<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SPECTRASITE HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[Spectrasite Logo]
To the Stockholders of SpectraSite Holdings, Inc.
You are invited to attend the Annual Meeting of Stockholders of SpectraSite
Holdings, Inc. to be held at the Washington Duke Inn, 301 Cameron Boulevard,
Durham, North Carolina on Tuesday, May 2, 2000 at 1:30 p.m., local time.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement explain the matters to be voted on at the meeting. Please read the
enclosed Notice and Proxy Statement so you will be informed about the business
to come before the meeting. Your vote is important, regardless of the number of
shares you own. On behalf of the Board of Directors, I urge you to mark, sign
and return the enclosed proxy card as soon as possible, even if you plan to
attend the Annual Meeting. You may, of course, revoke your proxy by notice in
writing to SpectraSite's Secretary at any time before the proxy is voted.
Sincerely,
/s/ STEPHEN CLARK
Stephen H. Clark
President and Chief Executive Officer
<PAGE> 3
SPECTRASITE HOLDINGS, INC.
100 REGENCY FOREST DRIVE
SUITE 400
CARY, NORTH CAROLINA 27511
(919) 468-0112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 2, 2000
To the Stockholders of SpectraSite Holdings, Inc.
The Annual Meeting of the holders of common stock of SpectraSite Holdings,
Inc. will be held at the Washington Duke Inn, 301 Cameron Boulevard, Durham,
North Carolina 27706, on Tuesday, May 2, 2000 at 1:30 p.m., local time, for the
following purposes:
1. to elect eleven members of the Board of Directors to serve until the
2001 Annual Meeting of Stockholders or until their successors are
duly elected and qualified;
2. to amend the Stock Incentive Plan to increase the allocated shares
from 10 million to 20 million;
3. to ratify the appointment by the Board of Directors of Ernst & Young
LLP, independent certified public accountants, as the independent
auditors for the year ending December 31, 2000; and
4. to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 17, 2000 as the record date for the
Annual Meeting with respect to this solicitation. Only holders of record of
SpectraSite's common stock at the close of business on that date are entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof as
described in the Proxy Statement.
SpectraSite's Annual Report to Stockholders for the year ended December 31,
1999 is enclosed.
By Order of the Board of Directors,
/s/ DAVID TOMICK
David P. Tomick
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE AS
PROMPTLY AS POSSIBLE. A PROXY MAY BE REVOKED BY A STOCKHOLDER ANY TIME PRIOR TO
ITS USE AS SPECIFIED IN THE ENCLOSED PROXY STATEMENT.
<PAGE> 4
SPECTRASITE HOLDINGS, INC.
100 REGENCY FOREST DRIVE
SUITE 400
CARY, NORTH CAROLINA 27511
(919) 468-0112
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
SOLICITATION OF PROXIES
The Board of Directors of SpectraSite Holdings, Inc. is furnishing this
Proxy Statement to solicit proxies for use at SpectraSite's 2000 Annual Meeting
of Stockholders, to be held on Tuesday, May 2, 2000 at 1:30 p.m., local time, at
the Washington Duke Inn, 301 Cameron Boulevard, Durham, North Carolina 27706,
and at any adjournment of the meeting. Each valid proxy received in time will be
voted at the meeting according to the choice specified, if any. A proxy may be
revoked at any time before the proxy is voted as outlined below.
This Proxy Statement and the enclosed proxy card are first being sent for
delivery to SpectraSite stockholders on or about March 31, 2000. SpectraSite
will pay the cost of solicitation of proxies, including the reimbursement to
banks and brokers for reasonable expenses for sending proxy materials to their
principals.
The shares of common stock represented by valid proxies we receive in time
for the Annual Meeting will be voted as specified in such proxies. Valid proxies
include all proxy cards properly executed pursuant to this solicitation and not
later revoked. Voting your proxy by mail will not limit your right to vote at
the Annual Meeting if you later decide to attend in person. Executed but unvoted
proxies will be voted:
(1) FOR the election of the Board of Directors' nominees for directors;
(2) FOR the amendment to the Stock Incentive Plan to increase the
allocated shares from 10 million to 20 million; and
(3) FOR the ratification of the appointment of Ernst & Young LLP,
independent certified public accountants, as SpectraSite's
independent auditors for the year ending December 31, 2000.
If any other matters properly come before the Annual Meeting, the persons
named on the proxies will, unless the stockholder otherwise specifies in the
proxy, vote upon such matters in accordance with their best judgment.
VOTING SECURITIES
SpectraSite has one class of outstanding voting securities, its common
stock, $.001 par value per share. SpectraSite has two classes of authorized
common stock which are identical in all respects, except that one class is
non-voting. If a stockholder is deemed a regulated entity under the Bank Holding
Company Act of 1956, as amended, its shares of common stock over 5% of the total
issued and outstanding common stock will become non-voting until transferred to
a non-regulated entity. A portion of the shares held by affiliates of Canadian
Imperial Bank of Commerce are non-voting while owned by such affiliates. As of
February 29, 2000, there were 124,265,493 shares of common stock issued, of
which 120,478,767 are entitled to vote at the Annual Meeting.
Only holders of record of shares of common stock at the close of business
on March 17, 2000, which the Board of Directors has fixed as the record date,
are entitled to vote at the meeting.
Each share of common stock is entitled to one vote. The presence in person
or by proxy of holders of a majority of the issued and outstanding shares of
common stock entitled to vote at the Annual Meeting will constitute a quorum.
Stockholders may elect to vote for the entire slate of eleven nominees for the
Board of Directors, to vote against the entire slate of nominees, or to vote for
some nominees but not others. The
<PAGE> 5
affirmative vote of a majority of the shares of the common stock present at the
Annual Meeting in person or by proxy, and entitled to vote, is required for
approval of the amendment to the Stock Incentive Plan and for the ratification
of appointment of our independent auditors.
Stockholders voting by proxy may elect to vote for all eleven nominees as a
slate, or may elect to vote for certain nominees but not others, at their
discretion; provided, however, that a stockholder voting by proxy who elects to
vote for fewer than all eleven nominees must specify, in writing on the proxy
where indicated, the name or names of the nominee or nominees for whom such
stockholder has elected to refrain voting. We will count shares that the
stockholder votes "for" the nominees for the Board of Directors, where such
stockholder does not specify any nominee for whom he or she elects to refrain
voting, as a vote for the entire slate of nominees. We will count shares that
the stockholder does not vote "for" the nominees or some of them, as a vote
"against" the proposal to elect the nominees to the Board of Directors. On the
other hand, broker non-votes are not considered shares entitled to vote on this
proposal and are not included in determining whether the proposal is approved. A
broker non-vote occurs when the nominee of a beneficial owner with the power to
vote on at least one matter does not vote on another matter because the nominee
does not have discretionary voting power and has not received instructions from
the beneficial owner with respect to such matter. Accordingly, broker non-votes
have no effect on the outcome of a vote on the proposal to elect the nominees to
the Board of Directors.
In determining whether the proposals to amend the Stock Incentive Plan and
to ratify the appointment of our independent auditors are approved, we will
count shares that the stockholder does not vote "for" a proposal as a vote
"against" that proposal. Thus, an abstention would have the effect of a vote
against the applicable proposal. On the other hand, broker non-votes are not
considered shares entitled to vote on the applicable proposal and are not
included in determining whether such proposal is approved. As described in the
preceding paragraph, broker non-votes have no effect on the outcome of a vote on
the applicable proposal.
VOTING BY PROXY
If a stockholder is a corporation or partnership, the accompanying proxy
card must be signed in the full corporate or partnership name by a duly
authorized person. If the proxy card is signed pursuant to a power of attorney
or by an executor, administrator, trustee or guardian, the signer's full title
must be given and a certificate or other evidence of appointment must be
furnished. If shares are owned jointly, each joint owner must sign the proxy
card.
