, during such period, is listed on Schedule 6.14, which
Schedule reflects in each case the amounts so paid. Except as set forth on
Schedule 6.14, there exits no actual or threatened termination, cancellation
or limitation of, or any adverse modification or change in, the business
relationship of Metrosite or its business with any customer or any group of
customers whose purchases are individually or in the aggregate material to
the business of Metrosite, or with any material supplier, and there exists no
present condition or state of facts or circumstances that would materially
affect the assets, business properties, operations or financial condition of
Metrosite to prevent Metrosite from conducting the Metrosite Business after
the consummation of the transactions contemplated by this Agreement, in
substantially the same manner in which it has heretofore been conducted.
Metrosite has no reason to believe that the execution, delivery and
performance of this Agreement will have any adverse effect on the business
relationship of any such suppliers or customers with the Metrosite Business.
6.15 Litigation. Except as set forth on Schedule 6.15, there are no
Claims pending, or to the best knowledge of Metrosite, threatened, against
Metrosite, its operations or the Metrosite Business. No Claims have been
brought within the last two years against Metrosite or the Metrosite
Business, or affecting the Metrosite Assets, or relating to Metrosite's
ownership, use or operation of the Metrosite Assets. There are no facts or
circumstances which could serve as the basis for any Claim against Metrosite
involving the Metrosite Business or the Metrosite Assets, or, by virtue of
the execution, delivery and performance of this Agreement, against ISD.
6.16 Compliance with Decrees and Laws. There is no outstanding or, to
the best knowledge of Metrosite, threatened, any order, writ, injunction or
decree of any court, governmental agency or arbitration tribunal against or
involving Metrosite, the Metrosite Business or the Metrosite Assets.
Metrosite is currently, and has been at all times in full compliance with all
Rules of federal, state, local and foreign agencies and authorities
applicable to the business, properties and operations of the Metrosite
Business (including, without limitation, those relating to antitrust and
trade regulation, civil rights, labor and discrimination, safety and
health). To the best knowledge of Metrosite, there has been no allegation of
any violation of any such Rules, and no investigation or review by any
federal, state or local body or agency is pending, threatened or planned with
respect to Metrosite, the Metrosite Business or the Metrosite Assets.
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6.17 Permits. Metrosite has obtained all permits, authorizations,
certificates, approvals, licenses, exemptions and classifications required
for the conduct of the Metrosite Business and the ownership and operation of
the Metrosite Assets (the "Metrosite Permits"). Metrosite is not in
violation of any of the Metrosite Permits, and no proceedings are pending or,
to the best knowledge of Metrosite, threatened, to revoke or limit any
Metrosite Permit.
6.18 Taxes. Metrosite has not filed, and has not been required to
file with any United States, state and local governmental agencies or with
any foreign countries and political subdivisions thereof, any tax returns,
reports and declarations of estimated tax (the "Metrosite Tax Returns")
required to be filed before the Effective Time. All Taxes due from or
claimed to be due by each taxing authority in respect of Metrosite, the
Metrosite Business or the Metrosite Assets, for all periods through the date
of this Agreement, have been, and for all periods through the Effective Time
will be, fully paid or adequately provided for in the Telesite March 1997
Balance Sheet. Metrosite has timely made and will timely make all
withholdings of tax required to be made under all applicable United States,
state and local tax regulations, and such withholdings have either been paid
or will be paid to the respective governmental agencies or set aside in
accounts for such purpose or accrued, reserved against and entered upon the
books of Metrosite or Telesite. Metrosite is, and since its formation has
been, properly classified as a "partnership" for Federal income tax purposes
rather than as an association taxable as a corporation, and will maintain
such classification through the Effective Date.
6.19 Environmental Protection. The existing and prior uses of the
Metrosite Assets and the operation of the Metrosite Business comply with, and
at all times have complied with, and Metrosite is not in violation of, and
have not violated, in connection with the ownership, use, maintenance or
operation of the Metrosite Assets, any Environmental Laws. Specifically, but
not in limitation of the foregoing:
(a) Metrosite has obtained and is in full compliance with the
terms and provisions of all licenses and permits necessary for
compliance with the Environmental Laws with respect to the Metrosite
Business, all of which are listed on Schedule 6.17;
(b) The Metrosite Assets are free of ACM's, and are free of
Hazardous Materials except for current inventories of gasoline, diesel
fuel, fuel oil greases, motor oils and other lubricants.
(c) Metrosite and its predecessors in interest have operated
the Metrosite Assets have at all times received, handled, used, stored,
treated and disposed of all Hazardous Materials, in strict compliance
with all Environmental Laws. Metrosite has not transported or arranged
for the transport of any Hazardous Materials to or from any real
property included in the Metrosite Leased Real Property.
(d) No Hazardous Material has been released, deposited,
discharged, placed, disposed of or originated on or under the Metrosite
Assets, nor has any real estate included in the Metrosite Leased Real
Property been used at any time by any person as a landfill or a waste
disposal site.
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(e) There is no electrical equipment, including transformers,
containing PCB's included in the Metrosite Assets or the Metrosite
Leased Real Property.
(f) There are no monitoring wells on any real property included
in the Metrosite Leased Real Property for monitoring any Hazardous
Materials.
(g) There are no underground or above-ground tanks situated on
the real property included in the Metrosite Leased Real Property.
(h) There are no liens on any of the Metrosite Assets resulting
from any cleanup or proposed cleanup under the Environmental Laws.
(i) No part of the real estate included in the Metrosite Leased
Real Property constitutes "wetlands" as defined under any Environmental
Law or other law or regulation.
(j) No Environmental Law, and to the best of Metrosite's
knowledge, no proposed Environmental Law, imposes standards or
requirements, or will impose standards or requirements, which will
require the owner or operator of the Metrosite Business to engage in
any work, repairs, construction or capital expenditures in excess of
$5,000 in the aggregate in order to comply with such Environmental Law
or such proposed Environmental Law.
(k) No notices of any violation, inquiries or requests for
information relating to any of the matters referred to in Subsections
(a) through (k) above relating to the Metrosite Assets or the Metrosite
Leased Real Property or their use have been received by Metrosite or
Telesite.
6.20 Insurance. Schedule 6.20 describes all insurance policies
maintained by Metrosite with respect to the Metrosite Business and the
Metrosite Assets. Such policies are valid, binding and enforceable in
accordance with their terms, are in full force and effect, and all premiums
due thereon have been paid and will be paid through the Effective Time. Such
policies provide adequate coverage for all risks customarily insured against
by insured of similar size and in similar business. Metrosite has not been
refused any insurance by any insurance carrier during the past two years.
6.21 Labor and Employment Matters. With respect to employment matters:
(a) No employees of Metrosite who work in the Metrosite
Business are or have been represented by a union or other labor organization
or covered by any collective bargaining agreement, and to the best knowledge
of Metrosite, no union is attempting to organize any such employees.
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(b) There is no labor strike, dispute, slowdown, stoppage or
similar labor difficulty pending or, to the best knowledge of Metrosite,
threatened against or affecting Metrosite or the Metrosite Business, nor have
there been any such events pending or threatened since December 31, 1996.
(c) Metrosite is in compliance with all federal, state and
local laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours, and there is no
unfair labor practice complaint against Metrosite pending or, to the best
knowledge of Metrosite, threatened.
(d) No representations have been made by Metrosite or its
employees or agents to employees of Seller with respect to ISD's intentions
to employ, or not to employ, Metrosite's employees or with respect to the
conditions of any such employment.
6.22 Employees; Compensation; Benefit Plans.
(a) Compensation. Metrosite has previously given to ISD a
complete and correct list of the name, age, position, rate of compensation
and any incentive compensation arrangements, bonuses or commissions or fringe
or other benefits, whether payable in cash or in kind, of each current
employee, director, independent contractor, consultant and agent of Metrosite
who is associated with the Metrosite Business and each other person to whom
Metrosite pays or provides, or has an obligation, agreement (written or
unwritten), policy or practice of paying or providing, retirement, health,
welfare or other benefits of any kind or description whatsoever.
(b) Employee Benefit Plans.
(i) Schedule 6.22 contains an accurate and complete list
of all Plans contributed to, maintained or sponsored by Metrosite, to which
Metrosite is obligated to contribute or with respect to which Metrosite has
any liability or potential liability, whether direct or indirect, including,
without limitation, all Metrosite Plans contributed to, maintained or
sponsored by each member of the controlled group of companies, within the
meaning of Sections 414(b), 414(c), and 414(m) of the Code, of which
Metrosite is a member to the extent Metrosite has any potential liability
with respect to such Plans.
(ii) Except as disclosed in Schedule 6.22, Metrosite does
not contribute to, has no obligation to contribute to or otherwise has no
liability or potential liability with respect to (A) any Multiemployer Plan
(as such term is defined in Section 3(37) of ERISA), (B) any Plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413 of the Code
(and regulations promulgated thereunder), or (C) any plan which provides
health, life insurance, accident or other "welfare-type" benefits to current
or future retirees or current former employees, their spouses or dependents,
other than in accordance with Section 4980B of the Code or applicable state
continuation coverage law.
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(iii) Except as disclosed in Schedule 6.22, none of the
Plans obligates Metrosite to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by
this Agreement or solely as a result of a "change in control," as such term
is used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan and all related trusts, insurance
contracts, and funds have been maintained, funded and administered in
compliance in all respects with all applicable laws and regulations,
including but not limited to ERISA and the Code. None of Metrosite, any
trustee or administrator of any Plan, or any other person has engaged in any
transaction with respect to any Plan which could subject Metrosite, or any
trustee or administrator of any Plan, or any party dealing with any Plan, or
ISD to any tax or penalty imposed by ERISA or the Code. No actions, suits,
claims, complaints, charges, proceedings, hearings, investigations, or
demands with respect to the Plans (other than routine claims for benefits)
are pending or threatened, and Metrosite has no knowledge of any facts which
could give rise to or be expected to give rise to any actions, suits, claims,
complaints, charges, proceedings, hearings, investigations, or demands. No
Plan that is subject to the funding requirements of Section 412 of the Code
or Section 302 of ERISA has incurred any "accumulated funding deficiency" as
such term is defined in such Sections of ERISA and the Code, whether or not
waived. No liability to PBGC (except for routine payment of premiums) has
been or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in Section
4043 of ERISA) has occurred with respect to any such Plan, and the PBGC has
not commenced or threatened the termination of any Plan. None of the assets
of Metrosite is the subject of any lien arising under Section 302(f) or ERISA
or Section 412(n) of the Code, Metrosite has not been required to post any
security pursuant to Section 307 of ERISA or Section 401 (a)(29) of the Code,
and Metrosite has no knowledge of any facts which could be expected to give
rise to such lien or such posting of security.
(v) Each Plan that is intended to be qualified under
Section 401(a) of the Code, and each trust (if any) forming a part thereof,
has received a favorable determination letter from the Internal Revenue
Service as to the qualification under the Code of such Plan and the tax
exempt status of such related trust, and nothing has occurred since the date
of such determination letter that could adversely affect the qualification of
such Plan or the tax exempt status of such related trust.
(vi) No underfunded "defined benefit plan" (as such term
is defined in Section 3(35) of ERISA) has been, during the five years
preceding the Closing Date, transferred out of the controlled group of
companies (within the meaning of Sections 414(b), (c) and (m) of the Code) of
which Metrosite is a member or was a member during such five-year period.