Any proxy duly given pursuant to this solicitation may be revoked by the
stockholder, at any time prior to the voting of the proxy, by written notice to
SpectraSite's Secretary, either by a later dated proxy signed and returned by
mail or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not in and of itself constitute a revocation of a proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth, as of February 29, 2000, information with
respect to the beneficial ownership of SpectraSite's common stock by:
- each person who is known to be the beneficial owner of more than 5% of
any class or series of capital stock;
- each of the directors and named executive officers individually; and
- all directors and executive officers as a group.
The amounts and percentages of common stock beneficially owned are reported
on the basis of regulations of the SEC governing the determination of beneficial
ownership of securities. Under the rules of the SEC, 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
2
<PAGE> 6
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.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE OF
BENEFICIALLY TOTAL VOTING
NAME OF BENEFICIAL OWNER OWNED POWER
------------------------ ------------ -------------
<S> <C> <C>
Stephen H. Clark(a)......................................... 1,614,435 1.3%
Timothy G. Biltz............................................ -- --
David P. Tomick(b).......................................... 257,500 *
Richard J. Byrne(c)......................................... 90,000 *
Terry L. Armant(d).......................................... 36,250 *
Calvin J. Payne(e).......................................... 2,091,454 1.7%
Michael R. Stone(f)......................................... 12,676,837 10.2%
James R. Matthews(f)........................................ 12,676,837 10.2%
Lawrence B. Sorrel(g)....................................... 30,875,000 24.8%
Andrew R. Heyer(h)(k)....................................... 10,312,500 8.3%
Thomas E. McInerney(g)...................................... 31,087,973 25.0%
Michael J. Price(i)......................................... 200,000 *
Rudolph E. Rupert(g)........................................ 30,850,000 24.8%
Timothy M. Donahue(j)....................................... 14,025,000 11.3%
Steven M. Shindler(j)....................................... 14,000,000 11.3%
Nextel Communications, Inc.(j).............................. 14,000,000 11.3%
Welsh, Carson, Anderson & Stowe(g).......................... 30,825,000 24.8%
Funds affiliated with J.H. Whitney & Co.(f)................. 12,676,837 10.2%
Canadian Imperial Bank of Commerce(h)....................... 10,000,000 8.0%
All directors and executive officers as a group (20
persons)(l)............................................... 73,294,755 58.7%
</TABLE>
- ---------------
* Less than 1%.
(a) Includes 155,000 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days. Of the shares reported in
the table, 816,327 are held by Holt Road, L.P. Mr. Clark owns a 1% general
partnership interest, certain family trusts own a 98% limited partnership
interest and Mary Clark, Mr. Clark's spouse, owns a 1% limited partnership
interest in Holt Road, L.P. Mr. Clark is a trustee of each family trust, and
he disclaims beneficial ownership of the shares held by Holt Road, L.P., as
well as those deemed to be beneficially owned by the family trusts.
(b) Includes 45,000 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(c) Includes 40,000 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(d) Includes 36,250 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(e) Includes 177,380 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(f) Represents 4,923,524 shares held by Whitney Equity Partners, L.P.; 7,265,734
shares held by J.H. Whitney III, L.P.; 175,079 shares held by Whitney
Strategic Partners III, L.P.; and 312,500 shares held by J.H. Whitney
Mezzanine Fund, L.P. Each of these funds is affiliated with J.H. Whitney &
Co. Each of Mr. Stone and Mr. Matthews disclaims beneficial ownership of
shares held by these entities except to the extent of his pecuniary interest
in such funds. The business address for Mr. Stone, Mr. Matthews and the
Whitney funds is 177 Broad Street, Stamford, Connecticut 06901.
(g) Messrs. Sorrel, McInerney and Rupert are each principals of Welsh, Carson,
Anderson & Stowe and acquired directly 50,000, 262,973 and 25,000 shares,
respectively. Messrs. Sorrel, McInerney and Rupert
3
<PAGE> 7
each disclaim beneficial ownership of the shares held by Welsh, Carson. The
business address for Messrs. Sorrel, McInerney and Rupert and Welsh, Carson
is 320 Park Avenue, Suite 2500, New York, New York 10022.
(h) Andrew R. Heyer, an employee of an affiliate of Canadian Imperial Bank of
Commerce, along with Jay R. Bloom and Dean C. Kehler, who are also employees
of an affiliate of Canadian Imperial Bank of Commerce, have shared power to
vote and dispose of the Series C preferred stock reported in the table. The
business address for Canadian Imperial Bank of Commerce is 161 Bay Street,
PP Box 500, M51 258, Toronto, Canada, and the business address for Mr. Heyer
is 425 Lexington Avenue, 3rd Floor, New York, New York 10017. Pursuant to
SpectraSite's amended and restated certificate of incorporation, the shares
of common stock beneficially owned by Canadian Imperial Bank of Commerce in
excess of 5% of the total issued and outstanding common stock shall be
non-voting until such shares are transferred to an entity not subject to the
restrictions of the Bank Holding Company Act of 1956, as amended.
(i) Includes 100,000 shares of common stock reported as beneficially owned by
Mr. Price which are held by The Price Family Limited Partnership. Mr. Price
disclaims beneficial ownership of all such shares.
(j) Messrs. Donahue and Shindler are executive officers of Nextel and disclaim
beneficial ownership of the shares held by Nextel. Mr. Donahue owns 25,000
shares directly, and Mr. Shindler owns no shares directly. The business
address for Messrs. Donahue and Shindler and Nextel is 2001 Edmund Halley
Drive, Reston, Virginia 20191.
(k) Includes 312,500 shares of common stock held by Caravelle Investment Fund,
L.L.C. The general partner and investment manager of Caravelle Investment
Fund, L.L.C. are affiliates of Andrew R. Heyer, Jay R. Bloom and Dean C.
Kehler. See footnote (h).
(l) Includes shares of common stock issuable upon the exercise of outstanding
options exercisable within 60 days.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors had seven regular meetings and no special meetings
and approved actions by unanimous written consent eight times in 1999. During
1999, the Executive Committee held no meetings and approved actions by unanimous
written consent one time. The current members of the Executive Committee are
Stephen Clark, Andrew Heyer, Thomas McInerney, Steven Shindler, Lawrence Sorrel
and Michael Stone.
The Board of Directors also has an Audit Committee and a Compensation
Committee. The Audit Committee, to the extent not otherwise approved by the full
Board of Directors:
- approves the selection of the independent auditors for SpectraSite;
- reviews the scope and results of the annual audit;
- approves the services to be performed by the independent auditors;
- reviews the performance and fees of the independent auditors;
- reviews the independence of the auditors;
- reviews the adequacy of the system of internal accounting controls;
- reviews the scope and results of internal auditing procedures; and
- reviews related party transactions.
The Audit Committee held one telephonic meeting during 1999 and did not approve
any actions by unanimous written consent in 1999. The current members of the
Audit Committee are James Matthews, Michael Price and Lawrence Sorrel.
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<PAGE> 8
The Compensation Committee, to the extent not otherwise approved by the
full Board of Directors:
- adopts and oversees the administration of compensation plans for
executive officers and senior management of SpectraSite;
- determines awards granted to executive officers under such plans;
- approves the Chief Executive Officer's compensation; and
- reviews the reasonableness of such compensation.
The Compensation Committee did not meet in 1999 and did not approve any actions
by unanimous written consent. The members of the Compensation Committee in 1999
were Thomas McInerney, Lawrence Sorrel and Michael Stone. In March 2000, the
Board of Directors appointed Timothy Donahue as a fourth member of the
Compensation Committee.
During 1999, each director attended at least 75% of the total number of
meetings of the Board of Directors and meetings of the committees on which such
director served, except Timothy Donahue, Andrew Heyer, Michael Price, Rudolph
Rupert and Steven Shindler.
The following information regarding the nominees, their occupations,
employment history and directorships in certain companies is as reported by the
respective nominees.
Lawrence B. Sorrel, 41, has been Chairman of the Board since April 1999.
Mr. Sorrel joined Welsh, Carson, Anderson & Stowe in 1998 and is a managing
member or general partner of the respective sole general partners of WCAS VIII
and other associated investment partnerships. Prior to joining Welsh, Carson,
Mr. Sorrel spent 12 years at Morgan Stanley, where he was a Managing Director
and senior executive in Morgan Stanley's private equity group, Morgan Stanley
Capital Partners. Mr. Sorrel is a director of Select Medical Corp., Emmis
Communications, Westminster Healthcare Ltd, Valor Telecommunications, LLC and
Winstar Communications, Inc.
Stephen H. Clark, 55, is President and Chief Executive Officer of
SpectraSite and a director. He has been a director of SpectraSite since its
formation in May 1997. Mr. Clark has 22 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, 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 B.A. in physics and an M.B.A. from the
University of Colorado.
Timothy M. Donahue, 51, has been a director since April 1999. Mr. Donahue
has served as Chief Executive Officer of Nextel since July 15, 1999, and as a
director of Nextel since May 1996. Prior to being named Chief Executive Officer,
Mr. Donahue served as President, and on February 29, 1996, he was elected to the
additional position of Chief Operating Officer of Nextel. From 1986 to January
1996, Mr. Donahue held various senior management positions with AT&T Wireless
Services, Inc., including Regional President for the Northeast. Mr. Donahue
serves as a director of Nextel International.
Andrew R. Heyer, 42, has been a director since April 1999. Mr. Heyer is a
Managing Director at CIBC World Markets Corp., where he serves as co-head of The
High Yield Group. Prior to joining CIBC World Markets, Mr. Heyer was founder and
Managing Director of the Argosy Group L.P., which was acquired by CIBC World
Markets in 1995. Mr. Heyer is also Chairman of the Board of Directors of the
Hain Food Group, and is a director of Niagara Corporation, Hayes Lemmerz
International, Inc., Lancer Industries, Fairfield Manufacturing Company and
Millenium Digital Media Holdings, Inc.
James R. Matthews, 32, has been a director since August 1998. Mr. Matthews
has been employed by J. H. Whitney & Co. since 1994 and serves as a General
Partner. Previously, he was with Gleacher & Co. Inc. and Salomon Brothers Inc.
Mr. Matthews is a director of ClearSource, Inc. and NewPath Holdings, Inc.
Thomas E. McInerney, 58, has been a director since April 1999. Mr.
McInerney joined Welsh, Carson, Anderson & Stowe in 1986 and is a managing
member or general partner of the respective sole general
5
<PAGE> 9
partners of WCAS VIII and other associated investment partnerships. Formerly, he
co-founded and served as President and Chief Executive Officer of Dama
Telecommunications Corp., a telecommunications services company. Earlier, he was
Group Vice President -- Financial Services at ADP and Senior Vice President --
Operations at the American Stock Exchange. Mr. McInerney is a director of, among
others, Centennial Cellular Corp., Control Data Systems, Bridge Information
Systems, The BISYS Group, The Cerplex Group, Attachmate Corp., Global Knowledge
Network and Valor Telecommunications, LLC.
Calvin J. Payne, 47, is Executive Vice President -- Design and Construction
of SpectraSite and a director since September 1999. Mr. Payne was Co-founder,
Chairman of the Board and Chief Executive Officer of Westower and had been a
director of Westower or its predecessor since 1990. Prior to founding Westower,
Mr. Payne acquired experience in all aspects of the construction of steel
communications towers. Mr. Payne, an award-winning tower designer, has
engineered over 600 towers. Mr. Payne is a graduate of the University of British
Columbia and the University of Western Australia.
Michael J. Price, 42, has been a director since April 1999. Mr. Price is
Co-Chairman of FirstMark Communications International LLC, a broadband wireless
telecommunications company. Prior to that, he worked at Lazard Freres & Co. LLC,
starting in 1987, serving first as a Vice President and then as a Managing
Director, where he led their global technology and telecommunications practice.
Rudolph E. Rupert, 34, has been a director since April 1999. Mr. Rupert
joined Welsh, Carson, Anderson & Stowe in 1997 and is a managing member or
general partner of the respective sole general partners of Welsh, Carson,
Anderson, & Stowe VIII and other associated investment partnerships. Previously
he was at General Atlantic Partners and Lazard Freres. Mr. Rupert is a director
of Centennial Cellular and Control Data Systems, Inc.
Steven M. Shindler, 37, has been a director since April 1999. Mr. Shindler
joined Nextel in May 1996 and serves as Executive Vice President and Chief
Financial Officer. Between 1987 and 1996, Mr. Shindler was an officer with
Toronto Dominion Bank, where most recently he was a Managing Director in its
Communications Finance Group. Mr. Shindler serves as a director of Nextel
International.
Michael R. Stone, 37, has been a director since May 1997. Mr. Stone has
been employed by J. H. Whitney & Co. since 1989 and serves as a General Partner.
Previously, he was with Bain & Company. Mr. Stone is a director of TBM Holdings,
Inc., Scirex Corporation, MedSource Technologies, Inc. and Physicians Surgical
Care, Inc.
COMPENSATION OF DIRECTORS
Directors who are also officers of SpectraSite are not separately
compensated for their services as a director. Directors who are not officers do
not receive cash compensation for their services; however, non-employee
directors are reimbursed for their expenses incurred in connection with
attending meetings of the Board or any committee on which they serve and are
eligible to receive awards under SpectraSite's Stock Incentive Plan. No stock
incentive awards were made to non-employee directors in 1999.
EXECUTIVE OFFICERS
The executive officers of SpectraSite who are not directors are set forth
below. Executive officers of SpectraSite are elected to serve until they resign
or are removed, or are otherwise disqualified to serve, or until their
successors are elected and qualified.
Timothy G. Biltz, 41, is Chief Operating Officer. Prior to joining
SpectraSite in August 1999, Mr. Biltz spent 10 years at Vanguard Cellular
Systems, Inc., most recently as Executive Vice President and Chief Operating
Officer. He joined Vanguard in 1989 as Vice President of Marketing and
Operations and was Executive Vice President and President of U.S. Wireless
Operations from November 1996 until May 1998 when he became Chief Operating
Officer. Mr. Biltz was instrumental in Vanguard's development from an initial
start-up to an enterprise with over 800,000 subscribers.
6
<PAGE> 10
David P. Tomick, 48, is Executive Vice President, Chief Financial Officer
and Secretary. 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.
Richard J. Byrne, 42, is Executive Vice President -- Business Development.
Prior to joining SpectraSite in April 1999, Mr. Byrne served as the Director of
Business Development for Nextel. He had primary responsibility for the tower
sale/lease-back and build-to-suit commitment. In addition, Mr. Byrne was
responsible for all carrier-to-carrier co-location agreements. Before joining
Nextel in 1997, Mr. Byrne held positions of increasing responsibility in the
System Development Group of AT&T Wireless Services. Prior to entering the
wireless communications industry, Mr. Byrne spent 15 years in the real-estate
industry. His work centered on property management, ownership and brokerage of
investment properties.
Terry L. Armant, 51, is Senior Vice President -- Operations. 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.
John H. Lynch, 42, is Vice President, General Counsel. Prior to joining
SpectraSite in August 1999, Mr. Lynch served as General Counsel for Qualex Inc.,
the wholly-owned photofinishing subsidiary of Eastman Kodak Company. Before
joining Qualex in 1989, Mr. Lynch practiced corporate and real estate law in the
Atlanta, Georgia offices of Wildman, Harrold, Allen, Dixon and Branch. Mr. Lynch
holds a B.A. in Economics and English from Ohio Wesleyan University, an M.B.A.
from Ohio State University, and a J.D. from Ohio State University.