(vii) As of the Closing Date, the fair market value of the
assets of each Plan that is a defined benefit pension plan equals or exceeds
the present value of all vested and non-vested liabilities thereunder
determined in accordance with applicable PBGC methods, factors and
assumptions applicable to a defined benefit pension plan terminating on such
date. With respect to each Plan that is subject to the funding requirements
of Section 412 of the Code and Section 302 of ERISA, all required or
recommended contributions for all periods ending
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prior to or as of the Closing Date (including periods from the first day of
the then-current plan year to the Closing Date and including all quarterly
contributions required in accordance with Section 412(m) of the Code) shall
have been made. With respect to each other Plan, all required or recommended
payments, premiums, contributions, reimbursements or accruals for all periods
ending prior to or as of the Closing Date shall have been made. No Plan has
any material unfunded liabilities.
(viii) With respect to each Plan, Metrosite has
provided ISD with true, complete and correct copies, to the extent
applicable, of (A) all documents pursuant to which the Plans are maintained,
funded and administered, (B) the two most recent annual reports (Form 5500
series) filed with the Internal Revenue Service (with attachments), (C) the
two most recent actuarial reports, (D) the two most recent financial
statements, (E) all governmental rulings, determinations, and opinions (and
pending requests for governmental rulings, determinations, and opinions), and
(F) the most recent valuation (but in any case at least one that has been
completed within the last calendar year) of the present and future
obligations under each Plan that provides post-retirement or post-employment
health, life insurance, accident or other "welfare-type" benefits.
6.23 Absence of Certain Changes. Except as described in Schedule
6.23, since March 31, 1997, Metrosite has conducted the operations and
business of the Metrosite Business only in the ordinary course, and has not:
(a) Suffered any damage, destruction or loss to any asset of
the Metrosite Business, whether or not covered by insurance;
(b) Sold, transferred, distributed or otherwise disposed of any
assets used in the operation of the Metrosite Business;
(c) Made or entered into any general wage or salary increase
for its employees as a group;
(d) Declared, made or paid any distribution or dividend to the
Members;
(e) Amended or terminated any contract, lease, license or
commitment relating to the conduct of the Metrosite Business or the Metrosite
Assets;
(f) Incurred any obligation or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become due) except
normal trade or business obligations incurred in the ordinary course of
business;
(g) Introduced any new method of management, operations or
accounting;
(h) Suffered any adverse change in the condition (financial or
otherwise), results of operations or business of the Metrosite Business or
the Metrosite Assets, or any other
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event or condition of any character that might reasonably be expected to have
an adverse effect on the Metrosite Business or the Metrosite Assets; or
(i) Agreed, whether in writing or otherwise, to take any action
described in this Section.
6.24 Product Warranties. There are no continuing or outstanding
warranties applicable to goods or products manufactured or sold by Metrosite
except for warranties implied by law, with which all such products are in
conformity.
6.25 Brokers. No finder, broker, agent or other intermediary has
acted for or on behalf of Metrosite in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from Metrosite.
6.26 Disclosure. No representation, warranty or statement made by
Metrosite in this Agreement, or any document furnished or to be furnished to
ISD pursuant to this Agreement, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact
necessary to make the statements contained herein or therein not misleading.
The fact that Metrosite has delivered copies of certain documents to ISD
shall not alone constitute disclosure of facts required to be disclosed on
any Schedule to this Agreement, unless such document is expressly referenced
in such Schedule. Receipt by ISD of such documents and notice of their
contents (other than by reference on a Schedule) shall in no way limit
Metrosite's other obligations or ISD's other rights under this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF ISD
ISD represents and warrants to the Members, Telesite and Metrosite as
follows:
7.1 Organization and Good Standing. ISD is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Prior to the Effective date, ISD has not, and will not, conduct
any significant activities other than those incident to its formation and the
consummation of the transactions contemplated by this Agreement.
7.2 Authority. ISD has all requisite power and authority to execute,
deliver and perform this Agreement and the ISD Agreements and transactions
contemplated hereby and thereby. The execution, delivery and performance of
this Agreement and the ISD Agreements, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of ISD. This
Agreement and the ISD Agreements, have been, or, with respect to ISD
Agreements to be executed at the Closing, will be duly executed and delivered
by ISD and each constitutes, or will constitute when executed and delivered,
a valid and binding obligation of ISD, enforceable against ISD in accordance
with its terms.
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7.3 Capital Stock and Shares of ISD Stock. The shares of ISD Common
Stock to be issued to the Members at the Closing will, upon issuance, be duly
authorized and validly issued, fully paid and nonassessable. Except as
provided in the Stockholders' Agreement and the Stock Restriction Agreement,
the shares of ISD Stock to be issued to the Members at the Closing will, upon
issuance, be free and clear of any liens, encumbrances, claims, security
interests, restrictions or pledges of any nature.
The authorized capital stock of ISD (which has the rights and
preferences set forth on the Certificate of Amendment to the Certificate of
Incorporation of ISD which will be filed with the Delaware Secretary of State
at the Closing, a true and correct copy of which is attached as Schedule
7.3(a) (the "Certificate of Amendment")), after giving effect to the issuance
of the shares of ISD Common Stock to the Members and the transactions
contemplated by the Whitney and Kitty Hawk contributions and transfers and
the US Towers contribution and transfer, consists of 12,000,000 shares of ISD
Common Stock, of which 1,340,517 shares are issued and outstanding, and
5,680,000 shares of preferred stock, par value $0.001, of ISD (the "Preferred
Stock"), 5,680,000 shares of which have been designated as 8% Series A
Cumulative Convertible Redeemable Preferred Stock, par value $0.001 per share
(the "Series A Stock") of which 3,462,830 shares (the "Shares") are issued
and outstanding. After giving effect to the issuance of the shares of ISD
Common Stock to the Members and the transactions contemplated by the Whitney
and Kitty Hawk contributions and transfers and the US Towers contribution and
transfer, (a) 3,462,830 shares of Common Stock have been reserved by
appropriate corporate action for issuance upon conversion of the Shares, (b)
2,217,170 shares of Series A Stock have been reserved for issuance, which
shares may be issued by ISD, at its election, as payment-in-kind dividends on
the Series A Stock, in accordance with the terms of the Certificate of
Amendment, (c) 2,217,170 shares of Common Stock have been reserved for
issuance upon conversion of the Series A Stock described in clause (b)
hereof, (d) 967,700 shares of Common Stock have been reserved for issuance
upon the exercise of stock options issuable under one or more stock option
plans of ISD, which plans shall have been approved by the Board of Directors
of ISD, and (e) 150,000 shares of Common Stock have been reserved for
issuance upon the exercise of the ISD Warrant.
7.4 No Conflict or Breach. The execution, delivery and performance
of this Agreement and the ISD Agreements do not and will not: (a) conflict
with or constitute a violation of the Certificate of Incorporation or Bylaws
of ISD or (b) conflict with or constitute a violation of any statute,
judgment, order, decree or regulation of any court, administrative agency,
governmental authority or arbitrator applicable to or relating to ISD.
7.5 Governmental Approvals. No consent, approval, authorization,
registration or filing with any federal, state or local judicial or
governmental authority or administrative agency is required in connection
with the valid execution and delivery by ISD of this Agreement and the ISD
Agreements or the consummation by ISD of the transactions contemplated herein
or therein.
7.6 Brokers. No finder, broker, agent or other intermediary has
acted for or on behalf of ISD in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from ISD.
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7.7 Due Diligence Review. ISD has had an opportunity to conduct such
due diligence and other investigations concerning Telesite, Metrosite and
their respective businesses and assets as it deemed necessary in connection
with the consummation of the transactions contemplated hereunder. In
connection with such examination, ISD, its representatives and advisors, were
given unlimited access to Telesite, Metrosite, their assets, books and
records and access to key employees and had an opportunity to ask such
questions and request information. To that end, ISD acknowledges that
Telesite and Metrosite supplied all such requested information.
ARTICLE VIII
COVENANTS OF MEMBERS, CAROLINE FINLEY, TELESITE AND METROSITE
The Members, Caroline Finley, Telesite and Metrosite covenant and agree
with ISD as follows:
8.1 Conduct of Business. Between the date of this Agreement and the
Effective Time, the Members, Telesite and Metrosite shall except as otherwise
specifically consented to in writing by ISD:
(a) Conduct the operations of the Telesite Business and the
Metrosite Business in the normal and customary manner in the ordinary course
of business;
(b) Maintain and keep the tangible Telesite Assets and the
Metrosite Assets, and any tangible assets leased under leases by Telesite or
Metrosite, in good operating order, repair and condition ordinary wear and
tear excepted;
(c) Keep in full force and effect the insurance described in
Sections 5.20 and 6.20;
(d) Perform all of its obligations under all Telesite Contracts
and Metrosite Contracts, Telesite Real Property Leases and Metrosite Real
Property Leases, and not amend, alter or modify any provision thereof;
(e) Use its best efforts to preserve Telesite's and Metrosite's
organization intact and maintain their relationships with their employees,
suppliers and customers;
(f) Promptly advise ISD of any adverse change in the condition
(financial or otherwise) of the Telesite Business, the Telesite Assets, the
Metrosite Business or the Metrosite Assets;
(g) Promptly advise ISD of the occurrence of any event or
circumstance which affects the consummation of the transactions contemplated
by this Agreement or which, if in existence on the date of this Agreement,
would have been required to have been disclosed in a Schedule to this
Agreement;
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(h) Not create or permit to exist any security interest,
mortgage, pledge, lien, charge, encumbrance or adverse claim of any kind or
nature with respect to any of the Telesite Assets or the Metrosite Assets,
except for the Telesite Liens and the Metrosite Liens, all of which will be
removed at or prior to the Closing;
(i) Not sell or dispose of any Telesite Assets or the Metrosite
Assets, except in the ordinary course of business and except that prior to
the Closing Telesite will transfer the Telesite Excluded Real Estate to the
Partnership;
(j) Promptly advise ISD of any change in the list of employees
referred to in Sections 5.21(a) and 6.21(a) or in the compensation payable to
any such employee;
(k) Not declare, make or pay any distribution or dividend to
the Members; and
(l) Not make any capital improvement or expenditure other than
in the ordinary course of business.
8.2 Intellectual Property. Except as provided in Section 8.3 hereof,
the Members, Telesite and Metrosite and their respective shareholders,
partners, members, directors, managers, officers, employees, consultants,
professional representatives and agents (collectively, "Representatives")
will not disclose to any Person the Telesite Intellectual Property or the
Metrosite Intellectual Property.
8.3 Access and Information. The Members, Telesite and Metrosite will
permit ISD and its Representatives full access during normal business hours
to all the properties, assets, books, records, agreements and other documents
of Telesite, the Telesite Assets, Metrosite and the Metrosite Assets. The
Members, Telesite and Metrosite will furnish to ISD and its Representatives
all information concerning Telesite, the Telesite Assets, Metrosite and the
Metrosite Assets as ISD may request. The Members, Telesite, and Metrosite
will permit and facilitate communications between ISD and Telesite's and
Metrosite's suppliers, customers, and other persons having relationships with
the Telesite Business and Metrosite Business.
8.4 No Other Solicitations. Until the earlier of the Closing Date or
the termination of this Agreement, the Members, Telesite and Metrosite and
their respective Representatives will not directly or indirectly initiate
contact with or solicit or encourage any inquiries or proposal from, or
solicit, initiate, encourage or participate in any discussion or negotiations
with, or provide any confidential information to, any corporation,
partnership, person or other entity or group (other than ISD, US Towers and
Whitney and their Representatives) in connection with any possible proposal
regarding a sale of the Telesite Interests or Metrosite Interests, or a sale
of all or a substantial portion of the assets of Telesite or Metrosite, a
merger of Telesite or Metrosite with or into any other corporation, or any
equity transaction similar to any of the foregoing.