Daniel I. Hunt, 35, is Vice President -- Finance and Administration. Prior
to joining SpectraSite in April 1999, Mr. Hunt served as Director of Accounting
and Financial Reporting at Wavetek Wandel & Goltermann, Inc., a developer and
manufacturer of communications test equipment based in North Carolina and
Eningen, Germany. Previously, Mr. Hunt was Controller for Wandel & Goltermann
Technologies, Inc. Before joining Wandel & Goltermann, Mr. Hunt worked in the
audit and business consulting practice of Arthur Andersen. Mr. Hunt is a
certified public accountant and a graduate of Wake Forest University.
Steven C. Lilly, 30, is Vice President and Treasurer. Prior to joining
SpectraSite in July 1999, Mr. Lilly served as a Vice President in First Union
Corporation's loan syndications group where he was primarily responsible for
structuring and negotiating transactions for emerging telecommunications
companies, including wireless service providers, competitive local exchange
carriers and tower companies.
Douglas A. Standley, 42, is Vice President of SpectraSite's Broadcast
Group. Prior to joining SpectraSite in December 1999, Mr. Standley was President
of Stainless, Inc. From 1997 to 1999, Mr. Standley was the Chief Executive
Officer and President of FWT, Inc., a provider of wireless infrastructure
products, and from 1995 to 1997, he was a director of Synergetics, Inc., a
boutique international management consulting firm. Mr. Standley holds a B.A. in
Business Administration from California State University and is completing a
Presidential Key Executive M.B.A. through Pepperdine University.
Alexander L. Gellman, 39, is Vice President of SpectraSite's Site
Management Group. Prior to joining SpectraSite in January 2000, Mr. Gellman was
Chief Executive Officer of Apex, which he co-founded in March 1995. Prior to
founding Apex, Mr. Gellman co-founded Horizon Cellular Group, where he most
recently served as Vice President of Development. Mr. Gellman has founded and
developed several other telecommunications-related start-up companies. Mr.
Gellman holds an M.B.A. in Finance and Accounting from The Wharton School of the
University of Pennsylvania and a B.A. in Biology from Tufts University.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation paid by
or incurred on behalf of SpectraSite to its Chief Executive Officer and four
other most highly compensated executive officers for the years ended December
31, 1997, 1998 and 1999. Amounts shown for 1997 include compensation paid by
Holdings to the named executive officers from April 25, 1997, the date of
Holdings' inception, through December 31, 1997.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-------------------------
NUMBER OF
ANNUAL COMPENSATION SECURITIES
--------------------------------------- UNDERLYING
NAME AND PRINCIPAL OTHER RESTRICTED OPTIONS/ ALL OTHER
POSITION YEAR SALARY($) BONUS($) ANNUAL($) STOCK($) SARS(#) COMPENSATION($)(e)
------------------ ---- --------- -------- --------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen H. Clark.......... 1999 219,006 150,000 -- -- 775,000 2,535
Chief Executive Officer 1998 168,000 68,000 -- -- 300,000 2,400
1997 107,046 -- -- -- 425,000 --
David P. Tomick........... 1999 187,921 77,360 -- -- 225,000 2,442
Chief Financial Officer 1998 140,000 56,000 -- -- 50,000 2,178
1997 64,029 -- -- -- 225,000 --
Terry L. Armant(a)........ 1999 148,025 51,845 -- -- 25,000 2,316
Senior Vice President 1998 55,192 68,150 -- -- 125,000 --
-- Operations
Richard J. Byrne(b)....... 1999 103,205 70,613 138,613 224,500(d) 200,000 22,172
Executive Vice
President -- Business
Development
Timothy G. Biltz(c)....... 1999 89,000 50,000 17,609 -- 400,000 32,064
Chief Operating Officer
</TABLE>
- ---------------
(a) Mr. Armant joined SpectraSite in August 1998.
(b) Mr. Byrne joined SpectraSite in April 1999.
(c) Mr. Biltz joined SpectraSite in August 1999.
(d) Mr. Byrne received 50,000 shares of restricted common stock in connection
with his employment by SpectraSite, and he is entitled to dividends, if any,
paid on his restricted stock. As of December 31, 1999, Mr. Byrne held 50,000
shares of restricted common stock with a fair market value of $544,000. No
other named executive officer holds shares of restricted stock.
(e) Amounts reported for 1999 include SpectraSite's contribution under its
401(k) plan of $2,535, $2,442, $2,316 and $707 for Messrs. Clark, Tomick,
Armant and Byrne, respectively, and relocation allowances of $21,465 and
$32,064 for Messrs. Byrne and Biltz, respectively.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
All options become exercisable immediately upon a change in control. Unless
a particular option grant provides otherwise, a change in control occurs upon a
merger, consolidation, reorganization or any transaction in which all or
substantially all of Holdings' assets are sold, leased or transferred. However,
a transaction in which the holders of Holdings' capital stock immediately prior
to the transaction continue to hold at least a majority of the voting power of
the surviving corporation does not constitute a change in control, and no
options become exercisable upon a change in control as to which a performance
milestone has not been achieved as of the date of the change in control. Holders
of options at the time of the Nextel tower acquisition in April 1999 agreed that
the acquisition and related financing transactions did not constitute a change
of control under their options.
8
<PAGE> 12
The present value of the options granted was estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions:
dividend yield of 0.0%, volatility of 0.7, risk-free interest rate of 5.0% and
expected option lives of seven years.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#) 1999 PER SHARE($) DATE PRESENT VALUE($)
---- ------------ ------------ -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Stephen H. Clark................ 775,000 29 5.00 4/20/09 2,187,825
David P. Tomick................. 225,000 8 5.00 4/20/09 635,175
Terry L. Armant................. 25,000 1 5.00 4/20/09 70,575
Richard J. Byrne................ 200,000 7 5.00 4/20/09 564,600
Timothy G. Biltz................ 300,000 11 5.00 8/31/09 1,764,270
100,000 4 9.26 11/23/09 598,370
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
SHARES 1999(#) AT DECEMBER 31, 1999($)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen H. Clark.......... -- -- 212,500 1,287,500 1,697,875 8,318,875
David P. Tomick........... 112,500 535,500 0 387,500 0 2,565,875
Terry L. Armant........... -- -- 31,250 118,750 249,688 896,063
Richard J. Byrne.......... -- -- 0 200,000 0 1,176,000
Timothy G. Biltz.......... -- -- 0 400,000 0 1,926,000
</TABLE>
EMPLOYMENT AGREEMENTS
SpectraSite has entered into employment agreements with each of Messrs.
Clark, Tomick and Byrne effective April 20, 1999. The initial term of the
employment agreements is five years. In 2000, the annual salaries for Messrs.
Clark, Tomick and Byrne are $325,000, $220,000 and $175,000, respectively, and
they are eligible to receive annual bonuses determined at the discretion of the
board of directors. Mr. Byrne also received a $40,000 bonus in connection with
his relocation to Cary, North Carolina. If their employment is terminated as a
result of their death, disability, or termination without cause Messrs. Clark,
Tomick and Byrne will be entitled to receive continued salary, bonus and health
benefits for a period of 24 months.
Under the employment agreements, Messrs. Clark, Tomick and Byrne were
granted incentive stock options to purchase 775,000, 225,000 and 200,000 shares
of common stock, respectively. The exercise price for the options will be $5.00.
Twenty percent of the stock options will become exercisable each year over the
five-year employment period. If SpectraSite terminates the employment of Mr.
Byrne without cause, or if he dies or becomes disabled, then his stock options
shall be fully exercisable. If SpectraSite terminates the employment of Mr.
Clark or Mr. Tomick without cause, or if either of them dies or becomes
disabled, then the stock options that they held prior to entering into the
employment agreement, but not those granted under the employment agreement,
shall be fully exercisable.
Messrs. Clark, Tomick and Byrne have agreed that for a period of 24 months
following the termination of their employment with SpectraSite they will not:
- engage in competition, own any interest in, or perform any services for
any business which engages in competition with SpectraSite;
- solicit management employees of SpectraSite or otherwise interfere with
the employment relationship between SpectraSite and its employees; or
9
<PAGE> 13
- engage or work with any supplier, contractor or entity with a business
relationship with SpectraSite, if such action would have a material
adverse effect on SpectraSite.