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ARTICLE IX
MUTUAL COVENANTS
Each of ISD, the Members, Caroline Finley, Telesite and Metrosite
covenants and agrees with the other as follows:
9.1 Best Efforts. Each of ISD, the Members, Telesite and Metrosite
will use its best efforts to make or obtain all consents, approvals,
authorizations, registrations and filings with all federal, state or local
judicial or governmental authorities or administrative agencies as are
required in connection with the consummation of the transactions contemplated
by this Agreement In addition, each of the Members, Telesite, and Metrosite
will use its best efforts to obtain as promptly as possible all other
Telesite Required Consents and Metrosite Required Consents.
9.2 Confidentiality. In recognition of the confidential nature of
certain of the information which will be provided to any party by the other
parties, each of ISD, the Members, Telesite and Metrosite agrees to retain in
confidence, and to require its Representatives to retain in confidence all
information transmitted or disclosed to it by any other party, and further
agrees that it will not use for its own benefit and will not use or disclose
to any third party, or permit the use or disclosure to any third party of,
any information obtained from or revealed by any other party, except that
each of ISD, the Members, Telesite and Metrosite may disclose the information
to those of its Representatives who need the information for the proper
performance of their assigned duties with respect to the consummation of the
transactions contemplated hereby. In making such information available to
its Representatives, each of ISD, the Members, Telesite and Metrosite will
take any and all precautions necessary to ensure that its Representatives use
the information only as permitted hereby. Notwithstanding anything to the
contrary in the foregoing provisions, such information may be disclosed: (a)
where it is necessary to any regulatory authorities or governmental agencies,
(b) if it is required by court order or decree or applicable law, (c) if it
is ascertainable or obtained from public or published information, (d) if it
is received from a third party not known to the recipient to be under an
obligation to keep such information confidential or (e) if the recipient can
demonstrate that such information was in its possession prior to disclosure
thereof in connection with this Agreement. If any party is required to make
disclosure of any such information by operation of law, such disclosing party
will give the other parties prior notice of the making of such disclosure and
will use all reasonable efforts to afford such other parties an opportunity
to contest the making of such disclosure. In the event that the Closing does
not occur, each of ISD, the Members, Telesite and Metrosite will immediately
deliver, or cause to be delivered, to the other (without retaining any copies
thereof) any and all documents, statements or other written information
obtained from the other that contain confidential information.
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ARTICLE X
CONDITIONS PRECEDENT TO ISD's OBLIGATIONS
The obligations of ISD to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of the following conditions on
or before the Closing Date, unless specifically waived in writing by ISD
prior to the Closing Date:
10.1 Representations and Warranties. The representations and
warranties of each of the Members, Caroline Finley, Telesite and Metrosite
contained in this Agreement shall have been true and correct on the date of
this Agreement and shall be true and correct on the Closing Date as though
made on and as of the Closing Date.
10.2 Compliance with Covenants. Each of the Members, Caroline Finley,
Telesite and Metrosite shall have duly performed and complied with all
covenants, agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing.
10.3 Absence of Litigation. No action or proceeding shall be pending
or, in the reasonable opinion of ISD, threatened by or before any court or
other governmental body or agency seeking to restrain, prohibit or invalidate
the transactions contemplated by this Agreement or which would adversely
affect the right of ISD to operate or control the Telesite Business or the
Metrosite Business after the Closing Date.
10.4 Absence of Changes. Between the date of this Agreement and the
Closing, no material adverse change shall have occurred in the business,
operations or financial or other condition of the Telesite Business, the
Metrosite Business, the Telesite Assets or the Metrosite Assets, nor shall
there have occurred any casualty loss or destruction of, or damage to, any of
the Telesite Assets or the Metrosite Assets.
10.5 Consents and Approvals. All: (a) Telesite Consents and Metrosite
Consents, (b) licenses, (c) other orders or notifications of, or
registrations, declarations or filings with, or expiration of waiting periods
imposed by, any applicable governmental or judicial authority and (d)
consents, approvals, authorizations or notifications of any other third
parties, all as required in connection with consummation of the transactions
contemplated by this Agreement, shall have been made or obtained or shall
have occurred.
10.6 Removal of Liens. All Telesite Liens and Metrosite Liens, other
than the Permitted Telesite Liens, shall have been removed, and the Members,
Telesite and Metrosite shall have provided evidence satisfactory to ISD of
such removal.
10.7 Whitney and Kitty Hawk Contribution and Transfer. ISD, Whitney
and Kitty Hawk shall have simultaneously consummated Tranche A of Whitney's
and Kitty Hawk's contribution and transfer to ISD pursuant to Section 351 of
the Code and in accordance with the Whitney Letter of Intent and such other
agreements between Whitney and Kitty Hawk.
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10.8 US Towers Contribution and Transfer. Clark and Long shall have
simultaneously contributed their shares of capital stock of US Towers to ISD
solely in exchange for shares of ISD Common Stock pursuant to Section 351 of
the Code and upon such terms and conditions as may be acceptable to Clark and
Long and ISD in their sole discretion.
10.9 Stockholders' Agreement. Each of the Members shall have executed
and delivered the Stockholders' Agreement.
10.10 Real Estate Lease. Telesite and the Partnership shall have
executed and delivered the Real Estate Lease.
10.11 Employment Agreements. ISD and Finley and Telesite and Tracy
Gill shall have executed and delivered to the Executive Employment Agreement
in the form attached hereto as Exhibit G and the Employment Agreement in the
form attached hereto as Exhibit H, respectively.
10.12 Assumption of Indebtedness. Finely shall have, in a form
satisfactory to ISD: (a) assumed Telesite's existing construction loan from
Merchantile Bank of Arkansas (the "Merchantile Loan"); (b) obtained a full
release of Telesite, of all of its obligations under the Merchantile Loan;
and (c) obtained a full release of Telesite's $100,000 Certificate of Deposit
that is being held as security for the Merchantile Loan.
10.13 Legal Opinion. ISD shall have received from Friday, Eldredge &
Clark, counsel to the Members, Telesite and Metrosite, an opinion, dated the
Closing Date, in the form of Exhibit I.
10.14 Stock Restriction Agreement. The Partnership shall have executed
and delivered the Stock Restriction Agreement.
10.15 Boatman's Commitment. Telesite shall have received a commitment,
in a form and upon terms and conditions satisfactory to ISD, to extend
Telesite's existing line of credit with Boatman's National Bank of Arkansas
until August 31, 1997 (the "Boatman's Line of Credit").
10.16 PCX Settlement and Release. US Towers shall have entered into a
Release and Settlement Agreement, in a form and upon terms and conditions
satisfactory to ISD, with PCX releasing US Towers with respect to the PCX
tower business corporate opportunity.
10.17 Exchange of UST Warrant. PCX shall have simultaneously exchanged
the UST Warrant for the ISD Warrant.
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ARTICLE XI
CONDITIONS PRECEDENT TO MEMBER'S, CAROLINE FINLEY'S,
TELESITE'S, AND METROSITE'S OBLIGATIONS
The obligations of the Members, Caroline Finley, Telesite and Metrosite
to consummate the transaction contemplated by this Agreement are subject to
the satisfaction of each of the following conditions on or before the Closing
Date, unless specifically waived in writing by the Members, Telesite and
Metrosite prior to the Closing:
11.1 Representations and Warranties. The representations and
warranties of ISD contained in this Agreement shall have been true and
correct on the date of this Agreement, and shall be true and correct on the
Closing Date as through made on and as of the Closing Date.
11.2 Compliance with Covenants. ISD shall have duly performed and
complied with all covenants, agreements and obligations required by this
Agreement to be performed or complied with by it on or before the Closing
Date.
11.3 Absence of Litigation. No action or proceeding shall be pending
by or before any court or other governmental body or agency seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
11.4 Consents and Approvals. All Telesite Required Consents and
Metrosite Required Consents shall have been obtained prior to or at the
Closing.
11.5 Whitney and Kitty Hawk Contribution and Transfer. ISD, Whitney
and Kitty Hawk shall have simultaneously consummated Tranche A of Whitney's
and Kitty Hawk's contribution and transfer to ISD pursuant to Section 351 of
the Code and in accordance with the Whitney Letter of Intent and such other
agreements between Whitney and Kitty Hawk.
11.6 US Towers Contribution and Transfer. Clark and Long shall have
simultaneously contributed their shares of capital stock of US Towers to ISD
solely in exchange for shares of ISD Stock pursuant to Section 351 of the
Code and upon such terms and conditions as may be acceptable to Clark and
Long and ISD in their sole discretion.
11.7 Real Estate Lease. Telesite and the Partnership shall have
executed and delivered the Real Estate Lease.
11.8 Employment Agreements. ISD and Finley and Telesite and Tracy
Gill shall have executed and delivered the Executive Employment Agreement in
the form attached hereto as Exhibit G and the Employment Agreement in the
form attached hereto as Exhibit H, respectively.
11.9 Legal Opinion. The Members, Telesite and Metrosite shall have
received from Hutchison & Mason PLLC, counsel to ISD, an opinion, dated the
Closing Date, in the form of Exhibit J.
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11.10 Exchange of UST Warrant. PCX shall have simultaneously exchanged
the UST Warrant for the ISD Warrant.
ARTICLE XII
CLOSING
12.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Friday, Eldredge
& Clark, in Little Rock, Arkansas at 10:00 am., local time, on May 9, 1997,
or such other date as may be mutually agreed upon by the parties hereto;
provided, however, as follows: (a) if one or more conditions to this
Agreement is not satisfied by such date, the party benefiting from such
condition may elect, in its sole discretion, one or more postponements of the
Closing for the purpose of enabling such condition to be satisfied and (b)
notwithstanding the provisions of the preceding clause (a), in no event may
the Closing be postponed beyond May 31, 1997. The date of the Closing is
referred to as the "Closing Date." For the purposes of passage of title and
risk of loss, allocation of expenses, adjustments and other economic or
financial effects of the transactions contemplated hereby, the Closing when
completed shall be deemed to have occurred at 12:01 am., local time, on the
Closing Date (the "Effective Time").
12.2 Deliveries by Members, Caroline Finley, Telesite and Metrosite.
At the Closing, the Members, Caroline Finley, Telesite, and Metrosite shall
deliver or cause to be delivered to ISD the following:
(a) A certificate of the Members and the Presidents of each of
Telesite and Metrosite confirming the satisfaction of the conditions set
forth in Sections 10.1 and 10.2 hereof as to representations, warranties and
covenants of the Members, Telesite and Metrosite and Section 10.4 hereof as
to absence of changes.
(b) A copy of all resolutions of Telesite and Metrosite
authorizing the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated herein, accompanied by the
certification of the Secretaries of each of Telesite and Metrosite to the
effect that such resolutions are in full force and effect and have not been
amended, modified or rescinded.
(c) A Good Standing Certificate from the Secretary of State of
Arkansas for each of Telesite and Metrosite.
(d) Evidence of the removal of Telesite Liens and Metrosite
Liens, other than the Permitted Telesite Liens, as described in Section 10.6.
(e) The legal opinion referred to in Section 10.13.