In addition, in connection with his employment with SpectraSite, Mr. Byrne
purchased 50,000 shares of common stock for a nominal amount. Mr. Byrne's right
to retain these shares of common stock vests in equal 25% installments on each
of the first four anniversaries of his employment agreement. Vesting will
accelerate upon Mr. Byrne's termination without cause or if he dies or becomes
disabled. Mr. Byrne will also receive a bonus to pay income taxes incurred in
connection with this purchase of common stock.
PERFORMANCE GRAPH
The following graph compares, for the period beginning on September 3,
1999, the date SpectraSite's common stock first became publicly traded on the
Nasdaq National Market, and ending on December 31, 1999, the cumulative total
return of the common stock to the cumulative total returns on the Nasdaq
Composite Index and a peer group index, comprised of American Tower Corporation,
Crown Castle International Corp., Pinnacle Holdings, Inc. and SBA Communications
Corporation. The comparison assumes $100 was invested on September 3, 1999 in
SpectraSite's common stock and in each of the foregoing indices and that all
dividends were reinvested.
[CHART]
<TABLE>
<CAPTION>
SPECTRASITE NASDAQ COMPOSITE INDEX PEER GROUP INDEX
----------- ---------------------- ----------------
<S> <C> <C> <C>
9/3/99 100.00 100.00 100.00
12/31/99 85.29 100.18 157.47
</TABLE>
10
<PAGE> 14
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is currently comprised of four non-employee,
independent members of the Board of Directors. The Committee has responsibility
to review, recommend and approve changes to SpectraSite's compensation policies
and benefits programs, to administer the Company's stock plans, including
approving stock grants to executive officers and directors and certain other
stock option grants, and otherwise to ensure that the compensation philosophy is
consistent with SpectraSite's best interests and is implemented in an
appropriate manner.
COMPENSATION PHILOSOPHY
SpectraSite's compensation philosophy gives form to the actions of the
Compensation Committee and underlies the compensation structure. Our philosophy
is to (i) provide a competitive total compensation package that allows us to
attract and retain key executive and employee talent that promotes our ability
to accomplish our goals and (ii) directly link compensation to improvements in
our financial and operational performance and increases in stockholder value, as
measured by SpectraSite's common stock price.
COMPENSATION PROGRAM
SpectraSite's compensation program for key employees emphasizes variable
compensation, primarily through performance-based grants of long-term,
equity-based incentives in the form of stock options. Salaries at all employee
levels are generally targeted at median market levels.
The Committee reviews compensation structure and total compensation levels
to ensure that management and key employee total compensation opportunities are
linked to SpectraSite's performance and stock price appreciation and keep pace
with SpectraSite's competition. The Committee believes that the base salary,
total cash compensation and stock appreciation opportunities for senior
management, as well as those of the general employee population, are consistent
with competitive market levels. Furthermore, we emphasize the stock incentive
portion of our compensation packages in order to increase our ability to attract
and retain qualified executive officers.
We believe our status as a newly public company makes the equity-based
component of our compensation packages a strong element in our ability to keep
and retain the executives we need to grow and prosper in a business dominated by
a number of strong national tower companies. The Committee feels the use of
stock options and performance-based bonuses encourages a continuity of interests
between our stockholders and our senior management. Because a stock option's
value is based on the market price of our stock, in order for our executives to
realize the value of their option awards they must encourage and engage in
activities which increase stockholder value. Conversely, if SpectraSite performs
poorly, senior management is directly affected as stock options lose value and
performance-based bonuses are not paid, lowering the overall compensation
package.
BASE SALARIES
The base salary of certain executive officers is determined by employment
agreements. In determining base salary for executives not covered by employment
agreements, the Committee considers the officer's impact on the organization,
scope of responsibility, prior experience, past accomplishments and data on
prevailing compensation levels in relevant executive labor markets as it
determines appropriate salary levels. Rather than calculate a precise formula to
determine an officer's compensation, the Committee studies each officer's
contribution to his or her respective area of concentration and responsibility,
using the criteria listed above as a general framework for consideration. The
Committee believes the flexibility inherent in an approach which allows it to
evaluate each individual's particular situation before making consideration
determinations serves SpectraSite's interests by allowing the Committee to focus
on each individual's total performance and contributions to SpectraSite as a
whole.
11
<PAGE> 15
LONG-TERM INCENTIVES
SpectraSite's compensation packages for executive officers include stock
option awards and annual cash bonuses payable upon achievement of previously
stated performance targets, such as the improvement of earnings before interest,
taxes, depreciation and amortization. This allows the Committee to give
financial rewards for the achievement of high standards of business performance;
conversely, senior management risks the loss of significant compensation through
the failure to achieve these standards. For most executive officers, target cash
bonuses approximate 30% to 40% of base salary. Senior executive officers have
target cash bonuses at a higher salary percentage. In order to determine amounts
of stock option awards, the Committee assesses responsibility and performance
criteria appropriate to the executive officer in question to select
performance-based targets the achievement of which result in option awards. The
size of the option awards for which an officer is eligible are determined
principally by the level of responsibility for SpectraSite's performance that
the officer holds.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Stephen H. Clark, SpectraSite's President and Chief Executive Officer, has
entered into an employment agreement effective April 20, 1999. The agreement has
an initial term of five years. For a description of the employment agreement,
see "Executive Compensation -- Employee Agreements." Mr. Clark's salary for 1999
was $219,006, and he is eligible to receive an annual bonus at the discretion of
the Board of Directors. Under the terms of his employment agreement, Mr. Clark
was granted incentive stock options to purchase 775,000 shares of common stock
at an exercise price of $5.00 per share. Twenty percent of the options become
exercisable each year during the term of the employment agreement. Mr. Clark was
awarded a cash bonus of $150,000 for 1999 in recognition of his leadership and
vision. In the past year, SpectraSite increased its tower portfolio from 106 to
2,765 towers, acquired Westower Corporation to gain construction and engineering
capabilities and entered the broadcast tower industry through a series of
year-end transactions. Mr. Clark was instrumental in spearheading and
orchestrating each of these 1999 milestones.
Thomas McInerney
Lawrence Sorrel
Michael Stone
Timothy Donahue
CERTAIN TRANSACTIONS
REPURCHASE OF COMMON STOCK FROM FORMER EMPLOYEE
In an agreement dated September 15, 1998, a former employee agreed to sell
125,000 shares of common stock to SpectraSite and to release SpectraSite from
any potential claims for an agreed upon price. In addition, the agreement
provided that stockholders of SpectraSite Holdings would have an option to
purchase the former employee's remaining 37,605 shares of common stock for the
same price per share, provided that SpectraSite 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, SpectraSite paid the former employee $0.5 million for
his shares and the release under the agreement, and on February 5, 1999, David
P. Tomick purchased the remaining 37,605 shares for an aggregate purchase price
of $150,240.
THE PREFERRED STOCK OFFERINGS
According to the terms of a stock purchase agreement, dated as of May 12,
1997, Whitney Equity Partners, L.P. and Kitty Hawk Capital Limited Partnership,
III purchased an aggregate of 3,462,830 shares of SpectraSite Holdings' Series A
preferred stock for an aggregate purchase price of $10.0 million in a
transaction exempt from registration under the Securities Act.
12
<PAGE> 16
According to the terms of a stock purchase agreement, dated as of March 23,
1998, 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 purchased an
aggregate of 7,000,000 shares of SpectraSite Holdings' Series B preferred stock
for an aggregate purchase price of $28.0 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 $17.0 million. As of August 27, 1998, the Series B
investors (other than Whitney Equity Partners, L.P.) purchased 2,074,016 shares
for an aggregate purchase price of approximately $8.3 million 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
approximately $2.7 million.