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(f) Evidence of that all Telesite Required Consents and
Metrosite Required Consents have been obtained or satisfied.
(g) Assignments to ISD evidencing the Telesite Interests and
the Metrosite Interests and such documents and instruments as may be required
to substitute ISD as the sole member of each of Telesite and Metrosite;
(h) The Real Estate Lease.
(i) Such other documents and instruments as ISD may reasonably
request to effect and evidence the consummation of the transaction
contemplated by this Agreement.
12.3 Deliveries by ISD. At the Closing, ISD will deliver or cause to
be delivered to Seller the following:
(a) A certificate of the President of ISD confirming the
satisfaction of the conditions set forth in Sections 11.1 and 11.2 as to
representations, warranties and covenants of ISD.
(b) A copy of all corporate resolutions authorizing the
execution, delivery and performance of this, and the consummation of the
transactions contemplated herein, accompanied by the certification of the
Secretary of ISD to the effect that such resolutions are in full force and
effect and have not been amended, modified or rescinded.
(c) The legal opinion referred to in Section 11.9.
(d) The cash portion of the Purchase Price, evidenced by a wire
transfers of immediately available funds.
(e) The Promissory Note.
(f) Such other documents and instruments as any of the Members,
Telesite or Metrosite may reasonably request to effect and evidence the
consummation of the transactions contemplated by this Agreement.
12.4 Further Assurances. The Members will, at any time on or after
the Closing Date, take all actions requested by ISD effect and evidence the
transfer to and reduction to possession of Buyer, or its successors or
assigns, of the Telesite Interests and Metrosite Interests.
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ARTICLE XIII
INDEMNIFICATION
13.1 Indemnification by Members, Caroline Finley, Telesite and
Metrosite.
(a) In addition to all other sums due hereunder or provided for
in this Agreement, the Members, Caroline Finley, Telesite and Metrosite
jointly and severally agree to indemnify and hold harmless ISD and its
Affiliates and each of their respective officers, directors, agents,
employees, subsidiaries, partners, attorneys, accountants and controlling
persons (each, an "ISD Indemnified Party") to the fullest extent permitted by
law from and against any and all losses, claims, damages, expenses
(including, without limitation, reasonable fees, disbursements and other
charges of counsel incurred by an ISD Indemnified Party in any action or
proceeding between any of the Members, Caroline Finley, Telesite or Metrosite
and such ISD Indemnified Party (or ISD Indemnified Parties) or between an ISD
Indemnified Party (or ISD Indemnified Parties) and any third party or
otherwise) or other liabilities, losses, or diminution in value of Telesite,
Metrosite, or ISD (collectively, "Loss") resulting from or arising out of the
Merchantile Loan and the assumption thereof by Finley, any amounts payable to
Llama Company or otherwise, pursuant to the Agreement, dated November 15,
1996 (the "Llama Agreement"), by and between Llama Company (other than any
"Disengagement Fee," as defined in the Llama Agreement, payable as a result
of the termination of the Llama Agreement by ISD or Telesite after the
Closing), and Telesite any breach of any representation or warranty
(including, without limitation, if any of the Telesite Receivables or
Metrosite Receivables are not collected with the periods set forth in
Sections 5.12 and 6.12, respectively), any breach of any covenant or
agreement of any of the Members, Caroline Finley, Telesite or Metrosite in
this Agreement or in any Member Agreement, including, without limitation, the
failure to make payment when due of amounts owing pursuant to this Agreement
or any Member Agreement, on the due date thereof (whether at the scheduled
maturity, by acceleration or otherwise) or any legal, administrative or other
actions (including actions brought by ISD, Metrosite or Telesite or any
equity holders of Telesite or Metrosite or derivative actions brought by any
Person claiming through or in Telesite's or Metrosite's name), proceedings or
investigations (whether formal or informal), or written threats thereof,
based upon, relating to or arising out of this Agreement or any Member
Agreement, the transactions contemplated hereby or thereby, or any ISD
Indemnified Party's role therein or in the transactions contemplated thereby,
any and all liabilities and obligations of the Members, Caroline Finley,
Telesite and Metrosite, of any kind or nature whatsoever, whether accrued,
absolute, contingent or otherwise, known or unknown, that are not set forth
on the Telesite Financial Statements or the Metrosite Financial Statements;
or the Member's ownership and operation of the Telesite Business and the
Metrosite Business prior to the Closing Date; provided, however, that none of
the Members, Caroline Finley, Telesite or Metrosite shall be liable under
this Section 13.1 to an ISD Indemnified Party: (a) for any amount paid by the
ISD Indemnified Party in settlement of claims by the ISD Indemnified Party
without the consent of the Members (which consent shall not be unreasonably
withheld), (b) to the extent that it is finally judicially determined that
such Loss resulted primarily from the willful misconduct or gross negligence
of such ISD Indemnified Party or (c) to the extent that it is finally
judicially determined that such Loss resulted primarily from the breach by
such ISD Indemnified Party of any representation, warranty, covenant or other
agreement of such ISD
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Indemnified Party contained in this Agreement or any ISD Agreement; provided,
further, that if and to the extent that such indemnification is unenforceable
for any reason, the Members, Caroline Finley, Telesite and Metrosite will
make the maximum contribution to the payment and satisfaction of such Loss
which shall be permissable under applicable laws. In connection with the
obligation of the Members, Caroline Finley, Telesite and Metrosite to
indemnify for expenses as set forth above, the Members, Caroline Finley,
Telesite and Metrosite further jointly and severally agree, upon presentation
of appropriate invoices containing reasonable detail, to reimburse each ISD
Indemnified Party for all such expenses (including, without limitation, fees,
disbursements and other charges of counsel incurred by an ISD Indemnified
Party in any action or proceeding between ISD and such ISD Indemnified Party
(or ISD Indemnified Parties) or between an ISD Indemnified Party (or ISD
Indemnified Parties) and any third party or otherwise) as they are incurred
by such ISD Indemnified Party; provided, however, that if an ISD Indemnified
Party is reimbursed hereunder for any expenses, such reimbursement of
expenses shall be refunded to the extent it is finally judicially determined
that the Loss in question resulted primarily from (i) the willful misconduct
or gross negligence of such ISD Indemnified party or (ii) the breach by such
ISD Indemnified Party of any representation, warranty, covenant or other
agreement of such ISD Indemnified Party contained in this Agreement or any
ISD Agreement.
(b) Notwithstanding the foregoing, from and after the Closing
Date, the Members and Caroline Finley will be primarily responsible for the
obligations under this Article XIII and will have no right of contribution or
other rights against Telesite or Metrosite with respect to such obligations.
13.2 Indemnification by ISD. In addition to all other sums due
hereunder or provided for in this Agreement, ISD agrees to indemnify and hold
harmless the Members and each of their respective officers, directors,
agents, employees, partners, attorneys, accountants and controlling persons
(each, a "Member Indemnified Party") to the fullest extent permitted by law
from and against any and all losses, claims, damages, expenses (including,
without limitation, reasonable fees, disbursements and other charges of
counsel incurred by a Member Indemnified Party in any action or proceeding
between ISD and such Member Indemnified Party (or Member Indemnified Parties)
or between a Member Indemnified Party (or Member Indemnified Parties) and any
third party or otherwise) or other liabilities, losses, or diminution in
value (collectively, "Loss") resulting from or arising out of any breach of
any representation or warranty, covenant or agreement of ISD in this
Agreement or in any ISD Agreement, including, without limitation, the failure
to make payment when due of amounts owing pursuant to this Agreement or any
ISD Agreement, on the due date thereof (whether at the scheduled maturity, by
acceleration or otherwise) or any legal, administrative or other actions
(including actions brought by ISD, or any equity holders of ISD or derivative
actions brought by any Person claiming through or in ISD's name), proceedings
or investigations (whether formal or informal), or written threats thereof,
based upon, relating to or arising out of this Agreement or any ISD
Agreement, the transactions contemplated hereby or thereby, or any Member
Indemnified Party's role therein or in the transactions contemplated thereby
or any loss suffered by Finley under the Commercial Continuing Guaranty,
dated May 31, 1996 (the "Finley Guarantee"), as a result of or arising from a
default after the Closing by Telesite under the Boatman's Line of Credit;
provided, however, that ISD shall be liable under this Section 13.2 to a
Member Indemnified Party: (a) for any amount paid by the Member Indemnified
Party in settlement of claims by the Member
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Indemnified Party without the consent of ISD (which consent shall not be
unreasonably withheld), (b) to the extent that it is finally judicially
determined that such Loss resulted primarily from the willful misconduct or
gross negligence of such Member Indemnified Party or (c) to the extent that
it is finally judicially determined that such Loss resulted primarily from
the breach by such Member Indemnified Party of any representation, warranty,
covenant or other agreement of such Member Indemnified Party contained in
this Agreement or any Member Agreement; provided, further, that if and to the
extent that such indemnification is unenforceable for any reason, ISD will
make the maximum contribution to the payment and satisfaction of such Loss
which shall be permissable under applicable laws. In connection with the
obligation of ISD to indemnify for expenses as set forth above, ISD further
agrees, upon presentation of appropriate invoices containing reasonable
detail, to reimburse each Member Indemnified Party for all such expenses
(including, without limitation, fees, disbursements and other charges of
counsel incurred by a Member Indemnified Party in any action or proceeding
between a Member and such Member Indemnified Party (or Member Indemnified
Parties) or between a Member Indemnified Party (or Member Indemnified
Parties) and any third party or otherwise) as they are incurred by such
Member Indemnified Party; provided, however, that if a Member Indemnified
Party is reimbursed hereunder for any expenses, such reimbursement of
expenses shall be refunded to the extent it is finally judicially determined
that the Loss in question resulted primarily from (i) the willful misconduct
or gross negligence of such Member Indemnified Party or (ii) the breach by
such Member Indemnified Party of any representation, warranty, covenant or
other agreement of such Member Indemnified Party contained in this Agreement
or any Member Agreement.
13.3 Notification. Each party entitled to indemnification under this
Article XIII (an "Indemnified Party") will, promptly after the receipt of
notice of the commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of which indemnity may
be sought from any other party under this Article XIII (the "Indemnity
Obligor"), notify the Indemnity Obligor in writing of the commencement
thereof. The omission of any Indemnified Party so to notify the Indemnity
Obligor of any such action shall not relieve any Indemnity Obligor from any
liability which it may have to such Indemnified Party (a) other than pursuant
to this Article XIII or (b) under this Article XIII unless, and only to the
extent that, such omission results in the Indemnity Obligor's forfeiture of
material substantive rights or defenses. In case any such action, claim or
other proceeding shall be brought against any Indemnified Party and it shall
notify the Indemnity Obligor of the commencement thereof, the Indemnity
Obligor shall be entitled to assume the defense thereof at their own expense,
with counsel satisfactory to such Indemnified Party in its reasonable
judgment; provided, however, that any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action, claim or proceeding in which
any Indemnity Obligor, on the one hand, and an Indemnified Party, on the
other hand, is, or is reasonably likely to become, a part, such Indemnified
Party shall have the right to employ separate counsel at the Indemnity
Obligor's expense and to control its own defense of such action, claim or
proceeding; if, in the reasonable opinion of counsel to such Indemnified
Party, a conflict or potential conflict exists between any Indemnity Obligor,
on the one hand, and such Indemnified Party, on the other hand, that would
make such separate representation advisable; provided, however, that in no
event shall the Indemnity Obligors be required to pay fees and expenses under
this Article XIII for more than one firm of attorneys in any jurisdiction in
any
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one legal action or group of related legal actions. The Indemnity Obligors
jointly and severally agree that they will not, without the prior written
consent of the Indemnified Parties, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated hereby (if any Indemnified
Party is a party thereto or has been actually threatened to be made a party
thereto) unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Party and each other Indemnified
Party from all liability arising or that may arise out of such claim, action
or proceeding. No Indemnity Obligor shall be liable for any settlement of
any claim, action or proceeding effected against an Indemnified Party without
its written consent, which consent shall not be unreasonably withheld. The
rights accorded to Indemnified Parties hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate
agreement or otherwise.