According to the terms of a stock purchase agreement, dated as of February
10, 1999, as amended on April 20, 1999, Welsh, Carson, Anderson & Stowe VIII,
L.P., certain other persons and entities affiliated with Welsh, Carson, Anderson
& Stowe, J.H. Whitney III, L.P., Whitney Strategic Partners III, L.P., CIBC WG
Argosy Merchant Fund 2, L.L.C., Co-Investment Merchant Fund 3, LLC, The North
Carolina Enterprise Fund, L.P., Waller-Sutton Media Partners, L.P., Kitty Hawk
Capital Limited Partnership, IV, Finley Family Limited Partnership, Eagle Creek
Capital, L.L.C., David P. Tomick, Jack W. Jackman, Alton D. Eckert, William R.
Gupton, The Price Family Limited Partnership and Benake L.P. agreed to purchase
46,286,795 shares of SpectraSite Holdings' Series C convertible preferred stock
in connection with and partially to fund the Nextel tower acquisition. The
Series C investors paid an aggregate purchase price of approximately $231.4
million on April 20, 1999 for the shares of SpectraSite Holdings' Series C
preferred stock in a transaction exempt from registration under the Securities
Act.
In connection with the consummation of our public offering of common stock
on February 4, 2000, all outstanding shares of Series A, Series B and Series C
preferred stock converted on a share-for-share basis into common stock. The
Series C investors, including the holders of the Series A preferred stock and
the Series B preferred stock, and certain other stockholders of SpectraSite
Holdings are entitled to certain rights under the stockholders' agreement and
the registration rights agreement, described below.
AGREEMENTS WITH NEXTEL
On April 20, 1999, Nextel and SpectraSite entered into several agreements
in connection with SpectraSite's acquisition of tower assets from Nextel. The
following is a summary of the material terms of these agreements.
Master Site Commitment Agreement. SpectraSite and certain of Nextel's
subsidiaries entered into a master site commitment agreement under which Nextel
and its controlled affiliates will offer SpectraSite certain exclusive
opportunities, under specified terms and conditions, relating to the
construction or purchase of, or co-location on, additional communications sites.
These sites will then be leased by subsidiaries of Nextel under the terms of the
master site lease agreement. If the number of new sites leased, whether
purchased from Nextel, constructed at Nextel's request or otherwise made
available for co-location by Nextel, its affiliates and Nextel Partners, is less
than the agreed upon numbers as of particular dates, then commencing with the
37th month after the closing, Nextel has agreed to make certain payments to
SpectraSite. The master site commitment agreement terminates on the earlier of
April 20, 2004 or the date on which the number of sites purchased or constructed
or made available for co-location under the master site commitment agreement
equals or exceeds 1,700. The master site commitment agreement also gives
SpectraSite a right of first refusal to acquire any towers that Nextel or
certain affiliates desire to sell.
The master site commitment agreement specifies that SpectraSite is not
obligated to develop more than 566 new sites each year. SpectraSite has agreed
to abide by Nextel's deployment plan. To date, Nextel's plan has emphasized
filling gaps in current coverage areas to increase capacity and enhance signal
quality, as well as deploying sites in areas contiguous to Nextel's existing
markets and deploying sites in new markets to expand the Nextel network. These
sites also include sites operated or to be developed by Nextel Partners in their
service areas. This strategy contemplates expansion and deployment in most major
metropolitan areas of
13
<PAGE> 17
the contiguous United States, including highway corridors that connect existing
and planned markets, particularly in the eastern half of the United States and
along the west coast. SpectraSite is not obligated to develop sites outside of
Nextel's or Nextel Partners' currently delineated network deployment area to the
extent these sites account for more than 10% of the total sites developed under
this agreement.
The agreement may be terminated by either side, by written notice, under
certain conditions. SpectraSite may terminate the agreement if:
- Nextel or one of its subsidiaries that transferred assets to SpectraSite
becomes insolvent, or is unable to pay its debts as they become due; or
- Nextel or a transferring subsidiary is liquidated, voluntarily or
involuntarily, or a receiver or liquidator is appointed for that entity.
Nextel may terminate the agreement if:
- either SpectraSite Holdings or its subsidiary holding the Nextel towers
becomes insolvent, or is unable to pay its debts as they become due;
- either SpectraSite Holdings or such subsidiary is liquidated, voluntarily
or involuntarily, or a receiver or liquidator is appointed for such
entity; or
- at or after the end of any calendar year, Nextel has exercised its rights
to recover a penalty payment, as specified in the agreement, because, for
more than 10% of the total number of towers required to be developed by
SpectraSite during each year, SpectraSite has failed to complete
development of new towers during the allotted time period.
Either SpectraSite or Nextel may terminate the agreement if the other party
is in breach of an obligation to pay money or in breach of a material
nonmonetary obligation, if the breach is neither waived nor cured.
Master Site Lease Agreement. SpectraSite and Nextel entered into a master
site lease agreement under which SpectraSite has agreed to lease to Nextel's
subsidiaries space on wireless communications towers or other transmission
space:
- at the sites transferred to SpectraSite as part of the Nextel tower
acquisition;
- at the sites subsequently constructed or acquired by SpectraSite under
the master site commitment agreement; or
- at other sites and related wireless communications towers or transmission
space owned, leased or licensed by SpectraSite.
In addition, an entity in which Nextel holds a minority equity interest,
Nextel Partners, may in the future enter into a separate master site lease
agreement. Under this separate agreement, SpectraSite would agree to lease to
Nextel Partners space on wireless communications towers or other transmission
space:
- at some of the sites transferred to SpectraSite as part of the Nextel
tower acquisition;
- at some of the sites subsequently constructed or acquired by SpectraSite
under the master site commitment agreement; or
- at other sites and related space on wireless communications towers or
transmission space owned, leased or licensed by SpectraSite.
If Nextel Partners does not enter into a master site lease agreement with
SpectraSite in the future, any site that would otherwise have been leased to
Nextel Partners thereunder will instead be leased to Nextel's subsidiaries under
the Nextel master site lease agreement.
The Nextel master site lease agreement and, if executed, the Nextel
Partners master site lease agreement will be supplemented from time to time to
provide for the lease of space on certain additional communications towers or
other transmission space at sites owned, constructed or acquired by SpectraSite.
Nextel and, if Nextel Partners executes a master site lease agreement, Nextel
Partners shall have a right of first refusal
14
<PAGE> 18
with respect to the sale of any sites acquired by SpectraSite as part of the
Nextel tower acquisition or constructed or acquired by SpectraSite under the
master site commitment agreement.
The Nextel master site lease agreement and, if executed, the Nextel
Partners master site lease agreement provide that within 15 days of the
commencement of the lease of a given site, and on the first day of each month
thereafter for the term of the lease, a rental payment of $1,600 per month will
be due on each tower which SpectraSite leases to any of the tenants who are
parties to the agreement. Monthly payments will be adjusted for partial months
when appropriate. On each annual anniversary of a given lease's commencement,
the rent owed under the lease will increase by 3%.
Other rental provisions include:
- an option for tenants to lease additional space, if available, on sites
where the tenant already leases space; and
- a right allowing tenants to install, at their sole option and expense and
only when additional capacity exists at the rental site, microwave
antennae of various sizes and other equipment at additional rental rates
delineated in the agreement.
These provisions are subject to the same annual 3% rate increase as the
base rent.
The agreement further provides that each tenant is responsible for any
portion of personal property taxes assessed on any site and directly
attributable to the tenant's property, franchise and similar taxes imposed on
the tenant's business and sales tax imposed upon payment or receipt of rents
payable under the agreement. The landlord is responsible for all other taxes.
Additionally, the agreement provides that the landlord will be responsible for
certain types of insurance. Each tenant is also responsible for certain other
types of insurance.
The term of each lease contracted under the agreement is at least five
years, with a right to extend for five successive five-year periods. In certain
cases, the initial lease term will be six, seven or eight years. The lease is
automatically renewed unless the tenant submits notification of its intent to
terminate the lease, when its current term expires, prior to such expiration.
The tenant has the right to trade the term of any given site for the term of any
other site, upon written notice to the landlord. However, such a trade is
limited to one time per site per term.