13.4 Limitations on Indemnification.
(a) Subject to Section 13.4(b) hereof, no Indemnity Obligor
shall have no liability hereunder with respect to a breach of any
representation or warranty, unless written notice asserting a claim for
indemnification based thereon is given to the Indemnity Obligor within the
applicable survival period for such representation or warranty as set forth
in Section 13.5 hereof.
(b) No Indemnified Party shall be entitled to indemnification
hereunder, unless such Indemnified Party has sustained losses in excess of
Fifty Thousand Dollars ($50,000) in the aggregate, and then only to the
extent such losses exceed Twenty-Five Thousand Dollars ($25,000). The
foregoing provision will not apply to any indemnification claim under Section
13.1 related to the Llama Agreement or under Section 13.2 related to the
Finley Guarantee.
13.5 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until November 30, 1999, except for the
representations and warranties set forth in Section 5.18, 5.19, 5.22(b),
6.18, 6.19, and 6.22(b), which shall survive for the applicable statute of
limitation periods (including extensions or waivers thereof).
13.6 Other Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable or common law
remedy any party may have as a result of a Loss.
13.7 Right to Offset. Subject to the limitations set forth in Article
XIII, the Members agree that, if ISD should suffer any Loss described in
Section 13.1 above, then, in addition to and without limitation of any other
rights or remedies to which ISD may be entitled as a result of such Loss, ISD
shall have the unconditional right to offset (dollar for dollar) the amount
of such Loss against the principal amount and accrued interest owed pursuant
to the Promissory Note. Notwithstanding any other provision of this
Agreement, the amount of any Loss related to the uncollectibility of any of
the Telesite Receivables and the Metrosite Receivables (and the amount
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of any resulting offset against the Promissory Note) shall be the actual
dollar amount of any such Telesite Receivable or Metrosite Receivable that is
uncollectible.
ARTICLE XIV
TERMINATION
14.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) By the mutual written consent of all of the parties to this
Agreement;
(b) By the Members, Caroline Finley, Telesite and Metrosite (if
they are not then in breach of any term of this Agreement), if ISD: (i) fails
to perform in any material respect its agreements contained herein required
to be performed on or prior to the Closing Date or (ii) materially breaches
any of its representations or warranties contained herein, which failure or
breach is not cured within ten days after the Members, Telesite, and
Metrosite have notified ISD of their intent to terminate this Agreement
pursuant to this subparagraph;
(c) By ISD (if ISD is not then in breach of any term of this
Agreement), if the Members, Telesite, and Metrosite (i) fails to perform in
any material respect its agreements contained herein required to be performed
on or prior to the Closing Date, or (ii) materially breaches any of its
representations or warranties contained herein , which failure or breach is
not cured within ten days after ISD has notified them of its intent to
terminate this Agreement pursuant to this subparagraph;
(d) By any of the parties, if there is any order, writ,
injunction or decree of any court or governmental or regulatory agency
binding on such party which prohibits or restrains such party from
consummating the transactions contemplated hereby; or
(e) By any of the parties, if the Closing has not occurred by
May 31, 1997, for any reason other than delay or nonperformance of the party
seeking such termination.
14.2 Effect on Obligations. Termination of this Agreement pursuant to
this Article shall terminate all obligation of the parties hereunder, except
for the obligations under Sections 15.3 (with respect to expenses), 15.4
(with respect to publicity) and 9.2 (with respect to confidentiality);
provided, however, that termination pursuant to subparagraphs (b) or (c) of
Section 14.1 will not relieve the defaulting or breaching party from any
liability to the other party hereto. In the event of termination under
subsection (c), ISD will have the rights and remedies with respect to
specific performance as set forth in Section 15.13 hereof, in addition to any
other remedies that may be available at law or in equity.
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ARTICLE XV
MISCELLANEOUS
15.1 Survival of Representations. All representations and warranties
of the parties hereto contained in this Agreement or otherwise made in
writing in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement and the Closing hereunder for
the periods described in Section 13.5. All of the other covenants and
agreements of the parties hereto contained in this Agreement or otherwise
made in writing in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the Closing
hereunder.
15.2 Risk of Loss. The risk of loss, damage or condemnation of any of
the Telesite Assets and the Metrosite Assets from any cause whatsoever will
be borne by the Members, Caroline Finley, Telesite and Metrosite at all times
prior to the completion of the Closing. In the event of any loss, damage or
condemnation of any of the Telesite Assets or the Metrosite Assets prior to
completion of the Closing, ISD shall have the option, in its sole discretion,
to:
(a) terminate this Agreement by written notice to the Members,
Telesite and Metrosite;
(b) postpone the Closing for a period of up to five (5) days to
permit the Members, Telesite and Metrosite to repair, replace or restore such
Telesite Assets or Metrosite Assets to their prior condition; or
(c) proceed to close this Agreement and complete the
restoration and replacement of such damaged Telesite Assets or Metrosite
Assets after the Closing Date, in which event the Members, Telesite and
Metrosite shall assign to ISD the right to receive all insurance proceeds
payable in connection with such damage.
15.3 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, whether or not the transactions contemplated by
this Agreement are consummated.
15.4 Publicity. Each of the parties agrees it will not make any press
releases or other announcements prior to the Closing with respect to the
transactions contemplated hereby, except as required by applicable law,
without the prior approval of the other parties.
15.5 Best Efforts. Each party hereto agrees to use its best efforts
to satisfy the conditions to the Closing set forth in this Agreement and
otherwise to consummate the transactions contemplated by this Agreement.
15.6 Notices. All notices, demands and other communications made
hereunder will be in writing and shall be given either by personal delivery,
by nationally recognized overnight courier (with charges prepaid) or by
telecopy (with telephone confirmation), and will be deemed to have been given
or made when personally delivered, the day following the date deposited with
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such overnight courier service or when transmitted to telecopy machine and
confirmed by telephone, addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
If to the Members, Caroline Finley, Telesite or Metrosite:
Joe L. Finley, III
10770 Samples Road
Alexander, Arkansas 72002
Telephone: (501) 316-1451
With a copy (which shall not constitute notice) to:
Friday, Eldredge & Clark
Attention: Price C. Gardner, Esq.
400 West Capitol Avenue
Suite 2000
Little Rock, Arkansas 72201
Telephone : (501) 370-1543
Telecopy : (501) 376-2147
If to ISD:
US Towers, Inc.
Attention: Stephen H. Clark
1135 Kildaire Farm Road
Suite 200
Cary, North Carolina 27511
Telephone: (919) 550-2800
Telecopy: (919) 481-9255
With a copy (which shall not constitute notice) to:
Hutchison & Mason PLLC
Attention: Fred D. Hutchison, Esq.
4011 Westchase Boulevard, Suite 400
Raleigh, North Carolina 27607
Telephone: (919) 829-9600
Telecopy: (919) 829-9696
15.7 Obligations of the Parties. All obligations of the Members,
Caroline Finley, Telesite and Metrosite hereunder shall be joint and several.
15.8 Knowledge. All references to the knowledge of a party or to
facts known by a party means the actual knowledge of such party, if such
party is a natural person, and the actual
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knowledge of the Chairman, Chief Executive Officer, President or Chief
Financial Officer of such party, if such party is not a natural person.
15.9 Governing Law. This agreement will be governed by the laws of
the State of Delaware without regard to its rules regarding choice of law.
15.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
15.11 Assignment. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interest or
obligations hereunder may be assigned by any of the parties hereto without
the prior written consent of all other parties hereto, and any purported
assignment without such consent shall be void.
15.12 Third Party Beneficiaries. None of the provisions of this
Agreement or any document contemplated hereby is intended to grant any right
or benefit to any person or entity which is not a party to this Agreement.
15.13 Headings. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of
this Agreement.
15.14 Amendments. Any waiver, amendment, modification or supplement of
or to any term or condition of this Agreement will be effective only if in
writing and signed by all parties hereto, and the parties hereto waive the
right to amend the provisions of this Section orally.
15.15 Specific Performance. The Members, Telesite and Metrosite
acknowledge that the Telesite Interests and the Metrosite Interests are
unique and that if the Members, Telesite and Metrosite fail to consummate the
transactions contemplated by this Agreement such failure will cause
irreparable harm to ISD for which there will be no adequate remedy at law.
Buyer shall be entitled, in addition to its other remedies at law or at
equity, to specific performance of this Agreement if the Members, Caroline
Finley, Telesite and Metrosite will, without cause, refuse to consummate the
transactions contemplated by this Agreement.
15.16 Severability. In the event that any provision in this Agreement
shall be determined to be invalid, illegal or unenforceable in any respect,
the remaining provisions of this Agreement will not be in any way impaired,
and the illegal, invalid or unenforceable provision shall be fully severed
from this Agreement and there will be automatically added in lieu thereof a
provision as similar in terms and intent to such severed provision as may be
legal, valid and enforceable.
15.17 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof,
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and supersede all prior and contemporaneous agreements and understandings
between the parties with respect to such subject matter including without
limitation the letter of intent dated March 19, 1997, as amended, between
Telesite and US Towers are hereby expressly terminated.
[The remainder of this page is left blank intentionally.]
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<PAGE> 50
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its duly authorized officer as of the date first
above written.
INTEGRATED SITE DEVELOPMENT, INC.
By: /s/ STEPHEN H. CLARK
----------------------------------
Stephen H. Clark
President
/s/ JOE L. FINLEY, III
--------------------------------------
Joe L. Finley, III
/s/ CAROLINE M. FINLEY
--------------------------------------
Caroline M. Finley
FINLEY FAMILY LIMITED PARTNERSHIP
By: /s/ JOE L. FINLEY, III
----------------------------------
Joe L. Finley, III
General Partnership
THE CENTRAL ARKANSAS OPPORTUNITY
FOUNDATION
By: /s/ JOE L. FINLEY, III
----------------------------------
Joe L. Finley, III
Trustee
TELESITE SERVICES, LLC
By: /s/ JOE L. FINLEY, III
------------------------------------
Joe L. Finley, III
President
49
<PAGE> 51
METROSITE MANAGEMENT, LLC
By: /s/ JOE L. FINLEY, III
------------------------------------
Joe L. Finley, III
President
50
<PAGE> 1
Exhibit 10.29
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 31, 1997, between
US Towers, Inc., a Delaware corporation ("US Towers" or the "Surviving
Corporation") and SpectraSite Communications, LLC, an Arkansas limited liability
company ("SpectraSite Communications") (such entities are herein sometimes
collectively called the "Constituent Entities").
RECITALS
US Towers is a corporation duly organized and existing under the laws of
the State of Delaware, having been incorporated on November 13, 1996, by a
Certificate of Incorporation filed with the Secretary of State of the State of
Delaware and recorded in the Office of the Recorder of Deeds of the County of
New Castle, Delaware, on that date. The registered office of US Towers in the
State of Delaware is located at 1013 Centre Road, in the City of Wilmington,
County of New Castle, and the name of its registered agent at such office is
Corporation Service Company.
SpectraSite Communications is a limited liability company duly organized
and existing under the laws of the State of Arkansas, having been organized on
August 4, 1995, by Articles of Organization filed with the Secretary of State of
the State of Arkansas on that date. The registered office of SpectraSite
Communications in the State of Arkansas is located at 2100 Riverdale Road,
Little Rock, Arkansas, and the name of its registered agent at such office is
Price C. Gardner.
US Towers has an authorized capitalization consisting of 5,000,000 shares
of Common Stock, $0.001 par value per share ("US Towers Common Stock"), 850,000
of which have been validly issued, are outstanding and owned by SpectraSite
Holdings, Inc., a Delaware corporation ("SpectraSite Holdings").
SpectraSite Communications has an authorized capitalization consisting of
one hundred units of membership interests, all of which have been validly
issued, are outstanding and owned by SpectraSite Holdings.
The Boards of Directors, stockholders, and members of the Constituent
Entities deem it desirable, upon the terms and subject to the conditions herein
stated, that SpectraSite Communications be merged with and into US Towers (the
"Merger") and that US Towers be the Surviving Corporation, with the outstanding
membership interests of SpectraSite Communications converted into shares of US
Towers Common Stock.
AGREEMENT
NOW, THEREFORE, it is agreed as follows:
<PAGE> 2
Section 1
Terms
1.1 On the Effective Date (as hereinafter defined) of the Merger,
SpectraSite Communications shall be merged with and into US Towers with US
Towers being the Surviving Corporation.
1.2 On the Effective Date of the Merger, the Surviving Corporation will
have the name "SpectraSite Communications, Inc."
1.3 On the Effective Date of the Merger: (a) each of the then
outstanding membership interests of SpectraSite Communications, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
cancelled and shall cease to exist; and (b) all of the membership interests of
SpectraSite Communications held in the treasuries of SpectraSite Communications
and all of the membership interests of SpectraSite Communications owned by
SpectraSite Holdings shall be cancelled and shall cease to exist.
1.4 On the Effective Date of the Merger, all of the assets and
properties of SpectraSite Communications shall be vested in the Surviving
Corporation without reversion or impairment, and the Surviving Corporation shall
be liable for all liabilities of SpectraSite Communications.
Section 2
Effective Date
2.1 As provided by the applicable laws of the States of Delaware and
Arkansas, as appropriate, this Agreement shall be adopted by written consent of:
(a) the sole stockholder of the Surviving Corporation; and (b) the sole member
of SpectraSite Communications. Following such adoption and if this Agreement is
not terminated as contemplated by Section 4, a Certificate of Merger, executed
in accordance with the laws of the State of Delaware, shall be filed with the
Secretary of State of the State of Delaware, and Articles of Merger, executed in
accordance with the laws of the State of Arkansas, shall be filed with the
Secretary of State of the State of Arkansas.
2.2 The Merger shall become effective at 11:59 p.m. Eastern Standard
Time (10:59 p.m. Central Standard Time), October 31, 1997, the time and date
specified in the Certificate of Merger filed with the Secretary of State of the
State of Delaware, and in the Articles of Merger filed with the Secretary of
State of the State of Arkansas, herein sometimes referred to as of the
"Effective Date" of the Merger.
2
<PAGE> 3
Section 3
Certificate of Incorporation and Bylaws; Directors
3.1 The Certificate of Incorporation and Bylaws of US Towers, as in
effect immediately prior to the Effective Date, shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation until further amended as
provided by law.
3.2 The Board of Directors of US Towers immediately prior to the
Effective Date of the Merger shall be the Board of Directors of the Surviving
Corporation.
Section 4
Amendment and Termination
4.1 To the extent permitted by law, this Agreement may be amended by an
agreement in writing, before or after action by the sole stockholder of US
Towers, and the sole member of SpectraSite Communications, at any time prior to
the Effective Date of the Merger, with respect to any of the terms contained
herein.
4.2 To the extent permitted by law, this Agreement may be terminated
and abandoned by the Board of Directors of US Towers or the Board of Directors
of SpectraSite Communications, before or after action by the sole stockholder of
US Towers and the sole member of SpectraSite Communications, at any time prior
to the Effective Date of the Merger.
3
<PAGE> 4
IN WITNESS WHEREOF, US Towers, SpectraSite Communications, and SpectraSite
Holdings have each caused this Agreement to be executed by its President and
attested by its Secretary, all as of the date first above written.
ATTEST: US TOWERS, INC.
/s/ DAVID P. TOMICK By: /s/ STEPHEN H. CLARK
- ------------------------------ --------------------------------
David P. Tomick, Secretary Stephen H. Clark, President
SPECTRASITE COMMUNICATIONS, LLC
ATTEST: By: SpectraSite Holdings, Inc.
Its Sole Member
/s/ DAVID P. TOMICK By: /s/ STEPHEN H. CLARK
- ------------------------------ --------------------------------
David P. Tomick, Secretary Stephen H. Clark, President
4
<PAGE> 5
CERTIFICATE OF THE SECRETARY
OF
US TOWERS, INC.
I, David P. Tomick, the Secretary of US Towers, Inc., hereby certify that
the Agreement and Plan of Merger to which this certificate is attached, after
having been first duly signed on behalf of the corporation by the President and
Secretary, was duly approved and adopted by written consent in lieu of a meeting
of the sole stockholder of US Towers, Inc. dated October 31, 1997.
WITNESS my hand and seal of said corporation this 31st day of October,
1997.
/s/ DAVID P. TOMMICK
---------------------------------
David P. Tomick, Secretary
CERTIFICATE OF THE SECRETARY
OF
SPECTRASITE HOLDINGS, INC.
I, David P. Tomick, the Secretary of SpectraSite Holdings, Inc., the sole
member of SpectraSite Communications, LLC, hereby certify that the Agreement and
Plan of Merger to which this certificate is attached, after having been first
duly signed on behalf of the company by the President and Secretary, was duly
approved and adopted by written consent in lieu of a meeting of the sole member
of SpectraSite Communications, LLC dated October 31, 1997.
WITNESS my hand and seal of said corporation this 31st day of October,
1997.
/s/ DAVID P. TOMICK
---------------------------------
David P. Tomick, Secretary
5
<PAGE> 1
Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
TeleSite Services, LLC
-----------------------------
(predecessor) SpectraSite Combined SpectraSite Combined SpectraSite
----------------------------- ------------ ------------- ----------- --------- ------------
Nine
Months Nine Months
Year ended January 1 - April 25 - Year ended April 25 - Ended Ended
December 31, May 12, December 31, December 31, September September September
1996 1997 1997 1997 30, 1997 30, 1997 30, 1998
----------------------------- ------------ ------------- ----------- --------- ------------
FIXED CHARGES (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated pretax income
(loss) from continuing
operations 2,289 (503) (2,160) (2,663) (1,128) (1,631) (5,027)
Interest 67 36 164 200 149 185 304
Net amortization of debt
discount and debt
issuance costs - - - - - - 4,031
Interest portion of rental
expense 36 19 77 96 40 72 137
----------- ---------- ------------ ------------- ---------- --------- -----------
Earnings 2,392 (448) (1,919) (2,367) (939) (1,374) (555)
Interest 67 36 164 200 149 185 304
Net amortization of debt
discount and debt
issuance costs - - - - - - 4,031
Interest portion of rental
expense 36 19 77 96 40 72 137
----------- ---------- ------------ ------------- ---------- --------- -----------
Fixed Charges 103 55 241 296 189 257 4,472
----------- ---------- ------------ ------------- ---------- --------- -----------
Ratio of earnings to fixed
charges 23.2 - - - - - -
=========== ========== ============ ============= ========== ========= ===========
Insufficient earnings
to cover fixed charges - $ 503 $ 2,160 $ 2,663 $ 1,128 $ 1,631 $ 5,027
=========== ========== ============ ============= ========== ========= ===========
</TABLE>
<PAGE> 1
Exhibit 21.1
Subsidiaries of SpectraSite Holdings, Inc.
<TABLE>
<CAPTION>
Name State of Incorporation Doing Business As
- ---- ---------------------- -----------------
<S> <C> <C>
SpectraSite Communications, Inc. Delaware SpectraSite Communications
</TABLE>
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated October 23, 1998 in the Registration Statement (Form
S-4) of SpectraSite Holdings, Inc., for the offer to exchange its 12% Senior
Notes due 2008, with respect to the consolidated financial statements of
SpectraSite Holdings, Inc. as of December 31, 1997 and September 30, 1998 and
for the period from inception (April 25, 1997) to December 31, 1997 and for the
nine months ended September 30, 1998 and our report dated March 27, 1998, with
respect to the consolidated financial statements of the Company's predecessor,
TeleSite Services, LLC, as of December 31, 1996 and for the year ended December
31, 1996 and the period from January 1, 1997 to May 12, 1997.
/s/ Ernst & Young LLP
Raleigh, North Carolina
November 9, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
AUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND FOR THE PERIOD FROM APRIL 25, 1997 (INCEPTION) TO
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 APR-25-1997
<PERIOD-END> SEP-30-1998 DEC-31-1997
<CASH> 76,204,475 2,234,148
<SECURITIES> 45,561,147 0
<RECEIVABLES> 1,466,338 1,610,039
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 123,489,075 3,878,206
<PP&E> 15,213,495 1,336,856
<DEPRECIATION> 395,186 160,824
<TOTAL-ASSETS> 163,170,997 13,641,953
<CURRENT-LIABILITIES> 3,034,979 2,708,439
<BONDS> 0 0
39,896,158 10,500,000
0 0
<COMMON> 1,032 932
<OTHER-SE> (8,682,238) (2,159,596)
<TOTAL-LIABILITY-AND-EQUITY> 163,170,997 13,641,953
<SALES> 0 0
<TOTAL-REVENUES> 5,365,175 5,001,668
<CGS> 0 0
<TOTAL-COSTS> 1,863,844 1,119,608
<OTHER-EXPENSES> 6,776,681 6,148,119
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,335,285 163,555
<INCOME-PRETAX> (5,027,798) (2,159,596)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (5,027,798) (2,159,596)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,027,798) (2,159,596)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
Exhibit 99.1
PURSUANT TO THE PROSPECTUS DATED , 1998, THE EXCHANGE OFFER WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED
(THE "EXPIRATION DATE").
SPECTRASITE HOLDINGS, INC.
LETTER OF TRANSMITTAL
12% SENIOR DISCOUNT NOTES DUE 2008
TO: UNITED STATES TRUST COMPANY OF NEW YORK, THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway, 13th Floor
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attn: Corporate Trust Window
Attn: Corporate Trust Services
By Hand: By Facsimile:
United States Trust Company of New York (212) 780-0592
111 Broadway, Lower Level
Corporate Trust Window Confirm by telephone:
New York, New York 10006 (800) 548-6565
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS INSTRUMENT 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 receipt of the Prospectus, dated ,
1998 (the "Prospectus") of SpectraSite Holdings, Inc. (the "Issuer") and the
related Letter of Transmittal (the "Letter of Transmittal"), which together
describe the Issuer's offer (the "Exchange Offer") to exchange $1,000 principal
amount at maturity of its 12% Senior Discount Notes Due 2008 (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement, for each $1,000
principal amount at maturity of its outstanding 12% Senior Discount Notes Due
2008 (the "Old Notes"), of which $225,238,000 original principal amount at
maturity is outstanding. The term "Expiration Date" shall mean 5:00 p.m., New
York City time, on 1998, unless the Issuer, in its sole discretion,
extends the Exchange Offer, in which case the term shall mean the latest date
and time to which the Exchange Offer is extended. The term "Holder" with respect
to the Exchange Offer means any person: (i) in whose name Old Notes are
registered on the books of the Issuer or any other person who has obtained a
properly completed bond power from the registered Holder or (ii) whose Old Notes
are held of record by The Depository Trust Company ("DTC") and who desires to
deliver such Old Notes by book-entry transfer at DTC. Capitalized terms used but
not defined herein have the respective meanings set forth in the Prospectus.