A tenant may terminate a lease for any site, at its sole discretion,
without further liability to the landlord, with 30 days prior written notice,
if:
- the tenant uses reasonable efforts and fails to obtain or maintain any
license, permit or other approval necessary for operation of its
communications equipment; or
- the tenant is unable to use the tower due to FCC action which is not a
result of any action by the tenant.
Either party may terminate a lease for any site with 60 days prior written
notice, if the other party breaches a nonmonetary obligation, subject to certain
cure provisions. Either party may terminate a lease for any site with 10 days
prior written notice, if the other party breaches a monetary obligation and that
breach is not cured within the 10-day period. In addition, if Nextel or Nextel
Partners, if Nextel Partners executes a master site lease agreement, defaults on
rental payments with respect to more than 10% of the sites covered by its
respective master site lease agreement and Nextel or Nextel Partners, as the
case may be, remains in default for 30 days following notice from SpectraSite,
SpectraSite may cancel the master site lease agreement of the defaulting party
as to all sites covered by that agreement.
Security and Subordination Agreement. SpectraSite and Nextel entered into
a security and subordination agreement under which SpectraSite granted to Nextel
a continuing security interest in the assets acquired in the Nextel tower
acquisition or acquired or constructed under the master site commitment
agreement. This interest secures SpectraSite's obligations under the Nextel
master site lease agreement and, if applicable, the Nextel Partners master site
lease agreement. The terms of an intercreditor agreement render Nextel's lien
and the other rights and remedies of Nextel under the security and subordination
agreement subordinate and subject to the rights and remedies of the lenders
under the credit facility.
15
<PAGE> 19
TRANSACTIONS RELATED TO THE NEXTEL TOWER ACQUISITION
On April 20, 1999, in connection with the Nextel tower acquisition, Messrs.
Sorrel, Rupert, McInerney and Price purchased 50,000, 25,000, 262,973 and
100,000 shares of SpectraSite Holdings' Series C preferred stock for $5.00 per
share, respectively. In addition, Mr. Price purchased 100,000 shares of common
stock and executed promissory notes as payment for the common stock. The
promissory notes mature on April 20, 2009 and bear interest at 5.67% per year.
Under the purchase agreement for Mr. Price's shares, 25% of the shares of common
stock vest each year, with the first installment vesting on April 20, 2000. In
addition, SpectraSite has the right to repurchase half of the shares at their
original cost to Mr. Price at any time prior to April 20, 2000 and upon the date
Mr. Price ceases to perform services for SpectraSite. Each of Messrs. Sorrel,
Rupert, McInerney and Price are members of SpectraSite Holdings' board of
directors. Messrs. Sorrel, Rupert and McInerney are also affiliates of Welsh,
Carson, Anderson & Stowe.
Affiliates of Welsh, Carson, Anderson & Stowe, J. H. Whitney & Co., and
Canadian Imperial Bank of Commerce received an aggregate of two million shares
of SpectraSite Holdings common stock as consideration for financing commitments
made in connection with the Nextel tower acquisition. Welsh Carson, J. H.
Whitney and Canadian Imperial Bank of Commerce are each significant stockholders
of SpectraSite Holdings and affiliates of each entity are members of SpectraSite
Holdings' board of directors.
To finance a portion of the cash consideration paid to Nextel, SpectraSite
Holdings issued and sold 11 1/4% senior discount notes due 2009 in a private
offering and borrowed $150.0 million under its credit facility. CIBC World
Markets Corp. was an initial purchaser in the 2009 notes offering, and an
affiliate of CIBC World Markets is an agent and a lender under the credit
facility. See "-- Transactions with Affiliates."
TRANSACTIONS WITH EXECUTIVE OFFICERS
In May 1997, Stephen H. Clark agreed to invest additional personal funds in
SpectraSite at the average per share price of SpectraSite Holdings Series A and
Series B preferred stock. In satisfaction of this commitment, Mr. Clark
purchased 210,000 shares of common stock for an aggregate purchase price of
$772,800 on April 20, 1999.
In August 1999, SpectraSite loaned David P. Tomick $325,000 in connection
with the exercise of certain stock options. The 112,500 shares Mr. Tomick
acquired through the exercise of these options are pledged to SpectraSite as
security for this loan. The loan bears interest at the applicable federal rate
under the Internal Revenue Code, 5.36% per annum, and matures in August 2002.
In September 1999, SpectraSite loaned Timothy G. Biltz $500,000 to purchase
a home as a relocation incentive. This loan will be secured by any shares of
common stock issued to Mr. Biltz upon his exercise of options, bears interest at
5.82% per annum and matures in September 2004.
In January 2000, SpectraSite loaned Stephen H. Clark $1,100,000 in
connection with the exercise of stock options to acquire 512,500 shares of
common stock. The loan bears interest at the applicable federal rate under the
Internal Revenue Code and matures on December 31, 2002.
STOCKHOLDERS' AGREEMENT
In connection with the closing of the Nextel tower acquisition, SpectraSite
Holdings and its stockholders entered into the third amended and restated
stockholders' agreement, which superseded and replaced the existing
stockholders' agreement among SpectraSite Holdings and its stockholders. The
following is a summary of the material terms of the stockholders' agreement.
The stockholders' agreement contains a voting agreement provision under
which SpectraSite Holdings and certain stockholders agreed to take all
appropriate action to:
- elect the greater of three and the number of directors Welsh, Carson
could appoint based on its proportionate ownership of SpectraSite
Holdings stock to SpectraSite Holdings' board;
- elect two Nextel designees to SpectraSite Holdings' board;
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- elect two designees of funds affiliated with J.H. Whitney & Co. to
SpectraSite Holdings' board;
- elect one designee of Canadian Imperial Bank of Commerce or its
affiliates to SpectraSite Holdings' board;
- elect the Chief Executive Officer, initially Stephen H. Clark, to
SpectraSite Holdings' board;
- remove and replace any director if requested to do so by the stockholders
who designated the director;
- use their best efforts to cause Welsh, Carson designees to make up two of
the three members of a compensation committee created to, among other
things, set SpectraSite's employee compensation policy;
- use their best efforts to cause Welsh, Carson and the J.H. Whitney funds'
designees to make up two of the three members of an audit committee to,
among other things, review and approve SpectraSite's financial
statements; and
- use their best efforts to elect a Welsh, Carson affiliate, Lawrence B.
Sorrel, as Chairman of SpectraSite Holdings' board.
This voting agreement provision terminates on February 4, 2005. The voting
agreement provision will terminate as to any given stockholder on the earlier to
occur of that stockholder's disposition of 50% or more of its SpectraSite
Holdings stock and the date on which the stockholder owns less than 8% of
SpectraSite Holdings' outstanding stock.
The stockholders' agreement also prohibits all stockholders that are
parties to the agreement other than Welsh, Carson from selling or otherwise
transferring their SpectraSite Holdings stock, except for transfers:
- made with the prior written consent of Welsh, Carson;
- in limited instances, made with the prior written consent of 60% of the
aggregate shares of capital stock held by affiliates of J.H. Whitney &
Co., Canadian Imperial Bank of Commerce and Nextel;
- by an individual stockholder to his or her spouse or descendant;
- in accordance with the tag-along provisions described below;
- by institutional stockholders to their affiliates; and
- by Nextel to its affiliates or creditors to secure obligations under a
secured credit facility.
These transfer restrictions terminate upon the earlier of the sale,
transfer or other disposition by Welsh, Carson of 50% or more of its SpectraSite
Holdings stock and August 4, 2001. SpectraSite Holdings' stockholders also
agreed that they would agree to a longer transfer restriction period if asked to
do so by the underwriter of certain public offerings of SpectraSite Holdings'
stock, so long as the lock-up binds SpectraSite's executive officers and all
holders of more than 5% of SpectraSite Holdings' outstanding stock, and any
exceptions to the lock-up provision apply equally to all stockholders.