<PAGE> 2
This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Old Notes is to be made by book-entry
transfer to the Exchange Agent's account at DTC pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Procedures for Tendering"
by any financial institution that is a participant in DTC and whose name appears
on a security position listing as the owner of Old Notes (such participants,
acting on behalf of Holders, are referred to herein as "Acting Holders"); or
(iii) tender of Old Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2 below. Delivery of
documents to DTC does not constitute delivery to the Exchange Agent.
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 Old Notes must complete
this Letter of Transmittal in its entirety.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE
AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
DTC Book-Entry Account No.:
Transaction Code No.:
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 2):
Name of Registered or Acting Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution
that Guaranteed Delivery:
If Delivered by Book-Entry Transfer,
DTC Book-Entry Account No.:
Transaction Code Number:
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
PLEASE NOTE: THE ISSUER HAS AGREED THAT, FOR A PERIOD OF 180 DAYS AFTER THE
EXPIRATION DATE, OR UNTIL ALL BROKER-DEALERS WHO EXCHANGE OLD NOTES WHICH
WERE ACQUIRED AS A RESULT OF MARKET MAKING ACTIVITIES FOR EXCHANGE NOTES
HAVE SOLD ALL EXCHANGE NOTES HELD BY THEM, THE ISSUER WILL MAKE COPIES OF
THE PROSPECTUS AVAILABLE TO ANY PARTICIPATING BROKER-DEALER FOR USE IN
CONNECTION WITH RESALES OF THE EXCHANGE NOTES (PROVIDED THAT SUCH
BROKER-DEALER REQUESTS COPIES OF THE PROSPECTUS).
Name:
Address:
Attention:
2
<PAGE> 3
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX BELOW
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the certificate numbers and principal
amount at maturity of Old Notes should be listed on a separate signed schedule
affixed hereto.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
BOX 1
DESCRIPTION OF 12% SENIOR DISCOUNT NOTES DUE 2008 (OLD NOTES)
- ------------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT AT MATURITY TENDERED
(PLEASE FILL IN, IF BLANK) NUMBER(S)** AT MATURITY (MUST BE IN
REPRESENTED BY INTEGRAL MULTIPLE
CERTIFICATE(S) OF $1,000)*
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders who wish to tender with respect to all Old Notes listed. See Instruction 4.
If the space provided above is inadequate, list the certificate numbers and Principal Amounts at Maturity on a
separate signed schedule and affix the list to this Letter of Transmittal.
** Need not be completed by Holders tendering by book-entry transfer.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Old Notes in a principal amount at
maturity not tendered, or Exchange Notes issued in exchange for Old Notes
accepted for exchange, are to be issued in a name other than the name appearing
in Box 1 above.
Issue Certificate(s) to:
Name:
(PLEASE PRINT)
Address:
(INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Old Notes in a principal amount at
maturity not tendered, or Exchange Notes issued in exchange for Old Notes
accepted for exchange, are to be sent to an address other than the address
appearing in Box 1 above, or if Box 2 is filled in, to an address other than the
address appearing in Box 2.
Deliver Certificate(s) to:
Name:
(PLEASE PRINT)
Address:
(INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
BOX 4
BROKER-DEALER STATUS
[ ] Check this box if the beneficial owner of the Old Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Old Notes
for its own account as a result of market-making activities or other trading
activities.
4
<PAGE> 5
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to SpectraSite Holdings, Inc. (the "Issuer") the principal amount
at maturity of Old Notes indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount at maturity of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Issuer all right, title and interest in and to the Old Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent its agent and attorney-in-fact (with full knowledge that the Exchange
Agent also acts as the agent of the Issuer) with respect to the tendered Old
Notes with the full power of substitution to (i) present such Old Notes and all
evidences of transfer and authenticity to, or transfer ownership of, such Old
Notes on the account books maintained by DTC to, or upon, the order of, the
Issuer, (ii) deliver certificates for such Old Notes to the Issuer and deliver
all accompanying evidences of transfer and authenticity to, or upon the order
of, the Issuer and (iii) present such Old Notes for transfer on the books of the
Issuer and receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the Exchange
Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Issuer will acquire good, valid and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claims, when the same are acquired
by the Issuer. The undersigned hereby further represents that (i) the Exchange
Notes are to be acquired by the Holder or the person receiving such Exchange
Notes, whether or not such person is the Holder, in the ordinary course of
business, (ii) the Holder or any such other person is not engaging and does not
intend to engage in the distribution of the Exchange Notes, (iii) the Holder or
any such other person has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, and (iv) neither the
Holder nor any such other person is an "affiliate" of the Issuer within the
meaning of Rule 405 under the Securities Act. As indicated above, each
Participating Broker-Dealer that receives an Exchange Note for its own account
in exchange for Old Notes must acknowledge that it (i) acquired the Old Notes
for its own account as a result of market-making activities or other trading
activities, (ii) has not entered into any arrangement or understanding with the
Issuer or any "affiliate" of the Issuer (within the meaning of Rule 405 under
the Securities Act) to distribute the Exchange Notes to be received in the
Exchange Offer and (iii) will deliver a Prospectus in connection with any resale
of such Exchange 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. If applicable, the
undersigned shall use its reasonable best efforts to notify the Issuer when it
is no longer subject to such Prospectus delivery requirements. Unless otherwise
notified in accordance with the instructions set forth herein in Box 4 under
"Broker-Dealer Status," the Issuer will assume that the undersigned is not a
Participating Broker-Dealer. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in and does not intend to engage
in, a distribution of Exchange Notes.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Old Notes when, as and if the Issuer has given oral or
written notice thereof to the Exchange Agent.
If any Old Notes tendered herewith are not accepted for exchange pursuant
to the Exchange Offer for any reason, certificates for any such unaccepted Old
Notes will be returned (except as noted below with respect to tenders through
DTC), without expense, to the undersigned at the address shown below or to a
different address as may be indicated herein in Box 3 under "Special Delivery
Instructions" as promptly as practicable after the Expiration Date.
5
<PAGE> 6
All authority conferred or agreed 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 Old 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 Issuer upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer -- Withdrawal of Tenders."
Unless otherwise indicated in Box 2 under "Special Registration
Instructions," please issue the certificates representing the Exchange Notes
issued in exchange for the Old Notes accepted for exchange and any certificates
for Old Notes not tendered or not exchanged, in the name(s) of the registered
Holder of the Old Notes appearing in Box 1 above (or in such event in the case
of Old Notes tendered by DTC, by credit to the account of DTC). Similarly,
unless otherwise indicated in Box 3 under "Special Delivery Instructions,"
please send the certificates, if any, representing the Exchange Notes issued in
exchange for the Old Notes accepted for exchange and any certificates for Old
Notes not tendered or not exchanged (and accompanying documents, as appropriate)
to the undersigned at the address shown below in the undersigned's signature(s),
unless tender is being made through DTC. In the event that the box entitled
"Special Registration Instructions" and the box entitled "Special Delivery
Instructions" both are completed, please issue the certificates representing the
Exchange Notes issued in exchange for the Old Notes accepted for exchange in the
name(s) of, and return any certificates for Old Notes not tendered or not
exchanged to, the person(s) so indicated. The undersigned understands that the
Issuer has no obligation pursuant to the "Special Registration Instructions" and
"Special Delivery Instructions" to transfer any Old Notes from the name of the
registered Holder(s) thereof if the Issuer does not accept for exchange any of
the Old Notes so tendered.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver the Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2.
6
<PAGE> 7
The lines below must be signed by the registered Holder(s) exactly as their
name(s) appear(s) on the Old Notes or, if tendered by a participant in DTC,
exactly as such participant's name appears on a security position listing as the
owner of Old Notes, or by person(s) authorized to become registered Holder(s) by
a properly completed bond power from the registered Holder(s), a copy of which
must be transmitted with this Letter of Transmittal. If Old 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.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
<TABLE>
<S> <C>
x
- ------------------------------------------------------------ -------------------
DATE
- ------------------------------------------------------------ -------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) DATE
OR AUTHORIZED SIGNATORY
</TABLE>
Area Code and Telephone Number:
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) submit evidence satisfactory to the Issuer of such person's
authority so to act. See Instruction 5.
Name(s):
(PLEASE TYPE OR PRINT)
Capacity:
Address:
(INCLUDE ZIP CODE)
MEDALLION SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 5)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
Signature(s) Guaranteed by an Eligible Institution:
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(TITLE)
- --------------------------------------------------------------------------------
(NAME OF FIRM)
- --------------------------------------------------------------------------------
(ADDRESS, INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(AREA CODE AND TELEPHONE NUMBER)
Dated: , 1998
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates for Old Notes or
Book-Entry Confirmations. Certificates representing the tendered Old Notes (or a
confirmation of book-entry transfer of such Old Notes into the Exchange Agent's
account with DTC), as well as a properly completed and duly executed copy of
this Letter of Transmittal (or facsimile thereof) (or, in the case of a
book-entry transfer, an Agent's Message), a Substitute Form W-9 (or facsimile
thereof) and any other documents required by this Letter of Transmittal must be
received by the Exchange Agent at its address set forth herein prior to the
Expiration Date. The method of delivery of certificates for Old Notes and all
other required documents is at the election and sole risk of the tendering
Holder and delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. As an alternative to delivery by
mail, the Holder may wish to use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. Neither the
Issuer nor the Exchange Agent is under an obligation to notify any tendering
Holder of the Issuer's acceptance of tendered Old Notes prior to the completion
of the Exchange Offer.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Old
Notes but whose Old Notes are not immediately available and who cannot deliver
their certificates for Old Notes (or comply with the procedures for book-entry
transfer prior to the Expiration Date), the Letter of Transmittal and any other
documents required by the Letter of Transmittal to the Exchange Agent prior to
the Expiration Date must tender their Old Notes according to the guaranteed
delivery procedures set forth below. Pursuant to such procedures:
(i) such tender must be made by or through a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States (an
"Eligible Institution");
(ii) prior to the Expiration Date, the Exchange Agent must have
received from the Holder and the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by
facsimile transmission, mail, or hand delivery) setting forth the name
and address of the Holder, the certificate number or numbers of the
tendered Old Notes, and the principal amount of tendered Old Notes and
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) (or, in the
case of a book-entry transfer, an Agent's Message), together with the
tendered Old Notes (or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account with DTC) and any other
required documents will be deposited by the Eligible Institution with
the Exchange Agent; and
(iii) the certificates representing the tendered Old Notes in
proper form for transfer (or a confirmation of book-entry transfer of
such Old Notes into the Exchange Agent's account with DTC), together
with the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and all
other documents required by the Letter of Transmittal must be received
by the Exchange Agent within five New York Stock Exchange trading days
after the Expiration Date.
Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery procedure.
3. Tender by Holder. Only a Holder or Acting Holder of Old Notes may
tender such Old Notes in the Exchange Offer. Any beneficial owner of Old Notes
who is not the registered Holder and who wishes to tender should arrange with
such 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 such Old Notes, either make
8
<PAGE> 9
appropriate arrangements to register ownership of the Old Notes in such owner's
name or obtain a properly completed bond power from the registered Holder.
4. Partial Tenders. Tenders of Old Notes will be accepted only in integral
multiples of $1,000 principal amount at maturity. If less than the entire
principal amount at maturity of Old Notes is tendered, the tendering Holder
should fill in the principal amount at maturity tendered in the column labeled
"Principal Amount at Maturity Tendered" of the box entitled "Description of Old
Notes" (Box 1) above. The entire principal amount at maturity of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount at maturity of Old Notes is
not tendered, Old Notes for the principal amount at maturity of Old Notes not
tendered and Exchange Notes exchanged for any Old Notes tendered will be sent to
the Holder at his or her registered address, unless a different address is
provided in the appropriate box on this Letter of Transmittal or unless tender
is made through DTC, as soon as practicable following the Expiration Date.
5. Signatures on the Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signature. If this Letter of Transmittal is signed by
the registered Holder(s) of the Old Notes tendered herewith, the signatures must
correspond with the name(s) as written on the face of the tendered Old Notes
without alteration, enlargement, or any change whatsoever.
If any of the tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Old Notes are held in different names on several Old Notes, it will be necessary
to complete, sign, and submit as many separate copies of the Letter of
Transmittal documents as there are names in which tendered Old Notes are held.
If this Letter of Transmittal is signed by the registered Holder, and
Exchange Notes are to be issued and any untendered or unaccepted principal
amount at maturity of Old Notes are to be reissued or returned to the registered
Holder, then the registered Holder need not and should not endorse any tendered
Old Notes nor provide a separate bond power. In any other case, the registered
Holder must either properly endorse the Old Notes tendered or transmit a
properly completed separate bond power with this Letter of Transmittal (executed
exactly as the name(s) of the registered Holder(s) appear(s) on such Old Notes),
with the signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution unless such certificates or bond powers are signed by an Eligible
Institution.
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and evidence satisfactory to the Issuer
of their authority to so act must be submitted with this Letter of Transmittal.
No medallion signature guarantee is required if (i) this Letter of
Transmittal is signed by the registered Holder(s) of the Old Notes tendered
herewith and the issuance of Exchange Notes (and any Old Notes not tendered or
not accepted) are to be issued directly to such registered Holder(s) and neither
the "Special Registration Instructions" (Box 2) nor the "Special Delivery
Instructions" (Box 3) has been completed. In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution.
6. Special Registration and Delivery Instructions. Tendering Holders
should indicate, in the applicable box, the name and address in which the
Exchange Notes and/or substitute Old Notes for Principal Amounts at Maturity not
tendered or not accepted for exchange are to be sent, if different from the name
and address or account of the person signing this Letter of Transmittal. In the
case of issuance in a different name, the employer identification number or
social security number of the person named must also be indicated and the
indicated and the tendering Holders should complete the applicable box.
If no such instructions are given, the Exchange Notes (and any Old Notes
not tendered or not accepted) will be issued in the name of and sent to the
registered Holder of the Old Notes.
7. Transfer Taxes. The Issuer will pay all transfer taxes, if any,
applicable to the sale and transfer of Old Notes to the Issuer or its order
pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any
reason other than the transfer and sale of Old Notes to the Issuer or its order
pursuant to the Exchange
9
<PAGE> 10
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or on any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption from such
taxes 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 7, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
8. Tax Identification Number. Under the federal income tax laws, payments
that may be made by the Issuer on account of Exchange Notes issued pursuant to
the Exchange Offer may be subject to backup withholding at the rate of 31%. In
order to avoid such backup withholding, each tendering Holder should complete
and sign the Substitute Form W-9 included in this Letter of Transmittal and
either (a) provide the correct taxpayer identification number ("TIN") and
certify, under penalties of perjury, that the TIN provided is correct and that
(i) the Holder has not been notified by the Internal Revenue Service (the "IRS")
that the Holder is subject to backup withholding as a result of failure to
report all interest or dividends or (ii) the IRS has notified the Holder that
the Holder is no longer subject to backup withholding; or (b) provide an
adequate basis for exemption. If the tendering Holder has not been issued a TIN
and has applied for one, or intends to apply for one in the near future, such
holder should write "Applied For" in the space provided for the TIN in Part I of
the Substitute Form W-9, sign and date the Substitute Form W-9 and sign the
Certificate of Payee Awaiting Taxpayer Identification Number. If "Applied For"
is written in Part I, the Issuer (or the Exchange Agent with respect to the
Exchange Notes or a broker or custodian) may still withhold 31% of the amount of
any payments made on account of the Exchange Notes until the Holder furnishes
the Issuer or the Exchange Agent with respect to the Exchange Notes, broker or
custodian with its TIN. In general, if a Holder is an individual, the taxpayer
identification number is the Social Security number of such individual. If the
Exchange Agent or the Issuer are not provided with the correct TIN, the Holder
may be subject to a $50 penalty imposed by the IRS. Certain Holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. In order for a foreign
individual to qualify as an exempt recipient, such Holder must submit a
statement (generally, IRS Form W-8), signed under penalties of perjury,
attesting to that individual's exempt status. Such statements can be obtained
from the Exchange Agent.
Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Notes to be deemed invalidly tendered, but may require the Issuer or the
Exchange Agent with respect to the Exchange Notes, broker or custodian to
withhold 31% of the amount of any payments made on account of the Exchange
Notes. Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person 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.
9. Validity of Tenders. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of tendered Old Notes
will be determined by the Issuer, in its sole discretion, which determination
will be final and binding. The Issuer reserves the right to reject any and all
Old Notes not validly tendered or any Old Notes, the Issuer's acceptance of
which would, in the opinion of the Issuer or its counsel, be unlawful. The
Issuer also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Notes as to any ineligibility of any
Holder who seeks to tender Old Notes in the Exchange Offer. The interpretation
of the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Issuer shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Issuer shall determine. The Issuer will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Old Notes,
but shall not incur any liability for failure to give such notification.
10. Waiver of Conditions. The Issuer reserves the absolute right to amend,
waive, or modify specified conditions in the Exchange Offer in the case of any
tendered Old Notes.
11. No Conditional Tender. No alternative, conditional, irregular, or
contingent tender of Old Notes will be accepted.
10
<PAGE> 11
12. Mutilated, Lost, Stolen, or Destroyed Old Notes. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen, or destroyed should contact
the Exchange Agent at the address indicated above for further instructions.
13. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address set forth on the first page of
this Letter of Transmittal. Holders may also contact their broker, dealer,
commercial bank, trust company, or other nominee for assistance concerning the
Exchange Offer.
14. Acceptance of Tendered Old Notes and Issuance of Exchange Notes; Return
of Old Notes. Subject to the terms and conditions of the Exchange Offer, the
Issuer will accept for exchange all validly tendered Old Notes as soon as
practicable after the Expiration Date and will issue Exchange Notes therefor as
soon as practicable thereafter. For purposes of the Exchange Offer, the Issuer
shall be deemed to have accepted tendered Old Notes when, as and if the Issuer
has given written and oral notice thereof to the Exchange Agent. If any tendered
Old Notes are not exchanged pursuant to the Exchange Offer for any reason, such
unexchanged Old Notes will be returned, without expense, to the undersigned at
the address shown above or at a different address as may be indicated under
"Special Delivery Instructions."
15. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<CAPTION>
CERTIFICATE OLD NOTES OLD NOTES
SURRENDERED TENDERED ACCEPTED
<S> <C> <C>
</TABLE>
Delivery Prepared By: ________ Checked By: ________ Date: ________
11
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: SPECTRASITE HOLDINGS, INC.
- ------------------------------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity whose number you
enter in Part 1 below. See instructions if your name has changed.)
----------------------------------------------------------------------------------------------
Address
----------------------------------------------------------------------------------------------
SUBSTITUTE City, State and ZIP Code
FORM W-9
----------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 1 -- PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUM- Social Security
BER ("TIN") IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND Number or TIN
INTERNAL REVENUE SERVICE DATING BELOW
----------------------------------------------------------------------------------------------
PART 2 -- Check the box if you are NOT subject to backup withholding under the
provisions of section 3408(a)(1)(C) of the Internal Revenue Code because (1) you have
not been notified that you are subject to backup withholding as a result of failure
to report all interest or dividends or (2) the Internal Revenue Service has notified
you that you are no longer subject to backup withholding. [ ]
- ------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY PART 3 --
THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT Awaiting TIN [ ]
AND COMPLETE.
Signature: Date:
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
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 Administrative Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number by the time of the
exchange, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
<TABLE>
<S> <C>
Signature: Date:
</TABLE>
12
<PAGE> 1
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
12% SENIOR DISCOUNT NOTES DUE 2008
OF
SPECTRASITE HOLDINGS, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of SpectraSite Holdings, Inc. (the "Issuer") made pursuant to the
Prospectus dated , 1998 (the "Prospectus") if Holders of certificates
for the 12% Senior Discount Notes Due 2008 (the "Old Notes") who wish to tender
their Old Notes but whose Old Notes are not immediately available and who cannot
deliver their certificates for Old Notes (or comply with the procedures for
book-entry transfer prior to the Expiration Date), the Letter of Transmittal and
any other documents required by the Letter of Transmittal to the Exchange Agent
prior to 5:00 P.M., New York City time, on the Expiration Date (as defined in
the Prospectus). Such form may be delivered by hand or transmitted by facsimile
transmission, overnight courier or mail to the Exchange Agent. Capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.
TO: UNITED STATES TRUST COMPANY OF NEW YORK, THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway, 13th Floor
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attn: Corporate Trust Window
Attn: Corporate Trust Services
By Hand: By Facsimile:
United States Trust Company of New York (212) 780-0592
111 Broadway, Lower Level
Corporate Trust Window Confirm by telephone:
New York, New York 10006 (800) 548-6565
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal to be used to tender Old Notes is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuer, upon the terms and subject to
the conditions set forth in the Prospectus and the Letter of Transmittal (which
together constitute the "Exchange Offer"), receipt of which is hereby
acknowledged, (number of Old Notes) Old Notes pursuant to the
guaranteed delivery procedures set forth in Instruction 2 of the Letter of
Transmittal.
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.
<TABLE>
<S> <C>
Certificate No(s). for Old Notes (if Name(s) of Record Holder(s)
available)
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- --------------------------------------------
PLEASE PRINT OR TYPE
Address
--------------------------------------------
Telephone. No. ( )_
Signature(s)
--------------------------------------------
Dated:
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or 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, hereby (a) represents that the
above named person(s) own(s) the Old Notes tendered hereby and (b) guarantees
that delivery to the Exchange Agent of certificates for the Old Notes tendered
hereby, in proper form for transfer, with delivery of a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature and any other required documents, will be received by the
Exchange Agent at one of its addresses set forth above within five business days
after the Expiration Date.
Name of Firm
Authorized Signature
Name
PLEASE PRINT OR TYPE
Title
Address
Zip Code
Telephone. No. ( )_
Dated: , 1998
NOTE: DO NOT SEND OLD NOTES WITH THIS FORM; OLD NOTES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE EXCHANGE AGENT WITHIN
FIVE BUSINESS DAYS AFTER THE EXPIRATION DATE.