Once the transfer restrictions terminate, all transfers by stockholders
owning more than 5% of SpectraSite Holdings' stock will continue to be governed
by the coordinated distribution requirements of SpectraSite Holdings' second
amended and restated registration rights agreement.
The stockholders' agreement contains a tag-along provision which gives the
parties to the stockholders' agreement the right to participate in any sale by
Welsh, Carson of its SpectraSite Holdings stock on the same terms as Welsh,
Carson sells its stock. This provision will terminate at the same time as the
transfer restrictions terminate.
SpectraSite may not redeem any shares of common stock, except for
repurchases from employees of up to $0.5 million in any twelve-month period.
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REGISTRATION RIGHTS AGREEMENT
In connection with the closing of the Nextel tower acquisition,
SpectraSite, Nextel, the Series A investors, the Series B investors, the Series
C investors and certain members of SpectraSite's management entered into a
second amended and restated registration rights agreement. In connection with
SpectraSite's acquisition of Apex, the former stockholders of Apex joined the
registration rights agreement. The following is a summary of the material terms
of the registration rights agreement.
Under the registration rights agreement, the holders of SpectraSite
Holdings' stock party to the agreement may require SpectraSite to register all
or some of their shares under the Securities Act. The following conditions must
be met to trigger this registration obligation:
- SpectraSite must receive a request for registration from holders of at
least 25% of its outstanding stock covered by the registration rights
agreement, exclusive of stock held by management;
- the request must be received at any time following August 4, 2001; and
- SpectraSite must expect the aggregate offering price of the registered
securities will exceed $50.0 million.
SpectraSite is only obligated to effect three such registrations. Both
SpectraSite Holdings and its management have the right to include their shares
in any registration statement required by the registration rights agreement.
The registration rights agreement also provides that SpectraSite Holdings'
institutional stockholders and Nextel have the right to require SpectraSite to
file a registration statement on a Form S-3 covering their stock if and when
SpectraSite Holdings becomes eligible to file a such a registration statement.
Nextel or the institutional shareholders may request this registration if:
- SpectraSite Holdings is eligible to file a registration statement on Form
S-3; and
- SpectraSite expects the aggregate offering price of the registered
securities will exceed $10.0 million.
In addition to SpectraSite's registration obligations discussed above, if
SpectraSite Holdings registers any of its common stock under the Securities Act
for sale to the public for SpectraSite's account or for the account of others or
both, the registration rights agreement requires that it use its best efforts to
include in the registration statement stock held by other of SpectraSite
Holdings' stockholders who wish to participate in the offering. Registrations by
SpectraSite Holdings on Form S-4, Form S-8 or any other form not available for
registering stock for sale to the public will not trigger this registration
obligation.
The parties to the registration rights agreement also agreed that if they
publicly sell their securities they will attempt to conduct the sale in a manner
that will not adversely disrupt the market for SpectraSite Holdings stock. The
stockholders agreed, to the extent practicable, to coordinate those sales and
make them through a single broker or market maker over a sufficient period of
time to permit an orderly disposition of their securities. This coordinated
distribution restriction terminates:
- with respect to any shares that have been effectively registered and
disposed of in accordance with the registration statement covering those
shares;
- as to any stockholder who owns less than 5% of SpectraSite Holdings'
outstanding stock; or
- at such time as the number of shares of common stock in the hands of the
public exceeds the number of shares of SpectraSite Holdings' restricted
stock and stock held by management.
TRANSACTIONS WITH AFFILIATES
Affiliates of Canadian Imperial Bank of Commerce, which owns 8.0% of
SpectraSite Holdings' common stock, have provided, and may continue to provide,
investment banking services to SpectraSite. CIBC World Markets Corp. is acting
as agent and lender under our credit facility and receives customary fees for
the performance of these activities. In addition, CIBC World Markets Corp. was
an initial purchaser of
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SpectraSite Holdings' 12% Senior Discount Notes due 2008, SpectraSite Holdings'
11 1/4% Senior Discount Notes due 2009, SpectraSite Holdings' 10 3/4% Senior
Notes due 2010 and SpectraSite Holdings' 12 7/8% Senior Discount Notes due 2010,
and an underwriter of SpectraSite Holdings' public offering of common stock in
February 2000.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the meeting, eleven directors are to be elected to hold office until the
2001 Annual Meeting of Stockholders or until their respective successors have
been elected and qualified. All eleven of the nominees are currently directors.
The eleven directors nominated for re-election at the 2000 Annual Meeting
of Stockholders are: Lawrence B. Sorrel; Stephen H. Clark; Timothy M. Donahue;
Andrew R. Heyer; James R. Matthews; Thomas E. McInerney; Calvin J. Payne;
Michael J. Price; Rudolph E. Rupert; Steven M. Shindler; and Michael R. Stone.
The persons named as proxies intend (unless authority is withheld) to vote for
the election of all of the nominees as directors.
The Board of Directors knows of no reason why any nominee for director
would be unable to serve as director. If at the time of the Annual Meeting any
of the nominees is unable or unwilling to serve as a director of SpectraSite,
the persons named in the proxy intend to vote for such substitutes as may be
nominated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF ALL OF THE NOMINEES.
ADOPTION OF AMENDMENT TO STOCK INCENTIVE PLAN TO INCREASE
ALLOCATED SHARES OF COMMON STOCK
(PROPOSAL NO. 2)
As of February 29, 2000, we had an aggregate of 10 million shares of common
stock reserved for issuance under our Stock Incentive Plan, of which options to
purchase 8,606,970 shares of common stock are outstanding and 1,146,274 shares
of common stock have been issued. The Board of Directors recommends that our
Stock Incentive Plan be amended to increase the number of shares of common stock
reserved for issuance under the Plan by 10 million shares, for an aggregate of
20 million shares.
The Board of Directors considers it in the best interest of SpectraSite and
its stockholders for the stockholders to adopt the proposed increase. The
additional shares of common stock reserved under the Stock Incentive Plan will
allow additional grants of stock options to be made under the plan, which will
further the goals of the Plan, including our policy of using performance-based
grants of long-term, equity-based incentives in the form of stock options in
order to link total compensation for management and key employees to our
performance and stock price appreciation and remain competitive and able to
retain top performers over time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 3)
The Board of Directors has selected the firm of Ernst & Young LLP,
independent certified public accountants, as our independent auditors for the
year ending December 31, 2000. Ernst & Young LLP has audited the financial
statements of SpectraSite since inception, April 25, 1997.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the shares of the common stock
present or represented by proxy and entitled to vote at the Annual Meeting.
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A representative of Ernst & Young LLP will be present at the Annual
Meeting, will be offered the opportunity to make a statement if he desires to do
so, and will be available to respond to appropriate questions. In the event the
appointment is not ratified, the Board of Directors will consider the
appointment of other independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER MATTERS
Management does not know of any other matters to be considered at the
Annual Meeting. If any other matters do properly come before the meeting,
persons named in the accompanying form of proxy intend to vote thereon in
accordance with their best judgment, and the discretionary authority to do so is
included in the Proxy Statement.
ANNUAL REPORT ON FORM 10-K
SpectraSite will provide upon request and without charge to each
stockholder receiving this Proxy Statement a copy of SpectraSite's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999, including the
financial statements and financial statement schedule information included
therein, as filed with the SEC on March 2, 2000.
SUBMISSION OF STOCKHOLDER PROPOSALS
We anticipate that the 2001 Annual Meeting of Stockholders of SpectraSite
will be held in May 2001. Any stockholders who intend to present proposals at
the 2001 Annual Meeting, and who wish to have such proposal included in
SpectraSite's Proxy Statement for the 2001 Annual Meeting, must ensure that
SpectraSite's Secretary receives such proposals not later than December 1, 2000.
Such proposals must meet the requirements set forth in the rules and regulations
of the Securities and Exchange Commission in order to be eligible for inclusion
in SpectraSite's 2001 proxy materials.
By Order of the Board of Directors
/s/ DAVID TOMICK
David P. Tomick
Secretary
Cary, North Carolina
March 31, 2000
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